author: CUMMINGS, Circuit Judge. KILEY, Circuit Judge

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, and Wisconsin Electric Power Company, Intervenor, v. LOCAL 2150, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, Respondent.
    No. 71-1864.
    United States Court of Appeals, Seventh Circuit.
    Argued Nov. 29, 1972.
    Decided July 13, 1973.
    Rehearing En Banc Denied Aug. 6, 1973.

      Marcel Mallet-Prevost, Asst. Gen. Counsel, Daniel M. Katz, Atty., N. L. R. B., Washington, D. C., for petitioner.
    Robert H. Gorske, Milwaukee, Wis.. for intervenor.
    Alan M. Levy, Milwaukee, Wis., for respondent.
    Before KILEY and CUMMINGS, Circuit Judges, and ESCHBACH,
      District Judge.

      . District Judge Jesse E. Eschbach of the Northern District of Indiana is sitting by designation.

      . Local 2150, International Brotherhood of Electrical Workers, AFL-CIO.

   CUMMINGS, Circuit Judge.

The National Labor Relations Board found that the Union violated Section 8(b)(1)(B) of the National Labor Relations'Act by disciplining certain company supervisors for performing bargaining unit work during the Union’s economic strike. This case arises on the Board’s application for enforcement of its order issued pursuant to that finding. The Board’s decision and order are reported at 192 NLRB No. 16.

Since the 1930’s the Company and the Union have enjoyed a collective bargaining relationship. When their then current two-year contract expired on June 16, 1969, the Union initiated an economic strike which continued until July 1, 1969. During the strike all the Company’s supervisors in the categories of those disciplined save one, who was hospitalized at the time, reported for work. The record contains no suggestion that the Company gave the supervisors an option to choose not to cross the picket line. Following the strike the Union preferred charges against 60 supervisors (including the hospitalized one) for doing struck work. All but two of these were holders of union withdrawal cards. A withdrawal card entitles the holder to a very qualified union membership as explained below. After a trial at which none of the charged supervisors appeared, the Union found all guilty except for the hospitalized supervisor and one of the two who did not possess a withdrawal card. The other supervisor not retaining a withdrawal card had his discipline nullified upon appeal to the International Union. The Union imposed on each guilty supervisor a $100 fine and a year’s suspension. This sentence was to be suspended on condition that the supervisors were not found guilty of a similar offense for a period of two years, which period extended beyond the expiration of the new collective bargaining agreement.

None of the supervisors here involved were members of the bargaining unit, and the Union did not represent them in bargaining with the Company. Nevertheless, the collective bargaining agreement in force prior to the strike provided that upon an employee’s promotion to a supervisory position the Union would give him a withdrawal card if he so requested. Union withdrawal cards are either of the honorary or participating type. Some supervisors involved here held the former; others the latter. Both types carry an exemption for the holder from the dues obligation to the Union and entitle the holder to regain regular membership without fulfilling normal reinstatement requirements. In addition, the holder of the participating withdrawal card is entitled to participate in the pension and insurance benefits of the Union’s International Affiliate upon the payment of certain fees. Withdrawal card-holders are denied all other benefits of membership including even the right to attend union meetings, but are subject to the Union’s constitution.

The Board agreed with the Trial Examiner that all 60 of the concededly statutory supervisors possessed the authority to adjust grievances and were representatives of the Employer within the meaning of Section 8(b)(1)(B). The Union does not contest this finding. With Member Fanning dissenting, a three-member majority of the Board panel concluded that the Union violated Section 8(b)(1)(B) when it disciplined the supervisors for crossing the picket line and performing struck work. Relying on the general principles of law defining the thrust of Section 8(b)(1)(B) as enunciated in Lithographers Locals 15-P and 272 (The Toledo Blade Co., Inc.), 175 NLRB 1072, 1080, enforced, 437 F.2d 55 (6th Cir. 1971), which principles the Board found long settled in its decisions and the courts’, the Board reasoned : “Of course, our decision is not meant to imply that a union is completely precluded from disciplining supervisor-union members. It only means that when the underlying dispute is between the employer and the union rather than between the union and the supervisor, then the union is precluded in taking disciplinary action by Section 8(b)(1)(B). The intent is to prevent the supervisor from being placed in a position where he must decide either to support his employer and thereby risk internal union discipline or support the union and thereby jeopardize his position with the employer. To place the supervisor in such a position casts doubt both upon his loyalty to his employer and upon his effectiveness as the employer’s collective-bargaining and grievance adjustment representative. The purpose of Section 8(b)(1)(B) is to assure to the employer that its selected collective-bargaining repre-
“Here the supervisors, by doing struck work, as directed, by the Employer, were furthering the interests of the Employer in a dispute not between the Union and the supervisor-union members but between the Employer and the Union. During the strike of the Union, the Employer clearly considered its supervisors among those it could depend on during this period. The Union’s fining of the supervisors who were acting in the Employer’s interest in performing the struck work severely jeopardized the relationship between the Employer and its supervisors. Thus, the fines, if found to be lawful, would now permit the Union to drive a wedge between a supervisor and the Employer, thus interfering with the performance of the duties the Employer had a right to expect the supervisor to perform. The Employer could no longer count on the complete and undivided loyalty of those it had selected to act as its collective-bargaining agents or to act for it in adjusting grievances. Moreover, such fines clearly interfere with the Employer’s control over its own representatives. sentatives will be completely faithful to its desires. This cannot be achieved if the union has an effective method, union disciplinary action, by which it can pressure such representative to deviate from the interests of the employer. Accordingly, we find that Section 8(b)(1)(B) has been violated.”

Section 8(b)(1)(B) of the Labor-Management Relations Act (29 U.S.C. § 158(b) (1) (B)) provides: “It shall be an unfair labor practice for a labor organization or its agents * * * to restrain or coerce * * * an employer in the selection of his representatives for the purposes of collective bargaining or the adjustment of grievances.” The Union raises three principal arguments against the Board’s decision that discipline of supervisor-members for performing struck work for the Employer was prohibited by this Section. First, the Union urges that the Section should be interpreted literally so as only to prohibit unions from “restraining or coercing employers — not supervisors — in the selection of representatives for bargaining or grievance adjustment process.” Second, it argues that even if Section 8(b)(1)(B) does prohibit union restraint or coercion against employers through the imposition of discipline on supervisor-members (who are concededly representatives of the employer) for their exercise of management responsibilities, it does not reach disciplinary action taken against these persons for their performance of struck work. Third, it contends that the Supreme Court’s decision in National Labor Relations Board v. Allis-Chalmers Mfg. Co., 388 U.S. 175, 87 S.Ct. 2001, 18 L.Ed.2d 1123, demonstrates that the Union’s exertion of internal discipline against any members for crossing its picket lines is not restraint or coercion within the meaning of Section 8(b)(1)(B).

Each of these arguments was raised and rejected in International Brotherhood of Electrical Workers v. National Labor Relations Board, 487 F.2d 1113 (D.C. Cir. 1972). In that case also, the union disciplined supervisors who performed rank-and-file work during an economic strike. We are persuaded by much of Judge MacKinnon’s reasoning and consider it largely dispositive of the arguments the Union makes on the facts of this case. Although we shall not traverse in detail the same ground he has so thoroughly covered, because the panel in the District of Columbia Circuit was so sharply divided, we shall briefly respond to the Union’s arguments and address what we believe to be the critical points of difference between the majority there and Judge Wright in dissent.

The Union’s literal interpretation argument was squarely rejected by the Board in San Franciseo-Oakland Mailers No. 18, 172 NLRB 2173 (1968). In that case the union brought charges against certain supervisor-members for alleged contract violations including the use of an assistant foreman to repair a machine and the permitting of non-union members to do bargaining unit work, and the union fined the supervisors for contempt when they failed to appear before the executive committee. In finding a violation of Section 8(b)(1)(B), the Board stated:

“ * * * Respondent’s actions * * * were designed to change the Charging Party’s representatives from persons representing the viewpoint of management to persons responsive or subservient to Respondent’s will. In enacting Section 8(b) (1) (B) Congress sought to prevent the very evil involved herein — union interference with an employer’s control over its own representatives. [Footnote omitted.] That Respondent may have sought the substitution of attitudes rather than persons, and may have exerted its pressure upon the Charging Party by indirect rather than direct means, cannot alter the ultimate fact that pressure was exerted here for the purpose of interfering with the Charging Party’s control over its representatives. Realistically, the Employer would have to replace its foremen or face de facto nonrepresentation by them.” 172 NLRB at 2173.

Without exception the. courts which have been faced with the question have interpreted Section 8(b) (1) (B) not merely to prohibit restraint or coercion directly aimed at an employer in his actual selection of his representatives but to forbid pressure against an employer accomplished indirectly by way of disciplinary action leveled against those whom the employer had selected to represent him for their conduct in performing their collective-bargaining or grievance-adjustment functions, which included contract interpretation. We agree that an employer’s right to select those representatives whom he chooses would be worthless if the Union could accomplish the functional equivalent of restraining or coercing him in that selection by applying pressure upon those whom the employer has already selected so as to compromise their loyalty. But, like the District of Columbia Circuit, we do not believe Section 8(b)(1)(B) can properly be confined to apply only to union discipline of an employer representative that is based upon his actions on behalf of management regarding a specific disagreement with the Union over the negotiation of a contract term or the proper interpretation of the collective bargaining agreement or the adjustment of a specific grievance. International Brotherhood of Electrical Workers v. National Labor Relations Board, supra, 487 F.2d at 1121.

Because they are supervisors, an employer has a right to expect that whether they are union members or not, they will discharge their properly supervisory or managerial responsibilities in the best interests of the company. When the employer has a dispute with the union, and the union disciplines supervisors for performing their supervisory responsibilities on the employer’s behalf in that dispute, that discipline “drive [s] a wedge between [the] supervisor^] and the Employer” and may reasonably be expected to undermine the loyalty'and effectiveness of these supervisors when called upon to act for the company in their representative capacities. In this way the union’s disei-pline effects a “substitution of attitudes rather than of persons” and accomplishes the functional equivalent of forcing the employer to select representatives responsive to the union’s interests.

In International Brotherhood of Electrical Workers v. National Labor Relations Board, supra, the dissent did not disagree that Section 8(b)(1)(B) would reach discipline imposed on a supervisor-representative for his exercise of a properly managerial responsibility. Id., 487 F.2d at 1135-1137. However, in opposition to the panel majority, Judge Wright felt that the “performance of ordinary rank-and-file work * * * could not possibly be considered to fall within their [the supervisors’] ordinary managerial responsibilities.” Id., 487 F.2d at 1135, 1136. We disagree and align ourselves more closely with the panel majority on this point.

We cannot accept the notion that supervisors who perform bargaining-unit work during a strike, at least in the absence of an express option to refuse to cross the picket line, are not exercising a properly supervisory responsibility because “under normal circumstances” that work is the responsibility of rank- and-file employees. Id., 487 F.2d at 1137. What a supervisor’s proper functions are when the full complement of employees is at work under the regime of a collective bargaining agreement then in force is not determinative of supervisory responsibility during a strike. Otherwise, with no employees to supervise, many supervisors would simply have no managerial responsibilities during a strike. But it can hardly be doubted that it is an essential part of the economic warfare involved in a strike for management to muster its resources in an effort to withstand the union’s economic coercion. Equally undisputable, it would seem, is that an employer is not limited to combatting a strike only with his pocketbook while the business lies idle. Rather, management has “traditionally” (id.) relied upon supervisors, where practicable, to pitch in and perform rank-and-file work in an attempt both to strengthen its bargaining position and to preserve the enterprise from collapse during an adverse economic repercussion following a strike. Insofar as the supervisors work to give the employer added economic leverage, they are acting as members of the management team are expected to act when the employer and union are at loggerheads in their most fundamental of disputes. Indeed, in a real sense they are representing the employer for the purpose of collective bargaining, for “the use of economic pressure by the parties to a labor dispute * * * is part and parcel of the process of collective bargaining.” National Labor Relations Board v. Insurance Agents International Union, 361 U.S. 477, 495, 80 S.Ct. 419, 430, 4 L.Ed.2d 454. Insofar as their effort helps to keep the business going in order to fulfill commitments to customers and to preserve the company’s clientele and good name from deterioration, it lies at the very core of the entrepreneurial function. Assuredly here where the Company is an electric power company, holding a monopoly, its managment has an especial obligation to continue to provide an indispensable public service during a time of strike. Accordingly, we think supervisors who act in their employer’s interests by performing rank-and-file work during a strike are indeed performing a properly managerial function.

Any suggestion that National Labor Relations Board v. Allis-Chalmers Mfg. Co., 388 U.S. 175, 87 S.Ct. 2001, 18 L. Ed.2d 1123, has controlling significance for this case because the words “restrain or coerce” are common to Sections 8(b)(1)(A) and 8(b)(1)(B) and because in both cases the Unions imposed fines for the performance of struck work (International Brotherhood of Electrical Workers v. National Labor Relations Board, supra, 487 F.2d at 1138-1141) must be rejected. Allis-Chalmers only considered the question whether union fines against employee-members for strikebreaking constituted an unfair labor practice under Section 8(b) (1) (A) as a restraint or coercion of those employees in the exercise of their Section 7 right to refrain from concerted activities. Id. at 176, 87 S.Ct. 2001. Here the question is whether the imposition of discipline against supervisor-members for performing struck work is an unfair labor practice under Section 8(b)(1)(B) as a restraint or coercion of the employer in his right to select and retain loyal representatives. Since Sections 8(b)(1)(A) and 8(b)(1)(B) protect different interests, it simply does not follow that discipline which does not amount to restraint or coercion of the employee under the former cannot constitute restraint or coercion of the employer under the latter. The analysis of the employee-member’s relationship with his union on which Allis-Chalmers is predicated is not apposite or adequate when the employer claims that the union’s discipline of its members interfered with his protected relationship with his representatives.

In Allis-Chalmers the Supreme Court concluded that Congress did not intend in enacting Section 8(b)(1)(A) to regulate internal union affairs to the extent of stripping unions of the power to fine members for strikebreaking (Id. at 183, 87 S.Ct. 2001), but that says nothing about the proper reach of Section 8(b)(1)(B), by which Congress evidenced a concern to deprive the unions of power to turn the employer’s representatives against him. Recently the Supreme Court has explained that the basis of its holding in Allis-Chalmers was that Section 8(b)(1)(A) was “not intended by Congress to apply to the imposition by the union of fines not affecting the employer-employee relationship and not otherwise prohibited by the Act.” National Labor Relations Board v. Boeing Co., 412 U.S. 67, 73, 93 S.Ct. 1952, 1956, 36 L.Ed.2d 752. Where, as here, Congress granted express protection to the employer-representative relationship it cannot be said that Congress intended to leave the union as free to discipline its members as it did in enacting Section 8(b)(1) (A).

Accordingly, Allis-Chalmers does not control this case. To be sure the Union’s interest in enforcing a rule against its members crossing picket lines must be acknowledged, but in our view its enforcement against supervisor-members who are employer representatives “impairs [a] policy Congress has imbedded in the labor laws.” National Labor Relations Board v. Textile Workers, 409 U.S. 213, 216, 93 S.Ct. 385, 387, 34 L. Ed.2d 422; Scofield v. National Labor Relations Board, 394 U.S. 423, 430, 89 S.Ct. 1154, 22 L.Ed.2d 385.

The Union also argues that since the Company allowed its supervisors to retain union membership, it thus voluntarily agreed that the Union could exert its discipline over these members. Undoubtedly by permitting employees promoted to supervisory positions to retain withdrawal cards, the Company must be taken to have acquiesced in some union control over those supervisors who requested the cards. But to agree that the Company acceded to some union control hardly means that the Company waived its right to the protection of Seetion 8(b)(1)(B). Even where the employers have agreed to union security provisions requiring supervisors to be full union members, and they were included in the bargaining unit, no waiver of the protection of Section 8(b)(1)(B) has been found. International Brotherhood of Electrical Workers v. National Labor Relations Board, supra,, 487 F.2d at 1122; Lithographers Locals 15-P and 272 (The Toledo Blade Co., Inc.), 175 NLRB 1072, 1080, enforced, 437 F.2d 55 (6th Cir. 1971); see Meat Cutters Local 81 v. National Labor Relations Board, 458 F.2d 794, 796 n.3 (D.C. Cir. 1972). Whether or not that view is correct, surely no waiver should be found here where the supervisors were not in the bargaining unit and retained only a vestigial membership status entitling them to nothing more than a waiver of reinstatement requirements and, in the case of the participating withdrawal card-holder, certain pension and insurance benefits. Indeed, the logical upshot of the Union’s argument is that the Company acquiesced in any discipline the Union might impose on a supervisor for practically anything since the Union’s constitution, to which the withdrawal card-holders are subject, makes it an offense to work “in the interest of any organization or cause which is detrimental to, or opposed to, the I.B.E.W.” Furthermore, the withdrawal card, and in turn the Company’s agreement that promoted supervisors could request and retain the cards, hardly clear by their own terms, must be construed as ambulatory with respect to changes in the Union’s constitution. If the Company waived the protection to which it is entitled under Section 8(b)(1)(B), that waiver must be found in clear and unmistakable terms. See National Labor Relations Board v. Wisconsin Aluminum Foundry Co., 440 F.2d 393, 399-400 (7th Cir. 1971). Since we cannot find such an expression of waiver, the measure of union control over supervisor-members in which the Company acquiesced is only that which is without the reach of Section 8(b)(1)(B).

Accordingly, the Board’s order will be enforced.

KILEY, Circuit Judge

(dissenting).

I respectfully dissent, for the reasons so ably and persuasively expressed by Judge Skelly Wright in writing the opinion for the District of Columbia Circuit On Rehearing En Banc in International Brotherhood of Electrical Workers, etc., et al. v. National Labor Relations Board, 487 F.2d 1143, decided June 29, 1973.

      . Although at oral argument before the Board company counsel asserted that the Company had instructed the supervisors to report for work and this is uncontroverted, as the Board noted, that is not explicit in the record. However, unless the Company expressly gave the supervisors an option as to whether to cross the picket lines or not, the Board’s case would not be vulnerable. It is such an option which could present a problem in that if the Company left to the supervisors’ discretion the decision whether to align themselves with management or with the Union, arguably it might be difficult for the Company legitimately to complain about the Union’s compromising the loyalty of these representatives. But see International Brotherhood of Electrical Workers v. National Labor Relations Board, 487 F.2d 1113, 1125 (D.C. Cir. 1972). (It has also been suggested that whether the supervisors were performing a properly supervisory function might be more debatable. See id., 487 F.2d at 1137.) But this record contains not the slightest hint of the Company’s giving such an option and, even if there were no direct order, is only reasonably consistent with the Company’s expectation that the supervisors would report for work.

      . The complaint originally involved 61 persons, but the 61st, a safety specialist, was found to be not clearly a statutory supervisor and not to be an employer representative within the coverage of Section 8(b) (1) (B).

      . See Section 2(11) of the Act (29 U.S.C. § 152(11)) for the statutory definition of “supervisor.”

      . Thus the Board agreed with the Trial Examiner’s decision as regards those supervisors whose disciplines remained in effect but, contrary to the Trial Examiner, concluded that as regards the two supervisors against whom charges were eventually dropped and the third whose discipline was revoked on appeal, the Union had also violated Section 8(b) (1)(B). It reasoned “[t]he fact that the Union brought charges of misconduct against these supervisors is sufficient to warrant the finding of a violation.”
      With regard to the Union’s merely bringing charges against the one supervis- or who did not possess a withdrawal card and in fining the other non-possessor of a withdrawal card, whose discipline was revoked on appeal, the restraint or coercion of the employer is not so clear. Since these supervisors had no cards, since the Union’s actions against them were eoncededly the result of error, and since the Union professes no jurisdiction over them, it is difficult to see how the Company can reasonably be doubtful of their loyalty or how they might in fact be deterred from vigorously representing management’s interests in their representative capacities. The situation may be different with respect to the hospitalized supervisor because he did retain a withdrawal card, and the Union’s actions in preferring charges against him served notice on him that had he actually performed his managerial responsibility, the Union would surely have fined him. His loyalty and effectiveness in the future might be undermined. Nevertheless, the Union has not objected to the Board’s treating the aborted discipline of any of these three supervisors on the same footing as the discipline of the others. Therefore, we do not actually reach the point, but do put the Board on notice that when the issue is live, the Board’s conclusion as to restraint or coercion in similar circumstances will be closely scrutinized.

      . This opinion was prepared before the release of the District of Columbia’s en banc opinion in International Brotherhood of Electrical Workers v. National Labor Relations Board, 487 F.2d 1143. In its en bamo opinion the District of Columbia Circuit also disposed of National Labor Relations Board v. Florida Power & Light Co., wherein some of the supervisors disciplined for performing struck work wex'e not included in the bargaining unit, were not represented by the union in bargaining, were only affiliated with the union by virtue of withdrawal cards, and wexe not shown to have been accorded an express option by the employer as to working during the strike. At the very least, insofar as it reaches an opposite conclusion on these facts, we disagree with the majority opinion therein and are in accord with Judge MacKinnon’s dissenting opinion representing the views of himself and Judges Tamm, Robb, and Wilkey. The referenees herein to the International Brotherhood of Electrical Workers opinion refer to the prior panel opinion, 487 F. 2d 1113 (D.C.Cir. 1972).

      . The facts in Intei-national Brotherhood of Electrical Workers v. National Labor Relations Board, supra, are different in several respects from those in .this case, and, of course, we intimate no view as to whether the differences call for a different result. In that case, the disciplined supervisors wexe full union members, were x-equix’ed to be union members under the terms of the union security provision of the collective bargaining agreement, and were members of the bargaining unit. Also, at the inception of the strike, the company expressly told the supervisors that the decision whether or not to respect the picket lines was up to the discretion of each individual foreman.

      . Dallas Mailers Local 143 v. National Labor Relations Board, 144 U.S.App.D.C. 254, 445 F.2d 730 (1971) ; National Labor Relations Board v. Lithographers Local Nos. 15-P and 272, 437 F.2d 55 (6th Cir. 1971) ; National Labor Relations Board v. Sheet Metal Workers Local 49, 430 F.2d 1348 (10th Cir. 1970).

      . See Meat Cutters Local 81 v. National Labor Relations Board, 458 F.2d 794 (D.C.Cir. 1972) (discipline of supervisor-grievance adjustment representative for carrying out management’s order to implement new meat procurement policy) ; National Labor Relations Board v. New Mexico Dist. Coun. of Carpenters, 454 F.2d 1116 (10th Cir. 1972) (discipline of supervisor-representative for working for an employer who was not making payments into the union’s health and welfare fund and who had no working agreement with the union; discipline of supervisor-grievance adjustment representative for co-signing letter urging employees to vote against the union in an upcoming election).

      . As the Sixth Circuit stated in a case where supervisors were fined for performing struck work .in alleged derogation of the collective bargaining agreement, “[t]his conduct of the union would further operate to make the employees reluctant in the future to take a position adverse to the union, and their usefulness to their employer would thereby be impaired.” National Labor Relations Board v. Lithographers Locals Nos. 15-P and 272, 437 F.2d 55, 57 (6th Cir. 1971). And in Meat Cutters Local 81 v. National Labor Relations Board, 458 F.2d 794, 799 (D.C.Cir. 1972), where the union disciplined a supervisor for implementing the employer’s new meat procurement policy, the Court stated, “ * * * there would have been serious doubt thereafter as to whether he could represent the Company in a bona fide manner against the Union in other matters where their interests were adverse.”

      . Section 8(b)(1)(A) (29 U.S.C. § 158 (b) (1) (A)) provides:
      “It shall be an unfair labor practice for a labor organization or its agents * * * to restrain or coerce * * * employees in the exercise of the rights guaranteed in section [7] : Provided, That this paragraph shall not impair the right of a labor organization to prescribe its own rules with respect to the acquisition or retention of membership therein * * *.”
      Section 7 (29 U.S.C. § 157) provides in pertinent part:
      “Employees shall have the right to * * * engage in * * * concerted activities * * *, and shall also have the right to refrain from any or all of such activities * * *

      . International Brotherhood of Electrical Workers Constitution, Article XXVII, Section 1(10).


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    In the Matter of N. PFEFFER JEWELERS, INC., Debtor-Appellee, v. Arthur I. WINARD, Attorney-Appellant.
    No. 71-2801.
    United States Court of Appeals, Ninth Circuit.
    Oct. 26, 1973.

      Arthur I. Winard in pro. per.
    Clague A. Van Slyke (appeared), William A. Scanland, Bilby, Thompson, Shoenhair & Warnock, Charles D. McCarty, Richard H. Goetz, Donald Pitt, Marvin Karp, William C. Scott, Tucson, Ariz., Jos. H. Frier, Goldman, Frier & Altesman, New York City, for debtor-ap-pellee.
    Before MERRILL and GOODWIN, Circuit Judges, and PLUMMER, District Judge.

       Honorable Raymond E. Plummer, Chief United States District Judge for the District of Alaska, sitting by designation.

   OPINION

PER CURIAM:

By these proceedings appellant seeks compensation for his legal services in preserving a debtor’s estate preparatory to an Arizona bankruptcy. His petition for allowance of fees was opposed by the trustee who filed formal written objections to which appellant responded. The matter was set for hearing at which appellant did not appear. Following hearing the referee filed findings of fact and conclusions of law followed by an order fixing compensation at a figure which amounted to a drastic reduction from that sought by appellant. Appellant then petitioned for review by the District Court. His petition, however, was filed 11 days after entry of the order — one day late under the requirements of § 39 (c) of the Bankruptcy Act, 11 U.S.C. § 67(c). On this ground the petition was dismissed by the referee and that dismissal was upheld by the District Court. Appellant contends that the order was not one controlled by § 39(c), but was an administrative order subject to modification at any time by the referee.

We agree with the referee and the District Court that § 39(c) applied to the order of the referee fixing compensation for appellant’s services. This was not an administrative order entered without opposition after informal proceedings such as was before this court in Flaxman, Coleman, Gorman & Rosoff v. Cheek, 355 F.2d 672 (9th Cir.), cert, denied, 384 U.S. 954, 86 S.Ct. 1574, 16 L.Ed.2d 549 (1966). Here, as we have noted, the relief sought by appellant was formally contested by the trustee. Appellant’s motion was made the subject of a noticed hearing followed by written findings of fact and conclusions of law. Under § 39(c), ten days after entry of the order it became final and was no longer subject to review by the District Court. Appellant’s petition was then subject to dismissal.

Judgment affirmed.

      . “A person aggrieved by an order of a referee may, within ten days after the entry thereof or within such extended time as the court upon petition filed within such ten-day period may for cause shown allow, file with the referee a petition for review of such order by a judge and serve a copy of such petition upon the adverse parties who were represented at the hearing. Such petition shall set forth the order complained of and the alleged errors in respect thereto. Unless the person aggrieved shall petition for review of such order within such ten-day period, or any extension thereof, the order of the referee shall become final. Upon application of any party in interest, the execution or enforcement of the order’ complained of may be suspended by the court upon such terms as will protect the rights of all parties in interest.”


author: JOHN R. BROWN, Chief Judge:

text:
    Claude FLIPPO, Plain tiff-Appellant, v. TENNESSEE VALLEY AUTHORITY, Defendant-Appellee.
    No. 73-1892
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Oct. 18, 1973.
    Rehearing and Rehearing En Banc Denied Nov. 28, 1973.
    Robert E. Jones, III, C. A. Poellnitz, Sam H. Robison, Florence, Ala., for plaintiff-appellant.
    Robert H. Marquis, Gen. Counsel, Herbert S. Sanger, Jr., Associate Gen. Counsel, Beauchamp E. Brogan, Asst. Gen. Counsel, Charles A. Wagner, III, Atty., J.V.A., Knoxville, Tenn., for defendant-appellee.
    Before JOHN R. BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges.

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

   JOHN R. BROWN, Chief Judge:

Once again in a case where on Blue Cat readings the employee made himself out an ambiguous-amphibious seaman, Mike Hooks, Inc. v. Pena, 5 Cir., 1963, 313 F.2d 696, 1963 A.M.C. 355, against the employer, TVA, we confess a certain bewilderment as to how the plain language of the 1949 amendment to FECA cuts off substantial rights recognized under the maritime law vis-a-vis a seaman employee and a governmental agency having a very relaxed sovereign immunity, Gulfspray I: Gulf Oil Corp. v. Panama Canal Co., 5 Cir., 1969, 407 F.2d 24, 1969 A.M.C. 1; Gulfspray III: Gulf Oil Corp. v. Panama Canal Co., 5 Cir., 1973, 481 F.2d 561, 1973 A.M.C. 1582 [1973]. Nevertheless, assuming the broadest congressional waiver of sovereign immunity by TYA, we find no meaningful distinction between TVA and other governmental agencies as to whom we have held that the claim of such a real or pseudo seaman strands on 5 U.S.C.A. § 8116(c). Johnson v. United States, 5 Cir., 1968, 402 F.2d 778, cert, denied, 1969, 394 U.S. 930, 89 S.Ct. 1195, 22 L.Ed.2d 459; Petition of United States, E.D.La., 1962, 212 F.Supp. 214, aff’d sub nom. Jarvis v. United States, 5 Cir., 1962, 342 F.2d 799, cert.. denied, 1965, 382 U.S. 831, 86 S.Ct. 70, 15 L.Ed.2d 75. Nothing new has been added, nothing new need be stated. So nothing new need be ordained.

Affirmed.

      . Barber v. “Blue Cat”, 5 Cir., 1967, 372 F. 2d 626, 1969 A.M.C. 211.

      . 5 U.S.C.A. § 8116(c) :
      “The liability of the United States or an instrumentality thereof under this sub-chapter or any extension thereof with respect to the injury or death of an employee is exclusive and instead of all other liability of the United States or the instrumentality to the employee, his legal representative, spouse, dependents, next of kin, and any other person otherwise entitled to recover damages from the United States or the instrumentality because of the injury or death in a direct judicial proceeding, in a civil action, or in admiralty, or by an administrative or judicial proceeding under a workmen’s compensation statute or under a Federal tort liability statute. However, this subsection does not apply to a master or a member of a crew of a vessel." (Emphasis added).


text:
    M. V. McDonald, Plaintiff-Appellant, v. Oivind LOKENTZEN et al., Defendants-Appellees.
    No. 73-2438
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit..
    Nov. 6, 1973.
    Atreus M. Clay, R. M. Sharpe, Jr., Houston, Tex., for plaintiff-appellant.
    Dixie Smith, H. Lee Lewis, Jr., Houston, Tex., for defendants-appellees.
    Before GEWIN, COLEMAN and MORGAN, Circuit Judges.

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

   PER CURIAM:

Plaintiff-appellant sued in admiralty for injuries sustained while working as a longshoreman for the Southern Steve-doring Co., Inc. He was injured while helping to unload cargo from the SS No-pal Luna while the ship lay docked in navigable waters at Houston, Texas. After a trial on the merits, the district court found that the vessel was not un-seaworthy and that the individual defendants were in no way negligent. It, therefore, entered judgment in favor of the defendants, from which judgment plaintiff appeals.

On April 19, 1969, when the incident occurred, plaintiff McDonald and others were unloading logs from the vessel into a railroad car, using one of the ship’s winches. Logs were attached to the winch line with steel wire “snorters” on each end, then the winch operator swung the logs over the dock and lowered them into the railroad car. McDonald and á fellow longshoreman, Williamson, would then unhook the “snorters” from each log after it had been placed in the railroad car.

After one of the logs had been lowered into the railroad ear, the winch operator caused the winch line to be drawn in after Williamson’s end of the log had been unhooked from the line, but before McDonald had unhooked his end. This caused the winch to pull McDonald’s end of the log toward him, injuring him.

The district court found that the sole proximate cause of McDonald’s injury was Williamson’s negligence in signaling the winch operator to draw in the winch line without cheeking to see whether McDonald had unhooked his end of the log. The district court also found that the ship and its equipment (including the winch) were not unseaworthy.

Appellant urges us to overturn the trial court’s finding of fact that Williamson unhooked his end of the log. His argument is that the only fact supportable in the record is that Williamson’s end of the log “came unhooked.” Even if we accepted this argument, it would not change the trial court’s further finding of fact that, “As a result of the signal given by the plaintiff’s coworker (Williamson), the winch operator picked up the load while one wire snorter was still attached to the log.” This finding is the basis for the trial court’s conclusion that Williamson, and Williamson alone, caused the accident.

Appellant also urges us to find that the district court erred in applying the principle of Usner v. Luckenbach Overseas Corp., 400 U.S. 494, 91 S.Ct. 514, 27 L.Ed.2d 562 (1971), to the facts of this case. In Usner, the Supreme Court held that when a longshoreman was injured by an isolated act of negligence of a fellow longshoreman, he could not recover against a shipowner on the basis of the ship’s unseaworthiness. We find that the district court was correct in applying Usner to this ease.

The judgment of the district court is

Affirmed.


author: PER CURIAM.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Ramon Pedro HERNANDEZ, Defendant-Appellant.
    No. 72-1981.
    United States Court of Appeals, Seventh Circuit.
    Heard Sept. 10, 1973.
    Decided Oct. 3, 1973.

      Prof. Francis X. Beytagh, Notre Dame, Ind., for defendant-appellant.
    Donald B. Mackay, U. S. Atty., Springfield, Ill., Max J. Lipkin, Asst. U. S. Atty., Peoria, Ill., for plaintiff-appellee.
    Before CUMMINGS, PELL and STEVENS, Circuit Judges.
   PER CURIAM.

After a jury trial, defendant was sentenced to concurrent terms of1 5-years’ imprisonment under three counts of an indictment charging him with the unlawful transportation of aliens, as proscribed by 8 U.S.C. § 1324(a) (2).

On the night of June 13, 1971, Corporal Kettman of the Illinois State Police in Pontiac, Illinois, was on a tour of duty in a patrol car. At 11:45 p. m. he observed a 1970 Ford van, bearing 1971 Illinois license plates number PF 8083, being driven by defendant three miles south of Odell, Illinois. Kettman required defendant to pull over and stop on the basis of the following message received over the police radio in his squad car:

“REPORT CAR AT LINCOLN ILLEGAL ENTRIES ALIENS WHITE FORD SPORTVAN BDL 70 MODEL SEVERAL MEX. SUBJECT IN IT COVERED UP BY BLANKET 71 IL PF 8083 LEFT LINCOLN 10 10P DRIVER ASK DISTANCE JOLET” (sic)

This bulletin was transmitted from the Illinois State Police headquarters in Springfield, Illinois, to the Pontiac Police Department, which in turn dispatched it to police cars operating out of Pontiac. The bulletin was apparently inspired by observation of the van containing “people in the back * * * under covers * * * [who] would not show themselves” at a service station in the vicinity of Lincoln, Illinois. The record does not disclose who observed the van and notified the police, but defendant’s brief states “Officer Kettman believed the information was called in from a service station” in Lincoln.

After his van was stopped, defendant left the vehicle. Upon being asked for 'his driver’s license, he replied that he did not have any. Kettman’s fellow officers shone their flashlights into the windows of the van and observed numerous persons lying inside under blankets. Defendant was put under arrest at the scene and the twenty occupants of the van were removed and searched “for their own protection.” Kettman asked defendant “if he was hauling wetbacks,” and he admitted that he was. He was arrested for driving without a driver’s license.

A motion to suppress was filed, urging the district court to exclude “all evidence and testimony concerning the possession of alleged illegal entrants being present in*his [defendant’s] motor vehicle on June IS, 1971.” The principal ground for the motion was that the only basis for stopping the van was the above-quoted police bulletin which contained “no reference to the identity of the person who supplied the information nor to the credibility or reliability of the informant.”

Careful analysis requires recognition of the fact that three legally separable events, viz., stopping the van, arresting defendant and searching the van, occurred in rapid succession after Corporal Kettman turned on his flashing light behind defendant’s van. But stopping the van, briefly questioning the occupants, and observing anything which could be seen from outside the van constituted only an investigatory stop. Whiteley v. Warden, 401 U.S. 560, 566-567, 91 S.Ct. 1031, 28 L.Ed.2d 306. This was followed by the arrest of Hernandez and the search of the van.

Because of the information contained in the police bulletin, it is clear that Corporal Kettman had authority to stop defendant and conduct temporary questioning. Under the rationale of Terry v. Ohio, 392 U.S. 1, 22, 88 S.Ct. 1868, 1880, 20 L.Ed.2d 889, we conclude that the facts available to Kettman at the mo‘ment he stopped and questioned defendant “ ‘warrant [ed] a man of reasonable caution in the belief’ that the action taken was appropriate.” As Chief Justice Warren there observed, “[A] police officer may in appropriate circumstances and in an appropriate manner approach a person for purposes of investigating possibly criminal behavior even though there is no probable cause to make an arrest.”

A recent decision elaborating these principles is Adams v. Williams, 407 U.S. 143, 92 S.Ct. 1921, 32 L.Ed.2d 612, where the Supreme Court sustained an investigatory stop of a suspect in a parked car. In that case the “stop and frisk” officer had been advised by an informant that “an individual seated in a nearby vehicle was carrying narcotics and had a gun at his waist” (at p. 145, 92 S.Ct. at p. 1922.) As the Court there stated:

“The Fourth Amendment does not require a policeman who lacks the precise level of information necessary for probable cause to arrest to simply shrug his shoulders and allow a crime to occur or to allow a criminal to escape. On the contrary, Terry recognizes that it may be the essence of good police work to adopt an intermediate response. * * * A brief stop of a suspicious individual, in order to determine his identity or to maintain the status quo momentarily while obtaining more information, may be most reasonable in light of the facts known to the officer at the time.” Id. at 145-146, 92 S.Ct. at 1923.

Applying these principles to the present case, we believe that Corporal Kettman acted justifiably in responding to the police bulletin even though the bulletin was insufficient to support an arrest or search warrant. Here the police bulletin described defendant’s vehicle by year, model and license plates and stated that it carried Mexicans, covered by blankets, who had entered the country illegally. When stopped, it was on a route from Lincoln to Joliet at an appropriate time, just as indicated in the bulletin. Clearly, sufficient criminal behavior was outlined in the radio dispatch to justify this investigative stop. Once the van was stopped, its illegal contents were in plain view and there was probable cause for the subsequent arrest and search.

To support reversal, defendant relies principally on Whiteley v. Warden, 401 U.S. 560, 91 S.Ct. 1031, 28 L.Ed.2d 306. In that case, an arrest warrant was issued without probable cause. Subsequently, the Sheriff of Carbon County, Wyoming, issued a statewide radio bulletin describing Whiteley and his companion and requesting the assistance of other law enforcement agencies in apprehending them. City police officers in Laramie, relying on the radio bulletin, stopped, arrested and searched the defendants. The Supreme Court held that the Laramie police had no probable cause to make the arrest and search incident thereto, because the radio bulletin on which they relied was issued without probable cause, and the officers did not observe other facts sufficient to give them probable cause.

However, a careful reading of Whiteley reveals that it supports the result we have reached in this case. Although the radio bulletin was not sufficient to support an arrest, it was sufficient to support an investigatory stop. Justice Harlan was careful to point out in Whiteley that “the Laramie police were entitled to act on the strength of the radio bulletin.” 401 U.S. at 568, 91 S.Ct. at 1037. The Court clearly contemplated that the arresting officer would have an opportunity to stop the suspect and attempt to corroborate the radio bulletin before making an arrest. Justice Harlan’s opinion enumerated every fact known by the arresting officers before concluding that they acted without probable cause. The last fact considered by the Court is particularly significant here.

“[T]he information possessed by the Laramie police officer at the time of arrest and search consisted of: * * * (5) the knowledge, acquired by the officer after stopping Whiteley, that he had given a false name.” 401 U.S. at 566-567, 91 S.Ct. at 1036 (emphasis added).

In a footnote, the Court distinguished this information from other evidence the officers found while searching the car_ after Whiteley’s arrest. It is thus clear that information obtained by police officers after stopping a moving vehicle at the side of the road to question the driver briefly can be used to justify a subsequent arrest of the driver and a search of the vehicle incident to that arrest.

There were no more grounds for issuing the radio bulletin in Whiteley than in this case, and the bulletin gave no more information. The difference in the two cases is that here the officers were able to see evidence of criminal conduct sufficient to constitute probable cause without searching the vehicle; in Whiteley no such evidence was visible. The motion to suppress in this case was properly denied.

Defendant concedes that there was substantial evidence that the three alien witnesses entered the United States about June 12, 1971, by walking with a rope across the Rio Grande River and that none of them was legally entitled to enter or remain within the United States. However, he argues that the Government failed to prove that he knew the Mexican aliens he transported from Texas to Illinois were illegally in the United States. Such knowledge is an element of the offense charged (see note 1 supra), but the record abounds with evidence thereof. Thus defendant told Ralph Johnson, an investigator for the Immigration and Naturalization Service, that he- had purchased the van to transport aliens from the Texas-Mexican border to Joliet, Illinois, and that was his only means of livelihood. Defendant also told Johnson that he picked up this group of aliens in Texas, near Rio Grande City, and loaded them into his 1970 van and brought them north. Defendant said he collected $5 from each and was to collect $195 more in Joliet, Illinois, the point of destination, or a total of $4,000 for the trip.

One of the aliens, Luis Salazar, testified that defendant picked him up in native dress in a truck in a Texas bush area and transferred him to the Ford van, telling the alien to cover himself. Defendant covered him on a later occasion and told all the aliens in the van to cover themselves well at a gasoline stop.

Jesus Margana, another alien, testified that he saw defendant a half-hour after crossing the Rio Grande and that twenty of the Mexicans got into defendant’s truck after hiding in a wooded area. They were then driven with a “kind of cover over them” for another half-hour to another wooded area.

The third alien to testify without objection was'Tomas Perez-Alverez. He also stated that he was picked up in a truck in a wooded Texas area and then transferred to the Ford van. He said that defendant was the truck driver.

At the trial, Officer Kettman testified that when he stopped defendant’s van near Odell, Illinois at 11:45 P.M., there were twenty men in the back, and that the defendant driver was the only occupant in the front seat.

The jury could properly infer defendant’s guilty knowledge from his admissions to investigator Johnson, from his furtiveness, from the high price paid for very uncomfortable transportation, and from the dress of at least one of the aliens when defendant picked him up near the border. In concluding that the Government proved its case, we have not considered materials improperly contained in its brief that were not before the jury.

Judgment affirmed.

      . This Section provides in pertinent part:
      “(a) Any person * * * who—
      # * * * *
      “(2) knowing that he [any alien] is in the United States in violation of law, and knowing or having reasonable grounds 'to believe that his last entry into the United States occurred less than three years prior thereto, transports, or moves, or attempts to transport or move, within the United States by means of transportation or otherwise, in furtherance of such violation of law;
      :(! % !!! * *
      any alien, including an alien crewman, not duly admitted by an immigration officer or not lawfully entitled to enter or reside within the United States under the terms of this chapter or any other law relating to the immigration or expulsion of aliens, shall be guilty of a felony * *

      . The internal evidenee of reliability provided by the details in the police bulletin (which were corroborated by the observations of the arresting officer before he stopped defendant’s vehicle) outweigh, in our opinion, the risk of acting on the basis of information that might have been supplied by an anonymous informant. We mention this point because, particularly when the case is one in which there is a risk that suspicion of criminal behavior may be prompted by nothing more than an ethnic identification, it is essential that even an investigative stop be supported by “specific and articula-ble facts which, taken together with rational inferences from those facts, reasonably warrant that intrusion.” Terry v. Ohio, 392 U. S. 1, 21, 88 S.Ct. 1868, 1880, 20 L.Ed.2d 889.


text:
    Frieda NIEBUHR et al., Plaintiffs-Appellees, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation, Defendant-Appellant.
    No. 73-1327.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Sept. 10, 1973.
    Decided Oct. 31, 1973.

      Lawrence L. Summerhays, Strong & Hanni, Salt Lake City, Utah, for defendant-appellant.
    Moyle & Draper, and W. Brent Wilcox, Salt Lake City, Utah, for plaintiff s-appellees.
    Before CLARK , Associate Justice, and McWILLIAMS and DOYLE, Circuit Judges.

       Associate Justice, United States Supreme Court, Retired, sitting by designation.

   PER CURIAM:

This appeal is from a declaratory judgment entered in an action to declare an automobile casualty insurance policy issued by State Farm Mutual Automobile Insurance Company, appellant [State Farm Mutual] to Osborne M. Allen, an appellee, to be in full force and effect at the time of an accident had by Allen on December 22, 1967, in which two pedestrians, Frieda Niebuhr and Kathleen McFarlane, also appellees, were injured. They originally filed suit against Allen in the Third District Court of Salt Lake County, Utah, whereupon State Farm Mutual refused to furnish Allen counsel, claiming its policy had been cancelled for non-payment of premium. Allen secured his own counsel but on trial judgments were recovered against him in the amounts of $35,560.-01 by Niebuhr and $7467.96 by McFarlane. $23.80 was awarded in costs to the two plaintiffs jointly. Thereafter on May 5, 1971, this suit was filed seeking (1) a declaration that State Farm Mutual’s policy was in full force and effect at the time of the accident; (2) payment of the state court judgments obtained by Niebuhr and McFarlane against Allen, and (3) payment of Allen’s claims for attorney’s fees and other damage to him in the amount of $5,000.-00 as a result of State Farm Mutual’s wrongful refusal to defend.

State Farm Mutual claimed: (1) It was deprived of a jury trial; (2) a previous judgment in another suit on the same policy prosecuted by Allen and Ruth Ross arising from a second accident on December 28, 1967, and seeking similar relief was res judicata here since the Utah district court had held the policy not to be in force; (3) there was a lack of jurisdictional amount since the limits of recovery on the policy were $10,000 to each individual injured; and, finally (4) that it had cancelled the policy as of December 14, 1967, for non-payment of premium. The court found no merit in any of these contentions and entered judgment for appellees, Niebuhr and McFarlane. Allen took nothing. We affirm the judgment.

(1) Factual Background:

The parties' stipulated the facts, although a deposition of Allen was read at the trial and other witnesses were heard without any material change, however, in the agreed facts of the stipulation.

Allen, a discharged war veteran, applied to Robert Fisher, an agent of State Farm Mutual, for the issuance of a six-month liability insurance policy to cover his 1963 Karmann Ghia. He had, before entering the Army, purchased an insurance policy from Fisher, and the latter remembered him as he sought another policy. Fisher told him that the policy he wanted was issued by State Farm Mutual and that a membership fee of $16.00 was required. However, Fisher said, if Allen’s previous policy had required the payment of a membership fee, it would not be chargeable again. He, therefore, marked in the appropriate place on the application that Allen had “a dormant” membership fee from -his old policy and took Allen’s check for $25.00 as a payment on the premium of $50.50, with the balance due in 60 days. The policy via binder was in effect as of September 26, 1967. When Fisher sent the application in for issuance of the policy, State Farm Mutual checked its files and could find no old policy. It thereupon issued the new policy that Allen applied for as “new business” and subsequently charged the $16.00 membership fee in addition to the $50.50 premium. In the statement of account it deducted the $16.00 membership fee from the $25.00 payment which left an amount due of $41.50 on the premium. Fisher, upon receipt of the new policy mailed it to Allen on October 9, 1967, with a statement showing the balance of $41.50 due on November 26th. Allen called Fisher upon receiving these papers and inquired about the additional charge. He was told that the old policy was not in State Farm Mutual, that no membership fee had been paid, and that, therefore, it had to be paid for issuance of the policy he wanted. On November 16 a reminder notice of premium due was sent Allen. Immediately prior to November 26th, the due date of the $41.-50 balance, Allen called Fisher’s office and finding him away, advised the secretary that he could not pay the balance due and asked her “what I should do, if they could extend it another two weeks.” No extension was made. When the due date came and Allen had not paid, State Farm Mutual cancelled the policy as of December 14, 1967, sending a notice of this cancellation on December 1st. Allen admitted that he received notice of the cancellation and “didn’t do anything at all” about it because of his financial condition.

(2) Appellant’s Claims:

We see no merit in the first three contentions, (a) While appellant originally called for a jury, it never insisted upon one. Indeed, it entered into a stipulation covering the facts; and even after taking into account the testimony of the witnesses, there was no material issue of fact involved, (b) A previous judgment in a Utah court had decided adversely to Allen on the question of the cancellation of the policy, but different parties and facts were involved. Indeed, in that case another separate and distinct accident on December 28 was involved which was beyond the time coverage of the policy under any of the various theories proposed. We have concluded that the adverse judgment in the case involving the claims of Ruth Ross does not operate as res judicata as to the claims of Niebuhr and McFarlane. (c) The trial court below found jurisdiction present in both the Niebuhr and McFarlane claims. The Niebuhr claim was in excess of $10,000. While the policy was limited to $10,000 in principal recovery per individual with a maximum of $20,000 per accident, it specifically provided that “in addition to the applicable limits of liability” State Farm Mutual would pay “all costs taxed against the insured in any such suit and, after entry of judgment, all interest accruing on the entire amount thereof until the company has paid as tendered such part of such- judgment as does not exceed the limit of the company’s liability thereon.” The costs in the state suit plus the interest ran the claim well over $10,000. McFarlane’s claim was below-the $10,000 figure but the court found it pendent to that of Niebuhr. This was entirely appropriate since both personal injury claims arose out of the same accident and required the same proof as to liability. See Jacobson v. Atlantic City Hospital, 392 F.2d 149, 153 (3rd Cir. 1968), Wilson v. American Chain and Cable Company, 364 F.2d 558, 564 (3rd Cir. 1966).

(3) Cancellation of the Policy:

We differ with the trial court as to the reason why the policy was in effect on the date of the accident involved in this case, i. e., December 22, 1967. It held that the entire $25.00 should have been applied on premiums which would have carried the policy until December 25 and that the notice of cancellation, contra to state law, was not accompanied by a tender of the unearned premium of $2.92, and was, therefore, invalid.

We do not think that the Company erred in applying $16.00 of the $25.00 Allen paid to the payment of the membership fee. The understanding was that a membership fee must be paid; Allen was notified that none had previously been paid and that the $16 was being deducted from his original $25.00 payment, leaving a balance due of $41.50 on the premium. Allen was given sixty days from the effective date of the policy to pay this balance. This he failed to do and the policy was cancelled as of December 14th. While the policy provides that the membership fee was not returnable, this provision, found under the heading “Mutual Conditions” on page 9 of the policy, seems to apply only where the policy has run over six months since the General Rules of State Farm Mutual require either a refund or application to earned premiums where the Company cancels prior to six months. General Rule 103 provides in pertinent part:

“When the Company cancels a policy less than six months after the initial effective date, the amount paid for membership fee may be applied to any earned automobile insurance premium otherwise the amount paid for membership fee is refunded’ in full to the policyholder.” (Emphasis supplied) .

At the time of the cancellation the Company had two options available under General Rule 103: (1) apply the $16.00 to the premiums or (2) refund it. Since State Farm Mutual never refunded Allen’s membership fee, the $16.00 was applicable to earned premiums and thus extended the coverage of the policy to December 25, 1967, three days subsequent to the liability involved here.

A party cannot cancel a contract and thereby avoid its future obligations and at the same time not honor in good faith its obligations arising incident to the cancellation. The failure of State Farm Mutual to refund or at least tender payment of the membership fee, as its own rules require, is inconsistent with an intent to cancel the policy. Its retention of the membership fee without application to the earned premium is a waiver of its right to cancel the policy. State Farm Mutual says that its practice has been not to honor General Rule 103; but it cannot be heard not to honor its own rule. It is here estopped from so doing and, hence, denying liability on the policy it issued to Allen.

The judgment is, therefore, affirmed.

      . State Farm Mutual also operates another company, State Farm Fire and Casualty Insurance Company, the policies of which involve higher premiums but no membership fee is required. It appears that Allen’s former policy was purchased from it.

      . There is no factual issue as to a membership fee being required for the new policy and Allen’s not paying it on the former policy. His deposition on the point reads :
      “Question: Was there a membership fee charged ordinarily, do you recall? “Answer: Not on the first dealing [the policy Allen bought before going to the Army] but on the second dealing, my Karmann Ghia, he [Fisher] asked me — He remembered my face, remembered my name, and he said, ‘There is a membership fee, but I think you have already paid it on your previous policy’ so he didn’t charge me at the time for a fee, but when I received a policy there was a fee on it. I called him up and asked him about it, and he said they could not find a record of my having insurance with them before and he asked me if I could look up in my files and give him a number of my old policy. But two years had passed since I had been in the Army and I threw a lot of stuff away and this happened to be one thing I threw away . . .
      “Question: Did you receive a bill of any kind or a statement after you had paid this $25 showing that there was a balance due on this policy?
      “Answer: Yes I believe so. I believe I received a notice that said $41.00 This was separate. This was about — maybe a couple three weeks after I got the policy.” Transcript at 77, 78.

      . Glenn v. State Farm Mutual Automobile Insurance Co., 341 F.2d 5 (10th Cir. 1965), heavily relied upon by appellant, is not apposite here.


author: CLARK, Associate Justice.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Mario MARRERO, Defendant-Appellant.
    No. 72-196L
    United States Court of Appeals, Seventh Circuit.
    Argued May 21, 1973.
    Decided Aug. 9, 1973.

      Tyce S. Smith, Chicago, Ill., for defendant-appellant.
    James R. Thompson, U. S. Atty., William T. Huyck, Sheldon R. Waxman, Asst. U. S. Attys., Chicago, Ill., for plaintiff-appellee.
    Before CLARK, Associate Justice, KNOCH, Senior Circuit Judge, and PELL, Circuit Judge.

       Associate Justice Tom C. Clark, United States Supreme Court, Retired, is sitting by designation.

   CLARK, Associate Justice.

Mario Marrero, Miguel Garcia and Sandra Teich were charged with conspiracy to violate the narcotic laws and with three separate sales of heroin, all in violation of 21 U.S.C. § 841(a)(1). Garcia pleaded guilty and both Marrero and Teich were found guilty by a jury. Teich, however, is presently a fugitive and only Marrero appeals. He contends that: (1) the evidence was insufficient; (2) the District Court erred in denying his motion for a mistrial based on the testimony of a government narcotics agent that, in “supervising a major investigation,” his office maintained files on “major violators” and that it contained a file on a person “named Mar-rero ;” and (3) the District Court erred in denying his motion to require the Government to confess that its informer, Amato, had testified falsely. We have concluded that in the framework of this case only the second claim has merit, and we reverse the judgment on this ground and remand for a new trial.

1. The Facts.

The conviction of Marrero depended on the jury’s belief of the testimony of Amato, the Government’s informer and star witness. Amato was married with three children. He worked as a truck driver. He was a former narcotics addict and had three felony convictions.

Teich introduced Amato to Garcia in a Chicago lounge in early July, 1971. At this meeting there was some discussion as to whether Amato knew any prospects for the purchase of narcotics. A week later Garcia called Amato and asked him again if he had any names of prospects. Amato reported this inquiry to Agents Fullett and Weinstein of the Bureau of Narcotics and Dangerous Drugs. The agents told Amato to “set up a buy” with Garcia. On July 13 Amato went to a room on the third floor of the Diver-sey Plaza Hotel to meet Garcia. He had received $1250 from the agents to purchase a sample ounce of heroin. Garcia carried the money in a multi-colored bag provided by the agents. Garcia told Amato he could handle the purchase and in the latter’s presence made a telephone call and spoke in Spanish language to someone he referred to as “Mario.” During this conversation Amato saw a telephone number on a paid of paper with the notation “Mario” written on it. After. completing his call, Garcia told Amato that Mario was waiting for them. Amato gave Garcia the $1250 in the multi-colored bag and the two of them went in Amato’s car to Clarendon Avenue and Montrose Street. Amato parked and waited. Agent Fullett observed Garcia leave the car and go around the corner on foot with the mul-ti-colored bag in his hand and return some fifteen minutes later. He got in the car, told Amato everything was all right, and they drove back to the hotel. When Amato and Garcia returned to the hotel room, Garcia handed Amato a bag of white powder. Amato left the room and turned the bag over to Agent Wein-stein, who had hidden himself behind the stairwell on the third floor. The bag and powder were introduced in evidence, and the powder was stipulated to be heroin. Amato then went with the agents to their office where he made a statement and gave them the telephone number that he had seen written on the pad in Garcia’s third-floor room. The agents subsequently retrieved this pad following Garcia’s arrest and found the name “Diaz” in addition to “Mario.” Appellant admittedly used the name “Diaz.”

Between July 13 and 27 Amato saw Garcia and Teich frequently at an apartment at 14 West Elm Street. They talked about narcotics. On July 27 the second purchase (an eighth of a kilo) was set up by Amato and Stacy, another federal narcotics agent. Amato and Stacy met at the Pixley and Ehlers Restaurant and then went to see Garcia at 14 West Elm Street. Garcia agreed to meet them at “Gogi’s,” a nearby restaurant. Later they returned to 14 West Elm and Garcia went in the building alone’. When he returned to the car, the three men drove to Division and Wells Streets, where Garcia gave the heroin to Stacy in exchange for $5000. Another buy was set up with Garcia for the same evening. When they met for the second sale, Stacy complained of the quality of the heroin purchased earlier that day, and Garcia gave him another bag of heroin. Stacy paid him $2500 for this bag two days later.

On September 17 Agent Stacy informed Teich that the two eighth-kilos sold earlier were no good. Teich told them Garcia would make it up, that she and Garcia were partners and that Garcia would supply high quality heroin.

On September 21, 1971, Agent Stacy and Amato met Garcia at the Lincoln Park Zoo. Up until this time the narcotics agents had not met Marrero, although Amato had met him at Garcia’s place on West Elm in July or August and had described Marrero to them, and Garcia had told Amato that Marrero was his source of supply. Stacy told Garcia he wanted Marrero to verify the quality of the drugs in person. It was agreed that Garcia would get Marrero and they would all meet at the Zoo at 5:30 p. m. As federal narcotics agents surveilled them, Garcia and Amato drove to a building at 848 West' Agatite. Garcia brought Marrero out of the building to the curb where Amato was standing by his car. Garcia told Marrero that Ama-to’s people refused to do business with him unless Marrero would meet them to verify the quality of the narcotics. Marrero refused to come and said to Amato that “if these people were my friends, then they should accept my word.” He added that Garcia was “his man and worked for him and that any deals that Garcia made he would stand behind because of the working relationship ... if anything was wrong with it [drugs] I [Amato] should come back to him.” Two federal narcotics agents watched this meeting. Agent Weinstein overheard Marrero tell Amato and Garcia, “I don’t want to meet anybody. I don’t want to meet anybody.” And Garcia was heard to say, “Mario, look. . . .” Agent Fullett observed Amato, Garcia and Marrero talking together and Agent Weinstein walking near the three men. Eventually Amato and Garcia left without Marrero and returned to the Zoo. There Agent Stacy told Garcia that he would buy the heroin because of Marrero’s guarantee to Ama-to. When Garcia returned with the drugs, he was arrested. Teich and Mar-rero were arrested later.

2. The Sufficiency of the Evidence.

The evidence tended to show that Marrero was aware of the action of his co-defendants. See United States v. Garelli, 333 F.2d 649 (7 Cir. 1964), cert, denied, 380 U.S. 917, 85 S.Ct. 904, 13 L. Ed.2d 801 (1965). Indeed, the evidence pointed to Marrero as the source of supply of the heroin involved. Amato testified that Garcia had told him that Marrero was his source of supply, and Marrero himself told Amato that Garcia was “his man” and that they had a “working relationship.” While the evidence was close with respect to some of the counts, taking it and the inferences reasonably drawn therefrom in the light most favorable to the government, United States v. Kwitek, 467 F.2d 1222 (7 Cir. 1972), we believe it was sufficient to support the verdict.

3. Alleged Perjury of Amato.

We need not tarry long over Marrero’s claim that the Government should have been required to inform the jury that its informer Amato had testified falsely. Government counsel asked Amato if any promises, rewards or remunerations had been offered by the Government for his testimony. He answered in the negative. Defense counsel, out of the presence of the jury, contended that Amato had “told a deliberate untruth” because a three count felony gun charge was dismissed in state court at the request of the federal government. There was no proof linking the dismissal to Amato’s testimony in this case. The court permitted defense counsel wide latitude in exploring the issue on cross-examination. The jury was properly left free to draw its own inferences.

4. The Testimony Concerning a File on “Major Violators.”

In its case-in-chief the Government called BNDD Agent Fullett who testified that he was in charge of the Marrero investigation and was one of the agents engaged in the surveillance of Marrero in the present case. On direct examination he was asked by the Assistant United States Attorney:

Q. “In your capacity as an agent sometimes supervising a major investigation, do you keep a file on major violators in your office ?
A. Yes, the government does have various files.
Q. Was there a file in your office on any person named Marrero ?
A. Yes, there was.”
[Objection]

The court sustained Marrero’s objection but denied his motion for mistrial. The judge indicated some doubt that the last question had been answered and, if it had been, whether the jury heard it. Nevertheless, he instructed the jurors to disregard the question and any answer they may have heard. It is apparent that the reporter heard the answer and we must proceed on the assumption that the jury heard it as well, especially in view of the District Court’s uncertainty about the matter.

The challenged question and answer are exemplary of a practice that has long been considered impermissible. Twenty-five years ago Mr. Justice Jackson stated the rule and its rationale:

“Courts that follow the common-law tradition almost unanimously have come to disallow resort by the prosecution to any kind of evidence of a defendant’s evil character to establish a probability of his guilt. Not that the law invests the defendant with a presumption of good character . but it simply closes the whole matter of character, disposition and reputation on the prosecutor’s case-in-chief. The State may not show defendant’s prior trouble with the law, specific criminal acts, or ill name among his neighbors, even though such facts might logically be persuasive that he is by propensity a probable perpetrator of the crime. The inquiry is not rejected because character is irrelevant; on the contrary, it is said to weigh too much with the jury and to so over-persuade them as to prejudge one with a bad general record and deny him a fair opportunity to defend against a particular charge. The overriding policy of excluding such evidence, despite its admitted probative ''due, is the practical experience that its disallowance tends to prevent confusion of issues, unfair surprise and undue prejudice.”

Michelson v. United States, 335 U.S. 469, 475-476, 69 S.Ct. 213, 218, 93 L.Ed. 168 (1948). Unless and until the defendant puts his reputation in issue, the Government is strictly forbidden from introducing evidence of bad reputation.

In the present case the Government suggests only one justification for its eliciting the fact that “a person named Marrero” was the subject of “a major investigation file ... on major violators.” Marrero had attempted earlier to discredit Agent Weinstein’s identification of him as the man he saw talking with Garcia and Amato on September 21 in front of the building at 848 West Agatite. The Government contends that this defense tactic justified asking Agent Fullett whether he maintained a major violator file on appellant Marrero. Presumably the Government wanted to show that Agent Ful-lett, who had also observed the meeting of Amato, Garcia and Marrero, was familiar with Marrero’s appearance on the basis of government files.

We reject this proffered justification. Marrero never attempted to discredit Agent Fullett’s identification of him as the individual who met with Amato and Garcia on September 21st. The Government could not assume, in an effort to beat Marrero to the punch, that he would make such an attempt. In view of the extremely prejudicial nature of the testimony elicited, we cannot dismiss the challenged questions as merely “poor strategy” on the Government’s part.

The Government relies on United States v. Pentado, 463 F.2d 355 (5 Cir. 1972) to justify its inquiry about the major violator file. In Pentado a Government witness testified in the course of cross-examination that he recognized one of the defendants from pictures “because he is a documented trafficker in our files.” 463 F.2d, at 361. The Court of Appeals for the Fifth Circuit affirmed the conviction over appellant’s argument that the witness’ response warranted a mistrial. The court reasoned that appellant’s counsel risked eliciting the challenged testimony by pursuing questions designed to show that the witness might have been mistaken in his identification. In contrast, in the present case the Government itself brought out on direct examination the testimony that “a person named Marrero” was the subject of its major violator file. Furthermore, the Government’s questions were directed to Agent Fullett, whose identification of Marrero had never been attacked; and, in the Government’s own words, “it is conjectural whether agent Weinstein had any knowledge of what the Bureau of Narcotics files contained on Marrero ”

It, remains to consider whether the challenged questioning requires reversal. As we have indicated, the central issue for the jury in this case was whom to believe, Amato or Marrero. Without Amato’s testimony, what little evidence the Government had of Marrero’s involvement in narcotics dealing was highly circumstantial and probably not sufficient to sustain a verdict against him on any of the counts. Amato was a Government informer and former narcotics addict. He had been convicted of three felonies. Appellant, who took the stand in his own behalf, had apparently never been arrested or convicted of a crime. Evidence that Marrero was considered a major narcotics violator by a federal law enforcement agency could only have had a devastating effect on his credibility. The jury received the case after hearing a short charge by the court at 2 p. m. on June 5th. It considered the case all of June 6 until 9 p. m. that evening. At that time the foreman asked the bailiff what he should do if the jury was deadlocked. The court then recessed the jury for the night and on the morning of June 7 read them the Brown charge. The guilty verdict was returned soon thereafter. The fact that the jury was deadlocked is indication of the closeness of the case. The instruction \delivered to the jury that it should disregard the challenged testimony was not sufficient to remove the prejudice. See Bruton v. United States, 391 U.S. 123, 88 S.Ct. 1620, 20 L.Ed.2d 476 (1968). We need not stop to consider whether the error here was of constitutional dimension for we cannot dismiss it as harmless even if it was not. We have serious doubt that the verdict was free from substantial prejudicial influence. Kotteakos v. United States, 328 U.S. 750, 764-765, 66 S.Ct. 1239, 1248, 90 L.Ed. 1557 (1946). See Fed.R.Crim. Proc. 52(a). If rules of evidence are to command any respect, we must reverse convictions tainted by clear error where there is significant possibility that the accused might have been acquitted in the absence of the error. In the framework of this case certainly such doubt is present. We must, therefore, reverse regardless of our own opinion of Mar-rero’s guilt or innocence. That question is for a jury in a trial not tainted by such inflammatory evidence.

Reversed and remanded.

      . Government brief, p. 20.

      . Government brief, p. 20.

      . United States v. Brown, 411 F.2d 930 (7 Cir. 1969).

      . Marrero argues, with some force, that the error here denied him due process. If the error is constitutional, the case must be reversed unless the error can be classified as harmless beyond a reasonable doubt. Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967). Since we find the error not harmless even judged by the lower standard set forth in Kotteakos, supra, we need not determine whether the reasonable doubt standard governs here.


author: PELL, Circuit Judge.

text:
    Elmo J. GILBERT, on behalf of himself and all others similarly situated, Plaintiff-Appellant, v. WOOD ACCEPTANCE CO. et al., Defendants-Appellees.
    No. 72-1617.
    United States Court of Appeals, Seventh Circuit.
    Argued May 31, 1973.
    Decided Oct. 24, 1973.

      Ronald W. Fritsch, Legal Aid Society of Chicago, Chicago, 111., for plaintiff-appellant.
    Max Wildman, David L. Sehiavone, Chicago, 111., for defendants-appellees.
    Before PELL and STEVENS, Circuit Judges, and REYNOLDS, District Judge.

       Chief Judge John W. Reynolds of the Eastern District of Wisconsin is sitting by designation.

   PELL, Circuit Judge.

This appeal concerns the interpretation of the Truth-in-Lending Act (Title I of the Consumer Credit Protection Act, 15 U.S.C. § 1601 et seq.), as implemented by Federal Reserve Board Regulation Z, 12 C.F.R. § 226. Appellant Gilbert, who signed a retail installment contract for the purchase of a used automobile from Southland Motors, Inc., (Southland) contends that the contract fails to disclose several items of information allegedly required to be disclosed by Section 128(a) (2) and (8) of the Act, 15 U.S.C. § 1638 (a)(2) and (8), and subsection 226.8 of the Regulation. Pursuant to 15 U.S.C. § 1640, he seeks a judgment for a penalty of $197.72, twice the finance charge due under the contract. The defendants are Southland and Wood Acceptance Co. (Wood), the assignee of the installment contract. The district court granted the defendants’ motion to dismiss the complaint, holding that even if all of Gilbert’s allegations were taken as true the complaint failed to state a claim upon which relief could be granted.

The complaint alleges that on March 6, 1971, Gilbert, a “consumer,” entered into a retail installment contract with Southland, a “creditor,” for the -purchase of a used automobile; that on or after March 6th, Southland assigned the contract to Wood, a “creditor”; that South-land and Wood are owned by the same persons; and that Wood had actual knowledge of all aspects of the March 6, 1971, transaction. The complaint further alleges that the contract, although reciting on its face that it includes “disclosures required by Federal law,” fails to comply with the applicable law: (1) the contract falsely states that plaintiff paid a “cash downpayment” of $350, when in fact the “cash downpayment” was only $100 and Gilbert was obligated to pay the $250 balance in four weekly installments ($100 on March 8, 1971, and $50 thereafter through March 29, 1971) to one “M. Wishner,” an agent of the defendants; and (2) the contract also states that the “total of payments” was $948.86, payable in 38 weekly installments of $24.97 each, beginning April 5, 1971, but the total of payments was really $1198.86, payable in 42 weekly payments beginning March 8, 1971.

The first “false statement” supposedly violates subsection 226.8(c)(2) of Regulation Z, which requires that a creditor disclose “[t]he amount of the downpayment itemized, as applicable, as down-payment in money, using the term ‘cash downpayment,’ downpayment in property, using the term ‘trade-in’ and the sum, using the term ‘total downpayment.’ ” The second asserted misstatement allegedly contravenes Section 128(a)(8) of the Act and subsection 226.8(b)(3) of the Regulation. Those provisions require a creditor to disclose “the number, amount, and due dates or periods of payments scheduled to repay the indebtedness and . . . the sum of such payments using the term, ‘total of payments.’ If any payment is more than twice the amount of an otherwise regularly scheduled equal payment, the creditor shall identify the amount of such payment by the term ‘balloon payment’ and shall state the conditions, if any, under which that payment be refinanced if not when due.”

In his brief, Gilbert further particularizes the charges he made in his complaint. The most important of these points — the one on which the validity of plaintiff’s other contentions hinges- — is defendants’ supposed failure to disclose accurately in the contract the “amount of downpayment itemized” and the “cash downpayment.” On the date the parties executed the contract, Gilbert paid Southland $100 in cash. He characterizes this amount as the “downpayment in money” or “cash downpayment.” The “total downpayment” agreed upon was $350 (which fact, plaintiff admits, the contract reveals). Because the $250 difference between the “total downpayment” and the $100 Gilbert gave to Southland on March 6th was to be paid in four weekly installments, Gilbert argues that the $250 cannot accurately be deemed part of the “cash downpayment” and should not have been noted as such in the contract. The crucial inquiry, therefore, is whether the applicable law requires that the contract disclose expressly the $250.

No provision of the Consumer Credit Protection Act directly addresses this issue. Subsection 226.8(c)(2) of Regulation Z seems to be of help, for it speaks, inter alia,, of disclosing “[t]he amount of the downpayment itemized, as applicable, as downpayment in money, using the term ‘cash downpayment,’ downpayment in property, using the term ‘trade-in’ and the sum . . . However, as the parties’ differing interpretations of this provision of the Regulation indicate, it is somewhat ambiguous.

The defendants read the provision as establishing exclusive subclassifications. That is, when disclosing in a contract the items of which the downpayment consists, a creditor is limited to the terms “cash downpayment” and “trade-in.” If that is so, then “cash downpayment” supposedly more aptly describes the $250 that Gilbert was to pay than “trade-in” does. Presumably the $250 is properly considered part of the downpayment not only because the parties characterized it as such but because Gilbert was allowed to pay it in installments without a finance charge and prior to the commencement of the 38 uniform, “interest-included” installments.

The plaintiff, in contrast, maintains that “cash downpayment” and “trade-in” are merely examples. He points out that the “section does not state that these are the only items or ingredients of the ‘total downpayment.’ ” He calls to our attention the following official interpretation of Regulation Z issued by the Board of Governors of the Federal Reserve System on September 11, 1969:

§ 226.504 Treatment of “Pick-up Payment” in an Instalment Contract

In some instances involving an in-stalment contract arising from a credit sale, the purchaser may not pay the full amount of the required downpayment at the time he signs the contract or otherwise enters into the credit transaction. In such cases, the creditor may include in the instalment contract or accept a separate obligation for the unpaid portion of the down-payment, commonly called a “pick-up payment,” the amount of which usually carries no finance charge and is to be paid on or before a specified date independent of the other scheduled payments.
The question arises whether the “pick-up payment” must be treated as part of the “amount financed” for purposes of disclosure and determination of the “annual percentage rate” or whether it may be treated as a deferred portion of the downpayment.
In determining the “amount financed” the creditor may exclude the amount of the “pick-up payment” provided that:
(1) The amount of the finance charge applicable to the transaction does not exceed the amount that would have been imposed had the required down payment been paid in full upon consummation of the transaction; and
(2) The due date of the “pick-up payment” is not later than the due date of the second payment otherwise scheduled.
In making the disclosures required under § 226.8(b)(3), if such “pick-up payment” is more than twice the amount of an otherwise regularly scheduled equal payment, the creditor shall state the conditions, if any, under which such “pick-up payment” may be refinanced if not paid when due; and such “pick-up payment” may be identified using that term or the term “balloon payment.”

It is obvious that the primary aim of § 226.504 is to clarify when a creditor must include the pick-up payment in the “amount financed.” However, it is not so certain that the section supports the plaintiff’s claim that “deferred downpay-ments” must be separately listed in a contract. Gilbert asserts that, in the final paragraph of the Interpretation, the Board was construing the disclosure requirement of subsection 226.8(b)(3) as including the “unpaid portion of the downpayment” or “pick-up payment.” In rebuttal, the defendants emphasize the use of the word “may” in the Interpretation and cite the grammatical usages provision of the original Act, Section 503. They also argue that it is illogical to construe subsection 226.8(b)(3), which involves repayment of the “indebtedness,” to include a deferred downpayment where the downpayment is excludable, as is the case here, from the “amount financed.” That phrase includes the “unpaid balance of cash price,” which is defined as the difference between the “cash price” and the “total downpayment.”

To resolve the central issue of this appeal, it is necessary, we think, to avoid becoming embroiled in such a verbal controversy. One purpose of the Consumer Credit Protection Act was to assure that customers will “avoid the uninformed use of credit.” 15 U.S.C. § 1601. Although the disclosure of information pertaining to the finance charge imposed for a transaction is important in achieving this goal, Congress did not limit the the required disclosures to such data. Further, it delegated broad authority to the Federal Reserve Board to render the Act effective. 15 U.S.C. § 1640. See Mourning v. Family Publications Service, Inc., 411 U.S. 356, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973).

The retail installment contract executed by Gilbert and Southland clearly does not disclose in full the terms of the transaction between the parties.

One cannot know from reading the contract that Gilbert was obligated to pay $250 in four installments as part of the agreed-upon downpayment of $350. That the customer was to pay no finance charge on the $250 does not mean, as we have indicated, that the Act or regulations promulgated under the Act might not require the separate disclosure of the “deferred downpayment.” Further, although the Act itself does not explicitly refer to the credit sale where the purchaser does not pay the full amount of the required downpayment at the time he signs the contract, the Board in Interpretation § 226.504 acknowledged the existence of such arrangements and, correctly, decided that the Act, which, with a few exceptions, applies to the entire genus “consumer credit transactions,” regulates disclosures for the “deferred downpayment” type of transaction.

With these points in mind, we turn again to 15 U.S.C. § 1638(a) (2) and subsection 226.8(e)(2) of Regulation Z. The words “The amount of the downpayment itemized” in the subsection call for the particularization of the sum required to be reported by Section 1638(a)(2). Because Interpretation § 226.504 establishes that the Board treats “deferred downpayment” situations as being among those transactions for which it has responsibility under Congress’s mandate, it follows that subsection 226.8(c) (2) is to be interpreted as applying to those situations. By engaging in a dispute about the meaning of “trade-in,” the parties have lost sight of the purpose of (c)(2): to aid the consumer, creditors are to “break down” the downpayment the consumer is obligated to make. The items of which the downpayment consists are, therefore, the required data. The creditor is to set out the form in which the downpayment is to be made, i. e., cash, property, or both. To emphasize the Board’s suggestion or requirement that certain phraseology be used is to focus on an incidental matter. Cf. 15 U.S.C. § 1632(a). Surely a legally binding promise to pay a specified amount of money in the future is a form of property to the promisee. We cannot agree that the inclusion of “deferred downpayment” in the definition of “downpayment in property” does violence to the common understanding of the word “property.” The “deferred” payment, therefore, should be stated separately in that part of the contract which breaks down the downpayment figure.

In sum, we do not think the semantical subterfuge of treating “pick-up payments” as a deferred but unspecified portion of the “cash downpayment” satisfies the avowed purpose of the Act “to assure a meaningful disclosure of credit terms.” This is so although we do recognize that because monthly payments, not only for necessities but for luxuries, have become a way of life in the American scene, many of those persons who periodically parcel out their paychecks are fully aware of the payments they must make. In our opinion, to conceal an unpaid part of the sales price in the category of “cash downpayment” is to evade both the letter and the spirit of this remedial legislation.

Accordingly, we hold that the district court incorrectly dismissed Gilbert’s complaint for failure to state a claim upon which relief can 'be granted. The order of dismissal is vacated, and the cause is remanded for further proceedings consistent with this opinion.

Reversed and remanded.

      . The complaint also purported to be a class action on behalf of all other customers of Wood and Southland to whom the defendants on and after March 6, 1971, had failed to make the disclosures alleged in the complaint to have been required by law. For the class action aspect of the action, Gilbert named a third defendant, Deluxe Motors, Inc., a used automobile dealership supposedly owned by the same person or persons who owned Wood and Southland. The district court did. not rule on the propriety of the action proceeding as a class action or on whether Deluxe was a proper party-defendant. Consequently, we do not treat those issues on this appeal.

      . We note that Gilbert was to pay the $250 in four installments, each of which was more than twice the amount of the $24.97 weekly installment he was to make beginning April 5, 1971. Gilbert maintains that the $250 should, therefore, have been identified in the contract as “balloon payments.” The defendants contest this, arguing that the $250 was not part of the “repay [ment] of the indebtedness.” Because we have approached the central issue of this appeal — whether the district court erred in dismissing the complaint — from a different perspective, we need not resolve this controversy.

      . Gilbert also refers us to a letter written by Milton W. Sebober, Assistant Director, for the Board of Governors in response to an inquiry the Board received :
      This is in response to your recent inquiry regarding the method of disclosing a “pick-up payment” as described in our interpretation of § 226.504 issued under date of September 11, 1969.
      In order to exclude the amount of a “pick-up payment” from the “amount financed” pursuant to that interpretation, the amount of the “pick-up payment” may be shown in the disclosure statement as a deferred portion of the “cash down payment” under the provisions of § 226.-8(c)(2), or it may be shown as a deduction from the amount disclosed under § 226.8(c)(5); however, in either case, it must be clearly identified as required in the final paragraph of interpretation § 226.504. [Letter dated October 28, 1969, excerpted in 4 CCH Consumer Credit Guide. ¶30,204.]
      Although the letter is not free from ambiguity, it does seem to support plaintiff. However, because it is not an officially promulgated rule or interpretation by the Board, it is not binding on the parties to the present action.

      . We note that combining “deferred” with “downpayment” might seem to present a conceptual difficulty since “down” might, to some, connote immediacy whereas “deferred” suggests future action.

      . If the defendants are genuinely concerned that they must use certain “magic words,” we see no reason why they may not disclose the deferred downpayment information in the blanks on their form beside the term “Trade In.”