author: ROSS, Circuit Judge.

text:
    Charles O’NEAL and Leo O’Neal, Appellants, v. CHEYENNE RIVER SIOUX TRIBE et al., Appellees.
    No. 73-1031.
    United States Court of Appeals, Eighth Circuit.
    Submitted June 14, 1973.
    Decided July 24, 1973.
    Rehearing Denied Aug. 20, 1973.

      David L. Bergren, Fort Pierre, S. D., for appellants.
    William J. Janklow, Pierre, S. D., for appellees.
    Before MATTHES, Chief Judge, VAN OOSTERHOUT, Senior Circuit Judge, and ROSS, Circuit Judge.
   ROSS, Circuit Judge.

The principal issue on this appeal is whether individual Indian plaintiffs, who fail to exhaust tribal remedies in civil disputes with the tribe, are prohibited from bringing suit in federal court on an action predicated essentially upon the Indian Bill of Rights. 25 U.S.C. § 1302. In this case the trial court held that such Indian plaintiffs must first exhaust their tribal remedies and dismissed the action. We affirm with modifications.

The plaintiffs are enrolled members of the Cheyenne River Sioux Tribe (hereafter CRST). They operate a ranch on the CRST reservation, and graze cattle on a “grazing unit” which is owned by the CRST, but leased to the plaintiffs.

In 1966 the plaintiffs borrowed $28,000.00 from the Farmers Home Administration and also borrpwed some $8,221.96 from the CRST to purchase 80 calves. In 1967, the plaintiffs secured a $13,000.00 loan from the bank, which was guaranteed by the CRST. By 1970 the plaintiffs had paid off some $24,000.00 of the FHA loan. The plaintiffs claim they were encouraged to “pay the FHA in advance and let the Tribe go”. The encouragement purportedly came from the Tribal Rehabilitation Committee and its manager.

On January 27, 1970, the plaintiffs were notified by letter that the Tribal Rehabilitation Committee had ordered foreclosure of “the loan.” The letter indicated that if the plaintiffs requested a hearing, the manager of the Committee was to be notified the next day. It appears that the plaintiffs did so, as there was a meeting between the Committee and the plaintiffs the next day. On January 29, 1970, the plaintiffs were served with a tribal court order, obtained ex parte, signed by a judge of the “Junior Court of the Cheyenne River Sioux Tribe.” The order authorized the Committee to take possession of cattle, a gas tank, and a tractor which evidently secured “the loan.” The order stated, in part:

“You are further ordered that within three (3) days from the date this order is served on you, unless you have made an appearance in this Court and an extension granted to have gathered all livestock, equipment and other items covered by this order at your ranch headquarters ft

Although the order appeared to give the plaintiffs three days to seek an extension of time in the Junior Court, the next day, January 30, 1970, more than 100 head of cattle were taken from the plaintiffs’ land. On February 26, 1970, the plaintiffs “received an accounting which [they] cannot understand ft

Sometime between January 24 and 30, with knowledge of the foreclosure order, the plaintiffs purchased 250 head of cattle. Sometime between January 24 and March 2 the plaintiffs orally learned that their grazing unit was being offered for lease. Although they made reapplication for the unit, they were told that they did not own 50% of the cattle grazing on the unit and hence were not entitled to lease the grazing unit. A CRST resolution provided that “[I]ndi-an operators must prove ownership of enough livestock to equal 50% of the carrying capacity of the range unit.” On March 2, 1970, the plaintiffs were notified that the grazing unit permit was revoked, and that the plaintiffs had 30 days to move from the grazing unit.

On April 10, 1970, this action was filed. The complaint was based upon 25 U.S.C. § 1302 (Constitutional Rights of Indians), 28 U.S.C. § 1346 (the United States as a defendant), the respective Constitutions of the United States and South Dakota, and the Law and Order Code of the CRST, against the present Indian defendants, together with the United States and some of its officers.

The substance of the complaint was that some of the defendants had wrongfully taken the above-mentioned cattle, and wrongfully threatened eviction from the grazing unit. The plaintiffs prayed for the following relief:

1. For an immediate Temporary Restraining Order restraining the Defendants from taking any further action concerning the attempted foreclosure of Plaintiffs’ loans and attempted revocation of Plaintiffs’ grazing permit and impending eviction from the grazing unit pending a determination of the rights of the parties to this action.
2. That this Court adjudge and declare the rights and other legal relations of the parties herein, and order that such declaration shall have the force and effect of a final judgment.
3. That the Court award to the Plaintiffs $50,000.00 actual and $1,000,000.00 punitive damages, and costs and allowances herein.
4. That the Court declare that the repossession of Plaintiffs’ cattle was illegal, null and void and that all cattle taken and subsequently converted be returned to the Plaintiffs or their equivalent.
5. That the Court grant such additional relief as may appear to the Court to be equitable.

On May 25, 1970, a restraining order was granted prohibiting the cancellation of the grazing permit. Upon stipulation of counsel the non-Indian defendants were dismissed from the suit since none of these government defendants performed a discretionary function with regard to the grazing permit. On October 3, 1972, after plaintiffs had presented their case, the action was dismissed without prejudice, for failure to exhaust tribal remedies. The basis for this action was:

“Obviously, he never went to the Superior Court, where he had a right to go. Under Title 4 of the Law and Order Code, Subchapter 3, and Section 9(a), the Superior Court of the Cheyenne River Sioux Tribe has original jurisdiction over all civil actions in which the defendant is an Indian and is found within the territorial jurisdiction and including civil remedies.
“Now, it seems to me that there was a clear failure on the part of the plaintiff to exhaust his remedies, the main remedies being application by the plaintiff to seek redress in the Tribal Court, especially the Superior Court.”

In order to determine whether the district court properly dismissed the action, this Court is required to answer three questions: (1) What, if any, tribal remedies existed? (2) Should an exhaustion requirement generally be applied in cases such as this? (3) If exhaustion is generally required, is it appropriate to require exhaustion in this case?

An analysis of the Law and Order Code of the CRST (hereinafter Code) leads us to the conclusion that two distinct tribal remedies existed which the plaintiffs coneededly did not exhaust.

First, the repossession order, which supplied the legal authority to repossess the cattle in this case, was issued by a judge of the Junior Court of the CRST. It appears that such an order would have been appealable: The Code, in Title 4, Chap. 1, Subehapter 5, § 49, provides :

“Notice of Appeals: Every person aggrieved by any final judgment or other final order of the Junior or Superi- or Court of the Cheyenne River Sioux Tribal Court except in those criminal cases where no right to appeal exists, must, either at the time of the rendering of judgment or within 5 days after such judgment or order was rendered give notice of appeal or demand a trial by jury.”

The Code, in Title 4, Chap. 1, Subchap-ter 4, § 13, further provides:

“Jurisdiction — Writs or Orders: The Appellate Court shall have power to issue any writs or orders necessary and proper to the complete exercise of its jurisdiction, or to prevent or remedy any act of the Junior or Superior Court beyond such court’s jurisdiction, or to cause the Junior or Superior Court to act where they unlawfully fail or refuse to act within their jurisdiction.”

This last provision is significant because the plaintiffs contended that the Junior Court of the CRST lacked civil jurisdiction as it was primarily a criminal court. This section clearly indicates that the appellate court had jurisdiction to issue a writ to prohibit the Junior Court from acting outside of its jurisdiction.

Second, the plaintiffs could have instituted a separate suit and the Superior Court would have had jurisdiction over most of the original defendants in this action. The Code, in Title 4, Chap. 1, Subchapter 3, §§ 9(A) and 10, provides:

“Jurisdiction — Generally: The Superior Court of the Cheyenne River Sioux Tribe shall have original jurisdiction over:
“Civil Causes of Action: All civil actions in which the defendant is an Indian and is found within its territorial jurisdiction; and including civil remedies.
“Jurisdiction — Territorial: The territorial jurisdiction of the Superior Court of the Cheyenne River Sioux Tribe shall embrace all land within the exterior boundaries of the Cheyenne River Sioux Indian Reservation tf

Furthermore, the Code, in Title 4, Chap. 1, Subehapter 3, § 11, provides that “[T]he Superior Court shall have power to issue any writs or orders necessary and proper to its jurisdiction.”

This review of the Code clearly indicates that there were two types of tribal remedies which were open to the plaintiffs. It is, therefore, incumbent on this Court to determine whether, as a general rule, exhaustion should be required.

This action, essentially predicated on allegations of due process violations, was primarily based upon 25 U.S.C. § 1302. 25 U.S.C. § 1302 provides in pertinent part:

“No Indian tribe in exercising powers of self-government shall—
(5) take any private property for a public use without just compensation;
(8) deny to any person within its jurisdiction the equal protection of its laws or deprive any person of liberty or property without due process of law;”

Enacted in 1968, this significant legislation was designed to remedy the anomalous situation in which reservation Indians found themselves. As Senator Er-vin, the moving force behind the legislation, said:

“ ‘The reservation Indian now has no Constitutional rights. The purpose of the amendment is to give these Indians constitutional rights which other Americans enjoy.’ ” White Eagle v. One Feather, 478 F.2d 1311 (8th Cir. 1973).

It is the plaintiffs’ position in this lawsuit that Congress did not intend to require exhaustion of tribal remedies, because the purpose of the legislation was to give Indians the “constitutional rights which other Americans enjoy.” Since other Americans, according to the plaintiffs, need not exhaust state remedies when bringing conventional civil rights suits, see e. g., Stradley v. Andersen, 456 F.2d 1063 (8th Cir. 1972), the plaintiffs argue that they should not be required to exhaust tribal remedies. However, it is clear to us that Congress wished to protect and preserve individual rights of the Indian peoples, with the realization that this goal is best achieved by maintaining the unique Indian culture and necessarily strengthening tribal governments. From this perspective an exhaustion requirement is consistent with the statute.

Prior to the adoption of the Indian Bill of Rights, the courts respected the need of Indians to maintain strong tribal governments. In 1959 the Supreme Court was faced with a suit by a non-Indian general store operator, who conducted his business on an Indian reservation, against an Indian couple. The non-Indian obtained a judgment in state court. The Supreme Court reversed on the basis that the state court lacked jurisdiction to determine the matter. The Court noted that it would not:

“undermine the authority of the tribal courts over Reservation affairs [which] would infringe on the right of the Indians to govern themselves. . . . The cases in this Court have consistently guarded the authority of Indian governments over their reservations. . . . ” Williams v. Lee, 358 U.S. 217, 223, 79 S.Ct. 269, 272, 3 L.Ed.2d 251 (1959).

Since the passage of the Indian Bill of Rights we have recognized the fear that the courts may “ ‘apply broadly such elusive and expanding concepts as due process . . . without sensitive regard for their impact on tribal structures and values.’ ” White Eagle v. One Feather, swpra, 478 F.2d 1311. In addition, Congress was sensitive to the possibility of disrupting the Indian governments when it passed the Indian Bill of Rights:

“Discussion of the Indian Bill of Rights showed no intent to use the statute as an instrument for modifying tribal cultural attitudes in order to facilitate assimilation of Indians into the non-Indian community. In fact, the committee showed a positive intent to avoid requirements injurious to the tribes’ capacity to function as autonomous governmental units.” Comment, The Indian Bill of Rights and The Constitutional Status of Tribal Governments, 82 Harv.L.Rev. 1358, 1359 (1969).

This Court has held that the rights engendered by the adoption of the Indian Bill of Rights may be enforced by appropriate federal jurisdictional statute. Luxon v. Rosebud Sioux Tribe of South Dakota, 455 F.2d 698 (8th Cir. 1972). In holding that 28 U.S.C. § 1343(4) gives a district court jurisdiction to determine whether an Indian tribe has denied to one of its members any of the rights given by the Indian Bill of Rights, we carefully noted that the plaintiff had exhausted all “administrative” remedies. Id. at 699.

Cited in the Luxon case, Id. at 700, was the decision in Dodge v. Nakai, 298 F.Supp. 17, 25 (D.Ariz.1968). In Dodge the court recognized that:

“The question arises whether an implied condition to invocation of Title II in this Court is a demonstration that plaintiffs have exhausted remedies available to them within the existing tribal government framework.” Id.

The court stated:

“Several factors support the implication of such'a condition into Title II. First, this interpretation would reconcile the statute with a ‘strong Congressional policy to vest Navajo Tribal Government with responsibility for their own affairs.’ . . . Second, this interpretation would place primary responsibility for the vindication of rights violated by Indian governmental agencies upon the tribal courts. Such responsibility may well enhance the development of an independent Indian judiciary, thus reconciling the statute with recognized federal policy. . . . Third, this interpretation would insure that this Court would intervene only in those instances in which local conflicts cannot be resolved .locally. . . . ” Id.

The court went on to hold, however, that exhaustion was not required because, due to the presence of defendants not amenable to tribal court jurisdiction, such a requirement would result in a multiplicity of lawsuits and a delay of remedy.

In McCurdy v. Steele, 353 F.Supp. 629 (D.Utah 1973), the plaintiffs sought official recognition as the governing business council of the Confederated Tribes of the Goshute Reservation. Faced with an argument that the plaintiffs should be required to exhaust, the court noted that such a requirement “finds support in the apparent congressional intention, reflected in the statute, to preserve the integrity of tribal governmental structure.” Id. at 636. However, since the Goshute apparently had no court having civil jurisdiction, such matters being decided by tribal council, and the tribal council which would decide the matter was the same tribal council challenged by the plaintiffs, exhaustion was held inappropriate.

We conclude that the adoption of the Indian Bill of Rights was not meant to detract from the generally recognized policy, stated in the Williams case, of preserving the “authority of the tribal courts . . . . ” Williams v. Lee, supra, 358 U.S. at 223, 79 S.Ct. 269. Furthermore, we believe that the policy stated in Williams “would support an exhaustion requirement.” Comment, The Indian Bill of Rights and the Constitutional Status of Tribal Governments, 82 Harv.L.Rev. 1358, 1373 & n. 124 (1969). While it is apparent from a reading of Dodge and McCurdy that an exhaustion requirement has generally been recognized, both of these cases, however, have indicated that exhaustion is not an inflexible requirement. A balancing process is evident; that is weighing the need to preserve the cultural identity of the tribe by strengthening the authority of the tribal courts, against the need to immediately adjudicate alleged deprivations of individual rights. Thus this Court must determine whether exhaustion is appropriate in the case at bar.

The plaintiffs assert essentially five grounds upon which they base their argument that exhaustion is not appropriate: (1) not all of the parties are amenable to tribal court jurisdiction, (2) the tribe has sovereign immunity, (3) the tribal courts lack injunctive powers, (4) the tribal courts are controlled by the CRST governing committee, (5) the CRST Code effectively prevents assistance of counsel.

First, the plaintiffs argue that since the United States and various non-Indians were once defendants, exhaustion, under the rationale of Dodge v. Nakai, supra, 298 F.Supp. 17, is inappropriate. This contention can be summarily disposed of due to the fact that these defendants were dismissed by stipulation, apparently because these defendants performed no discretionary functions and hence were not proper defendants in the first place. The plaintiffs are thus bound by their stipulation.

Second, while the plaintiffs are correct that the CRST is clothed with sovereign immunity, this provision obviously would not have prevented an appeal from the repossession order of the Junior Court of CRST. Moreover, it would not be an undue burden to require the plaintiffs to seek consent from the tribe in the event the plaintiffs are required to maintain a separate action in the Superior Court of the CRST.

Third, we do not read the Code in the same way plaintiffs do with respect to the injunctive powers of CRST courts. As previously noted, it is clear that had an appeal been taken from the order of the Junior Court, the appellate court had the power to issue “any writs or orders ... to prevent or remedy any act of the Junior Court beyond such court’s jurisdiction. . ” Code, Title 4, Chap. 1, Sub-chapter 4, § 13. The Superior Court has jurisdiction over all civil actions “including civil remedies.” Code, Title 4, Chap. 1, Subchapter 3, § 9[A]. Moreover, the Superior Court has jurisdiction to “issue any writs or orders necessary and proper to its jurisdiction.” Code, Title 4, Chap. 1, Subchapter 4, § 11. We are convinced that should an action be brought in the Superior Court, the court has the power to grant injunctive relief.

Fourth, we do not believe that the judicial system of the CRST has been demonstrated to be lacking in integrity. The only factual basis for such an assertion is testimony by a Junior Court judge that he consulted with a Superior Court judge relative to the jurisdictional powers of the Junior Court when deciding whether to grant the repossession order. The Superior Court judge, now deceased, evidently informed the Junior Court judge that the matter pending before the Junior Court was merely “administrative” and thus the Junior Court had jurisdiction. Regardless of the correctness of this advice, it does not demonstrate any illicit control of the judicial system by the CRST’s executive or legislative branches of government. Without a factual basis for the claim that the CRST judicial system is nothing more than a subservient branch of the executive or legislative branches of the CRST, we must indulge in a presumption that the judges of the CRST courts act independently.

The final argument rests upon the fact that professional attorneys must pay a license fee of $300.00 before admittance to practice before the courts of the CRST. Code, Title 4, Chap. 2, Subchapter 7, § 54 [C]. Upon this fact the plaintiffs rest their argument that exhaustion is inappropriate because they would be denied assistance of counsel. We reject this argument for a number of reasons. There has been no showing that the plaintiffs are unable to turn to attorneys who are admitted to practice before the CRST courts and we do not know whether or not plaintiffs’ attorney herein is admitted to practice before the courts of the CRST. Finally the plaintiffs note that the fee has been waived for the CRST’s professional attorney, but the plaintiffs do not indicate whether such a waiver has been or could be sought for their own attorney. Put simply, the relatively high license fee by itself does not mandate the conclusion that the plaintiffs will be denied assistance of counsel should they be required to return to the CRST courts.

Although not raised by either party, we note that an action maintained in the Superior Court at this time in an attempt to exhaust tribal remedies, might be barred by a Statute of Limitations contained in the Code. The Code, in Title 4, Chap. 2, Subchapter 1, § 20, provides :

“Limitation of Actions for Debts or Damages: The Court shall have no jurisdiction over any action for debt or damages brought more than three years after the cause of action arose.”

The cause of action apparently arose in this case sometime between January 27, 1970, and March 2, 1970. The federal suit was commenced on April 20, 1970. At the time of filing this opinion the Statute of Limitations apparently will have run unless the commencement of the action in federal court tolled the CRST Statute of Limitations.

We think the plaintiffs have a strong equitable argument that the federal action did toll the CRST Statute of Limitations. As the Supreme Court has said:

“Statutes of limitations are primarily designed to assure fairness to defendants. Such statutes ‘promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared. . . . ’
This policy of repose, designed to protect defendants, is frequently outweighed, however, where the interests of justice require vindication of the plaintiff’s rights.” Burnett v. New York Central R.R., 380 U.S. 424, 428, 85 S.Ct. 1050, 1055, 13 L.Ed.2d 941 (1965). Cf. Mizell v. North Broward Hospital District, 427 F.2d 468, 473-474 (5th Cir. 1970).

The defendants are in no position to claim that the plaintiffs have allowed their claims to “slumber”; indeed, it would seem anomalous for the defendants to plead the bar of the Statute of Limitations in the Superior Court when the defendants have faulted the plaintiffs for not returning to the Superior Court. In any event, this is a matter that should be decided in the first instance by the tribal court.

In sum, we can find no persuasive reasons for not requiring exhaustion in this case. A general exhaustion requirement in cases such as this will do much to strengthen tribal governments, including tribal courts, and, thereby aid the reservation Indian in maintaining a distinct cultural identity. However, each case will require a balancing of the merits of exhaustion against the harm an exhaustion requirement might threaten with regard to those who claim their constitutional rights have been violated.

In this case the plaintiffs have completed their proof at considerable expense and after three days of trial. They no longer have the right to appeal from the Junior Court’s order since the period within which to give notice of appeal has expired. The plaintiffs may however turn to the Superior Court in an original action against the Tribe if the CRST consents to suit and the Statute of Limitations has not run. Under these circumstances the trial court should enter an order withdrawing its order of dismissal of October 3, 1972, and substitute an order requiring the plaintiffs to institute suit in the Superi- or Court within a reasonable amount of time. If the plaintiffs fail to do so within a reasonable amount of time the order of dismissal shall be reinstated. If the plaintiffs institute suit in the Superior Court, and the Superior Court does not reach the merits of the controversy because it is barred by the Statute of Limitations, or, the CRST, after a request from the plaintiffs, refuses consent to be sued, the district court shall proceed with the trial and decide the case on its merits without reference to any further necessity of exhausting tribal remedies. If it becomes clear that the Superior Court will reach the merits of the controversy, the district court shall enter the order of dismissal, without prejudice.

For the reasons hereinbefore expressed, the decision appealed from is affirmed as modified.

      . Congress clearly did not intend to detract from the continued vitality of the tribal courts by passage of this legislation. For example, 25 U.S.C. § 1311 authorizes the creation of a Model Code Governing Courts of Indian Offenses. Furthermore, 25 U.S.C. §§ 1321-1322 require tribal consent before a State may assume civil or criminal jurisdiction. These sections were passed contemporaneously with the section enumerating the constitutional rights of Indians. 25 U.S.C. § 1302.

      . See also Seneca Constitutional Rights Organization v. George, 348 F.Supp. 51, 58 (W.D.N.Y.1972) : “ [C]ertainly no jurisdiction exists unless a claim is supported by well pleaded facts including facts which show that resort to tribal remedies has failed.”

      . The Code, in Title 4, Chap. 2, Sub-chapter 1, § 21, provides: "Tribe Immune from Suit: The Court shall have no jurisdiction over any suit brought against the Tribe without consent of the Tribe. Nothing in this Code shall be construed as consent by the Tribe to be sued.” (Emphasis supplied).


source: Caselaw Access Project

author: MATTHES, Senior Circuit Judge.

license: Public Domain

text:
    AGRI-TECH, INC., a Missouri corporation, Petitioner, v. Elliot L. RICHARDSON, Secretary of Health, Education, and Welfare, and Dr. Charles C. Edwards, Commissioner of Food and Drugs, Respondents.
    No. 72-1252.
    United States Court of Appeals, Eighth Circuit.
    Submitted Jan. 10, 1973.
    Decided Aug. 2, 1973.
    Rehearing Denied Aug. 31, 1973.

      Kirkpatrick W. Dilling, Chicago, 111., for petitioner.
    Howard S. Epstein, Asst. Chief, Consumer Affairs, Antitrust Div., Dept, of Justice, Washington, D. C., for respondents.
    Before MATTHES, Senior Circuit Judge, BRIGHT, Circuit Judge, and TALBOT SMITH, Senior District Judge.

       Eastern District of Michigan, sitting by designation.

   MATTHES, Senior Circuit Judge.

Agri-Tech, Inc. has petitioned this court to review an order of the Secretary of Health, Education, and Welfare issued through the Commissioner of Food and Drugs on February 24, 1972, withdrawing approval of New Animal Drug Applications (NADA) Nos. 5-987V and 5-633V, respectively, concerning drugs containing “iodinated casein,” or “Protamone,” as the active ingredient.

On January 10, 1973, we heard arguments, and the cause was taken under submission. Two days prior thereto, January 8, 1973, the Supreme Court had granted certiorari in Bentex Pharmaceuticals, Inc. v. Richardson, 463 F.2d 363 (4th Cir. 1972); CIBA Corp. v. Richardson, 463 F.2d 225 (3rd Cir. 1972); USV Pharmaceutical Corp. v. Richardson, 461 F.2d 223 (4th Cir. 1972); Hynson, Westcott & Dunning, Inc. v. Richardson, 461 F.2d 215 (4th Cir. 1972). Directly involved in those cases were the issues posed here. We therefore concluded to withhold our decision until opinions were forthcoming in the above cases. On June 18, 1973, opinions were filed by the Supreme Court and are reported sub nomine Weinberger v. Bentex Pharmaceuticals, Inc., 412 U.S. 645, 93 S.Ct. 2488, 37 L.Ed.2d 235; CIBA Corp. v. Weinberger, 412 U.S. 640, 93 S.Ct. 2495, 37 L.Ed.2d 230; USV Pharmaceutical Corporation v. Weinberger, 412 U.S. 655, 93 S.Ct. 2498, 37 L.Ed.2d 244; Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609, 93 S.Ct. 2469, 37 L.Ed.2d 207. Our judgment to delay decision has been vindicated. The Supreme Court opinions, in our view, are dispositive of petitioner’s challenge to the withdrawal order.

I. STATUTORY HISTORY AND SCHEME

The statutory history and regulatory scheme are discussed and considered in Weinberger v. Hynson, etc., supra (hereinafter referred to as Hynson). Therefore, another full recitation of the applicable statutes and regulations is unnecessary. We will, however, discuss the pertinent provisions of the legislation in our consideration of the issues which petitioner continues to urge upon us.

By way of background, petitioner has for approximately 25 years distributed and sold in interstate commerce products for animal feeding purposes containing iodinated casein, also known as Prota-mone. For some years subsequent to 1945, animal applications of iodinated casein were the subject of new animal drug applications, specifically, NADAs Nos. 5-633V and 5-987V. The applications had been approved by the United States Food and Drug Administration.

In 1962, Congress amended the Food, Drug and Cosmetic Act to expand jurisdiction of the Commissioner of the Food and Drug Administration to allow review of “new drugs” for substantial evidence of both safety and effectiveness. Pub.L. 87-781, 76 Stat. 780. The provision applied equally to human and animal drugs until the amendments in 1968, Pub.L. 90-399, 82 Stat. 342, separated and recompiled the provisions relating to animal drugs. S.Rep.No.1308, 90th Cong., 2d Sess.; 1968 U.S.Code, Cong, and Adm.News, p. 2607 et seq. These separate provisions are, insofar as applicable here, nearly identical.

To effect the provisions of the 1962 amendment, particularly 21 U.S.C. § 355(e), the FDA by notice in 31 Fed. Reg. 9426 on July 9, 1966, announced that the National Academy of Sciences-National Research Council (NAS-NRC) had agreed to assist the FDA in its review of claims of effectiveness for drugs that had been approved from 1938 until October, 1962. All holders of NDAs were directed to submit data to NAS-NRC in order to facilitate the determination whether there was ground for invoking § 505(e) of the Act, and to provide each holder of an approved- new-drug application an opportunity to present for the consideration of NAS-NRC the best data available to support the claims.

Petitioner responded to the notice by submitting data for each iodinated casein product on a “Drug Efficacy Study-Form Letter A.” According to the data submitted on the forms, Protamone:

(1) Improves growth and feathering in turkeys, chickens, or ducks.
(2) Improves egg production and eggshell texture in laying hens and breeders.
(3) Diminishes carcass fat on ducks.
(4) Increases milk and butterfat production in goats, sheep, beef cattle, and dairy cattle.
(5) Increases rate of growth, fertility and libido in goats, sheep, swine, beef cattle and dairy cattle.
(6) Increases milk flow and weaning weights and decreases baby mortality in swine.

In support of these claims petitioner submitted with these Forms A various citations to and reprints of studies allegedly evidencing the claims of effectiveness. The NRC then reviewed these data, and revealed its detailed reasoning on Forms B-l, which appear as a part of the official record filed in the office of the clerk of this court, but not in the Appendix. Apparently, petitioner never received the Forms B-l, but only the Forms B-2, which contain only the NRC’s ultimate findings, and the FDA Notice of Hearing, 36 Fed.Reg. 17367, infra, which summarized these findings. We shall review seriatim the supporting data and NRC B-2 conclusions which were given to petitioner.

To support its claim that Protamone improves growth and feathering in turkeys, petitioner submitted only an article cited at 27 Poultry Sci. 670 (1948) entitled “The effect of iodinated casein on moulting turkeys.” The conclusion of the NRC as to this claim was “not effective.” Under explanatory statements it said: “Induces moulting; no data on growth and feathering.” (Emphasis supplied.)

To support its claims that Protamone improves egg production and texture, and growth and feathering in chickens, petitioner cited 33 articles. The Form B-2 from the NRC said “not effective. No data to substantiate claims.”

To support its claims that Protamone improves growth and feathering and decreases carcass fat in ducks, petitioner cited four articles. The B-2 form from the NRC said “effective,” but said the label’s “[c]laims should state ‘increases daily gain’ instead of ‘improving growth and feathering.’ ”

To support its claim that Protamone increases milk and butterfat production, growth, fertility and libido in goats and sheep, petitioner cited 14 published articles, attached two unpublished articles and a letter of endorsement from a corporate farm as to goats; as to sheep it cited 24 published articles and attached two unpublished articles. The Forms B-2 from the NRC evaluated io-dinated casein as to both goats and sheep as follows:

“a. Milk production — probably effective
b. Rate of growth — probably not effective (more information needed)
c. Fertility and libido — probably not effective (more information needed).”

According to the NRC, “Categories b and e above must have more information before further consideration can be given.”

To support the claims Protamone increases milk flow and weaning weights, reduces baby mortality and improves growth, market finish, fertility and libido in swine, petitioner cited 28 articles and attached two articles. The NRC said on the Form B-2, “not effective. Claims on milk flow: not adequately substantiated. Rate of growth or breeding performance : no adequate evidence.”

Supporting its claims that Protamone increases milk and butterfat production, growth, fertility and libido in beef and dairly cattle, petitioner cited nine articles as to beef cattle and as to dairy cattle apparently cited 81 articles, plus attaching nine articles and various letters, advertisements and news items. As to both beef and dairy cattle, the NRC reported on the B-2 forms the following evaluation:

“a. Rate of gain- — probably not effective
• — -more information needed
b. Libido and fertility — probably effective
—for bulls only
—more information needed
c. Milk production — Probably effective
Qualification on label — ‘effective for limited periods of time’
■ — ‘effect limited to declining phase of lactation’'
—‘must be accompanied with increased feed intake’
—‘may increase heat sensitivity of animal.’ ”

Following this NRC evaluation of the data submitted by petitioner, the Commissioner published on October 8, 1970, at 35 Fed.Reg. 15859 his findings based upon the NRC evaluation. They were:

“1. Iodinated casein is effective for increasing daily gain in growing ducks and increasing milk production in dairy cows.
2. Information provided does not contain substantial evidence of effectiveness of iodinated casein for improving fertility in bulls; increasing milk production in goats, beef cows, and sheep; in improving fertility in boars, goats, and sheep; and for improving rate of gain in dairy cattle, sheep and goats.
3. Iodinated casein is not effective for improving growth and feathering in turkeys and chickens; increasing milk flow in nursing sows; or improving egg production and eggshell texture in chickens.”

As to the uses found effective, the NRC and FDA found the label should qualify the claims by informing the user as follows:

“1. The claim for increased milk production in dairy cows should be qualified as follows: (a) Effective for limited periods of time, (b) effectiveness is limited to the declining phase of lactation, (c) administration must be accompanied with increased feed intake, and (d) may increase heat sensitivity of the animal.
2. The claim for improving growth and feathering in growing ducks should state ‘increases daily gain’.”

This order gave petitioner six months ■in which to alter its labeling to conform to these findings or submit additional evidence of efficacy. Petitioner did neither. Instead, its technical counsel wrote the FDA on March 22 and April 13, 1971, requesting the Forms B-l of the NRC studies.

Upon expiration of the six months, the Commissioner entered a Notice in the Federal Register, 36 Fed.Reg. 17367 (Aug. 28, 1971), proposing to withdraw petitioner’s NADAs for iodinated casein pursuant to § 512 of the Act, 21 U.S.C. § 360b (e), on the grounds that there was a lack of substantial evidence of its effectiveness for its labeled purposes. This notice, after referring to the prior announcement in 35 Fed.Reg. 15859, stated:

“Therefore, notice is given to Agri-Tech, Inc., . . . and to any interested person who may be adversely affected that the Commissioner of Food and Drugs proposes to issue an order under the provisions of section 512(e) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360b(e)) withdrawing approval of NADA No. 5-633V, NADA No. 5-987V, . . . and all amendments and supplements thereto. This action is proposed on the grounds that there is a lack of substantial evidence that the drugs have the effect they purport or are represented to have under the conditions of use prescribed, recommended, or suggested in their labeling.
In accordance with the provisions of section 512 of the act (21 U.S.C. 360b), the Commissioner will give the applicant and any other interested person who would be adversely affected by an order withdrawing such approval an opportunity for a hearing at which time such persons may produce evidence and arguments to show why approval of said new animal drug applications should not be withdrawn.
Within 30 days after publication hereof in the FEDERAL REGISTER, such persons are required to file with the Hearing Clerk, Department of Health, Education and Welfare, Office of the General Counsel, Room 6-62, 5600 Fishers Lane, Rockville, Md. 20852, a written appearance electing whether:
1. To avail themselves of the opportunity for a hearing; or
2. Not to avail themselves of the opportunity for a hearing.
If such persons elect to avail themselves of the opportunity for a hearing, they must file a written appearance requesting the hearing and giving the reasons why approval of the new animal drug application should not be withdrawn together with a well-organized and full-factual analysis of the clinical and other investiga-tional data they are prepared to prove in support of their opposition to the grounds for this notice. A request for a hearing may not rest upon mere allegations or denials but must set forth specific facts showing a genuine and substantial issue of fact that requires a hearing.”

Subsequently, petitioner filed an Appearance and Request for Hearing, but did not file the requisite “well-organized and full-factual analysis of the clinical and other investigational data they [were] prepared to” present at the demanded hearing.

Instead, petitioner’s request for a hearing and a subsequent letter declared it sought to prove at that hearing (1) that Protamone is generally recognized as effective, is therefore not a new animal drug, and thus is exempt from the statute; (2) that pre-1962 letters from the FDA certify Protamone is not a new drug; (3) that the FDA order withdrawing such pre-1962 letter opinions is invalid and/or inapplicable; (4) that the withdrawal procedure is defective because (a) there was no “new information” before the Commissioner to warrant activation of the withdrawal procedure, (b) the failure to reveal fully the NRC’s findings (i.e., the B-l forms) violates due process; (c) the NRC study itself found Protamone effective for some uses; and (d) there were no NRC reports on petitioner’s other thyro-pro-tein products, Mom Sow Milking Tablets and Stimulac Pellets.

Thus, petitioner offered to reveal at the hearing no clinical evidence, but rather demanded an evidentiary hearing on the foregoing quéstions of law and demanded access to the B-l forms of the NRC before such a hearing. Consequently, on March 4, 1972, the Commissioner published the order sub judice, 37 Fed.Reg. 4730, denying a hearing on the proposed withdrawal and withdrawing approval of petitioner’s NADAs for io-dinated casein products (Protamone, Stimulac Pellets, Mom Sow Milking Tablets), i.e., NADA No. 5-633V and No. 5-987V. That order has been stayed by this court pending disposition of this petition for review.

Although, as above stated, we believe the pronouncements by the Supreme Court in the four drug eases are disposi-tive of all attacks of petitioner against the withdrawal order, we nonetheless believe further explication of our views is necessary, particularly in view of petitioner’s contention set forth in its supplemental brief. After the Supreme Court opinions had been filed, the parties, at our direction, filed supplemental briefs focused upon the holdings of the Supreme Court. The Commissioner in his brief submitted that the Supreme Court opinions are wholly dispositive of all of petitioner’s contentions. On the other hand, petitioner disagrees and insists in its supplemental brief that all of the issues have not been resolved by the Supreme Court; specifically, petitioner urges that the due process issue was not decided.

From the outset of this controversy, petitioner has adamantly insisted that the data and material it submitted to the NRC for review on Forms A, above referred to, were sufficient to constitute compliance with the statutory requirements essential to prevent withdrawal of a new animal drug application. Thus, in response to the notice of opportunity for a hearing appearing in 36 Fed.Reg. 17367, above quoted verbatim in part, counsel for petitioner, in requesting a hearing, enumerated a number of reasons in support of the request for a hearing. The reasons are also delineated, supra.

But the undeniable fact is that at no time did petitioner adhere to the mandate of the statutes and the regulations promulgated by the Commissioner by filing a well-organized factual analysis of the clinical and other data that it was prepared to prove in support of its opposition to the withdrawal of its drugs. Petitioner endeavored to justify its non-compliance by postulating that the burden of proof rested upon the Commissioner to prove at an adversarial hearing the deficiencies in the data and material submitted in support of its drug-efficacy study forms “A”. That is to say, petitioner argues that before it was required to submit any additional scientific data, it was entitled to a hearing at which the Commissioner was required to prove why the material submitted by petitioner did not constitute substantial evidence of the efficacy of its products. And, it also argued that it was entitled to a copy of the NRC B-l reports and the names of the members of the panel constituting the reviewing board. But there is no case law to support petitioner’s position. To the contrary, it has been held that in enacting the 1962 statute, Congress placed the burden of proving efficacy upon the manufacturer of the product. Ubiotica Corp. v. FDA, 427 F.2d 376, 378 (6th Cir. 1970); The Upjohn Co. v. Finch, 422 F.2d 944 (6th Cir. 1970). And that principle is implicit in Hynson, supra.

Furthermore, the Supreme Court, contrary to petitioner’s contention, held that the regulatory scheme does afford an applicant due process:

“There can be no question that to prevail at a hearing an applicant must furnish evidence stemming from ‘adequate and well-controlled investigations.’ We cannot impute to Congress the design of requiring, nor does due process demand, a hearing when it appears conclusively from the applicant’s ‘pleadings’ that it cannot succeed.
The NAS-NRS [sic] panels evaluated approximately 16,500 claims made on behalf of the 4,000 drugs marketed pursuant to effective NDAs in 1962. Seventy percent of these claims were found not to be supported by substantial evidence of effectiveness, and only 434 drugs were found effective for all their claimed uses. If the FDA were required automatically to hold a hearing for each product whose efficacy was questioned by the NAS-NRC study, even though many hearings would be an exercise in futility, we have no doubt that it could not fulfill its statutory mandate to remove from the market all those drugs which do not meet the effectiveness requirements of the Act.”

Hynson, supra, 93 S.Ct. at 2478. (Emphasis supplied.)

We are fully cognizant that in Hyn-son, supra, the Supreme Court affirmed that part of the opinion of the Court of Appeals setting aside the order of the Commissioner for failure to provide the petitioner with an opportunity for a hearing. But the Hynson case is clearly distinguishable in that there the applicant complied with the newly promulgated regulations and submitted the material which it claimed constituted “substantial evidence of [the] effectiveness [of its drug].”

Although petitioner also argues that it is entitled to a hearing before the Commissioner on the question of whether or not its product constitutes a new animal drug within the meaning of the Act, we regard the Hynson case as dispositive of that issue. In Hynson, the Court held that if there is not “substantial evidence” of the drug’s effectiveness, it cannot be considered generally recognized as effective. Hynson clearly holds that the initial determination whether a drug is a new animal drug is within the jurisdiction of the Commissioner and he may summarily deny a hearing on the issue whether a drug is “generally recognized” and therefore exempt from the withdrawal provisions if he finds there is no “substantial evidence” raising an issue of fact. “It also follows that if Hynson was not entitled to a hearing under § 505(e) [21 U.S.C. § 355(e)], it would not be entitled to a hearing on its claim that Lutrexin is not a ‘new drug.’ ” 93 S.Ct. at 2483.

In summary, we hold that petitioner failed to comply with the regulatory provisions for the withdrawal of approval of its NADAs and thus, it failed to fully exhaust its administrative remedies. We do not find any authority in this area of the law to sustain petitioner’s contention that it was entitled as a matter of right to a hearing on the record that it filed for review by the NRC.

We further hold that there is no substance in petitioner’s claim that the Commissioner lacked authority to withdraw ■ its NADAs as to those products which had been found effective. The drug applications in question covered all of the products and, under the clear terms of the statute, when the petitioner failed to follow the prescribed procedures, the Commissioner was fully authorized to withdraw the approval of the NADAs in their entirety.

We therefore deny Agri-Tech’s petition to review. Since it may desire to file a new animal drug application, or otherwise pursue the matter, and there being no claim that Protamone is unsafe, our stay heretofore granted will be continued in effect until the 15th day of September, 1973. See Pfizer, Inc. v. Richardson, 434 F.2d 536, 548 (2nd Cir. 1970).

      . The -withdrawal order was published in 37 Fed.Reg. 4730 (March 4, 1972).


author: RONEY, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Hector R. CALLES, Defendant-Appellant.
    No. 72-3195
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    July 11, 1973.
    Rehearing Denied Aug. 6, 1973.

      Lawrence E. Hoffman, Miami Beach, Fla., for defendant-appellant.
    Robert W. Rust, U. S. Atty., Miami, Fla., Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Atty., Tax Div., Dept, of Justice, Washington, D. C., for plaintiff-appellee.
    Before THORNBERRY, GOLDBERG and RONEY, Circuit Judges.

       Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 431 F.2d 409, Part I, (5th Cir. 1970).

   RONEY, Circuit Judge:

After a jury trial, appellant Hector R. Calles was convicted on two counts of willfully attempting to evade and defeat his income tax liability for the years 1969 and 1970, in violation of 26 U.S.C. A. § 7201. He was sentenced to two concurrent four-year terms in prison. On appeal, appellant contends (1) that the Government foiled to establish, by means of the “net worth method,” that he had taxable income during the years charged in the indictment, and (2) that various trial errors entitle him to a new trial. We affirm.

At the trial, the Government developed this preliminary evidence; Appellant Calles is a Cuban citizen born in 1931, has a college education plus two years of law school in Cuba, and claims to have been a government official in the early days of the Castro government. He entered the United States illegally in 1962 and has eluded the Immigration authorities ever since. He has never filed an income tax return. He established residence in Miami, but he has held his assets in the name of others. For example, his $68,000 home is in his wife’s name, his yacht, Roxanna II, has been held in the names of at least two and possibly three friends, and his automobiles were registered under the name of “Santora.”

According to the testimony of several federal and state law enforcement officials, appellant claimed various employments and occupations in conversations with them. For example, on May 25, 1968, he claimed to be in .the jewelry business. On December 6, 1969, he said that he was the owner or manager of a ladies’ wear store. On November 17, 1970, he told police that he was a merchant. On December 13, 1970, he said that he was a lobsterman and lobster dealer in Miami and the Bahamas.

In interviews with Government agents, appellant discussed what he termed his business activities in this country. He claimed that, after several years of inactivity subsequent to entering the United States, he invested and lost $32,000 in a partnership named Ablado Couture; engaged in an illegal nightclub operation in which he asserts that he invested $19,000; invested and lost $2,500 in a firm called B. A. U. International; in 1968 invested between $25,000 and $30,000 in the Roxanna Boutique in New York. This last claimed investment, however, was cast in doubt or at least clarified by the statement of Yolanda Alonzo, appellant’s mother-in-law. When contacted by Government agents, Mrs. Alonzo stated that she was the owner of the Roxanna Boutique and that appellant’s only investment was $2,000.

When questioned about his income, appellant gave two “sources” of funds. First, he claimed that many people brought money out of Cuba to him, from a hoard that he had built up as a Cuban official. He named only two such people and, since both of them had fled to other countries to avoid criminal prosecutions in the United States, his claim could not be verified. Second, appellant told the Government agents that he could call certain persons who would give money to him if he asked for it. He refused to identify these persons, but he told the Government agents that he would kill these people if the money was not forthcoming.

At the trial, appellant testified that his wife had no independent income during the years specified in the indictment, and he stated that his wife had never received any inheritances, gifts, or loans.

I.

To sustain a conviction under Section 7201, the Government must prove three elements: the existence of a tax deficiency, willfulness, and an affirmative act constituting an evasion or an attempted evasion of the tax. Sansone v. United States, 380 U.S. 343, 85 S.Ct. 1004, 13 L.Ed.2d 882 (1965).

The Government employed the “net worth method” to establish the tax deficiency here. The procedure for this method was approved in Holland v. United States, 348 U.S. 121, 125, 75 S.Ct. 127, 130, 99 L.Ed. 150 (1954):

In a typical net worth prosecution, the Government, having concluded that the taxpayer’s records are inadequate as a basis for determining income tax liability, attempts to establish an “opening net worth” or total net value of the taxpayer’s assets at the beginning of a given year. It then proves increases in the taxpayer’s net worth for each succeeding year during the period under examination and calculates the difference between the adjusted net values of the taxpayer’s assets at the beginning and end of each of the years involved. The taxpayer’s nondeductible expenditures, including living expenses, are added to these increases, and if the resulting figure for any year is substantially greater than the taxable income reported by the taxpayer for that year, the Government claims the excess represents unreported taxable income.

See also United States v. Massei, 355 U.S. 595, 78 S.Ct. 495, 2 L.Ed.2d 517 (1958); United States v. Newman, 468 F.2d 791 (5th Cir. 1972), cert. denied, 411 U.S. 905, 93 S.Ct. 1527, 36 L.Ed.2d 194 (1973); United States v. Penosi, 452 F.2d 217 (5th Cir. 1971), cert. denied, 405 U.S. 1065, 92 S.Ct. 1495, 31 L.Ed.2d 795 (1972).

The Government's computation of appellant’s taxable income for the years in question shows a net worth of $0 on December 31, 1968; $15,521.42 on December 31, 1969; and $64,898.33 on December 31, 1970. Thus, according to the Government’s figures, appellant's net worth increased by $15,521.42 during 1969 and by $49,376.91 during 1970. Combining these figures with proven non-deductible expenditures, the Government’s expert calculated a tax liability of $4,117.82 for 1969 and $19,135.93 for 1970.

1. Appellant contends that the zero net worth figure is not supported by the proof and is in fact contrary to his mode of living during 1968, the preprosecution year. We disagree. When appellant arrived in this country in 1962, he made a sworn statement that his assets consisted of only $925. In late 1962, he was living in a $60 per month room and his last month’s rent had been paid by a friend. Also in 1962, he borrowed $2,500 from a friend, a debt that remains unpaid. In 1963, he excused his burglary of a store by claiming that he needed funds to buy medicine. In 1967 or 1968, he was unable to pay the $1,000 medical expenses incurred with the birth of a child, so he was forced to seek financial assistance from his mother-in-law. In 1969, when he bought a $28,000 home he was unable to make the required down payment and was forced to resort to second and third mortgages, the latter for $600.

We recognize that the “net worth method” requires an accurate and definite showing of an opening net worth, for that figure is the keystone of the “net worth method” calculation process. Nevertheless, the Government’s evidence provides substantial and sufficient support for the jury to conclude that appellant’s zero net worth at the close of 1968 had been established with the requisite “reasonable certainty.” Holland v. United States, supra, 348 U.S. at 132, 75 S.Ct. 127.

2. Appellant contends that the Government was required to prove a likely source of income and to negate all possible sources of nontaxable income. This argument incorrectly states the law. As the Supreme Court made clear in United States v. Massei, supra, 355 U.S. at 595, 78 S.Ct. at 495: “In Holland we held that proof of a likely source was ‘sufficient’ to convict in a net worth case where the Government did not negative all the possible nontaxable sources of the alleged net worth increase.” Thus, the rule is that the Government in a “net worth method” case must either prove a likely source of income or negate all possible sources of nontaxable income. It need not do both.

In the case before us, the Government presented evidence of both of these alternatives. First, appellant’s statements that people who refused to send money to him when asked were killed established him as an extortionist and provided a likely source of taxable income. Second, appellant’s statement to the Government agents that he had no income except that from his extortions and from his failing businesses indicates no nontaxable source of income. Finally, we note the Supreme Court’s admonition in Holland, supra:

But where relevant leads are not forthcoming, the Government is not required to negate every possible source of nontaxable income, a matter peculiarly within the knowledge of the defendant.

348 U.S. at 138, 75 S.Ct. at 137. See also United States v. Newman, supra. The Government’s proof was sufficient on this point.

3. Appellant contends that the evidence does not support a finding of either willfulness or affirmative conduct by him. He claims that his mere failure to file a return does not constitute a sufficient willful, affirmative act to satisfy Section 7201.

What must the Government show to establish the necessary affirmative willfulness? In Spies v. United States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418 (1943), the Supreme Court spoke to this requirement:

By way of illustration, and not by way of limitation, we would think affirmative willful attempt may be inferred from conduct such as keeping a double set of books, making false entries or alterations, or false invoices or documents, destruction of books or records, concealment of assets or covering up sources of income, handling of one’s affairs to avoid making the records usual in transactions of the kind, and any conduct, the likely effect of which would be to mislead or to conceal.

317 U.S. 499, 63 S.Ct. 368. Other courts have held that willfulness may be inferred from such actions as holding assets in others’ names, Chinn v. United States, 228 F.2d 151 (4th Cir. 1955), making false explanations, United States v. Callanan, 450 F.2d 145 (4th Cir. 1971), and making inconsistent statements to Government agents, United States v. Jett, 352 F.2d 179 (6th Cir. 1965), cert. denied, 383 U.S. 935, 86 S.Ct. 1063, 15 L.Ed.2d 852 (1966). Moreover, this Court recently stated in United States v. Newman, supra, that “[i]t is clear that making false statements to Treasury agents for the purpose of concealing income constitutes a sufficient affirmative act to satisfy [Section] 7201.” 468 F.2d at 794.

In the case at bar, appellant held all of his assets in others’ names. He made false and inconsistent statements and explanations, such as his $25,000 alleged investment in the Roxanna Boutique which in reality was but a $2,000 investment, his various claimed occupations, and his claim of a cash hoard in a friend’s safety deposit box that was proven to be empty. He made false statements to Treasury agents, such as denying that he owned a boat. Moreover, appellant admitted that he was aware that he should have filed income tax returns. Hence, the jury could infer affirmative willfulness from these facts.

II.

Appellant contends that several errors during the trial mandate reversal for a new trial. We find no merit to these contentions, either singly or in combination.

1. Appellant argues that the trial court erred when it permitted the Government to introduce evidence of his financial condition in 1962, 1963, and 1967. He rests this objection on two bases: first, that the evidence was irrelevant, since the indictment charged only crimes allegedly committed in 1969 and 1970; and second, that the evidence, even if relevant, was too remote.

We find no error here. Appellant had claimed that his 1969 and 1970 expenditures were made out of a cash hoard brought to this country from his native Cuba. Thus, his standard of living and his statements were relevant to prove or to disprove its existence. The same issue surfaced in Holland v. United States, supra, where 1948 was the prosecution year and evidence of taxpayers’ behavior in the 1920’s and 1930’s was admitted to negate the existence of the hoard. Certainly, since Holland requires the Government to investigate all exculpatory leads and explanations offered by the defendant in a “net worth method” case and to show in court the results of that investigation, once appellant raised the defense of the hoard then the Government was required to rebut it. The evidence here objected to was neither irrelevant nor too remote.

2. Appellant contends that the District Court erred in permitting several law enforcement officers to testify about conversations that they had had with appellant. He argues that, even if relevant, that evidence should have been excluded because its prejudicial and inflammatory effect outweighed its relevancy.

A District Court has wide discretion in determining relevancy and materiality, and its ruling will not be disturbed absent a showing of an abuse of that discretion. United States v. Allison, 474 F.2d 286 (5th Cir. 1973); United States v. Garr, 461 F.2d 487 (5th Cir.), cert. denied, 409 U.S. 880, 93 S.Ct. 170, 34 L.Ed.2d 135 (1972); O’Brien v. United States, 411 F.2d 522 (5th Cir. 1969). Although the rule is clear that the prosecution must not employ evidence of prior crimes for the purpose of showing either the defendant’s criminal character or his propensity to commit crimes, e.g. United States v. Garber, 471 F.2d 212 (5th Cir. 1972), nevertheless evidence of prior criminal conduct is admissible if relevant for another purpose and if its probative worth is not outweighed by its prejudice. See, e.g., United States v. Payne, 467 F.2d 828 (5th Cir. 1972), cert. denied, 410 U.S. 912, 93 S.Ct. 975, 35 L.Ed.2d 275 (1973).

. Applying this balancing test, we conclude that the officials’ testimony did not unfairly prejudice appellant. Only one witness testified about a particular violation of the law, and that testimony established that appellant had justified a burglary by complaining that he needed money to buy medicine. The testimony was plainly relevant to rebut appellant’s claim of a cash hoard. Moreover, the jury was cautioned twice about the limited purpose of this testimony. The District Court acted well within its discretion in dealing with this testimony. Cf. United States v. Abshire, 471 F.2d 116, 118 (5th Cir. 1972) (“The inclusion of references to ‘jail’ or ‘prison’ does not disqualify essential, otherwise relevant, testimony”).

3. Appellant complains that he was denied a fair trial when he was not permitted to examine his Immigration and Naturalization Service file. At the trial, in response to appellant’s motion to examine the file, the Government admitted that the file might contain exculpatory material, searched the file briefly, and tendered the single exculpatory item producible under Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963). When appellant renewed his motion to examine the file, the District Court held an in camera inspection of the file and denied production, ruling that the file contained no material relevant to appellant’s defense. This ruling was correct. The file contained no statements of Government witnesses, and appellant had no right under either Rule 16, F.R.Crim.P., or the Jencks Act, 18 U.S.C.A. § 3500, to examine it.

4. Appellant contends that the District Court erred when it “cut off” his attempts to disprove the zero net worth figure established by the Government for the preprosecution year of 1968. He points to two such instances. First, when cross-examining the Government’s “net worth method” expert, appellant’s counsel was not permitted to inquire about the income figure developed for 1968. Second, appellant later attempted to introduce this evidence directly, but was again unsuccessful. These rulings were correct. Appellant’s income in 1968, as derived from his expenditures for that year, was irrelevant to disprove his net worth at the close of that year.

5. Finally, appellant contends that he was denied a fair trial because the jury took with it into the jury room an exhibit containing an inadmissible statement by appellant admitting that he had been previously arrested for carrying a concealed weapon. During the trial, counsel for both appellant and prosecution had agreed that that particular statement was irrelevant and should be excised before the exhibit was given to the jury. The trial court instructed both counsel to check the exhibits before the jury received them, but neither attorney noticed the failure to delete the objectionable statement. After about three hours, appellant’s counsel remembered that the statement had not been excised and notified the Court. After the exhibit had been removed from the jury room, with the statement not deleted, the Court examined the jury members and concluded that there was no reasonable possibility that any prejudice had inured to appellant.

This. error does not require a new trial. First, the trial court asked each juror if he or she remembered examining that particular exhibit. No one answered affirmatively. The Court then instructed the jury to disregard anything that they might have seen on the exhibit in question. We discern no error in either this procedure or the Court’s conclusion that the trial process had not been irretrievably tainted. Second, upon discovery of the error, appellant’s counsel did not move for a mistrial; he sought only the cautionary instruction that was given. Having made a conscious choice not to move for a mistrial, appellant may not now on appeal complain of the trial court’s failure to declare one. Ladakis v. United States, 283 F.2d 141 (10th Cir. 1960).

Even if this set of circumstances constituted error, we conclude that it was harmless beyond reasonable doubt. Appellant was entitled to a fair trial, not a perfect one, and in our judgment he received a fair trial. United States v. Harden, 469 F.2d 65 (5th Cir. 1972):

Rarely, if ever, is a hotly contested adversary proceeding conducted perfectly, but in our judgment appellant received a fair trial in this case.

469 F.2d at 66.

Affirmed.


author: PER CURIAM.

text:
    UNITED STATES of America, Appellee, v. Henry David BLOOM, Appellant.
    No. 72-1421.
    United States Court of Appeals, Eighth Circuit.
    Submitted Feb. 16, 1973.
    Decided July 25, 1973.
    Rehearing and Rehearing En Banc Denied Aug. 20, 1973.

      P. Terence Crebs, St. Louis, Mo., on brief for appellant.
    Daniel Bartlett, Jr., U. S. Atty., Terry I. Adelman and David W. Harlan, Asst. U. S. Attys., St. Louis, Mo., on brief for appellee.
    Before HEANEY and ROSS, Circuit Judges, and BENSON, Chief District Judge.
   PER CURIAM.

Henry David Bloom appeals from a conviction, based upon a jury verdict, of violating the provisions of 18 U.S.C. §§ 1708 and 2315. Count I, of the two count indictment, charged unlawful possession of a credit card stolen from the United States mails, knowing the same to be stolen, 18 U.S.C. § 1708. Count II charged unlawful receipt and concealment of certain falsely made, forged and counterfeited securities, to-wit: four counterfeit American Express Travelers checks, which were moving as, or were a part of, interstate commerce, 18 U.S.C. § 2315. We affirm the judgment of conviction with regard to both charges.

18 U.S.C. § 1708

Bloom first argues that the district court erred in denying his motion for judgment of acquittal because the Government improperly, relied upon an inference upon an inference in an attempt to establish that the credit card was stolen from the United States mail — an element that the Government must prove beyond a reasonable doubt.

Parenthetically, Bloom’s attempt to phrase his argument in terms of the “inference upon an inference” analysis seems to be an attempt to avoid the invocation of the sufficiency of the evidence rule. Clearly when faced with a sufficiency of the evidence question this Court is required to take the evidence in a light most favorable to the Government with all reasonable inferences which may be drawn therefrom. See e. g., Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942); United States v. Matzker, 473 F.2d 408, 410 (8th Cir. 1973). Scholars are uniformly critical of the inference upon an inference analysis. See e. g., 1 J. Wigmore, Wigmore on Evidence, § 41 at 434-435 (3 ed. 1940). Although this Court has applied such reasoning before, see e. g., Brady v. United States, 24 F.2d 399, 403-404 (8th Cir.), cert. denied, 278 U.S. 603, 49 S.Ct. 10, 73 L.Ed. 531 (1928), the better reasoning would seem to suggest that the proper inquiry is whether the inference to be drawn turns on a fact regardless of whether such fact has been arrived at by direct or circumstantial evidence. See e. g., Peterson v. United States, 411 F.2d 1074, 1077-1078 (8th Cir.), cert. denied, 396 U.S. 920, 90 S.Ct. 247, 24 L.Ed.2d 199 (1969). In any event, the evidence in this case was sufficient to allow the jury to find that the card had been stolen from the mails and the inferences from the facts proven were not so attenuated as to render the drawing of such inferences improper.

The evidence indicated that the credit card at issue was mailed on March 14, 1972. The name on the card was James P. Cullen, and it was placed in a mail bag with a “zip sort number” applicable to New York, New York. This evidence was derived from the testimony of the manager of accounts control for the American Express Company and was predicated upon records kept in the usual course of business. This testimony was highly probative evidence that the card had been mailed. See e. g., Whiteside v. United States, 346 F.2d 500, 504 (8th Cir. 1965), cert. denied, 384 U.S. 1023, 86 S.Ct. 1946, 16 L.Ed.2d 1025 (1966).

Mr. James P. Cullen testified that although he expected a renewed American Express Credit Card in March of 1972, at his office in New York, New York, he did not receive the card. Expected receipt of mail, but non-receipt, is evidence which the jury might properly consider as bearing on the question of whether the card had been stolen from the mails. See e. g., Whitehorn v. United States, 380 F.2d 909, 912 (8th Cir. 1967).

Joanne Warner testified that she' was employed on April 8, 1972, at a motel in the St. Louis area when Bloom represented himself as being James P. Cullen, registered for a room, and indicated that he would pay by credit card. The credit card was the one at issue here. Mr. Cullen testified that the card bore his name and a forgery of his signature. The shortness of time between the mailing and the false use of Mr. Cullen’s name on the credit card was competent evidence for the jury to consider in determining whether the card had been stolen from the mails. See e. g., United States v. Halprin, 450 F.2d 322 (9th Cir. 1971), cert. denied, 405 U.S. 994, 92 S.Ct. 1267, 31 L.Ed.2d 462 (1972).

As Chief Judge Matthes has recently said:

“While it may be theoretically possible that the cards were stolen from the plant before mailing or from the funeral home after receipt, the prosecution need not affirmatively disprove every conceivable alternative theory. United States v. Mooney, 417 F.2d 936, 938 (8th Cir. 1969), cert. denied, 397 U.S. 1029, 90 S.Ct. 1280, 25 L.Ed.2d 541 (1970); United States v. Zimple, 318 F.2d 676, 680 (7th Cir.), cert. denied, 375 U.S. 868, 84 S.Ct. 128, 11 L.Ed.2d 95 (1963). Where, as here, a letter containing a credit card was properly mailed and never received by the addressee but the card was found in quite improper and misusing hands it can be found that the card had been stolen from the mails in the absence of any other explanation being proffered. The jury need not grasp for improbable explanations, but may make common-sense inferences from the proven facts in both civil and criminal cases. See United States v. Hines, supra, 256 F.2d 561 at 562 (2 Cir.). Since here the uncontroverted evidence clearly shows the addressee never received the card, and shows the card turned up in improper hands, the only arguable point is the sufficiency of the evidence proving the card was mailed. We think that evidence was sufficient.” United States v. Matzker, supra, 473 F.2d at 411.

Second, Bloom objects to the following instruction:

“Possession of property recently stolen, if not satisfactorily explained, is a circumstance from which the jury may also reasonably draw the inference and find in the light of surrounding circumstances that the person in possession knew the property had been stolen.
If you find from the evidence beyond a reasonable doubt that the American Express Credit Card described in the indictment was stolen, and that, while recently stolen, the credit card was in the possession of the accused, the jury would be justified in drawing from those facts the inference that the credit card was possessed by the accused with knowledge that the property was stolen, unless possession by the accused of the recently stolen property is explained to the satisfaction of the jury by other facts and circumstances in evidence.”

Bloom argues that there was no direct evidence of mailing and no direct evidence of theft. From this premise Bloom argues that the above instruction improperly allowed the jury to infer that the card was mailed, was stolen, and was possessed with knowledge, simply on the basis that Bloom possessed the card. Thus, according to Bloom, the instruction allowed for an inference upon an inference upon an inference.

We note that the trial judge carefully pointed out the essential elements of the offense: stolen from the mails, unlawful possession, knowledge that the card was stolen. The court emphasized that the burden of proof rested at all times with the Government and stressed that Bloom was not required to testify.

The instruction, commonly known as a “possession of recently stolen property” instruction, see 1 E. Devitt & C. Blackmar, Federal Jury Practice and Instructions, § 13.12 at 287-288 (1970), has explicitly or implicitly been approved by this Court in varying contexts. See e. g., United States v. Sargis, 460 F.2d 1329, 1330 & n. 3 (8th Cir. 1972); United States v. Watson, 450 F.2d 290, 291 & n. 1 (8th Cir. 1971), cert. denied, 405 U.S. 993, 92 S.Ct. 1266, 31 L.Ed.2d 462 (1972); United States v. Brotherton, 427 F.2d 1286, 1288 (8th Cir. 1970); United States v. Jones, 418 F.2d 818, 820-821 & n. 2 (8th Cir. 1969); Anderson v. United States, 406 F.2d 529, 535 (8th Cir. 1969); Minor v. United States, 375 F.2d 170, 173 (8th Cir.), cert. denied, 389 U.S. 882, 88 S.Ct. 131, 19 L.Ed.2d 177 (1967); Lee v. United States, 363 F.2d 469, 474 (8th Cir.), cert. denied, 385 U.S. 947, 87 S.Ct. 323, 17 L.Ed.2d 227 (1966); Cloud v. United States, 361 F.2d 627, 629-630 (8th Cir. 1966).

The Supreme Court has recently considered such an instruction in a case very nearly identical to this one. In Barnes v. United States, supra, 412 U.S. 837, 93 S.Ct. 2357, 37 L.Ed.2d 380, the defendant was convicted on two counts of possessing United States Treasury checks stolen from the mails, knowing them to be stolen, two counts of forging the checks, and two counts of uttering the checks. The trial court instructed the jury that ordinarily it would be justified in inferring from unexplained possession of recently stolen mail that the defendant possessed the mail with knowledge that it was stolen. Id., at 840 n. 3, 93 S.Ct. 2357 n. 3. In upholding the instruction the Court detailed an “impressive historical basis” for the instruction, and said:

“The evidence established that petitioner possessed recently stolen Treasury checks payable to persons he did not know, and it provided no plausible explanation for such possesson consistent with innocence. On the basis of this evidence alone common sense and experience tells us that petitioner must have known or been aware of the high probability that the checks were stolen. . . . Such evidence was clearly sufficient to enable the jury to find beyond a reasonable doubt that petitioner knew the checks were stolen. Since the inference thus satisfies the reasonable doubt standard, the most stringent standard the Court has applied in judging permissive criminal law inferences, we conclude that it satisfies the requirements of due process.” Id. at 845, 93 S.Ct. at 2362.

As a consequence we must reject Bloom’s argument that giving the instruction in this ease was error.

18 U.S.C. § 2315

Bloom argues that the Government’s proof relating to the interstate commerce requirement was insufficient. This contention is without merit. The Government established that:

1. The genuine travelers cheeks were issued on February 15, 1972, in Montreal, Canada;
2. Bloom cashed a counterfeit travelers check in New Orleans, Louisiana on March 30, 1972, which was very similar to one found in his possession when he was arrested.
3. Bloom cashed two other counterfeit travelers checks on April 3 and 4 of 1972, in Minneapolis, Minnesota, • which were very similar to two of the checks found in his possession when arrested.
4. Bloom arrived in Missouri on April 8th, 1972, at about 12:30 p. m. from Atlanta, Georgia by airplane and was arrested some eight hours later while in possession of the credit card described in the indictment, the travelers checks charged in the indictment, and some 73 cents in change.

Objection is made to the evidence regarding the Minnesota and Louisiana transactions with the assertion that such evidence has no probative value as to whether the checks described in the indictment were “moving as” interstate commerce. We disagree. Viewing this evidence in the light most favorable to the Government, it tended to prove a common scheme to pass counterfeit travelers cheeks throughout the country thus inferentially tending to establish a link between the travelers checks charged in the indictment and interstate commerce.

The Fifth Circuit, in a somewhat analogous case involving the alleged sale of counterfeit rare pennies, held both competent and relevant testimony that the defendant had in his possession counterfeit nickels during the same year in the same city. The evidence was said to be so related in character, time and place to the transfer of the pennies that it tended to support the conclusion that both acts were part of a common scheme. The Court also held that the evidence was relevant to the issue of intent and knowledge. United States v. Hatcher, 423 F.2d 1086, 1090 (5th Cir.), cert. denied, 400 U.S. 848, 91 S.Ct. 35, 27 L.Ed.2d 86 (1970). Consider also United States v. Harrison, 461 F.2d 1127, 1132 (5th Cir.), cert. denied, 409 U.S. 884, 93 S.Ct. 174, 34 L.Ed.2d 140 (1972). In Harrison the Court held admissible evidence consisting of testimony of two persons who had cashed forged money orders for the defendant, other than the forged money orders charged in the indictment. The Court said, “The Government introduced the evidence to establish a pattern or system of conduct by the defendant as well as to prove the intent element of the offense charged.” Id. at 1132.

Hatcher and Harrison indicate that evidence of similar acts may be presented when they are so blended with the act at issue that proof of the related act explains and tends logically to prove an element of the crime charged. See generally United States v. Cochran, 475 F.2d 1080, 1082 (8th Cir. 1973); United States v. Lewis, 423 F.2d 457, 459 (8th Cir.), cert. denied, 400 U.S. 905, 91 S.Ct. 146, 27 L.Ed.2d 142 (1970); Tucker v. United States, 375 F.2d 363, 371 n. 9 (8th Cir.), cert. denied, 389 U.S. 888, 88 S.Ct. 128, 19 L.Ed.2d 189 (1967). To say that there was no proof that the travelers checks charged in the indictment were moving as interstate commerce, in the face of evidence demonstrating a nationwide check passing scheme, conducted by the defendant and closely related in time and character, disregards reality.

Bloom also argues that the trial judge instructed the jury that they could not consider the Louisiana and Minnesota transactions unless they first found from other evidence that Bloom did the acts charged in the indictment. As a consequence Bloom argues that the evidence was insufficient to support the interstate commerce proof requirement because the jury first had to find such an interstate commerce link without considering the Louisiana and Minnesota acts. But, as Bloom indicates in his brief, the instruction referred to related to intent and the use of acts of like nature to prove intent. Indeed a pattern instruction very nearly identical to the one used at trial is entitled “Evidence of Intent — ■ Earlier Act of Like Nature”. 1 E. Devitt and C. Blackmar, Federal Jury Practice and Instructions, § 13.08 at 281 (1970). The Assistant United States Attorney argued that the Minnesota and Louisiana transactions were introduced for two purposes: to prove a common scheme and to prove intent. Clearly such evidence may be introduced for those two purposes. See e. g., United States v. Harrison, supra, 461 F.2d at 1132; United States v. Hatcher, supra, 423 F.2d at 1090. As a consequence we do not believe that the intent instruction was meant to preclude the jury from considering the Louisiana and Minnesota transactions as direct evidence of interstate commerce involvement.

For the reasons hereinbefore expressed the judgment of conviction is affirmed.

      . The recent opinion of the Supreme Court in Barnes v. United States, 412 U.S. 837, 93 S.Ct, 2357, 37 L.Ed.24 380 (1973), makes clear that knowledge that the material was stolen from the mails is not an element of the crime.