author: NICHOL, District Judge.

text:
    UNITED STATES of America, Appellee, v. George Ronald DUGAN, Appellant.
    No. 72-1472.
    United States Court of Appeals, Eighth Circuit.
    Submitted Feb. 14, 1973.
    Decided April 20, 1973.
    Rehearing Denied May 25, 1972.
    Herbert D. Schaeffer, Clayton, Mo., for appellant.
    Robert D. Grote, Asst. U. S. Atty., St. Louis, Mo., for appellee.
    Before LAY and BRIGHT, Circuit Judges, and NICHOL, District Judge.

       Chief Judge, District of South Dakota, sitting by designation.

   NICHOL, District Judge.

George Ronald Dugan was indicted jointly with Arthur Lewis, Jr., and Maggie Lewis, husband and wife, in a three count indictment charging two counts of possessing chattels stolen from a vehicle moving in interstate commerce, in violation of 18 U.S.C. Sec. 659, and one count of conspiracy, in violation of 18 U.S.C. Secs. 659 and 371. At trial Arthur Lewis pleaded guilty to count two and the three counts against his wife were dismissed. Subsequently, the jury was dismissed and appellant Dugan waived trial by jury and was tried to the court. The District Court convicted him on all three counts. He was sentenced to two years imprisonment on each of the three counts, sentences to run concurrently.

The evidence shows that the chattels (coats) in question were manufactured by the California Manufacturing Company, California, Missouri. The bills of lading, corresponding to the two stolen shipments involved here, bear customer names whose places of business are situated outside the State of Missouri. Defendant Arthur Lewis, Jr., was a driver for the St. Louis-Kansas City Express, an intrastate carrier, and in that capacity, according to his guilty plea, stole the two shipments of coats. The coats were en route to St. Louis, Missouri, where they would have been transferred to an interstate carrier to continue their journey. ' The chattels never left the State of Missouri.

The testimony at trial disclosed that appellant Dugan solicited sales from amongst various acquaintances. If a prospective customer encountered size difficulties, or voiced a style preference for a coat other than those possessed by Dugan, Dugan would attempt to satisfy those needs from the stock held by Lewis. Appellant also informed other prospects that Lewis had coats for sale in his home. Occasionally Dugan would personally escort prospective customers to the Lewis home to permit the buyer to sort through an assortment of coats contained in shipping boxes open for inspection.

On appeal Dugan asserts error upon five grounds. Based upon the first three grounds, relating to counts one and two, we affirm his conviction.

Dugan’s first contention on appeal challenges the sufficiency of the evidence in the District Court’s ruling that the goods covered in counts one and two, severally, reached a value in excess of $100.00 as required for two felony convictions under 18 U.S.C. Sec. 659. This argument is without merit. In the trial record and again at oral argument in this appeal the government traced the individual sales back to the two stolen shipments providing the substance for counts one and two. Dugan was identified with the sale of coats from the two stolen shipments totalling $100.00 from each separate shipment. Alternatively, Dugan can be found to have been in possession of all of the coats involved in the two separate counts which were situated in the Lewis home. “Possession” under 18 U.S.C. See. 659 includes constructive as well as actual possession.

While term “constructive possession” is not free from ambiguity, it has been generally defined as knowingly having both the power and intention at a given time to exercise dominion or control over the property. Rodella v. United States, 286 F.2d 306, 311-312 (9th Cir. 1960).

United States v. Cousins, 427 F.2d 382, 384 (9th Cir. 1970). “Possession” may further be found to be sole or joint. Sewell v. United States, 406 F.2d 1289, 1293, n. 3 (8th Cir. 1969); United States v. Gulledge, 469 F.2d 713 (5th Cir. 1972). From our review of the record we find that Dugan exercised dominion or control over the stolen coats. He had access to the coats in the Lewis home which permitted him to show the goods to his prospective customers for their selection. Dugan’s dominion or control is further evidenced by his ability to exchange or supplement the coats he possessed with those in the Lewis home to accommodate a buyer’s needs. The evidence shows that he told various people that Mr. Lewis had coats for sale, and personally escorted them to the Lewis home for the purpose of making a choice. We conclude that there was a factual basis from which the trial judge could determine that Dugan was in possession of the stolen goods.

The second asserted ground for error is the sufficiency of the evidence as to the District Court’s finding that appellant possessed stolen chattels knowing them to have been stolen. Specifically, Dugan contends that mere contradictory statements in and of themselves do not provide an adequate basis for establishing guilt beyond a reasonable doubt. We view the evidence in the light most favorable to the verdict of the trier of fact, accepting as established all reasonable inferences that tend to support the fact trier’s decision, and resolve any evidentiary conflicts in favor of the fact finder’s verdict. United States v. Henson, 456 F.2d 1045 (8th Cir. 1972); Burke v. United States, 388 F.2d 286 (8th Cir. 1968).

In Aron v. United States, 382 F.2d 965, 970 (8th Cir. 1967), this court stated the law on the permissible inference to be drawn from possessing recently stolen property:

The doctrine that possession of recently stolen property gives a permissible inference of knowledge on the part of the possessor that the property had been stolen, unless the possession thereof is accounted for in a reasonable and satisfactory manner consistent with the circumstances of the possession, is a factually sound and a necessary evidentiary rule.

See also United States v. Brocato, 437 F.2d 1157 (8th Cir. 1971); Minor v. United States, 375 F.2d 170 (8th Cir. 1967). Knowledge that the goods were stolen must of necessity be found from the circumstances surrounding the appellant’s possession. An admission of such a mental state is not likely to be forthcoming. Aron v. United States, 382 F.2d 965, 970 (8th Cir. 1967). Thus, viewing the record in its entirety and complying with the preceding principles, we cannot find that the District Court erred in finding that Dugan knew the goods to be stolen. The District Court viewed the witnesses and heard the explanations of appellant Dugan. The trial judge found “that the defendant (Dugan) made so many statements which were at war with each other as to where these coats came from,” that he was convinced beyond a reasonable doubt that Dugan was guilty. We find no error in this determination.

The third alleged basis for error is that Dugan’s Fifth Amendment right against double jeopardy has been violated. Appellant asserts that the present state of the record does not identify a particular consignee with the particular stolen coats found in his possession. Apparently it is the appellant’s position that the government’s proof fails to align specific coats found in his possession with a specific consignee and could, therefore, subject him to a second prosecution on virtually the same evidence.

The appellant’s argument is based upon Kantor v. United States, 286 F. 897 (3rd Cir. 1923). There, the indictment named the consignee of a shipment of silk stolen in interstate commerce. At trial the government failed to prove that the stolen bale of silk in question was the one consigned to the party named in the indictment. This defect in proof, ruled the appellate court, deprived the defendant of the defense of “autrefois convict” and he could not assert this conviction as a defense in any subsequent charge. The case at bar does not suffer this infirmity. The alternate theory of finding appellant in possession of more than $100.00 worth of stolen chattels to comply with statutory requirements of possession for counts one and two attributes possession of all of the coats to Dugan. Thus they cannot provide the basis for a subsequent charge. Indeed, should appellant ever need to plead his conviction on counts one and two of his indictment as a bar to any subsequent prosecution, he can do so from the record made at trial. Lewis v. United States, 340 F.3d 678, 680 (8th Cir. 1965).

We find it unnecessary to review appellant Dugan’s other assignments of error relating to the third count of the indictment by affirming his conviction on counts one and two. “The law is settled that reversal is not required if the conviction underlying any one of several concurrent sentences is valid and alone supports the sentence and judgment.” Kilcrease v. United States, 457 F.2d 1328, 1331 (8th Cir. 1972); Greene v. United States, 358 U.S. 326, 79 S.Ct. 340, 3 L.Ed.2d 340 (1959); see also United States v. Huckensteine, 475 F.2d 1131 (8th Cir. March 22, 1973).

The conviction of George Ronald Dugan is affirmed.


source: Caselaw Access Project

author: HAMLEY, Circuit Judge:

license: Public Domain

text:
    Jassim Mohamed Thunayan ALGHANIM, Plaintiff-Appellant, v. The BOEING COMPANY, Defendant-Appellee.
    Nos. 71-1686, 71-1892.
    United States Court of Appeals, Ninth Circuit.
    March 9, 1973.

      Jennings P. Felix (argued), Thomas J. Kraft, of Jennings P. Felix and Associates, Seattle, Wash., for plaintiff-appellant.
    Keith Gerrard (argued), Randall Revelle, of Perkins, Coie, Stone, Olsen & Williams, Seattle, Wash., for defendant-appellee.
    Before HAMLEY, HUFSTEDLER, and GOODWIN, Circuit Judges.
   HAMLEY, Circuit Judge:

These two appeals, consolidated for argument and disposition, present contract and tort issues concerning the scope of, and the method of terminating, a sales representative agreement and questions concerning district court procedures pertaining to discovery, amendment of pleadings and motions for summary judgment.

The litigation arises out of the efforts of The Boeing Company (Boeing) to sell its airplanes in Kuwait, Arabia, and other nations along the Persian Gulf. Boeing’s prime prospect in this Middle East market was Kuwait Airways Corporation (KAC), a state-owned corporation. Yet, for years prior to 1966, Boeing had been unable to sell to Kuwait Airways or other airlines in this general area. Finally, Boeing determined that what it needed was an influential Kuwaiti citizen as its sales agent. After consultation with the American Embassy in Kuwait and Faisal Al-Fulaij (Al-Fulaij), chairman of the board of KAC, Boeing selected Jassim Mohamed Thunayan Alghanim (Alghanim) as its sales agent. Alghanim is the brother-in-law of Al-Fulaij.

In November, 1966, Alghanim and Boeing executed a written agreement by which Alghanim agreed to represent Boeing in promoting the sale of Boeing Models 707, 720, 727 and 737 type aircraft in Kuwait. Clause 6 of the agreement, defining the area covered by such representation, was later amended to include, in addition to Kuwait, the Sheikdoms of Bahrain, Doha, Dubai, Abu Dhabi and Sharja. Under clause 7, the agreement was to continue in full force and effect until terminated by either party giving sixty days written notice to the other party. Clause 11 provides that the agreement shall be governed by the laws of the State of Washington. The compensation to be paid the representative was provided for in clauses 4 and 5, the pertinent parts of which are quoted in the margin.

In 1967, with the assistance of Alghanim, Boeing executed a contract with KAC for the sale of three Model 707 aircraft for a sales price of approximately twenty-five million American dollars. Alghanim received full payment of his three percent commission on this sale. The twenty-five million dollar figure mentioned above did not include the substantial sum KAC paid Boeing for major component equipment, accessories, spare parts, and other items and services which Boeing delivered to KAC at the time the airplanes were delivered. Alghanim received no commission on the sale of any of these additional materials and services.

Boeing thereafter conducted further negotiations with KAC concerning the purchase of additional aircraft. According to Alghanim, during this period AlFulaij asked Boeing to cancel its agreement with Alghanim. By letter of June 12, 1969, Boeing gave Alghanim sixty days notice of termination, but sent immediate notice of cancellation to KAC. KAC did not buy any additional aircraft from Boeing, nor did Boeing, at least during this sixty-day period, sell any aircraft in the expanded area covered by the representation agreement.

Alghanim filed suit against Boeing in the United States District Court for the Western District of Washington on December 19, 1969 (Civil No. 8692). He sought damages in the sum of four hundred thousand dollars “or other appropriate amount” for (1) three percent commission on spare parts sold in connection with the sale of aircraft to KAC in 1967, (2) three percent commission on any sales made or contracted to be sold by Boeing during the period of the agreement in the prescribed territory, and (3) damages for Boeing’s action in assertedly wrongfully terminating the agreement.

Following rather extensive discovery, the cause was set for trial on February 10, 1971. On January 7, 1971, Alghanim filed a motion for leave to file an amended complaint. The amended complaint would expand the term “spare parts,” as used in the original complaint, and add two new legal theories. These new theories were: (1) Boeing had tortiously interfered or conspired to interfere with its -representation agreement with Alghanim, and (2) Boeing had defamed Alghanim by wrongfully terminating the agreement. On January 11, 1971, the trial was continued to February 16,1971.

Oh January 15, 1971, a hearing was held on Alghanim’s motion for leave to file an amended complaint. During the course of this hearing the district court indicated that Alghanim could amend his original complaint to expand the term “spare parts,” as indicated in the margin. But the court stated that it would deny leave to file an amended complaint adding the two new theories referred to above. The reason orally given by the court for denying this motion was that neither of the new theories stated a claim upon which relief could be granted.

On January 18, 1971, Alghanim propounded twenty-three interrogatories of Boeing. The bulk of these interrogatories were directed to discovering what spare parts were sold, the prices for them, and the supporting documents. Two days later Alghanim moved for an order requiring Boeing to answer the interrogatories within twenty days, so that the due date would fall prior to the trial set for February 16, 1971. Boeing opposed the motion for an order advancing the time for answering the interrogatories.

A hearing thereon was held on January 29, 1971. The court ordered Boeing to supply Alghanim, within the twenty-day period, information as to the dollar value of the spare parts Boeing sold KAC, but denied the motion with respect to any other information requested.

In the meantime, on January 26, 1971, Boeing moved for summary judgment for defendant in the original action. Boeing made this motion on the grounds that, under the undisputed facts, (1) Boeing never agreed to pay Alghanim a commission on spare parts or accessories, (2) Boeing has not sold nor entered into a contract to sell any other aircraft in Kuwait or the Persian Gulf area, and (3) Boeing had a right to terminate its representation agreement with Alghanim.

Boeing noted this motion for hearing on February 5, 1971. Two days later, on January 28, 1971, Boeing supported this motion with a brief and two affidavits. The brief also makes reference to various depositions, cables and an affidavit which had been previously filed.

Alghanim promptly moved, pursuant to Rule 56(f), F.R.Civ.P., to postpone the hearing on this motion until the day fixed for trial (February 16, 1971), or such other date as would give Alghanim twenty-five days in which to respond. In a supporting affidavit, counsel for Alghanim alleged that plaintiff wished to have Alghanim make an affidavit in opposition to the motion for summary judgment, but since Alghanim was then in Kuwait and the one-way mailing time between Seattle and Kuwait is approximately five to seven days, this would not be possible prior to February 5, 1971. Counsel for Alghanim also asserted that plaintiff was continuing his discovery proceedings and that the depositions of two Boeing employees then scheduled for February 2 and 3, 1971, could not be transcribed and filed by February 5, 1971.

At the same time, counsel for Alghanim moved for an order postponing the date set for trial for sixty days, so that plaintiff could have the additional time he needed for discovery and trial preparation. In his affidavit supporting this motion, counsel for Alghanim called attention to the difficulties he had experienced in preparing for trial because of Middle East tension which hampered travel.

On February 1, 1971, Boeing moved to quash Alghanim’s notice of depositions and subpoenas duces tecum directed to Donald McLaren and M. W. McClung. Boeing asserted that Alghanim was thereby attempting to gain information which had been denied to him in the order, described above, pertaining to Alghanim’s interrogatories. Boeing also asserted that the two subpoenas had not been effectively served because a copy of the subpoena had not been delivered to M. W. McClung, and neither he nor Donald McLaren had been tendered the fee, as required by Rule 45(c), F.R.Civ.P.

On February 5, 1971, the district court denied Alghanim’s motion to postpone the hearing on Boeing’s motion for summary judgment. The hearing was held on that day and, at the close, the court orally announced that it would grant the motion for a summary judgment for Boeing. At the same time the court struck, as moot, Alghanim’s motion to extend the trial date and Boeing’s motion to quash Alghanim’s notice of depositions and subpoenas. The formal order granting summary judgment for Boeing was entered on March 1, 1971. Alghanim took a timely appeal from this judgment. (No. 71-1686 in this court.)

In the meantime, on January 22, 1971, Alghanim filed a second action against Boeing (Civil No. 9455), setting out, in two claims, the substance of the two theories he had sought to advance in his proposed amended complaint in the original action. On his first claim in this new action Alghanim sought damages in the sum of two million dollars and, in his second claim, he sought damages in the sum of one hundred fifty thousand dollars.

Boeing moved to dismiss this action on the grounds that it failed to state a claim upon which relief could be granted and that the claims there asserted a.re barred by the doctrine of res judicata. After a hearing, the district court, on April 15, 1971, entered an order in which, treating Boeing’s motion to dismiss as one for summary judgment for defendant, such motion was granted on the grounds of res judicata and collateral estoppel, and judgment for Boeing was entered. Alghanim appealed therefrom. (No. 71-1892 in this court.)

We consider first the questions arising from the original action.

One ground urged by Alghanim why the district court erred in granting summary judgment in the original action is that the court abused its discretion in denying Alghanim’s motion for an extension of time to respond to the motion. In this connection Alghanim relies upon Rule 56(f), F.R.Civ.P., quoted in the margin.

The prime reason advanced by Alghanim why he needed an extension of time to respond to the motion was that it was impossible to prepare affidavits, mail them to Kuwait, and have them returned to Seattle prior to the hearing scheduled for February 5, 1971. The affidavit of Alghanim’s counsel as to the five to seven days mailing time between Seattle and Kuwait does not appear to be disputed.

Boeing contends that plaintiff’s counsel could have communicated with plaintiff in Kuwait by telephone or cable and in this way could have obtained one or more affidavits from Kuwait prior to the February 5, 1971, hearing. But the indications are that Alghanim, a citizen of Kuwait, was unfamiliar with the manner of preparing affidavits to meet the requirements of the federal rules.

In passing upon requests for additional time to respond to a motion for summary judgment, any special problems in communicating with prospective affiants, and the absolute right of a party to respond, must be taken into consideration. See Harris v. Pate, 440 F.2d 315 (7th Cir. 1971). See also, Cohen v. Cahill, 281 F.2d 879 (9th Cir. 1960).

Boeing calls attention to the fact that plaintiff did not, in support of his motion for a postponement of the hearing on the motion for summary judgment, allege the essential facts he expected to establish by the affidavits he wished to obtain from Kuwait.

Alghanim, as a party to the action, had an absolute right to file his own personal affidavit in opposition to the motion for summary judgment within the time provided by Rule 56 or an extension thereof required by the exercise of a sound discretion. Apart from this, however, Alghanim’s counsel filed, in the district court, on the day prior to the hearing on Alghanim’s motion for an extension of time and on Boeing’s motion for summary judgment, a comprehensive brief outlining the relevant facts he hoped to establish by such an affidavit. In our opinion, Alghanim thereby alleged that he would, if given an opportunity, present by affidavit “facts essential to justify his opposition,” to quote Rule 56(f), F.R.Civ.P.

We conclude that plaintiff’s counsel ought to have been given a reasonable opportunity to obtain an affidavit from at least his client in Kuwait. Alghanim would then at least have had his day in court, however effective his affidavit turned out to be. We recognize that an adequate extension of time might have necessitated a postponement of the trial date. But it was Boeing, not Alghanim, which chose to wait until three weeks before trial before filing the motion for summary judgment. It was Boeing which breached the ten-day notice provision of Rule 56(c), by filing affidavits and a statement of Kuwait law within ten days of the time set for the summary judgment hearing.

Under all of the circumstances we conclude that the district court abused its discretion in denying Alghanim a reasonable postponement of the hearing on the motion for summary judgment so that an affidavit or affidavits from Kuwait could be filed. This requires that the summary judgment in the original action be set aside.

We do not at this time intimate any view as to the merits of the motion, or as to whether, as Alghanim contends, some of Boeing’s supporting affidavits set forth facts which would not have been admissible in evidence, or as to whether there remain genuine issues of material fact. See Rule 56(c) and (e), F.R.Civ.P.

Inasmuch as further proceedings must be had in the original action, and no trial date is presently in the offing, we think Alghanim should be afforded an opportunity to conduct further discovery with reference to any issue pertaining to the motion for summary judgment. This would include discovery with regard to whether Boeing sold spare parts (using the expanded definition of the term) to KAC, or sold any aircraft or spare parts within the Persian Gulf area as described in the agreement. It would not include, at this time, discovery pertaining only to the issue of damages, although if summary judgment is ultimately denied, plaintiff may wish discovery in this area.

There remains for determination, on the appeal from the summary judgment entered in the original action, Alghanim’s contention that the district court erred in denying his motion for leave to file an amended complaint setting out two additional claims against Boeing. As stated above, this motion was denied on the ground that neither of the new theories advanced in the proposed amended complaint stated a claim upon which relief could be granted.

The new claims, pertaining to interference by Boeing with its own agreement with Alghanim, and defamation of Alghanim by cancelling the agreement in the manner asserted, are based upon alleged Kuwait law and, indeed, would have no recognition under Washington law. See Hein v. Chrysler Corp., 45 Wash.2d 586, 277 P.2d 708 (1954), pertaining to tortious interference with one’s own contract. There is no Washington statutory or judicial authority for the kind of defamation claim asserted by Alghanim and he does not rely upon common law defamation.

The agreement expressly provides that it shall be governed by the laws of the State of Washington. Alghanim argues that this provision should be ignored because this is a contract of adhesion. We need not reach the question of whether, in contracts of adhesion, such a provision is to be ignored, because, in our view, this is not such a contract. It was entered into after detailed negotiation, and Alghanim’s views prevailed at least to some extent in arriving at the final form of the contract.

Alghanim also argues that, in any event, this provision of the agreement does not stand in the way of his new claims, because the provision was not intended to permit disregard to Kuwait’s “fundamental” law, and has no reference to tort claims such as are assertedly embodied in Alghanim’s two new theories.

We are not convinced that there are valid reasons for holding the contract provision in question inoperative as to Alghanim’s new claims. It may be that Boeing has gotten itself into some trouble with the government of Kuwait by setting up and terminating a selling agency in a manner allegedly violative of Kuwait law. But as between Boeing and Alghanim, we think the contract provision must govern. While it may be that, in a broad sense, Alghanim’s new claims sound in tort, it seems to us they have their roots, even under the pleaded Kuwait law, in contractual relationships between Boeing and Alghanim. They are therefore subject to the contract provision subjecting controversies between the parties to the dictates of the law of Washington.

We accordingly hold that the district court did not err in denying Alghanim’s motion for leave to file the amended complaint.

Turning to the appeal from the summary judgment for Boeing entered in Alghanim’s second action, affirmance is indicated by what i5 said above. If, as we have held, the two new counts Alghanim sought to inject into the first action, by means of an amended complaint, fail to state a claim upon which relief can be granted, the essentially identical counts set forth in Alghanim’s complaint in the second action are similarly deficient. We need not decide whether, apart from this ground for affirmance, the district court summary judgment in the second action is sustainable on the grounds of res judicata or collateral estoppel.

The judgment under review in No. 71-1892 is affirmed. The judgment under review in No. 71-1686 is reversed, and the cause is remanded for further proceedings consistent with this opinion.

      . Clause 4 provides that
      “Full compensation for Representative’s performance of this Agreement shall be the payment . . . of an amount equal to Three percent (3%) of the purchase prices, as hereinafter defined, of all Model 707, 720, 727 and 737 type aircraft sold by Boeing during the period of this Agreement to purchasers having their principal office and principal place of business in the territory specified in Clause 6.”
      Clause 5:
      “for the purpose of Clause 4 hereof, the term ‘purchase prices’ shall mean the prices of aircraft as set forth in the firm agreement to purchase at the time of execution thereof.”

      . Alghanim asserts that Al-Fulaij took this action because Alghanim refused to pay Al-Fulaij one-third of Alghanim’s commission.

      . Wherever Alghanim’s original complaint uses the terms “spare parts,” “aircraft parts,” or “parts,” the following phrase was to be substituted:
      “spare parts, accessories, components, equipment, tools, personal services, training, technical publications, manuals, computer card decks, and other things essential to the operation and maintenance of the aircraft.”

      . The former order to this effect, entered on January 29, 1971, recited no reason for denying the motion to add the new claims.

      . Boeing argued : (1) it was impracticable for Boeing to answer the interrogatories in advance of the thirty days allowable under Rule 33(a), F.R.Civ.P., because the answers require meetings or other contact with Boeing’s personnel in Beirut, Lebanon and other distant parts of the world, and would also heavily burden Boeing’s preparation for trial, (2) all of the information needed to propound Alghanim’s interrogatories was available to his attorneys by no later than the end of August, 1970, and the requests are therefore untimely, and (3) Alghanim had offered no justification for submitting interrogatories less than a month before trial.

      . Using the expanded definition of “spare parts.”

      . On February 4, 1971, which was one day prior to the noted hearing on the motion for summary judgment, counsel for Boeing filed a statement in support of the motion which quotes Article 59 of Kuwaiti Law No. 5, “The Law Governing Legal Relations Involving a Foreign Element” (1961).

      . “(f) When Affidavits are XJnavaAlable. Should it appear from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.”

      . Among other things, Alghahim’s counsel hoped, by this means, to develop facts relevant to the following matters:
      1. Whether the term “aircraft” as used in the agreement is ambiguous, such that it may have been intended that the term include spare parts and accessories for use on the Model 707s Boeing sold to ICAO.
      2. Whether the reason the agreement does not contain an express provision pertaining to commissions on spare parts is because, during the negotiations, a Boeing representative falsely assured Alghanim that Boeing does not manufacture spare parts, leaving Alghanim with the belief that he was entitled to commissions on whatever Boeing actually did manufacture and sell in connection with airplanes delivered within Alghanim’s territory.
      3. Whether Boeing terminated the agreement because Al-Fulaij secretly told Boeing to do so because Alghanim had not shared his commission with AlFulaij and, if so, whether a termination for such a reason was permissible under the agreement.
      4. Whether Boeing gave KAC immediate notice of cancellation of agreement without awaiting expiration of the sixty-day period and, if so, whether Alghanim was prejudiced thereby.

      . If, in fact, neither of the proposed new theories state such a claim, this would be an adequate ground for denying leave to amend. See Gilbertson v. City of Fairbanks, 262 F.2d 734 (9th Cir. 1959); 3 Moore Federal Practice § 1508(4) (2d Ed. 1968).

      . Alghanim argues that the fact that the commission was increased from one percent to three percent upon his request has no significance because Boeing just added the commissions to the purchase price of the aircraft. But of course, in so doing, the purchase price was substantially increased, thus prejudicing Boeing’s competitive position.


author: WEICK, Circuit Judge.

text:
    OLD DUTCH FOODS, INC., Plaintiff-Appellee, v. DAN DEE PRETZEL & POTATO CHIP CO. and Berg’s Pretzels, Inc., Defendants-Appellants.
    No. 72-1487.
    United States Court of Appeals, Sixth Circuit.
    Argued Nov. 28, 1972.
    Decided April 25, 1973.

      Charles R. Rust, Cleveland, Ohio, for defendants-appellants; Bruce B. Krost, Woodling, Krost, Granger & Rust, Cleveland, Ohio, on brief.
    Phillip H. Smith, Merchant & Gould, Minneapolis, Minn., for plaintiff-appellee.
    Before WEICK and McCREE, Circuit Judges, and O’SULLIVAN, Senior Circuit Judge.
   WEICK, Circuit Judge.

This appeal is from a summary judgment in favor of the plaintiff in an action for infringement of its trademark, “OLD DUTCH” registered in the United States Patent Office as No. 648,659 on July 16, 1957. The action was brought under the Trademark Act of 1946, commonly referred to as the Lanham Act. 15 U.S.C; §§ 1051 to 1127, as amended.

Old Dutch Foods sought therein to enjoin the defendants, Dan Dee and its affiliate, from using its registered trademark “OLD DUTCH” or any words confusingly similar on the defendants’ packaged products. Dan Dee, in its answer and counterclaim, asserted that a complete injunction ought not to issue because it had a valid defense of good faith usage prior to the registration in six states, afforded by 15 U.S.C. § 1115(b)(5). In addition, Dan Dee sought concurrent registration of the term “OLD DUTCH” pursuant to 15 U. S.C. § 1052. The parties executed two stipulations and offered other evidence.

The District Court in its opinion, 345 F.Supp. 1399, held that Dan Dee was entitled to the use of “OLD DUTCH” on its packaged pretzel products “within the limited geographical areas of Ohio, Pennsylvania, New York, West Virginia, Kentucky and Indiana, as established by the prior use defense of 15 U.S.C. § 1115(b).” The Court denied Dan Dee the exclusive use of the mark “OLD DUTCH” in the above-named areas and also concurrent registration of the mark under 15 U.S.C. § 1052. 345 F.Supp. 1399 (N.D.Ohio 1972). The result of this decision was that Dan Dee could use the words “OLD DUTCH” along with its mark “DAN DEE” in the same manner in which it had been using them on its packaged products in a six-state area of prior use, but the plaintiff could also use its mark “OLD DUTCH” on its products in that same six-state area if it desired to trade in that area.

Old Dutch Foods is a Minnesota corporation having its home office located in Minneapolis, Minnesota. It commenced doing business in 1934 under the name of “Old Dutch Foods,” and began selling snack foods (potato chips, pretzels and popcorn) under the mark “OLD DUTCH” in interstate commerce on or about July 15, 1934.

It is the owner of United States Trademark Registration No. 648,659 registered July 16, 1957, on the mark “OLD DUTCH” for popped popcorn, potato chips, cheese flavored corn confection, fresh nut meats, salted peanuts, prepared edible sunflower seeds, pretzels and cheese crackers.

Its sale of snack food products under the mark “OLD DUTCH” has taken place in the following states for the time indicated:

Minnesota 1934 to date
Wisconsin 1934 to date
Iowa 1938 to date
South Dakota 1938 to date
Nebraska 1938 to date
Michigan 1939 to date
North Dakota 1939 to date
Wyoming 1955 to date
Montana 1940-1942, resumed 1955 to date
Oregon 1941 discontinued same year
Utah 1941 discontinued same year
Illinois 1960-1961 resumed 1970 to date

Its approximate annual advertising expenditure in the United States for promoting its products under the mark “OLD DUTCH” was $176,687.00 in 1970 and $213,729.00 in Canada. These amounts are representative of annual advertising commitments made by the Old Dutch Foods since 1959. Its products have been promoted in two advertisements placed in periodicals having nationwide distribution, one in 1967 and one in 1968. It has always promoted its products exclusively under the mark “OLD DUTCH.” Its sales of its trademarked product in the United States and Canada for the year 1970 were respectively $11,573,082.00 and $11,162,752.00.

Defendant, the Dan Dee Pretzel & Potato Chip Co., is an Ohio corporation, incorporated in 1931 and having its home base in Cleveland, Ohio.

The defendant and its related companies first adopted and applied the name “OLD DUTCH,” along with its name “DAN DEE,” to its packaged pretzels in the following states on the indicated dates:

Ohio 1941
Pennsylvania 1941
New York 1941
West Virginia 1941
Kentucky 1948
Indiana 1948

This use has been continuous and uninterrupted to the present date. The name as applied to pretzels was adopted and used by defendants in good faith and without actual knowledge of any use of the mark “OLD DUTCH” by the plaintiff. It had previously used the name “OLD DUTCH” on noodles from March 1, 1938 to 1948.

The defendant has expended approximately $150,000.00 annually during the last five years for advertising all of its snack food products. The name “OLD DUTCH” has been advertised to the public only in conjunction with the defendant’s registered trademark “DAN DEE.” Dan Dee has used a second name in all its products such as “OLD DUTCH,” “DUTCH,” or sometimes “BAVARIAN.”

In December, 1970, the defendant filed an application in the patent office for a concurrent-use federal trademark registration on “OLD DUTCH” for use in Ohio, Pennsylvania, New York, West Virginia, Kentucky and Indiana. The defendant has otherwise never attempted to obtain federal registration on “OLD DUTCH.” The application is presently pending the outcome of this appeal.

15 U.S.C. § 1115(b) provides in part as follows:

“. . . (b) If the right to use the registered mark has become incontestable under section 1065 of this title, the registration shall be conclusive evidence of the registrant’s exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the affidavit filed under the provisions of said section 1065 subject to any conditions or limitations stated therein except when one of the following defenses or defects is established :
. . . . . .
(5) That the mark whose use by a party is charged as an infrigement was adopted without knowledge of the registrant’s prior use and has been continuously used by such party or those in privity with him from a date prior to registration of the mark under this chapter or publication of the registered mark under subsection (c) of section 1062 of this title: Provided, however, That this defense or defect shall apply only for the area in which such continuous prior use is proved; . . .

On authority of Burger King of Florida, Inc. v. Hoots, 403 F.2d 904 (7th Cir. 1968), and Hot Shoppes, Inc. v. Hot Shoppe, Inc., 203 F.Supp. 777 (M.D.N.C.1962), the Court held that while the above section gave the defendant a limited defense, the defendant was not entitled under this section to keep the plaintiff from selling its products in the six-state area in which the defendant used the term on its products.

The District Court then held that the defendant was not entitled to concurrent registration of the mark “OLD DUTCH” under 15 U.S.C. § 1052(d). The Court predicated this holding upon a finding that the defendant did not use the term “OLD DUTCH” on its products as a trademark within the meaning of the Act.

The grounds for this finding that Dan Dee did not use the term “OLD DUTCH” as a “trademark” were said to be two-fold: First, Dan Dee consistently displayed the term “OLD DUTCH” on its products in conjunction with its registered trademark “DAN DEE,” i. e., that the term “OLD DUTCH” never singularly or prominently identified the defendant’s products to the consumer. Second, the defendant failed to exclusively promote and advertise the term “OLD DUTCH.”

This finding is either a mixed finding of fact and conclusion of law, or it is a finding of an ultimate fact in the making of which is involved legal principles. In either event, it is subject to appellate review and the clearly erroneous rule has no application. Fed.R.Civ.P. 52(a). United States v. Weingarden, 473 F.2d 454 (6th Cir. 1973); Cordovan Assodates, Inc. v. Dayton Rubber Co., 290 F.2d 858, 860 (6th Cir. 1961).

The term “trademark” as used in the Trade-Mark Act of 1946, is defined as follows:

“The term ‘trade-mark’ includes any word, name, symbol, or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others.” 15 U.S.C. § 1127.

Thus, a trademark is a term which serves the function of designating the goods as the product of a particular trader to the prospective purchaser. Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713 (1916); Sweetarts v. Sunline, Inc., 380 F.2d 923 (8th Cir. 1967). Moreover, the “designation” of the goods as those of the particular trader is liberally construed. See, e. g., Mishawaka Rubber & Woolen Mfg. Co. v. S. S. Kresge Co., 316 U.S. 203, 62 S.Ct. 1022, 86 L.Ed. 1381 (1942), wherein the Court held that it was not necessary to show that purchasers believed the goods were those of the trademark owner in order to recover for infringement of the mark.

It is inconceivable that a merchant would, as the defendant has done, imprint a term on its products continuously for over thirty years without any intention that the term would help identify the product to the consumer.

Furthermore, the fact that a product bears more than one mark does not mean that each can not be a valid trademark. In fact, not infrequently products have more than one trademark imprinted thereon. See e. g., Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 800 (9th Cir. 1970); United Lace & Braid Mfg. Co. v. Barrels Mfg. Co., 221 F. 456 (E.D.N.Y. 1915); Loonen v. Deitsch, 189 F. 487 (2nd Cir. 1911). Thus, the defendant’s use of the mark “DAN DEE” on its products does not mean that “OLD DUTCH” was used in a manner inconsistent with a trademark. “OLD DUTCH” could identify the products as those of the defendant as well as “DAN DEE.”

The District Court’s second ground for holding that “OLD DUTCH” was not used as a trademark is equally unpersuasive. While the promotion of a mark may be a factor in the determination of whether the mark is used to identify the manufacturer of the goods, it is not dispositive of the issue one way or the other. Compare Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794 (9th Cir. 1970) with Smith v. Chanel, Inc., 402 F.2d 562 (9th Cir. 1968).

If anything, it appears that advertising by the defendant in this case is a positive factor in the determination of whether “OLD DUTCH” was used as a trademark. While the defendant did not exclusively promote “OLD DUTCH” with its product, it did in fact promote “OLD DUTCH,” albeit in conjunction with its other trademark.

Most important, however, we note that the District Court implicitly found in another part of its opinion that the defendant used the term “OLD DUTCH” as a trademark. The Court quoted 15 U.S.C. § 1115(b)(5) which provides a defense to an infringement action where it is shown “[t]hat the mark whose use by a party is charged as an infringement was adopted without knowledge of the registrant’s prior use and has been continuously used by such party .” (Emphasis added.) In holding that the defendant had such a defense, the Court implicitly found that the term “OLD DUTCH” was used by the defendant as a “mark.”

Turning to the definitional section of the Act, we find that the word “mark” means the same thing (or even more) than the word “trademark.”

“The term ‘mark’ includes any trademark, service mark, collective mark, or certification mark entitled to registration under this chapter whether registered or not.” 15 U.S.C. § 1127 (Emphasis added.)

For these reasons, we find that the defendant Dan Dee used the term “OLD DUTCH” as a trademark within the meaning of the Act. We therefore direct our attention to the concurrent registration provision of the Act.

The Lanham Act of 1946 provides for the registration of similar marks on similar products of two different merchants in certain prescribed conditions. 15 U.S.C. § 1052 provides:

“No trade-mark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it—
. . (d) Consists of or comprises a mark which so resembles a mark registered in the Patent Office or a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when applied to the goods of the applicant, to cause confusion, or to cause mistake, or to deceive: Provided, That when the Commissioner determines that confusion, mistake, or deception is not likely to result from the continued use by more than one person of the same or similar marks under conditions and limitations as to the mode or place of use of the marks or the goods in connection with which such marks are used, concurrent registrations may be issued to such persons when they have become entitled to use such marks as a result of their concurrent lawful use in commerce prior to (i) the earliest of the filing dates of the applications pending or of any registration issued under this chapter . . . . ”

There is no question but that the defendant is entitled to concurrent registration of the mark “OLD DUTCH” as a result of its use of the mark in commerce prior to the earliest of the filing dates of the registration issued to the plaintiff Old Dutch under this Act. The defendant used the mark without knowledge of the plaintiff’s use in each of the six states since at least 1948, nine years prior to the registration of the mark by the plaintiff in 1957.

The only real issue then is the determination of the “conditions and limitations as to the mode or place of use of the mark” by the defendant. 15 U.S.C. § 1052(d).

We note initially that another Circuit has held that such a determination can be made only by the Commissioner and not by the courts. We decline to follow this decision. Safeway Stores, Inc. v. Safeway Quality Foods, Inc., 433 F.2d 99 (7th Cir. 1970). We recognize that the concurrent registration section provides that: “. the Commissioner shall prescribe conditions and limitations as to the mode or place of use of the mark . . . .” 15 U.S.C. § 1052(d). (Emphasis added.) This, of course, applies to cases where the Commissioner, and not the Court, orders the concurrent registration. Moreover, the above language must be read in conjunction with the powers given to the federal courts in trademark proceedings before them. 15 U.S.C. § 1071(b)(1) provides:

“. . . The court may adjudge that an applicant is entitled to a registration upon the application involved, that a registration involved should be canceled, or such other matter as the issues in the proceeding require, as the facts in the case may appear. Such adjudication shall authorize the Commissioner to take any necessary action, upon compliance with the requirements of law.”

Thus it is true that the Commissioner shall prescribe conditions and limitations, but only upon the authorization of the court before which the proceeding is brought. We therefore turn to the merits of what conditions and limitations must be imposed upon the concurrent registration of “OLD DUTCH” by the defendant.

In the Act itself there are a number of provisions which create new (federal) substantive rights of trademarks. The most important of these, and the provision that relates directly to this case, is 15 U.S.C. § 1072. This section makes registration of a mark on the principal register constructive notice to the nation of the registrant’s claim of ownership of the mark. The effect of § 1072 was concisely described in John R. Thompson Co. v. Holloway, 366 F.2d 108 (5th Cir. 1966).

“By eliminating the defense of good faith and lack of knowledge on the part of the junior user, sections 1072 and 1115 [giving the exclusive right to use the mark] afford a registrant nationwide protection for its registered marks, regardless of the geographic area in which the registrant actually uses his mark.” 366 F.2d at 115.

The result of this section is that, contrary to the common law, a registrant of a valid trademark has rights in his mark even in areas in which he does not conduct business. It simply is no longer the law that a trademark “does not . . . project the right of protection in advance of the extension of the trade . . . .” United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 98, 39 S.Ct. 48, 51, 63 L.Ed. 141 (1918).

Old Dutch Foods registered the trademark “OLD DUTCH” in 1957. After that registration, everyone had constructive notice that Old Dutch owned that mark nationwide, including the defendant Dan Dee. While Dan Dee had a right to use the mark in the six-state area of use prior to the registration by Old Dutch pursuant to the “good faith prior user” defense of 15 U.S.C. § 1115(b) (5), it did not have the right to use the mark in any other area in the nation. If it did it would be adopting a mark with constructive notice of Old Dutch’s ownership of the mark; if it did it would be in contravention of Old Dutch’s nationwide rights in the mark.

We are in accord with the reasoning of the U.S. Court of Customs and Patent Appeals in Alfred Dunhill of London, Inc. v. Dunhill Tailored Clothes, Inc., 293 F.2d 685, 49 C.C.P.A. 730 (1961), wherein the court stated that concurrent registration of a mark should conform with the right of the registrant to use the mark.

Having decided that the defendant’s right to use the mark “OLD DUTCH” is limited under the Lanham Act to the six-state area of usage prior to the 1957 registration of the mark by the plaintiff, we direct the Commissioner to issue concurrent registration to Dan Dee with these limitations: the registration shall reflect that the place of use of the mark “OLD DUTCH” shall be limited to the states of Ohio, Pennsylvania, New York, West Virginia, Kentucky and Indiana, and the use restricted to the manner, means and packaged products previously employed by Dan Dee as set forth in detail in the opinion of the District Court. The registration of the plaintiff shall reflect that the place of use of its mark includes the remainder of the United States.

The judgment of the District Court is modified as herein set forth and, as modified, is affirmed.

      . Dan Dee never applied the notation Trademark or its abbreviation “T.M.” to the names “ODD DUTCH,” “DUTCH” and “BAVARIAN” on its products but it did use the notation “R” to indicate its registration of “DAN DEE”. The name “OLD DUTCH”, “DUTCH” and “BAVARIAN” have always been used in a smaller letter size and less prominent than its name “DAN DEE”, which was featured. The “OLD DUTCH”, “DUTCH” and “BAVARIAN” names have never been used by the defendants independently of the name “DAN DEE”.

      . The defendant strenuously urges that the District Court ought not to have issued any type of injunction, stating that there was no evidence that it intended to expand business into areas in which the plaintiff sells its products. Considering the deposition testimony of the President of Dan Dee as to expansion plans (which testimony was before the Court), we cannot say that the implicit finding of the District Court to the contrary is clearly erroneous. Fed.R.Civ.P. 52(a).

      . Because of our holding on the availability of concurrent registration, above, it is not necessary to decide whether this restrictive interpretation of 15 U.S.C. § 1115 (b) (5) is correct. However, we do note that it is difficult to reconcile a result that two merchants are selling similar goods with the same mark side by side on the retail shelves with the stated purpose of the Lanham Act; i. e., to protect the public by enabling the consumer to distinguish between competing goods and to protect the merchant who has invested time and money into presenting his specific product to the consumer. See H.R. Rep.No.219, 79th Cong. 1st Sess. (1945).

      . For example, 15 U.S.C. § 1054, created what are denominated “collective marks”. See Pacific Supply Coop. v. Farmers Union Central Exch., Inc., 318 F.2d 894, 906 (9th Cir. 1963).

      . This section states: “Registration of a mark on the principal register provided by this chapter . . . shall be constructive notice of the registrant’s claim of ownership thereof.”

      . The fact that the Lanham Act of 1946 modified the substantive law of trademarks as it existed at common law does not mean that the Act obliterated it. In fact, many of the common law concepts of trademarks prevail in statutory form. For example, a trademark does not exist independent of any use of the mark since the definition of a trademark is a symbol or word “adopted and used by a manufacturer.” 15 U.S.C. Sec. 1127. Another example is the provision which prohibits a registrant from bringing an action of infringement until he begins trading in the area in which the junior user is expropriating his mark. 15 U.S.C. Sec. 1114. See John R. Thompson Co. v. Holloway, 366 F.2d 108 (5th Cir. 1966); Dawn Donut Co. v. Hart’s Food Stores, Inc., 267 F.2d 358 (2nd Cir. 1959).

      . Note that this is not a concurrent-use proceeding where two parties have used a mark in distinct areas and each applies for registration in the same proceeding. In such a case, the limitations on the respective registrations for the area of non-use of the mark (the remainder of the United States where neither had theretofore used the mark) can not be determined on a “right to use” basis. The reason is simply that it can not be said that either party has constructive notice of the other’s ownership where there has been no prior registration. See In Re Beatrice Foods Co., 429 F.2d 466, 474, 57 C.C.P.A. 1302 (C.C.P.A.1970).


author: GEWIN, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Francisco ARROYAVE et al., Defendants-Appellants.
    No. 72-1800.
    United States Court of Appeals, Fifth Circuit.
    April 13, 1973.

      George B. Weires, Miami, Fla., Court appointed, for Arroyave.
    Gino P. Negretti, Miami, Fla., for Posada.
    Shaya Estrumsa, Miami, Fla., for Barragan.
    Robert Rust, U. S. Atty., Michael P. Sullivan, Lawrance B. Craig, III, Asst. U. S. Attys., Miami, Fla., for plaintiff-appellee.
    Before GEWIN, GOLDBERG and DYER, Circuit Judges.
   GEWIN, Circuit Judge:

On January 13, 1972, a three count indictment was returned charging the appellants, Barragan, Posada, and Arroyave with: (1) a conspiracy to import and possess marijuana; (2) the actual importation of marijuana; and (3) possession of marijuana with intent to distribute. On February 14, 1972, at the conclusion of their trial, the jury found Barragan guilty of all three counts; Posada guilty of counts one and two; and Arroyave guilty of count one. They appeal from their convictions. We affirm the convictions of Barragan and Posada but for reasons later delineated are compelled to reverse the conviction of Arroyave.

On December 1, 1971, a government agency informed the United States Customs Bureau in Miami that marijuana might be smuggled into the United States aboard Colombian Air Force planes landing at the Fort LauderdaleHollywood International Airport. On December 21st, agents of the Custom’s Bureau received notice that a Colombian Air Force plane had landed at the airport at 3:00 p. m. Pursuant to this information, agents secretly surveilled the activities of this aircraft.

The aircraft was inspected and cleared by Customs after a general declaration had been presented by the flight crew. No marijuana was discovered at the time of clearance. After inspection, the aircraft was removed to the Colombian Air Force Purchasing Agency warehouse where workmen began to remove several large pieces of heavy machinery.

Agents DeGaglia, Mason, and Mc-Cutcheon secretly stationed themselves nearby to monitor the activities in and around the plane. After the heavy cor-go had been removed the aircraft cargo doors were partially closed thus limiting the agents’ view from the waist up of the persons inside the plane. Agent Mason testified that he saw Barragan reach above his head and place two rope-tied packages between himself and Posada. Agent DeGaglia testified that Posada carried these two packages and placed them in the bed of his pickup truck.

Posada returned to the aircraft and again retrieved two more packages. Posada took the two packages and walked over to Arroyave and engaged him in a short conversation. Posada then walked to his pickup truck, placed the packages in the bed of the truck, and proceeded to leave the warehouse area. Agent De-Gaglia pursued Posada and stopped the vehicle within the airport grounds. He informed Posada that he was an agent of the Customs Bureau and then opened the packages. A field test conducted by DeGaglia revealed the packages contained marijuana. Posada was immediately arrested and the contraband seized.

After the marijuana was discovered in Posada’s truck, other agents arrested those in and around the aircraft. A careful search of the plane yielded several other packages containing marijuana. There is some evidence that when Barragan was placed under arrest at the warehouse he requested to see the Colombian Consul. This request was apparently denied by the agents.

After his request, Barragan was taken to the Customs Agency Service office in downtown Miami. There Agent Perez, who speaks Spanish fluently, proceeded to advise Barragan of his Miranda protections by reading the Miranda rights to him from a card which was written in Spanish. Barragan responded that he understood his rights but preferred to waive them.

Barragan then proceeded to make a full confession. He stated that he knew the packages contained marijuana and he was to be paid 6,000 Colombian pesos for bringing the contraband to the United States from Colombia. He further admitted that he was to deliver the packages to various people at the airport and indeed had delivered four packages to a man who was driving a pickup truck. These are essentially the facts utilized by the government in its case which resulted in the convictions now under review.

Several contentions are presented which the appellants argue mandate a reversal of their convictions. Each challenges the sufficiency of the evidence; the make-up of the jury panel; and, certain comments by the district judge which allegedly predisposed the jury to an atmosphere of guilt. Other errors are presented which pertain more particularly to each individual appellant.

I. Jury Selection

Appellants urge that they were denied a fair trial since the jury selection system, allegedly excludes citizens between the ages of eighteen and twenty-one years and a proportionate percentage of Latin Americans. We find these contentions to be without merit. This court has previously reviewed the plan of the United States District Court for the Southern District of Florida for the Random Selection of Grand and Pet-it Jurors. Concerning this plan, our previous observations are equally decisive on the contentions presented here. We have stated that:

. . .there was no showing of a substantial noncompliance in that, considering the population of the District and the size of the master wheel, it was “practicable” (as the Plan phrases it) to have added the names of newly registered voters or that the absence of them could have produced any substantial effect on the fair cross-section concept.

Likewise, appellants have also failed to show that it was practical to add the names of newly registered voters.

At trial, appellants requested the court to take judicial notice that the proportion of Latin Americans on the jury panels did not equal their population in the general Miami area. This the trial court properly refused to do. Appellants made no attempt to prove these assertions. The burden is on the appellants to demonstrate the exclusion of a particular group from jury service. As the record reveals, the appellants never even attempted to fulfill this burden. Their argument that Latin Americans have been excluded from jury service is totally without merit.

II. Prejudicial Comments

Appellants further assert that reversal of their convictions is required-because of certain allegedly prejudicial comments made by the trial court which predisposed the jury to an atmosphere of guilt. A review of the record, however, reveals that only two of these comments were actually made in the presence of the jury. We accordingly limit our review to these comments.

As part of their defense, appellants presented evidence that it was possible that the marijuana could have been placed aboard the aircraft after it landed at the airport. In furtherance of this defense, appellants questioned Mr. Smith, a customs inspector, who initially cleared the aircraft on its arrival. Smith testified that he had discovered no marijuana during his inspection. The following colloquy then ensued:

Mr. Estrumsa: I have no further questions.

The Court: How did you overlook 240 pounds of marihuana? [sic] Was it careless, or—

Mr. Estrumsa: I object, your Honor, to these remarks, because it might very well have been possible, sir, that the marihuana — [sic]

The Court: I said did he overlook 240 pounds. The jury will determine whether it is possible or not. Everything is possible.

The Witness: I don’t know.

The Court: Did you see the airplane leave the ground after you inspected it.

The Witness: No, I did not.

Additionally, during the government’s closing argument, the trial court warned Barragan’s counsel that his continued objections to the government’s closing argument might prove to be an unwise courtroom tactic. The court stated after several objections by defense counsel to the government's summation that:

He [Government counsel] may play tricks on you and interrupt you every five minutes ... He might do it to you, if you interrupt him.

Appellants now claim that these comments require reversal.

Looking at the record as a whole, we do not believe that these two encounters could have possibly led the jury to a predisposition of guilt. The court properly advised the jury in accordance with the rule in this circuit that it was their exclusive function to determine whether the marijuana was in fact imported. Likewise, the court’s advisement after-counsel’s incessant objections to the government’s summation was an attempt to keep the jury from becoming confused. The court advised counsel that he would be given an opportunity to present his interpretation of the facts and summary of the case. The reaction of the court did not suggest the appellants’ guilt.

III. Barragan

Before responding to Barragan’s sufficiency of the evidence claim, a review of the propriety of admitting his prior confession is proper since the evidence adduced from this confession was the most direct and damaging in the government’s case. It appears that after Barragan was arrested at the warehouse, he requested to see the Colombian Consul. This request was denied and he was taken to the customs office in downtown Miami where he was apprised of his Miranda protections.

Barragan responded that he understood his Miranda protections but did not desire an attorney. At this time he did not make a request to see the Colombian Consul. Instead, he proceeded to make a full confession. Barragan admitted at trial that he was not coerced or threatened in any manner during his interrogation. He did state that he was a little nervous but such a reaction is quite normal and surely is not grounds for holding that an otherwise permissible confession is somehow tainted.

Since it is abundantly clear that the confession at the customs office was voluntary and otherwise admissible, the only issue to which we need address ourselves is whether the government must cease any further interrogation when a foreign national requests to see his country’s consul upon his arrest. The assertion of a desire to see the Colombian Consul was at most an ambiguous request. The motivation for this request is unknown. It does not share the specific connotations necessarily involved in the request for counsel. To conclude that such requests would invoke Miranda protections would unnecessarily and unwisely broaden the purpose of the Miranda decision.

Barragan did not continue to request assistance of the Columbian Consul when Agent Perez informed him of his Miranda rights at the customs office. Perez did inform Barragan that he was entitled to counsel and if he could not afford to retain an attorney, then one would be appointed for him. Barragan responded that he understood his right to counsel but voluntarily waived such right. This gives added weight to the supposition that the original request for the Colombian Consul was not for the purpose of obtaining the assistance of an attorney within the rationale and teachings of the Miranda decision.

Since the confession was properly admitted, Barragan’s argument that there was insufficient evidence to convict is without merit. Barragan stated in his confession that he brought the marijuana into this country; he was to be paid 6,000 Colombian pesos for his task; he was to deliver it to certain people at the warehouse; and he in fact delivered four packages to a man driving a pickup truck. In addition to the incriminating evidence adduced from the confession, the agents testified that they saw Barragan give four packages to Posada who was driving a pickup truck. We feel that this is ample evidence to sustain the jury’s verdict of guilty. Barragan’s other contentions are totally without merit.

IV. Posada

Posada claims that the search of his pickup truck violated his fourth amendment rights. He argues that the search was neither a customs or border type search. The contention that this was not a proper border search is totally frivolous. The agents testified that they saw Barragan give Posada several packages from a plane which had recently arrived in the United States. This Court has already held that a search need not occur at the border to be upheld as a border search. It is also unnecessary for the person to actually cross the border before he may be searched.

The class of persons who may be subjected to a border search (include) persons engaged in suspicious activity near a border area Therefore, we hold that when ... an individual’s movements are reasonably related to the border area, . . . that individual is a member of the class of persons that a customs officer may . stop and search . . .

The search of Posada’s pickup truck was a proper border search and the contraband seized was admissible at his trial.

It is our opinion that the agents’ testimony that they saw Barragan give Posada the packages, the later seizure of the marijuana from his pickup truck, together with all the circumstances surrounding the handling and movement of the contraband, constituted sufficient evidence to sustain Posada’s conviction of a conspiracy to import marijuana. Since Posada was sentenced to concurrent two year sentences under both counts, we need not review his conviction for actual importation.

V. Arroyave

After a careful review of the trial transcript, we conclude that the government did not present sufficient evidence to support Arroyave’s conviction. Viewing the evidence in a light most favorable to the government, the evidence proved that: Arroyave was a friend of Posada and the latter’s truck had been seen at Arroyave’s home on several occasions; on the day in question, Arroyave was milling around the aircraft and talking momentarily to Posada. We conclude as a matter of law that the evidentiary foundation relied upon by the Government is much too flimsy and insubstantial to support a guilty verdict of conspiracy to import marijuana.

Such a conclusion would stand for the impermissible proposition that one may be convicted of conspiracy on the mere association with others. The government’s evidence was purely circumstantial. In such case, it is incumbent upon the government to exclude every reasonable hypothesis except that of guilt. A cursory examination of the record in this case manifestly reveals that the government has failed in this regard.

Arroyave was a former employee of the Colombian Air Force. He unloaded air craft as it arrived at the warehouse. Stella Urrea, a secretary employed by the Colombian Warehouse, testified that on the day in question she called Arroyave and informed him that he would have to come out to the warehouse office to fill out some forms to qualify for a Christmas bonus check to which he was entitled. This is surely a plausible explanation for Arroyave’s presence at the warehouse on December 21, 1971. It is not unreasonable to believe that after he came to the warehouse he decided to renew old acquaintances and engage in some holiday revelry with his friends.

This Court has previously stated in circumstantial evidence cases that:

There is ample cause for suspicion and conjecture in this case, but suspicion and conjecture are not sufficient to sustain a conviction. In our view the jury was not justified in reaching a verdict of guilty, even though they accepted the Government’s evidence as true and accorded it full weight.

This summation is equally applicable to the government’s case against Arroyave.

Accordingly, it is our conclusion that the district court committed error in denying Arroyave’s motion for acquittal because as a matter of law, there was insufficient evidence of his guilt to submit the case to the jury. No purpose would be served by ordering a new trial in this case since the record fails to reveal the probability of a subsequent conviction. As we have often said, “No good purpose could be served in ordering a new trial” in this case.

The judgment of conviction of Arroyave is reversed, and his case is remanded to the district court with directions to vacate the judgment and to enter an order granting the motion of acquittal and a judgment acquitting Arroyave. In all other respects, the judgment of the district court is affirmed.

Affirmed in part and reversed and remanded in part with directions.

      . See, 18 U.S.C. § 2 and 21 U.S.C. §§ 841 (a) (1), 952(a).

      . United States v. Pentado, 463 F.2d 355, 359 (5th Cir. 1972). See also, United States v. Blair, 470 F.2d 331 (5th Cir. 1972).

      . Whitus v. Georgia, 385 U.S. 545, 87 S.Ct. 643, 17 L.Ed.2d 599 (1967).

      . See United States v. Penner, 425 F.2d 729, 730 (5th Cir. 1970).

      . “Thus the rule in this Circuit is clear: if the trial judge chooses to comment on the evidence he must instruct the jury that they are not bound by his comments or questions.” United States v. Musgrave, 444 F.2d 755, 762 (5th Cir. 1971); see also, Hale v. United States, 435 F.2d 737, 742 (5th Cir. 1970); Bursten v. United States, 395 F.2d 976, 982 (5th Cir. 1968).

      . Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966).

      . United States v. Thompson, 475 F.2d 1359 (5th Cir. 1973). See, United States v. Reagor, 441 F.2d 252 (5th Cir. 1971).

      . United States v. Glaziou, 402 F.2d 8, 13-14 (2nd Cir. 1968); United States v. Hill, 430 F.2d 129, 131 (5th Cir. 1970).

      . Hirabayashi v. United States, 320 U.S. 81, 63 S.Ct. 1375, 87 L.Ed. 1774 (1943); United States v. Abigando, 439 F.2d 827 (5th Cir. 1971).

      . Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942); Weaver v. United States, 374 F.2d 878 (5th Cir. 1967).

      . Vick v. United States, 216 F.2d 228, 232 (5th Cir. 1964).

      . Montoya v. United States, 402 F.2d 847, 850 (5th Cir. 1968).

      . See, United States v. Stephenson, 474 F.2d 1353, (5th Cir. 1973); United States v. Love, 472 F.2d 490 (5th Cir. 1973); Nagell v. United States, 392 F.2d 934 (5th Cir. 1968); Argent v. United States, 325 F.2d 162 (5th Cir. 1963).


author: HASTINGS, Senior Circuit Judge. PELL, Circuit Judge

text:
    JOHN R. THOMPSON CO., Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
    No. 72-1076.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 25, 1973.
    Decided April 20, 1973.

      William A. Cromartie, Chicago, Ill., for plaintiff-appellant.
    James R. Thompson, U. S. Atty., William T. Huyck, Asst. U. S. Atty., Chicago, Ill., Scott P. Crampton, Asst. Atty. Gen., James H. Bozarth, Atty., Tax Division, Dept. of Justice, Washington, D. C., for defendant-appellee.
    Before HASTINGS, Senior Circuit Judge, and KILEY and PELL, Circuit Judges.
   HASTINGS, Senior Circuit Judge.

Plaintiff John R. Thompson Co. is a corporate restaurateur. The present appeal involves its 1959 federal income tax liability, but plaintiff’s dispute with the United States centers on events which occurred in 1962. As well as owning other restaurants and restaurant chains, plaintiff owned and operated Henriei’s Restaurant on West Randolph Street in Chicago’s Loop area. A salient feature of this restaurant’s Victorian decor and flavor was the presence on its walls of 42 oil paintings, engravings and prints, most of which dated from the nineteenth century. Plaintiff purchased these works of art in 1929 as part of the transaction by which it acquired the restaurant. The paintings had been collected by the restaurant’s previous owners for over twenty years prior to the transaction, and they were used continuously after their initial acquisition to decorate the restaurant’s walls.

The City of Chicago condemned plaintiff’s leasehold interest in the restaurant premises in 1962, preparatory to erecting the Chicago Civic Center on the site, and plaintiff was forced to close the restaurant. It is plaintiff’s contention that the condemnation and resultant forced closing of the restaurant in 1962 caused it to suffer a loss because of the decline in value of the collection of paintings occasioned thereby. Plaintiff alleges that, since the paintings had been utilized in the operation of its trade or business, the loss could be taken under one or the other of §§ 165(a) and 167 of the Internal Revenue Code of 1954. Of necessity, plaintiff’s contention must be regarded as being in the alternative because § 165(a), nondepreciable property, and § 167, depreciable property, are mutually exclusive.

Plaintiff’s 1962 income tax return showed a consolidated net operating loss, which plaintiff used as a net operating loss carryback to 1959, pursuant to § 172 of the Code. Part of the 1962 net operating loss was the loss plaintiff claimed on the paintings. On plaintiff’s application under § 6411 of the Code, the Commissioner of Internal Revenue allowed a tentative carryback adjustment and made a 1959 income tax refund to plaintiff. Thereafter, following an audit of plaintiff’s 1962 return, the Commissioner disallowed the loss for the paintings, adjusted the 1962 net operating loss accordingly and asserted a deficiency for 1959. Plaintiff paid the deficiency assessment and then filed a claim for refund with the District Director of Internal Revenue in Chicago, pursuant to Treas.Reg. § 301.6402-2(a) (2). The claim was disallowed. Plaintiff brought this action against the United States to enforce its claim for refund and, ultimately, to vindicate its alleged right to take a 1962 loss deduction on the paintings. The district court, which had jurisdiction of the action under 28 U.S.C.A. § 1346(a)(1), held that plaintiff did not experience a loss in 1962 under either of the claimed sections of the Code. The court entered judgment for the United States, D.C., 338 F.Supp. 770 (1971), and we affirm.

Section 165(a) of the Code provides a deduction from income for “any loss sustained during the taxable year and not compensated for by insurance or otherwise.” It has been stipulated that plaintiff was not insured against its “loss” on the paintings and that it made no claim for compensation for such a loss as part of the condemnation award. A Treasury regulation defines the nature of the loss allowable under § 165(a):

“To be allowable as a deduction under section 165(a), a loss must be evidenced by closed and completed transactions, fixed by identifiable events, and * * * actually sustained during the taxable year. Only a bona fide loss is allowable. Substance and not mere form shall govern in determining a deductible loss.” Treas.Reg. § 1.165-1 (b).

Plaintiff contends that its alleged loss is further governed by Treas.Reg. § 1.-165-2(a)

“A loss incurred in a business or in a transaction entered into for profit and arising from the sudden termination of the usefulness in such business or transaction of any nondepreciable property, in a ease where such business or transaction is discontinued or where such property is permanently discarded from use therein, shall be allowed as a deduction under section 165(a) for the taxable year in which the loss is actually sustained. For this purpose, the taxable year in which the loss is sustained is not necessarily the taxable year in which the overt act of abandonment, or the loss of title to the property occurs.”

The record in this case consists solely of the pleadings, a stipulation by the parties with attached exhibits and the depositions of two of plaintiff’s former employees. “Since the evidence in this case is all either documentary or in the form of physical exhibits, we are in as good a position as the trial court to examine it and determine for ourselves” the facts of this case. “Under these circumstances ‘the findings of the District Court are deprived of the degree of finality which would otherwise attach under Rule 52 [, Federal Rules of Civil Procedure, Title 28, U.S.C.A.].”’ Kiwi Coders Corp. v. Acro Tool & Die Works, 7 Cir., 250 F.2d 562, 568 (1957), quoting (in part) Steiner v. Mitchell, 6 Cir., 215 F.2d 171, 175 (1954), aff’d, 350 U.S. 247, 76 S.Ct. 330, 100 L.Ed. 267 (1956). Our independent examination of the record leads us to two basic conclusions. (1) As a matter of law, plaintiff’s alleged loss in 1962 could not have been as great as it claims; the measure of loss for which it contends is wholly unsupportable. (2) As to that part of the alleged loss which plaintiff may, in fact, have sustained in 1962, there has been a failure of proof. Since the burden is on the taxpayer to prove the deductibility of the loss it claims, plaintiff cannot prevail.

In 1929, plaintiff paid $184,699 for the paintings in issue. In 1962, their value in the art market was appraised at $44,150. Plaintiff would deduct the entire $140,549 difference between these two sums as a 1962 loss. Under no tenable theory was this entire amount a “loss incurred in a business,” as required by Treas.Reg. § 1.165-2(a), supra. Some part of the difference between 1929 purchase price and 1962 appraisal value may be attributable to a decline in the popularity of these paintings among the art-buying public. Plaintiff would have suffered this portion of the loss regardless of whether the paintings were hanging in the restaurant, in an art gallery or elsewhere. The mere fact that an art owner chooses to display his collection in his place of business, for whatever reason, does not transform a loss incurred in the art market into a loss incurred in the business. Cf. A.R.R. 4530, II-2 Cum.Bull. 145 (1923), superseded by Rev.Rul. 68-232, 1968-1 Cum.Bull. 79. The phrase “incurred in a business” in the regulation cited above describes the manner of incurrence, not the place of incurrence. Furthermore, plaintiff has presented no evidence that the portion of the loss attributable to the decline in art market value was “actually sustained during the taxable year” 1962, as required by Treas.Reg. § 1.165-1(b), supra. Since the value of the paintings in the art market may have continued to fluctuate during 1962, 1963 and 1964, while plaintiff held the paintings, no reason is apparent why this case should not come under the general rule that fluctuations in the value of property are not recognized as gains or losses until “closed and completed transactions, fixed by identifiable events,” occur. Treas. Reg. § 1.165-1(b), supra. In this case, we find no transaction prior to the 1964 sale of the paintings which caused plaintiff to realize a loss on the art market value of the paintings.

Over and above their value in the art market, the paintings had an additional (and not inconsequential) value because of their use in plaintiff’s restaurant. This is clear from the 1971 deposition testimony of plaintiff’s former president and of the restaurant’s former manager. It is also clear that this additional value was a factor in the price plaintiff paid for the paintings in 1929. As such, its “basis” is ascertainable by subtracting the 1929 art market value of the paintings from the $184,699 purchase price. Unlike the loss in art market value for which plaintiff claimed a 1962 deduction, which we have held was barred as a matter of law, it is entirely possible that plaintiff suffered a 1962 loss on this additional value. Such a loss, if it occurred, would have been incurred by plaintiff “in a business,” for reasons having no connection with the art market, but dependent wholly upon the fortunes of plaintiff’s business.

Whatever the possibilities, we must agree with the district court that plaintiff failed to prove such loss in additional value. Plaintiff’s most telling failure was in not proving that a “closed and completed transaction” occurred in 1962, “fixed by [an] identifiable event.” Although the condemnation forced plaintiff to close the restaurant on August 15 of that year, a strong inference remains in the record that the usefulness of the paintings in plaintiff’s business did not terminate on that date and that the paintings were not “permanently discarded from use” at that time. On the contrary, plaintiff considered reestablishing the restaurant, with the identical decor, at some other location in the Loop. As an alternative, it also considered trying to recreate the restaurant’s atmosphere, by means including the use of the paintings, at one of the twelve other restaurants it owned and operated under the Henriei’s name. Thus, in response to the question why plaintiff did not eventually move the restaurant to another location within the Loop, plaintiff’s former president answered:

“Well, frankly, because we couldn’t find a location we liked and, particularly, the size of the room was very very important. To get that size room, the rent would have been almost prohibitive. So, after spending quite a little time looking over the various possibilities around the Loop, why, we finally give up.”

The restaurant’s former manager, when asked what his position had been with respect to relocation of the restaurant within the Loop, answered to the same effect:

“Well, in the first place, the square footage there was so much more than you could get in another building. This was one of the main stumbling blocks. In other words, there are many locations that became available, but most of the square footage that was offered was not adequate to take and to duplicate the Original Henriei’s.”

Finally, the former manager was asked, with respect to other restaurants plaintiff owned, “[D]id you consider the possibility of using any of these paintings from the Randolph Street location?” He replied:

“Well, we would have liked to have done it, yes. It would have been advantageous, particularly, at Oak Brook and O’Hare, where we made some effort to duplicate the Henrici’s. In fact, trying to capture the Victorian type era that we discussed previously.
“It would have been very advantageous, certainly, to have been able to transport these particular operations, because they were in the same general location, and Oak Brook and O’Hare caters to many of the same customers who are still customers of ours.”

A further indication of plaintiff’s intentions is found in a newspaper article attached to the parties’ stipulation as Exhibit 5. The article bears the date of August 9, 1962, six days before the restaurant closed. Short excerpts follow:

“Chicago’s new $76,000,000 Civic Center will rise on the site by 1965. A spokesman for Henrici’s said this week ‘it is likely’ that the restaurant will reappear in the Civic Center, but no contract has yet been signed.
* * * * * *
“Some of that flavorful Gay ’90s decor will be salvaged before the Loop restaurant is abandoned to the wreckers. To be saved are the familiar 11% foot grandfather’s clock, woodwork, some lighting fixtures, plaster wall disks and about 85 oil paintings, including the one of Niagara Falls that decorates the wall behind the cashier.
“These objects will be saved for future use in the new Henrici’s in the Loop.”

To overcome the inference created by this evidence, plaintiff relies on a single sentence in the parties’ stipulation: “From the time of the condemnation in 1962, until October 18, 1964 [the date the paintings were sold at auction], plaintiff held the paintings for disposition in the most profitable (or least unprofitable, as the case may be) manner possible.” Bearing in mind that plaintiff had the burden of proof in this matter, this sentence standing alone does not carry conviction that by August 15, 1962, plaintiff had abandoned all intention of using the paintings elsewhere within its corporate restaurant business. “Disposition,” as used in the stipulation, fails to overcome the impression created by the other evidence that, until it reached a specific decision at some unknown time before October 1964 to sell the paintings at auction, plaintiff had among its options the continued use of the paintings elsewhere within its business. Continued use of the paintings within its business might have turned out to be the “most profitable” disposition plaintiff could make of the paintings. The condemnation and forced closing of the West Randolph Street restaurant would not then have been the “closed and completed transaction” required by the regulations. Likewise, the ultimate corporate decision to sell the paintings at auction has not been “fixed by [an] identifiable event” as having occurred in 1962. For these reasons, plaintiff has failed to prove its right to a 1962 loss deduction on the additional value of the paintings under § 165(a) of the Code.

Plaintiff’s claim under § 167 gives us no difficulty. The loss deduction allowed under that section of the Code is for depreciable property only. Except to the extent that they are subject to physical decay (and the parties have stipulated that the physical condition of the paintings in 1962 was “not significantly different from their condition at the time the paintings were acquired in 1929”), works of art are not depreciable. The district court dealt with this question more than adequately, and we adopt that portion of its opinion which discusses plaintiff’s claim under § 167. 338 F.Supp. at 777-779.

Underlying the present dispute is another disagreement between the parties as to the character of the paintings for tax purposes. Are they business assets, which give rise to fully deductible ordinary losses? Or are they capital assets, which give rise to capital losses deductible only to the extent provided in §§ 1211 and 1212 of the Code? Since we affirm the district court’s decision denying plaintiff a 1962 loss deduction, we have no occasion to characterize the paintings in these terms or to determine the nature of the deduction plaintiff may claim in the year, if any, in which it proves its loss. We express no view on the merits of this underlying dispute.

For the foregoing reasons, the judgment of the district court is affirmed.

Affirmed.

PELL, Circuit Judge

(dissenting).

The only issue presented on this appeal is whether the appellant sustained a loss in 1962 deductible from ordinary income on its income tax under either § 165(a) or § 167 of the Internal Revenue Code. The holding of the majority opinion is that it did not. I respectfully dissent.

While the paintings were not sold until 1964, in my opinion the loss was sustained when the taxpayer’s unique restaurant business on Randolph Street, Chicago, was permanently closed by virtue of condemnation.

Looking at Treasury Regulation § 1.-165-2(a) it appears to me that a “loss [was] incurred in a business and arising from the sudden termination of the usefulness in such business of nondepreciable property, in a case where such business is discontinued [and] where such property is permanently discarded from use therein . . . . ’’ In such a case the Regulation provides that the loss shall be allowed as a deduction under § 165(a) for the taxable year in which the loss was actually sustained.

Under Treasury Regulation § 1.165-1(b), the loss was evidenced by the closed and completed transaction of the restaurant doors being permanently and irrevocably closed by the identifiable event of the condemnation. I do not conceive there could have been a viable contrary argument if the sale of the paintings had occurred immediately; however, the hope, and it was at most only that, that this traditional Loop restaurant, almost an institution, might once again engage in business was foreclosed by economic facts of life, all of which were in existence and applicable in 1962, irrespective of whether completely recognized by that human characteristic which “springs eternal.” The death knell was sounded in 1962 and any subsequent tolling was merely a corroborative requiem.

Although I do not conceive that it was necessary for the ultimate holding in the majority opinion, a part of that opinion is devoted to the necessity for allocating some part of the total dollar figures involved between paintings as art objects and paintings as an essential part of the decor of the restaurant. I did not understand that the Government made any such contention and certainly the taxpayer did not. In candor, I do not follow the line of reasoning in this part of the majority opinion. Any nondepreciable property utilized exclusively in connection with a business may have separate intrinsic value. But if X dollars are paid for such property on acquisition, that would appear to me to be the cost basis under the Code, and if at the time of the loss, here assumed arguendo, the fair market value is X-Y dollars, I fail to conceive why the loss (Y dollars) was not incurred in a business, where the property was used exclusively in the business, irrespective of an identifiable, separate intrinsic value of the property.

The majority opinion adverts to an underlying dispute as to whether the paintings were business or capital assets. The differentiation has a substantial tax impact. I entertain a sneaking suspicion that if the paintings had sold for a substantially greater sum than their cost the parties would have been equally vigorous in their disagreement, but supporting the opposite views to those presently entertained. Such seems to be the course of tax litigation.

Being of the opinion that the loss was final and irrevocable in 1962, 5 Mertens, Law of Federal Income Taxation § 28.-15,1 have recorded this dissent.

      . By the operation of § 6511 of the Code, the claim was only partially timely. As to the timely portion of the claim, howjever, the filing of the claim fulfilled the requirements of § 7422 of the Code.

      . Landerman v. Commissioner, 7 Cir., 454 F.2d 338, 341 (1971), cert. denied, 406 U.S. 967, 92 S.Ct. 2411, 32 L.Ed.2d 666 (1972).

      . See United States v. S. S. White Dental Mfg. Co., 274 U.S. 398, 401, 47 S.Ct. 598, 71 L.Ed. 1120 (1927). See also Hort v. Commissioner, 313 U.S. 28, 33, 61 S.Ct. 757, 85 L.Ed. 1168 (1941); Weiss v. Wiener, 279 U.S. 333, 335, 49 S.Ct. 337, 73 L.Ed. 720 (1929).