author: SWYGERT, Chief Judge.

text:
    Joan SMITH, Plaintiff-Appellee, v. MICHIGAN BEVERAGE COMPANY, INC., Defendant-Appellee, Allied Supermarkets, Inc., Defendant-Appellee, Glenshaw Glass Company, Defendant-Appellant.
    No. 72-2008.
    United States Court of Appeals, Seventh Circuit.
    Argued Sept. 28, 1973.
    Decided April 10, 1974.

      David E. Rosenfeld, Terre Haute, Ind., for appellant.
    Thomas H. Hicks, Warren R. Everett, Terre Haute, Ind., for appellee.
    Before SWYGERT, Chief Judge, HASTINGS, Senior Circuit Judge, and O’SULLIVAN, Senior Circuit Judge.

      . The Honorable Clifford O’Sullivan of the Sixth Circuit is sitting by designation.

   SWYGERT, Chief Judge.

Defendant Glenshaw Glass Company is appealing from a judgment entered on a jury verdict in favor of plaintiff Joan Smith for $100,000, for injuries she received when a bottle exploded. We reverse.

Glenshaw is a manufacturer of glass bottles. It manufactured and sold to Michigan Beverage the 28-ounce non-returnable bottle that is involved in the case. Michigan Beverage filed the bottle with a carbonated root beer beverage and then sold it to Allied Supermarkets. This bottle of root beer, along with two others, was purchased by Smith in the week before the accident. She took the bottles home and placed two of them on the floor in a space between the side of the refrigerator and a wall. Behind the bottles there was a gas pipe running parallel to the back wall and near the back baseboard. One of the bottles was taken from this storage place and used without incident. When Smith reached down and picked up the other bottle, it broke and she was injured by the broken glass.

She then filed this, diversity action against Allied, Michigan Beverage, and Glenshaw. Her amended complaint contained four counts. Counts III and IV were based on res ipsa loquitur and were dismissed on Smith’s own motion at the start of trial. Count I was based on negligence and contained two allegations of negligence by Glenshaw: (1) failure “to inspect the bottle for flaws and weaknesses before delivery to Michigan Beverage Company;” and (2) failure “to maintain quality control of the bottles in order that such bottles would be safe for intended use.” Count II alleged breach of implied warranties of mer-chantibility and fitness for intended use.

At trial, Smith testified that just as she picked up the bottle it exploded. On cross-examination she admitted she did not know whether she hit the gas pipe with the bottle, but admitted that it was possible that she had. However, she testified that if she had hit the pipe, it was not even hard enough that she was aware of it.

Dr. Andrew Dingle, a consulting scientist was called by Smith as an expert witness on glass fracture. He testified that the bottle broke when it received an external force, but that there was no way to determine the amount of external force necessary to cause the failure. On cross-examination he admitted that' there was nothing unusual about this bottle and that at the time it left the Glenshaw plant it had no mechanical or material defects. But, he did state that although this bottle had no physical defect, it had what he termed a “philosophical” defect since “it failed during normal use.” He testified that in his opinion this bottle was not reasonably fit for use in a house where it is expected to receive several bumps or bruises, “ [b] eeause it failed; it broke.”

Evidence was also introduced by the plaintiff concerning the amount and purpose of testing done by Glenshaw. The only evidence offered by Glenshaw was a report by a Dr. Fryer which indicated that “the glass walls were free of bubbles, stones, or any other blemishes that would render the bottle unfit for use in the trade.”

At the close of the evidence the district court granted Allied Market’s motion for a directed verdict and denied such motions on behalf of Michigan Beverage and Glenshaw. The case was submitted to the jury on the negligence theory only. The jury found Glenshaw liable and exonerated Michigan Beverage. After appropriate post-trial motions were denied, this appeal followed.

Glenshaw argues that the district court erred by not granting its motions for a directed verdict or judgment notwithstanding the verdict and by refusing to give some of its tendered jury instructions. Since we agree with Glen-shaw’s first contention, we do not reach the question of the instructions.

The question in this appeal is whether sufficient evidence was introduced to prove that this bottle was defective and that this defect was the proximate cause of plaintiff’s injuries. We must determine if the evidence “considered in its aspect most favorable to the plaintiff” exhibits “a total failure to prove any necessary element of the cause.” Rice v. Ringsby Truck Lines, 324 F.2d 146, 148 (7th Cir. 1963).

I

We begin by examining the evidence supporting the allegation that the proximate cause of this accident was Glen-shaw’s negligent failure “to inspect the bottle for flaws and weaknesses before delivery to Michigan.” In fact, there is no evidence supporting this contention. The plaintiff’s own expert testified that this bottle had no material or mechanical defect. He stated that as far as he could tell it was “a reasonably, normal commercial bottle of its type.” Indeed, even the trial court felt that a defect had not been proven: “There was really no defect under the evidence, or at least no shown defect, as in those bottles, or in the bottle that came from the factory of Glenshaw Glass Company.”

Smith argues that it was permissible to allow the jury to presume that the bottle had a defect since it broke under these particular circumstances. We find no support for such a proposition in Indiana law, the applicable law in this diversity action. Just as it is the “general rule that the mere fact of injury will not create an inference of negligence,” the mere fact of the accident cannot create an inference of a defect in a products case. The plaintiff is, in effect, asking this court to adopt a modified version of the res ipsa loquitur doctrine. As counsel for Smith has conceded, the Indiana doctrine of res ipsa loquitur is not applicable under the circumstances of this case. We decline to adopt a position that will allow the plaintiff to rely on a similar type of presumption in regard to the defect question. There is no difference in policy between allowing a general presumption of negligence, as in the usual res ipsa situation, and a more limited presumption of a defect. The general rule is that the plaintiff must prove the defendant’s negligence. The res ipsa loquitur doctrine is an exception to this rule in certain cases where the injuring element was in the exclusive control of the defendant. It is based on the theory that the plaintiff cannot prove the defendant’s negligence, because only the defendant actually knows what happened:

The doctrine of res ipsa loquitur is based to a large extent upon the ground that the evidence or facts concerning the operation of the injuring

agency are within the special knowledge and control of the defendant and the injured party does not have free access to such information. In this case, the bottle was under the exclusive control of the plaintiff and she knows what happened better than the defendant. Moreover, she had the broken pieces of the bottle and had her own expert examine them to determine the cause of the breakage. Hence, there is no justification for switching the burden of proof in this case.

Since there was no evidence of any flaws or weaknesses that caused the accident, and since none can be presumed, Glenshaw’s failure to inspect, even if it could be deemed negligent, could not be the proximate cause of this injury, because there is no foundation for assuming that such an inspection would have discovered a defect and averted the accident. Mere proof of a failure to inspect is not enough:

. A failure to make an inspection does not create liability unless the inspection, if made, would have disclosed the particular defect which makes the use harmful to the other.

Obviously there could be no proof that a harmful defect would have been discovered when it was not even shown that there was a defect. This theory of liability should not have been submitted to the jury.

II

We move next to Smith’s other negligence theory: failure “to maintain quality control of the bottles in order that such bottles would be safe for intended use.” By use of the term “quality control,” it would seem that under this portion of the negligence count it is against assumed that this particular bottle was not safe for its intended uses. The contention would be that Glenshaw was under a duty to ensure that all its bottles were of a uniform quality, that Glen-shaw breached this duty and allowed an unsafe bottle to reach the plaintiff, and that this breach was the proximate cause of the plaintiff’s injuries. However, the only “evidence” that this bottle was not safe for its intended use was Dr. Dingle’s assertion that it could not have been since “it'broke.” This was not a supported expert opinion, but rather a statement of the conclusion that the plaintiff wanted the jury to reach. As indicated above, there was no objective evidence of an unsafe condition peculiar to this particular bottle and there is no basis for such a presumption. It would be improper to give a jury an opportunity to reach such a conclusion.

There is the possibility, though, that this second allegation of negligence can be read more broadly. Failure to maintain quality control could be understood to mean that the general quality of all of Glenshaw’s 28-ounce non-returnable bottles is so inferior that they are unsafe for their intended use. This would be an attack on the design of these bottles. Glenshaw’s negligence would be based on its distribution of bottles that are not capable of resisting the type of bangs and knocks it could reasonably be foreseen they would receive in normal household use. The thread of this argument runs throughout the plaintiff’s brief. However, the evidence to support such an allegation was not introduced. Dr. Dingle’s conclusionary statement would not be enough. There was no evidence offered concerning the thickness of the glass used in these bottles. There was no expert testimony or evidence to prove what degree of external force a Glenshaw bottle could withstand without breaking. Nor was there any evidence or demonstration concerning the degree of force of an average household knock.

Thus, this broader theory must also fail for lack of evidence unless Smith was entitled to some type of presumption. It appears that she is arguing that, since Glenshaw was in the best position to test the strength of its bottles but it failed to do so, the jury should have been allowed, on the basis of the accident alone, to presume that Glenshaw negligently designed and manufactured bottles that are unable to withstand a reasonable external force. The burden of proof would then be on Glenshaw to show that its bottles can withstand a reasonably expected external force. No instruction concerning such a presumption was given, nor do we believe that one should have been. The relevant consideration is not whether Smith, herself, was able to determine the strength of such bottles before one broke. Rather the question is whether at the time of trial it would be impossible for Smith to introduce evidence concerning the strength of these bottles. There was no such impossibility and no need for such a presumption.

The judgment of the district court is reversed and this cause is remanded with directions that judgment notwithstanding the verdict be entered in favor of defendant Glenshaw Glass Company.

      . Smith has not appealed from the refusal to tender instructions on the implied warranties theory.

      . Baker v. Coca-Cola Bottling Works of Gary, 132 Ind.App. 390, 177 N.E.2d 759, 762 (1961). See Ruffin v. Coca-Cola Bottling Co., 311 Mass. 514, 42 N.E.2d 259 (1942).

      . “The mere fact that an accident happened is not proof of a defective condition alleged in the complaint.” Hook v. National Brick Co., 150 F.2d 184, 187 (7th Cir. 1945).

      . Evansville American Legion Home Ass’n v. White, 239 Ind. 138, 154 N.E.2d 109 (1958); N.Y., Chicago & St. Louis R. Co. v. Henderson, 237 Ind. 456, 146 N.E.2d 531 (1957).

      . Evansville American Legion Home Ass’n v. White, 239 Ind. 138, 154 N.E.2d 109, 111 (1958).

      . Restatement (Second) of Torts § 300, comment C at 77 (1965). Accord, Hook v. National Brick Co., 150 F.2d 184 (7th Cir. 1945).

      . Admittedly, there was testimony from a non-expert, the vice-president of Michigan Beverage, that these non-returnable bottles were lighter than returnable bottles and that, therefore, they must be made of thinner glass.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. ARMITAGE SAND AND GRAVEL, INC., Respondent.
    No. 73-1978.
    United States Court of Appeals, Sixth Circuit.
    Argued April 3, 1974.
    Decided May 3, 1974.
    Margery E. Lieber, N. L. R. B., for petitioner; Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, N. L. R. B., Washington, D. C., on brief.
    Arnold Morelli, Cincinnati, Ohio, for respondent; Bauer, Morelli & Heyd, Cincinnati, Ohio, on brief; Young & Jones, Fred E. Jones, Lebanon, Ohio, of counsel.
    Before WEICK, LIVELY and EN-GEL, Circuit Judges.
   PER CURIAM.

This ease is before the Court on the application of National Labor Relations Board for enforcement of its decision and order against Armitage Sand and Gravel, Inc., reported at 203 NLRB 26 (1973).

Upon consideration of the record we are of the opinion that the order of the Board, finding a Section 8(a)(1) violation, is supported by substantial evidence.

We are further of the opinion that the order of the Board, finding a Section 8(a)(3) violation in the discharges of Finley Fox and Estill Judd, is not supported by substantial evidence. We are of the opinion that the evidence, as well as the inferences properly deducible therefrom, does not prove knowledge on the part of the company that the discharged employees had engaged in union activity.

It is clear from the record that the company has sold only part of its physical assets, but not its business. The company is no longer in business and has no place of business. There is no basis, therefore, to order compliance with the cease and desist order with respect to the Section 8(a)(1) violation, being 1. (a), (b), (c), and (d) of said order, or with the notices provided in 2. (c) and (d) thereof. The law does not require the doing of a vain act. NLRB v. Schnell Tool & Die Corp., 359 F.2d 39 (6th Cir. 1966).

Enforcement is denied with respect to the Sec. 8(a)(3) violation, and, subject to the limitation in paragraph four hereof, enforcement is granted as to the Sec. 8(a)(1) violation. It is so ordered. No costs allowed.


text:
    Merrill L. KUEHN, Plaintiff-Appellee, v. MINNESOTA MUTUAL LIFE INSURANCE COMPANY, Defendant-Appellant.
    No. 73-1735.
    United States Court of Appeals, Eighth Circuit.
    Submitted April 16, 1974.
    Decided April 23, 1974.
    Frank Claybourne and Boyd H. Ratch-ye, St. Paul, Minn., for appellant.
    Walter W. Laidlaw, Minnetonka, Minn., for appellee.
    Before HEANEY and STEPHENSON, Circuit Judges, and TALBOT SMITH, Senior District Judge.

       TALBOT SMITH, Senior District Judge, Eastern District of Michigan, sitting by designation.

   PER CURIAM.

Minnesota Mutual Life Insurance Company appeals from a jury verdict awarding plaintiff, its insured, $20,000 under the total and permanent disability provisions of its policy covering plaintiff. Appellant urges that the trial court erred in denying its motion for judgment notwithstanding the verdict', or in the alternative for a new trial.

The evidence in brief discloses that plaintiff suffered from a heart condition in August 1968. He was immediately “grounded” as a pilot for Northwest Airlines, where he had earned an annual salary which varied from $25,000 to $32,000. A month later he reached retirement age of 60. Approximately six months thereafter plaintiff accepted a position as City Manager of Normandy Park, Washington, a city of some 4,200 population. While regularly employed as a pilot, plaintiff had served as councilman and mayor of the same city. His salary as city manager was $10,000 annually. The city had a total of twelve employees, three of whom were part-time.

Plaintiff testified he usually had to lie down for an hour at noon when he went home to lunch; that he continued to have chest pains for which he took medication.

Plaintiff offered the testimony of Dr. Fox who expressed the opinion that plaintiff was totally and permanently disabled when he saw him on March 4, 1970, and that this disability continued up to the time of trial on July 25, 1973.

Appellant now contends, as it did before the trial court, that no reasonable man could conclude that plaintiff was totally and permanently disabled during the period he was working as city manager. We conclude, as did the trial court, that a jury issue was created. No exception was taken to the trial court’s instruction on disability given to the jury. The jury arrived at a permissible verdict. We cannot interfere.

Appellant urges a new trial is warranted because the trial court erroneously allowed Dr. Fox to testify that plaintiff was totally disabled at the time of trial and, in fact, suffered an angina attack during his examination at that time. We disagree. Appellant’s position throughout the trial and now is that the mere fact that plaintiff was subsequently employed as city manager negatives any possible finding of total disability in August 1968. Under these circumstances it was appropriate for plaintiff to show not only what his condition was at the date of the beginning of his disability but in subsequent months for the purpose of establishing that it was of a continuing and permanent nature.

Finally, appellant urges that the verdict is not supported by the evidence and is contrary thereto. Although we may have arrived at a conclusion contrary to that of the jury, we cannot say that the jury could not reasonably conclude that plaintiff was totally disabled in August 1968. The mere fact that he has survived as a city manager under the conditions he described does not mandate a finding to the contrary.

Affirmed.

      . Dr. Fox’s examination included observing the electrocardiograms taken of plaintiff during his 1968 hospitalization which resulted in his being “grounded”.

      . The court’s instruction on disability was as follows:
      The question to be determined is whether plaintiff is physically able to engage in any occupation similar or comparable to that in which he was engaged before his disability, or one for which he may be capable of fitting himself within a reasonable time, and from which occupation plaintiff can earn a reasonably substantial income arising to the dignity of a livelihood in any such occupation, even though the income be not as much as he earned before the disability.
      Total disability does not mean a state of absolute helplessness, but rather a state of inability to do all substantial and material acts necessary to carrying on any calling in a customary and usual manner.
      A person may be totally disabled unless he is able to perform substantial or material parts of a gainful work or continue occupation with reasonable continuity.


author: PER CURIAM:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Donald N. GERVASI, Defendant-Appellant.
    No. 950, Docket 74-1064.
    United States Court of Appeals, Second Circuit.
    Argued and Decided April 25, 1974.
    Roger P. Williams, Asst. U. S. Atty., Buffalo, N. Y. (John T. Elfvin, U. S. Atty., W. D. N. Y., Buffalo, N. Y., on the brief), for plaintiff-appellee.
    Charles J. McDonough, Buffalo, N. Y., for defendant-appellant.
    Before LUMBARD and HAYS, Circuit Judges, and JAMESON, District Judge.

       Of tlie United States District Court for the District of Montana sitting by designation.

   PER CURIAM:

We affirm in open court the conviction of Donald N. Gervasi for possession of about $50,000 in $20 counterfeit Federal Reserve Notes, in violation of 18 U.S.C. § 472. There can be no complaint with Chief Judge Henderson’s charge on entrapment, which apparently resulted in a verdict of acquittal on the first three counts of the indictment, as the judge was not required to give any charge on entrapment in the light of the evidence adduced at trial.

Gervasi also claims that the sentence of seven years imprisonment imposed by Judge Henderson constituted cruel and unusual punishment in viola-, tion of the eighth amendment. While we do not agree with Gervasi’s claim that his seven-year sentence violates his eighth amendment rights, we do feel that the sentence may be unnecessarily harsh in view of the presentence report and the proceedings at sentencing.- We therefore urge the district court to give careful consideration to any motion for reduction of sentence, pursuant to Rule 35, Federal Rules of Criminal Procedure.


text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, The United States Playing Card Company, Intervenor, v. CINCINNATI LOCAL 271, LITHOGGRAPHERS & PHOTOENGRAVERS INTERNATIONAL UNION, AFL-CIO, Respondents.
    No. 73-1922.
    United States Court of Appeals, Sixth Circuit.
    Argued April 4, 1974.
    Decided April 16, 1974.
    Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, John H. Ferguson, Richard A. Cohen, Attys., National Labor Relations Board, Washington, D. C., on brief, for petitioner.
    Harold S. Freeman, Gregory L. Hell-rung, Cincinnati, Ohio, on brief, for in-tervenor, The United States Playing Card Co.; Dinsmore, Shohl, Coates & Deupree, Cincinnati, Ohio, of counsel.
    Eugene Cotton, Russell Woody, Chicago, 111., on brief, for respondents; Cotton, Watt, Jones, King & Bowlus, Chicago, 111., of counsel.
    Before CELEBREZZE, McCREE and ENGEL, Circuit Judges.
   ORDER

This cause came on to be heard on the record and the briefs and arguments of counsel. Upon due consideration thereof, the court is of the opinion that while it might have been better to defer the issues therein to arbitration, the Board’s failure to do so does not amount to an abuse of discretion, and it further appearing to the court that the decision and order of the Board, reported at 204 NLRB No. 65, are supported by substantial evidence on the record as a whole, now therefore

It is ordered that the order of the Board be and it is hereby enforced.


text:
    UNITED STATES of America, Appellee, v. Saul M. KOHN, Appellant.
    No. 1032, Docket 74-1217.
    United States Court of Appeals, Second Circuit.
    Argued May 9, 1974.
    Decided May 10, 1974.
    Aaron R. Schacher, Brooklyn, N. Y., for appellant.
    Ethan A. Levin-Epstein, Asst. U. S. Atty. (Edward John Boyd, V, U. S. Atty., for the Eastern District of New York, Raymond J. Dearie, Asst. U. S. Atty., on the brief), for appellee.
    Before ANDERSON, FEINBERG and MANSFIELD, Circuit Judges.
   PER CURIAM:

The judgment of the district court is affirmed upon the well considered opinion of Judge Costantino. 365 F.Supp. 1031 (1973).


text:
    The UNITED STATES of America ex rel. Elmer George ROE, Relator-Appellant, v. PEOPLE OF the STATE OF NEW YORK, Respondent.
    No. 991, Docket 73-2492.
    United States Court of Appeals, Second Circuit.
    Argued May 10, 1974.
    Decided May 10, 1974.
    Joseph B. Mistrett, Buffalo, N. Y., for relator-appellant.
    Arlene R. Silverman, Asst. Atty. Gen. (Louis J. Lefkowitz, Atty. Gen., of the State of New York, Samuel A. Hirshow-itz, First Asst. Atty. Gen., on the brief), for respondent.
    Before ANDERSON, FEINBERG and MANSFIELD, Circuit Judges.
   PER CURIAM:

We affirm the denial by the United States District Court for the Western District of New York of appellant’s petition for a writ of habeas corpus, upon the thorough opinion of Judge Curtin. 363 F.Supp. 788 (1973).


author: KUNZIG, Judge:

text:
    GLASGOW ASSOCIATES v. The UNITED STATES.
    No. 178-65.
    United States Court of Claims.
    Feb. 20, 1974.
    William Hart, New York City, for plaintiff; Robert R. Hume, New York City, attorney of record. Dale W. House, Hart & Hume, New York City, of counsel.
    John W. Showalter, Washington, D. C., with whom was Acting Asst. Atty. Gen., Irving Jaffe, for defendant Judith Ann Yanello, Washington, D. C., of counsel.
    Before NICHOLS, KASHIWA, and KUNZIG, Judges.
   OPINION

KUNZIG, Judge:

At issue in this suit for recovery of $200,000 is whether the Government, through various uncontroverted actions, breached a Capehart Housing contract between the Air Force and plaintiff. We hold for defendant, rejecting plaintiff’s assertion that the Government’s course of conduct constituted actionable breach.

The present action represents the sole surviving claim of a 14-count petition filed by plaintiff in this court for uncompensated costs arising under plaintiff’s Capehart Act contract for the construction of 460 housing units at Glasgow Air Force Base, Montana (Glasgow). By decision of June 13, 1967, the Armed Services Board of Contract Appeals declined consideration of this count on the ground that it lacked jurisdiction over it. To expedite the court’s de novo consideration of this final claim, the parties have stipulated “all the pertinent facts,” which are summarized as follows:

Plaintiff is a joint venture organized for the purpose of contracting with defendant for the construction of Capehart Housing under section 803 of the National Housing Act. On November 24, 1958, the Department of the Air Force issued Invitation for Bid (IFB) No. 13-606-59-32 for the construction of the Glasgow housing project. At that time, the statutory maximum interest guaranty rate for Capehart Housing mortgages was 4 y2 per cent while the maximum rate permitted by the Commissioner of the Federal Housing Administration (FHA) by administrative rule pursuant to the National Housing Act was 4% per cent. In accordance with this administrative rule, IFB 13-606-59-32 contemplated that the contractor would obtain financing at an interest rate not exceeding 4%. per cent.

The availability of private construction mortgage funds, which are required for Capehart Housing, was dependent on the FHA guaranty. Since the maximum interest rate which FHA would guarantee was lower than the prevailing rate, Capehart borrowers were required (even with the FHA guaranty) to pay an additional fee by way of a discount or “points” to obtain financing. The amount of these additional fees was fixed by lenders who received such “points” in addition to interest charged.

On January 24, 1959, plaintiff submitted its bid. Plaintiff computed the cost to it of obtaining financing as three “points,” or approximately $220,000, and included this sum in its bid. At this time, plaintiff had not yet actually secured private financing.

On February 17, 1959, Thomas Hef-feran, the Director of Real Property Management, Office of the Assistant Secretary of Defense for Properties and Installations, advised the Under Secretary of the Air Force, Assistant Secretary of the Army, and Assistant Secretary of the Navy as follows:

After careful consideration of recent trends in the market for Capehart housing mortgages, this office has recommended to the Federal Housing Commissioner that the interest rate on Capehart mortgages be increased from 4% percent to 4% percent, the current statutory maximum rate.
In view of the fact that the announcement of the increased rate will doubtless have an adverse effect on the 4j4 percent mortgages, it appears that every possible step must be taken to reduce to a minimum the number of projects affected by the change.

Beginning in mid-February, rumors circulated throughout the financial community that a change in the maximum permissible interest rate was probable.

The Hefferan memorandum was received by the office of the Assistant Secretary of the Air Force for Installations on or shortly before February 25. On February 25, it was forwarded through a routine chain of operation to the Housing Division of the Assistant Secretary’s office. One of the functions of this division was to review the three lowest bids for a construction contract and to recommend award to the lowest qualified bidder.

Under date of Friday, February 27, 1959, the Housing Division issued plaintiff a Letter of Acceptability advising that plaintiff’s bid was the lowest acceptable for IFB 13-606-59-32 and directing completion of various requirements in preparation for initial closing of the contract. On this date, the individuals involved on behalf of defendant in the contracting process with plaintiff did not have actual knowledge of when, if at all, the Commissioner of FHA would officially increase to 4% per cent the maximum permissible interest guaranty rate.

Announcement of such an increase was made by the Commissioner on the following Monday, March 2, effective following the close of business that day. The news release stated:

This action was taken as a result of a recommendation from the Department of Defense and of analysis of the current mortgage market by the Federal Housing Administration indicating the necessity for such an increase in order to improve the flow of funds to [the Capehart] program.

At no time prior to the FHA announcement did defendant advise plaintiff of the contemplated interest guaranty rate increase.

Plaintiff received the Letter of Acceptability on March 6. By memorandum dated that same day, the Assistant Secretary of Defense for Properties and Installations advised the Under Secre-tai’y of the Air Force, the Assistant Secretary of the Army, and the Assistant Secretary of the Navy as follows:

Effective March 3, 1959 the new interest rate will be applied to Capehart projects in accordance with the following criteria:
1. Projects which were advertised and bid at 4(4 percent will be closed at 4(4 percent, as follows:
a. Letter of Acceptability issued —no exception.
b. Letter of Acceptability not issued — if hardship is clearly demonstrated and is directly attributable to the lower interest rate, all bids should be rejected and the project re-advertised.
2. Projects currently under advertising (bids not opened) at 4(4 percent will be subject to the new rate and advertising will be amended accordingly.
3. Projects advertised subsequent to the effective date will be subject to the rate prescribed by the FHA rules and regulations at the time of advertising.

On April 30, 1959, the parties entered into a contract for the construction of the Glasgow Capehart project. Plaintiff at that time also delivered to defendant various documents required under the Letter of Acceptability, including evidence of the fact that plaintiff had arranged financing the project with mortgages bearing a 4(4 per cent interest rate. The actual cost to plaintiff of obtaining a financing commitment, which was accomplished subsequent to the March 2 guaranty rate announcement, was 5% “points,” or $419,678, approximately $200,000 more than plaintiff originally estimated and included in its bid. It is this last amount of additional cost which plaintiff here seeks to recover.

• A decade ago, this court rejected a similar contractor’s claim stemming from the same FHA interest guaranty rate increase on the ground that the FHA decision constituted a sovereign act for which the Government, in its role as contractor, could not be held liable for breach. Anthony P. Miller, Inc. v. United States, 161 Ct.Cl. 455, cert. denied, 375 U.S. 879, 84 S.Ct. 149, 11 L.Ed.2d 111 (1963). In the present case, however, plaintiff brings forth three new arguments in the light of Miller and decisions which have followed it. These arguments are:

(1) that defendant had a duty to disclose to plaintiff its superior knowledge of the impending interest guaranty rate increase;
(2) that defendant misrepresented in its bid documents the interest guaranty rate which would prevail at the time of contracting;
(3) that defendant hindered plaintiff’s performance of the subject contract by increasing the interest guaranty rate and by other acts in the context of that rate increase.

Defendant counters with an affirmative defense which successfully prevails over all three of these contentions, viz., that the FHA guaranty rate increase was not the proximate cause of plaintiff’s additional costs. Plaintiff’s asserted additional costs resulted not from the increase in interest rate itself, but from an increase in “points” (or additional fee) which the private lender imposed above and beyond the interest rate.

In its bid, plaintiff had already estimated $220,000 in additional fees (or three “points”) beyond the 4% per cent interest rate. An increase in the interest rate from 41/4 to 4% per cent on plaintiff’s mortgage would have resulted in an additional yield to the lender of $185,000. In other words, the Government’s action in no way assured lenders any greater yield (over the 4% per cent interest return) than plaintiff had already estimated and included as the cost of financing in its bid.

Instead, the lending institution on its own accord decided that a return of $185,000 above a 4% per cent mortgage, as would be obtained with a 4% per cent mortgage, was not sufficient. It decided it wanted to keep charging three “points” on the yield which would be returned at the increased 4y2 per cent interest rate. This could be and was accomplished by charging approximately 5% “points” above plaintiff’s fixed 4% per cent guaranteed interest rate to throw off $420,000 in additional fees rather than the $220,000 estimated by plaintiff.

Thus, it was the lender’s desire to reap a yield of $420,000 in additional fees which résulted in plaintiff’s additional costs here, not the Government’s decision to permit a yield of $185,000 above a 4% per cent mortgage by raising the guaranteeable interest rate to 4y2 per cent. In reaching this conclusion, we are troubled by the incomplete nature of stipulated facts surrounding this technical issue. On balance, however, our decision must be governed by the basic precept that it is the plaintiff who carries the burden of proof in establishing breach of contract and this responsibility encompasses ensuring that the stipulated facts adequately support its cause of action.

On the record as stipulated, the Government’s action cannot be seen to have directly or proximately caused plaintiff’s asserted injury. See National Bank of North America v. United States, 456 F.2d 754, 760, 197 Ct.Cl. 948, 959 (1972). As we said on this issue in Miller, 161 Ct.Cl. at 470-471:

The important consideration is that 414% financing was available albeit at a greater discount than plaintiff apparently wished to pay.
It could well be that this increased discount expense was due to the then state of the market and anticipated charges in the Government’s market rate. But these factors are immaterial since market fluctuations affecting the cost of financing are risks the bidder must assume just as he assumes the risk of higher labor and material costs.

Thus, the Government cannot be considered liable for plaintiff’s additional costs and the present action must fall.

Although defendant’s affirmative defense of “no proximate cause” may stand alone, we briefly now turn our attention to plaintiff’s three other arguments, each interesting and important in its own right.

We hold that the Government must also prevail on all three, considered seri-atim below:

Superior Knowledge

Plaintiff’s first argument is that relevant agents of defendant actually or constructively knew of the imminence of the FHA interest guaranty rate increase before plaintiff; that this information was vital to plaintiff’s performance of the contract; and that defendant’s failure to divulge this superior knowledge, which resulted in plaintiff’s injury, thus constituted a breach of contract. It is established that the superior knowledge principle, as it has developed since Miller, stands independent of the sovereign act defense. See J. A. Jones Construction Co. v. United States, 390 F.2d 886, 887, 182 Ct.Cl. 615, 618 (1968); Hardeman-Monier-Hutcherson v. United States, 458 F.2d 1364, 198 Ct.Cl. 472 (1972). Thus,

while the defendant had no obligation to prevent (and, indeed, was free to precipitate) the avalanche that buried the contractor, it was not free, if it was aware of the impending avalanche and knew that [the bidder] was not, to stand aside and let the bidder be overwhelmed without warning.

J. A. Jones Construction Co. v. United States, supra, 390 F.2d at 888, 182 Ct.Cl. at 619.

But did the Government have superior knowledge in this case? Was it withheld so as to cause plaintiff’s loss ?

From the stipulated facts, we can reasonably infer that plaintiff had sufficient notice to protect itself both before and after the interest guaranty rate announcement.

First, the parties have stipulated that it was not customary for Capehart contractors to enter into firm construction mortgage commitments before their bids were accepted because such prior commitments required substantial “standby” fees. Yet, we believe that a departure by plaintiff from such customary practice would have been reasonable in light of the rumors which circulated in the financial community by early February 1959 concerning an impending increase in the FHA guaranty rate. Does' plaintiff ask us to believe that in its world of construction and finance it had never heard of the possibility of changing interest rates? Again, of special relevance in this regard is our statement in Miller that “market fluctuations affecting the cost of financing are risks the bidder must assume just as he assumes the risk of higher labor and material costs.” Anthony P. Miller, Inc. v. United States, supra, 161 Ct.Cl. at 471.

Second and more importantly, even after the public announcement of the guaranty rate increase, plaintiff retained the option of mitigating damages which it anticipated would result. Upon receipt of its Letter of Acceptability, plaintiff was obligated only to complete necessary arrangements in preparation for the initial closing of the construction contract. Among ‘these arrangements was the securing of private financing for the construction undertaking. Had plaintiff determined it disadvantageous to secure financing for the increased “points” in question without obtaining defendant’s agreement to defray such higher expenses, plaintiff could have refused to enter the binding contract for construction of the Glasgow project and forfeited only liquidated damages (in this case, $25,000) in the process. This, in fact, was the option selected by the contractor in Miller. Indeed, the present factual situation is less favorable to plaintiff than that in Miller since here there is no evidence that plaintiff balked at securing financing subsequent to the guaranty rate increase. In summary, we find the assertion of superior knowledge here to be factually without merit since plaintiff had sufficient notice of the FHA interest guaranty rate increase to protect itself against any resulting additional costs. See Ambrose-Augusterfer Corp. v. United States, 394 F.2d 536, 547, 184 Ct.Cl. 18, 38 (1968); J. A. Jones Construction Co. v. United States, supra 390 F.2d at 893, 182 Ct.Cl. at 628; Bateson-Stolte, Inc. v. United States, 172 F.Supp. 454, 457, 145 Ct.Cl. 387, 392 (1959).

Misrepresentation

Regarding plaintiff’s second contention, we hasten to affirm at the outset that plaintiff may not be heard to suggest that the Air Force represented that the 4]4 per cent FHA interest guaranty rate, which prevailed when the Glasgow project IFB was issued, would remain unchanged through the time at which plaintiff secured its construction financing. It is established beyond dispute that one Government agency is without power to bind another to refrain from performing a sovereign act. Anthony P. Miller, Inc. v. United States, supra, 161 Ct.Cl. at 471-472; Bateson-Stolte, Inc. v. United States, 305 F.2d 386, 389, 158 Ct.Cl. 455, 460 (1962).

According to a recent pronouncement of the principle of misrepresentation in bid documents, defendant did have a continuing responsibility to exercise reasonable care to discover if, by the time of contracting, its representations were characterized by any “substantial incorrectness.” Womack v. United States, 389 F.2d 793, 799, 182 Ct.Cl. 399, 410 (1968). In neither the type of misrepresentation alleged nor the degree of awareness of defendant’s contracting agents, however, does the situation at bar approach that presented in Womack, where the defendant’s agent was manifestly negligent in carrying out an inspection visit for the purpose of expediting performance of the subject contract. In addition, as indicated in our discussion of the superior knowledge contention above, the situation at hand is one in which plaintiff “could and should have helped itself” as regards the adverse impact of the FHA interest guaranty rate increase. Aerojet-General Corp. v. United States, 467 F.2d 1293, 1303, 199 Ct.Cl. 422, 439 (1972). We find no actionable misrepresentation on the part of defendant.

Hindrance of Performance

As indicated above, plaintiff’s argument that the Government breached its implied duty not to hinder the contractor’s performance of his undertaking by increasing the FHA interest guaranty rate was disposed of in Miller. The court there applied the time-tested precept that

“the United States when sued as a contractor can not be held liable for an obstruction to the performance of the particular contract resulting from its public and general acts as a sovereign.” Horowitz v. United States, 267 U.S. 458, 461 [45 S.Ct. 344, 69 L.Ed. 736] (1925); Deming v. United States, 1 Ct.Cl. 190 (1865).

Anthony P. Miller, Inc. v. United States,. supra, 161 Ct.Cl. at 472.

We find no reason to believe the application of this principle to the action here in question has lost any vitality since Miller. Indeed, it has since been reinforced by our decision in Air Terminal Services, Inc. v. United States, 330 F.2d 974, 165 Ct.Cl. 525, cert. denied, 379 U.S. 829, 85 S.Ct. 57, 13 L.Ed.2d 38 (1964). There we held, 330 F.2d 974, 165 Ct.Cl. at 532, that an implied warranty not to hinder a contract’s performance cannot be discerned when statutory authority, of which the public is charged with knowledge, exists for the governmental action in question. In the present case, the Capehart Act put the public — and certainly Capehart contractors — clearly on notice that the Commissioner of FHA was empowered to raise at his discretion the federal housing interest guaranty rate to 4% per cent.

Plaintiff further contends that defendant effectively hindered performance of the subject contract through other actions taken in the context of the guaranty rate increase. Specifically, plaintiff urges that promulgation of Defense Department guidelines allowing cancellation and rebidding of some Cape-hart projects for which letters of acceptability had not issued before the FHA interest rate increase, but requiring performance at the 4%, per cent interest rate of projects (including plaintiff’s) for which letters of acceptability had already issued, constituted hindrance of plaintiff’s performance of the Glasgow project. In issuing such guidelines, plaintiff argues, defendant acted in its role of contractor, not sovereign. We reject, however, this effort to delimit defendant’s sovereign act immunity. Reasonable steps by the appropriate Government agency to put into effect a sovereign act can no more than the act itself be considered a breach of the implied duty not to hinder contract performance. Consequently, we find plaintiff’s final argument to be without merit.

CONCLUSION OF LAW

Upon the foregoing opinion, which contains the essential findings of fact as stipulated by the parties, the court concludes as a matter of law that plaintiff’s claim for recovery of additional costs should not be allowed. Accordingly, the petition is dismissed.

      . Ten of the 14 counts were disposed of upon remand to the Armed Services Board of Contract Appeals, and three others on cross-motions for summary judgment decided by this court by order, 198 Ct.Cl. 991 (1972).

      . Burl Johnson Associates & Glasgow Associates, 67-2 BCA If 6398.

      . Hence, the Wunderlich Act (41 U.S.C. §§ 321, 322), which normally obtains in government contract cases, is not applicable here.

      . Amendment of August 11, 1955, ch. 783, Title IV, § 401, 69 Stat. 635. Because the operation of the Capehart Act is thoroughly reviewed at Anthony P. Miller, Inc. v. United States, 161 Ct.Cl. 455, 457-458 (1963), explanation of this amendment to the National Housing Act is unnecessary here.


author: MARKEY, Chief Judge.

text:
    The UNITED STATES, Appellant, v. JOHN V. CARR & SON, INC., Appellee.
    Customs Appeal No. 5536.
    United States Court of Customs and Patent Appeals.
    April 25, 1974.

      Irving Jaffe, Acting Asst. Atty. Gen., Andrew P. Vance, Chief, Customs Section, Robert B. Silverman, New York City, for the United States.
    Barnes, Richardson & Colburn, New York City, attorneys of record, for ap-pellee. Joseph Schwartz and Irving Levine, of counsel.
    Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE and MILLER, Judges.
   MARKEY, Chief Judge.

This appeal is from the decision and judgment of the United States Customs Court, 70 Cust.Ct. 80, C.D. 4411, 358 F. Supp. 280 (1973) sustaining appellee’s claim that the subject merchandise was improperly classified. We reverse.

THE IMPORTATIONS

The merchandise consists of two kinds of transistorized printed wiring board assemblies, one invoiced as a “control board” and the other as a “protective circuit board.” Both assemblies are used as parts of a pulse modulation system for operating fork lift trucks. In such a system, the motor is supplied with energy in distinct pulses spaced at equal intervals of time through a solid state switch device in the battery circuit. The control board provides electrical pulses to control the opening and closing of the device. The pulses are varied in width by the operator to provide stepless control of the motor speed. According to appellee’s witness Evans, the protective circuit board monitors the control board and “induces a large con-tactor to open the power circuits” in case of malfunction of the control board.

THE CLASSIFICATIONS AND STATUTES

The importations were classified under TSUS item 685.90 reading:

Electrical switches, relays, fuses, lightning arresters, plugs, receptacles, lamp sockets, terminals, terminal strips, junction boxes and other electrical apparatus for making or breaking electrical circuits, for the protection of electrical circuits, or for making connections to or in electrical circuits; switchboards (except telephone switchboards) and control panels; all the foregoing and parts thereof .............17.5% ad val.

The claimed classification as approved by the Customs Court was TSUS item 692.40, which reads in pertinent part: Fork-lift trucks, platform trucks and other self-propelled work trucks, * * *; and parts of the foregoing trucks and tractors.

Other tariff provisions involved are: General Headnotes and Rules of Interpretation:

10. General Interpretative Rules. For the purposes of these schedules—
* -X- * -X- * -X-
(e) in the absence of special language or context which otherwise requires—
(i) a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of articles of that class or kind to which the imported articles belong, and the controlling use is the chief use, i. e., the use which exceeds all other uses (if any) combined;
(ii) a tariff classification controlled by the actual use to which an imported article is put in the United States is satisfied only if such use is intended at the time of importation, the article is so used, and proof thereof is furnished within 3 years after the date the article is entered;
******
(ij) a provision for “parts” of an article covers a product solely or chiefly used as a part of such article, but does not prevail over a specific provision for such part.

THE DECISION OF THE CUSTOMS COURT

The Customs Court held that the importations were excluded from TSUS item 685.90 “because they are unrelated to electrical power circuits,” relying on United States v. General Electric Co., 441 F.2d 1186, 58 CCPA 152, C.A.D. 1021 (1971). Accordingly, it was deemed unnecessary to consider “the common meaning of the terms employed in item 685.90 to describe the articles covered thereby.” As to item 692.40, the court held that the provision for parts of fork-lift trucks in that item “is not a tariff classification which is controlled by the chief use principle of general rule 10(e)(i).” It then stated:

* * * General Interpretative Rule 10(ij) states, among other things, that a provision for “parts” of an article covers a product solely or chiefly used as a part of such article. Thus, “actual use” of the imported merchandise governs a “parts” tariff classifi'cation provision, subject, of course, to the relative specificity principle written into general rule 10(ij). And “actual use” is excepted from the chief use principle set forth in general rule 10(e) (i) relied upon by the defendant. In this connection, it is to be noted that our appeals court in C.A.D. 1021 sustained the “parts” classification contended for by the importer on the basis of the record evidence of the “actual use” of the imported parts without regard to any consideration of the chief use principle set forth in general rule 10(e) (i).
Hence, in line with the require- ' ments of general rule 10(ij), plaintiff need only prove here the actual use of the imported boards as a predicate for classification under item 692.40. And the court is satisfied from the instant record that plaintiff has established the imported boards to be parts of fork-lift trucks within the meaning of item 692.40 consistent with the requirements of general rule 10(ij).

Having found that appellee’s evidence established that the importations were actually used in the manufacture of fork-lift trucks by the importer, Allis-Chalmers Manufacturing Company, the court found the claim for classification of the imported control and protective circuit boards under item 692.40 as parts of fork-lift trucks to be sustained by the record, which included testimony of two witnesses for appellee and one for appellant along with certain exhibits.

OPINION

With great deference to the fact that the learned trial court heard the witnesses and observed the initial presentation of the exhibits, we think the court erred in its application of General Electric to the present facts. There the goods were jacks for insertion into radio circuits to convey audio signals to earphones. We stated:

We cannot agree with appellant’s argument that rule 10(ij) requires that the provision of item 685.90 for “other electrical apparatus for making or breaking electrical circuits” must prevail over the provision for parts of radio reception apparatus in item 685.-22. This is because we think the Customs Court was correct in its holding that the imported jacks, used in low current audio circuits, are not specifically provided for in item 685.90 since the items enumerated therein all relate to electrical power circuits.

We then expressed the opinion that the jacks there were “not * * * the type of article [that] Congress intended to encompass by item 685.90” and concluded that “ ‘other electrical apparatus for making or breaking electrical circuits’ in item 685.90, TSUS, is not a specific provision [rule 10 (ij)] for the imported jacks.”

In General Electric and in Midland International Corporation v. United States, 62 Cust.Ct. 164, C.D. 3715, 295 F.Supp. 1101 (1969), cited therein, it was held that the items in 685.90 relate to power circuits, as contrasted to audio circuits. There is no contention and no evidence indicating that the circuits here involved are low current audio circuits. The testimony of appellee’s own witnesses is that 500 to 800 amperes may pass through the “major power circuit.” The control board itself carries five to ten amperes. The present importations participate directly in the operation of the switch elements that control energization of the motor. Thus they do relate to the main power circuit and General Electric does not constitute authority for excluding the present importations from item 685.90.

The Customs Court thus should have considered the common meaning of the terms employed in item 685.90 in light of the evidence of record, before holding the classification of the District Director erroneous. On examination'of the evidence, we are convinced that the importations are within the common meaning of at least certain of the articles in 685.90, including particularly “other electrical apparatus for making or breaking electrical circuits, for the protection of electrical circuits, or for making connections to or in electrical circuits; * * * control panels; * * * and parts thereof.” We therefore hold that appellee has failed to carry the first portion of its burden, i. e. to overcome the presumption that the District Director’s classification was correct. See New York Merchandise Inc. v. United States, 459 F.2d 1047, 59 CCPA 127, C.A.D. 1052 (1972); 28 U.S.C. § 2635(a).

The Customs Court further erred in holding that the actual use of the importations in issue governs their tariff classification. That holding is not supported by rule 10(ij), supra, which limits the provision for “parts” of an article to a product “solely or chiefly used” as a part of such article. The court apparently considered the reference to “actual use” in the parenthetical expression in general rule 10(e) (i) as creating an exception to rule 10(ij). But that parenthetical expression means that “actual use” is to be considered only when the tariff classification under review is controlled by actual use. Nothing in the law argued by the parties or in the evidence of record demonstrates that either item 685.90 or item 692.40 is so controlled. Hence, rule 10(ij) was fully applicable herein and appellee, to sustain its claimed classification as “parts of fork lift trucks,” was required to prove sole or chief use as such. The evidence of record does not convince us that the present importations are solely or chiefly used as parts of fork lift trucks.

The Customs Court’s reference to our decision in General Electric as sustaining a “parts” classification is mistaken. The subject of “sole” or “chief” vs. “actual” use is not discussed in that opinion. The decision of the Customs Court, which we sustained in General Electric, specifically held that the importer had established chief use, as required by rule 10(ij). (63 Cust.Ct. 140 at 145)

Appellee has thus failed to meet the second portion of its burden, i. e. to establish that the claimed classification is correct. See New York Merchandise Inc. v. United States, supra. The judgment of the 'Customs Court must be reversed.

Reversed.

      . An effort, based on General Electric, to incorporate a requirement for use with electric power in TSUS item 685.15, “insulated electrical conductors, other,” was not accepted by the court in United States v. Ampex Corp., 59 CCPA 134, 460 F.2d 1086, C.A.D. 1054 (1972).

      . Appellee argues in his brief that mention of “Electrical apparatus for the protection of electrical circuits; control panels; and parts thereof” in the District Director’s reference to item 685.90, in affirming the classification in response to the protest, limits the presumption of correctness to the speci-tied articles. We think appellee’s argument is wrong. It is apparent from the record that all the items in 685.90 were considered in issue throughout the proceedings below. Moreover, limitation of the presumption is not entitled to our consideration because it was raised here for the first time. See United States v. Superwood Corporation, 52 CCPA 57, C.A.D. 858 (1965).

      . There is evidence that articles similar to the control board were sold to a submarine builder and to the Post Office a few years prior to the time of the present importations.


author: LANE, Judge.

text:
    GREEN GIANT CO., Appellant, v. The UNITED STATES, Appellee.
    Customs Appeal No. 5533.
    United States Court of Customs and Patent Appeals.
    April 25, 1974.
    Glad, Tuttle & White, San Francisco, Cal., attorneys of record, for appellant. Edward N. Glad, San Francisco, Cal., of counsel.
    Irving Jaffe, Acting Asst. Atty. Gen., Andrew P. Vance, Chief, Customs Section, Saul Davis, New York City, for the United States.
    Before MARKEY, Chief Judge, and RICH, BALDWIN, LANE and MILLER, Judges.
   LANE, Judge.

This is an appeal from the judgment of the United States Customs Court overruling appellant’s protest against the classification of certain blanched and frozen mushrooms as “fresh” mushrooms under item 144.10 of the Tariff Schedules of the United States (TSUS), and rejecting appellant’s claim that the imported mushrooms are “otherwise prepared or preserved” under item 144.20, TSUS. We reverse.

The pertinent statutory provisions are as follows:

Mushrooms, fresh, or dried, or otherwise prepared or preserved:
144.10 Fresh ......................... 50 per lb. + 25% ad val.
* * * Dried ......................... * * *
144.20 Otherwise prepared or preserved .. 3.20 per lb. on drained wt. + 10% ad val.

The imported merchandise consisted of mushrooms which were grown and processed in Taiwan. The processing consisted of: (a) washing, (b) sorting, (c) trimming, (d) blanching, and (e) “quick-freezing.” The most important steps regarding the present controversy-are washing, blanching, and freezing.

The washing step was carried out in a wash tank where the fresh mushrooms were subjected to washing and to continuous movement by flowing water.

The blanching step was carried out in a machine called a “water blancher” which is accurately described in the opinion of the Customs Court. The mushrooms are subjected to water kept at a “rolling boil” (210 °F.) for a period of 80 to 95 seconds. Mr. John L. Welch, Director of Food Science for appellant and a graduate chemist, testified (in response to questions from the bench) that the purpose of the blanching step was two-fold: first, to reduce the bacterial load in the mushrooms; and second, to inactivate the surface enzymes in the mushroom which otherwise cause excessive discoloration. Mr. Welch stated that mushrooms are 90 percent moisture or water, and he described them as being “very tender,” “very easily bruised,” and “very prone to degradation.” Mr. Welch further testified (on voir dire examination by the Government trial attorney) that the heat absorbed by the mushrooms during the blanching step initiates a “browning reaction” (shown by photographic slides which are exhibits in the case) and a 10 to 12 percent loss of moisture. The following testimony by Mr. Welch (again in response to questions from the bench) was particularly graphic in describing the changes produced by the blanching step:

The Court: * * * would you say that the blanching produces a change in the natural condition of the mushroom?
The Witness: Yes, indeed.
The Court: In what respect ?
The Witness: The tissue is disrupted. It would be like holding your hand in boiling water for a minute. You can imagine what would have occurred to the skin of your hand and also to the tissue beneath it. This also occurs to a mushroom when you blanch it.
Mr. John W. Moody, the Far East Operations Manager for appellant, fairly summarized the effects of the blanching step when he testified “ * * * by the blanching process, you partially cook * * * and retard any deterioration of the mushroom from within * *

The freezing step was carried out in a “Lewis tunnel” which is accurately described in the opinion of the Customs Court. The temperature in the tunnel is maintained between minus 45 °F. and minus 37° F. The washed, blanched and drained mushrooms are kept in the freezing tunnel for a period of 8 minutes which is sufficient to “quick-freeze” the individual mushrooms. The frozen mushrooms are then placed in polyethylene-lined shipping containers and transported to the United States via cold-storage vessels which maintain the frozen condition. The purpose of the freezing step is to increase the “shelf life” — the span of time that the mushrooms remain in an edible condition— from one day (raw mushrooms at room temperature) to two or three years (blanched and frozen mushrooms at minus 10° F.).

In addition to the foregoing evidence bearing on the processing of the mushrooms prior to importation, appellant also produced evidence of how the imported frozen mushrooms are used by consumers in the United States. Mrs. Mary E. Jordal, Director of Home Services for the Green Giant Co. and an experienced home economist, testified that the uses for the blanched and frozen mushrooms were much more limited than for raw mushrooms or canned mushrooms. This witness stated that the frozen mushrooms must be prepared by the homemaker according to the specific instructions found on the consumer carton, which was admitted as Plaintiff’s Exhibit 1. The instructions referred to describe a single method of preparation — sautéing the frozen mushrooms in a saucepan over “high heat for 5 minutes” and then reducing the heat and cooking until the mushrooms are “golden brown.” The instructions warn the consumer: “Keep frozen until ready to use. . Do not re-freeze.” When asked if the frozen mushrooms could be thawed, and then sliced and used as a raw fresh mushroom, Mrs. Jordal responded :

No, you definitely could not because if you were to simply thaw them at room temperature, they would become very squishy, rubbery, and watery and they would just look very spoiled. The appearance would be drastically altered.

The Customs Court overruled the importer’s protest on three grounds: (1) that since prior judicial interpretation of the terms “preserved” and “prepared” had established that neither blanching nor freezing constituted preparation or preservation, then blanched and frozen mushrooms were not “prepared or preserved” for tariff purposes; (2) that while appellant had established certain differences in the use of frozen mushrooms compared to fresh mushrooms, nevertheless appellant had failed to establish its claimed classification (item 144.20, TSUS); and (3) that appellant’s claimed classification was not correct because under it the rate of duty is on the “drained weight” and in the Tariff Act of 1930 this language was intended to refer to only canned mushrooms.

For the broad proposition that freezing alone does not constitute “preservation,” the lower court cited and relied on three cases: Moscahlades Bros. v. United States, 6 Ct.Cust.Appls. 399, T.D. 35973 (1915), United States v. Conkey & Co., 12 Ct.Cust.Appls. 552, T.D. 40783 (1925), and John A. Conkey & Co. v. United States, 16 Ct.Cust.Appls. 120, T.D. 42766 (1928).

Moscahlades involved fish roe treated with salt and salt water, and the specific question was whether the merchandise was properly classified as “preserved roe of fish” or, as the importer claimed, as “eggs of roe” under different paragraphs of the Tariff Act of 1913. The predecessor of this court held that the salted fish roe were not “preserved” as that word was used in the statute.

The two other cases (United States v. Conkey & Co. and John A. Conkey & Co. v. United States) involved frozen lamb from Argentina, and the specific question was whether the merchandise was properly classified as “fresh lamb” or, as the importer claimed, as “meats, prepared or preserved, not specifically provided for” under different paragraphs of the Tariff Act of 1922. The court held in each case that the frozen lamb was properly classified as “fresh lamb” by the doctrine of similitude.

The present case is clearly distinguishable from these three cases for the simple reason that this case involves more than just freezing since the mushrooms were also washed and blanched. Being aware of these distinctions, the court below cited two additional cases for the proposition that blanching alone does not constitute preparation or preservation. The two additional cases are Border Brokerage Co., Inc. v. United States, 60 Cust.Ct. 487, 284 F.Supp. 806, C.D. 3437 (1968) and North Pacific Can-ners and Packers v. United States, 64 Cust.Ct. 551, C.D. 4034 (1970).

Border Brokerage involved a green vegetable described as “fiddlehead greens.” The vegetable was blanched and frozen in Canada prior to importation. The merchandise was classified under item 137.70, TSUS, as “Vegetables, fresh, chilled, or frozen (but not reduced in size nor otherwise prepared or preserved): * * * Other,” and one of the issues was “whether blanching as a step of the freezing process, in itself constitutes preparing or preserving otherwise than by freezing.” (emphasis added) The court found that the blanching was an essential step in the commercial process of freezing fiddle-head greens. Therefore, the court held that the blanching could not in itself constitute preparing or preserving otherwise than by freezing since the blanching was a part of the overall freezing process. Thus, Border Brokerage is authority for the narrow point, not involved here, that blanching, “as a step of the freezing process,” does not in itself constitute preparing or preserving otherwise than by freezing.

North Pacific Canners involved blanched and frozen onions imported from Holland. The merchandise was classified under item 138.00, TSUS, as “Vegetables, fresh, chilled, or frozen, and cut, sliced, or otherwise reduced in size (but not otherwise prepared or preserved).” (emphasis added) The sole issue was “whether the onions at bar, which were imported with the roots, stems and outer covering removed, are cut, sliced, or otherwise reduced in size within the intendment of item 138.00.” (emphasis added) The court held, with one dissent, that plaintiff had failed to prove that the onions were not “cut, sliced, or otherwise reduced in size.” Thus, North Pacific Canners is unrelated to the issue involved in the instant appeal. Viewing the five cases cited by the court below, we find that they are of no benefit in resolving the question of law here presented.

Turning now to the appellant’s dual burden of negating the District Director’s classification and establishing the proper classification, we agree with the court below that the evidence has established certain differences in the use of blanched and frozen mushrooms compared to fresh mushrooms. The testimony of Mrs. Jordal, the home economist, demonstrated this point very clearly. Furthermore, we conclude that the evidence established that the classification as “fresh mushrooms” was erroneous. In addition to the differences in use between frozen and fresh mushrooms, the uncontroverted evidence indicated that the term “fresh mushrooms” as used in commerce referred to a mushroom which is untreated in any way after picking and removing the root. Thus, the washing step and the blanching step take the instant mushrooms clearly beyond the “fresh” category. We are convinced that the effects of the blanching step are irreversible and sufficiently drastic that the mushrooms cannot properly be classified as “fresh mushrooms.” We recognize that the term “fresh frozen” may be loosely applied to the imported merchandise, but in view of the evidence “fresh” is not an accurate descriptor of the washed, blanched and frozen mushrooms for tariff purposes.

With respect to appellant’s second burden of establishing the correct classification, we conclude that the totality of the evidence establishes that washing, blanching, and freezing the mushrooms constitutes “preparation or preservation” for tariff purposes. The same evidence which demonstrates the impropriety of the “fresh mushrooms” classification establishes the correctness of the “otherwise prepared or preserved” classification.

Mr. Welch, the Director of Food Science for appellant, specifically testified on cross examination that the washing step is a preparation step in the case of mushrooms. This is consistent with the fact that the term “fresh mushrooms,” as used in commerce, refers to mushrooms which are untreated in any way after picking and removing the root.

Mr. Welch further testified on cross examination that the process of blanching is a “preparation step” prior to freezing, which he described as a “preservation procedure.” The Government’s sole witness, Dr. Howard E. Bauman, who is the Vice President of Science and Technology for the Pillsbury Co., testified that blanching and freezing are “both preservation steps in that blanching will destroy the surface enzymes and the freezing will retard any additional changes in the product.” We note the difference in terminology used by the two witnesses, but the important point is that the testimony of both witnesses demonstrates the correctness of appellant’s claimed classification.

The Customs Court referred to the fact that the rate of duty for item 144.-20, TSUS, claimed by appellant is for the “drained weight” of the mushrooms. The reference to “drained weight” may have been specifically adopted in the Tariff Act of 1930 for canned mushrooms as the Customs Court opinion indicates. This fact, however, does not weaken appellant’s case, since the evidence tends to support appellant’s contention that blanched and frozen mushrooms were not available commercially until 1965. In any event, the language of item 144.20 is “otherwise prepared or preserved,” and this is clearly not restricted to only canned mushrooms. Since appellant’s blanched and frozen mushrooms are imported in a drained status, there is no problem in applying the rate of duty claimed.

Our conclusion based on the entire record is that appellant has demonstrated the correctness of the claimed classification for the blanched and frozen mushrooms as “otherwise prepared or preserved.” We think that this result is consistent with the intent of Congress and note that in Headnote 1(e), Subpart B [Edible Fruits], Part 9 [Edible Nuts and Fruits], of Schedule 1, TSUS, Congress has stated that “the term ‘prepared or preserved’ covers fruit which is dried, in brine, pickled, frozen, or otherwise prepared or preserved * * (emphasis added) Thus, in the case of edible fruit, Congress has equated freezing with “prepared or preserved,” and we think the same equation holds true for blanched and frozen mushrooms. For the reasons set forth, the judgment of the Customs Court is reversed.

Reversed.

      . 70 Cust.Ct. 20, 355 F.Supp. 1397, C.D. 4401 (1973).


author: RICH, Judge.

text:
    Dale A. GELLERT, Appellant, v. Joseph S. WANBERG, Appellee.
    Patent Appeal No. 9045.
    United States Court of Customs and Patent Appeals.
    May 2, 1974.

      Albert E. Strasser, 'Melville, Strasser, Foster & Hoffman, Cincinnati, Ohio, attorney of record, for appellant; John V. Gorman, Richard C. Witte, George A. Arkwright, Shlesinger, Arkwright, Garvey & Dinsmore, Arlington, Va., of counsel.
    R. V. Patrick, Boston, Mass., attorney of record, for appellee, H. L. Kirkpatrick, Martini Kirkpatrick, Fish & Richardson, Boston, Mass., of counsel.
   RICH, Judge.

This appeal is from the decision of the Board of Patent Interferences awarding priority of the fifteen counts in interference No. 96,531 to the senior party, Joseph S. Wanberg, patentee of U. S. Patent No. 3,369,545, issued February 20, 1968, on an application filed September 25, 1964, entitled “Disposable Diaper with an Integral Container and Method for Disposal” and assigned to The Kendall Company. Appellant, Dale A. Gellert, is junior party, involved on his application serial No. 498,268, filed October 20, 1965, entitled “Disposable Diaper with Integral Disposal Bag” and assigned to Proctor and Gamble Company. We affirm.

The Invention

The invention to which all of the fifteen counts in issue are directed is a disposable or throw-away diaper having a fluid-impervious bag or pouch integrally attached to the outer or rear side of the diaper, the pouch being reversible, i. e., capable of being turned inside out, after the diaper has been used, to contain the soiled diaper and provide a convenient means for its disposal. Nine of the counts are directed to the disposable diaper structure and six to the method of manipulating the diaper to effect reversal of the pouch and form a container for the soiled diaper. The parties have treated all of the counts as standing or falling together on the issue before us. Representative are the broadest article and method counts, 1 and 5:

1. A disposable diaper having a length and width sufficient to fit around and cover the lower portion of the torso of a human body from the waist at the back of the body over the crotch to the waist of the front of the body, said diaper comprising a supple, fluid absorbent body and pouch integrate [sic] therewith suitably reversible for covering envelopment of a fluid-pervious surface of the diaper after use, said fluid absorbent body having a front side and a back side, said front side having a fluid-pervious surface for contact with a body, said back side having an impervious surface for preventing strike-through of fluid absorbed in said absorbent body, and said pouch having a wall portion thereof common with at least a portion of said impervious surface at the back side of said absorbent body and the remainder of the pouch wall comprising a supple, impervious sheet attached to said body whereby said impervious surface and said sheet form opposing wall portions of said pouch and define the pouch cavity at the back of said absorbent body when the absorbent body is in use.
5. In disposing of an absorbent article upon and in which are collected body fluids, said absorbent article comprising a supple fluid absorbent body having a fluid pervious front surface soiled by said fluids and a fluid pervious back surface and a fluid impervious sheet overlying said back surface and attached to said absorbent article to form a pouch therewith wherein said sheet and said body constitute opposing wall portions of the pouch defining the pouch cavity at the back of said absorbent article, the method comprising
turning said pouch inside-out by grasping a wall portion inside said cavity and moving said wall portions with respect to each other into a position in which the respective surfaces of said wall portions are positioned in substantially the reverse of their original positions so that said back surface of the absorbent body is disposed to the exterior and the soiled front surface is disposed to the interior of the cavity formed upon turning said pouch inside-out.

The Issue

The single determinative issue, under the view we take of this case, is whether Wanberg has established an actual reduction to practice prior to Gellert’s conception in May, 1963.

The Facts Surrounding Wanberg’s Reduction to Practice

While some of the facts surrounding the Wanberg reduction to practice are disputed, it is clear that Wanberg on at least one occasion made up a sample diaper embodying the invention and demonstrated his concept of a reversible pouch to his superior at the Kendall Company by the following acts, which Wanberg alleges show a reduction to practice. A conventional disposable diaper, which had a single layer of polyethylene film backing, was modified by the addition of a second sheet of polyethylene affixed to the film backing of the conventional diaper by pressure sensitive adhesive tape along three edges thereof to form an integral pouch. Then Wanberg reached into the pouch with his hand and reversed the pouch so it was “inside out” and the diaper itself was inside the bag formed by the reversed pouch.

We must determine whether this demonstration is sufficient to constitute a reduction to practice of the invention of the counts. It is appellant’s position that “a reduction to practice under the circumstances of this case requires more than merely demonstrating the reversibility of an unused diaper, i. e., the bare demonstration of its principle of operation.” What in essence is lacking, according to appellant, is the testing of this invention under circumstances actually representing or simulating in-use conditions of the disposable diaper which has as its ultimate purpose the containment of excrement emanating from a baby.

Appellant’s Arguments

Appellant made before the board several arguments why he believed the facts do not show a reduction to practice, being essentially the reasons why he believed the invention could only be reduced to practice by applying the diaper to an infant. These arguments are repeated before us. Appellant noted that the counts all contemplate use of the diaper on humans and define a structure which is reversible “after use” or “soiled by body fluids or excrements” or relate to a method of disposing of an article “in which are collected body fluids” and which has a “front surface soiled by said fluids” and argued that the fact that the claims contain such references should dispose of the contention that it was not necessary to put the diaper on an infant to reduce the invention to practice. In appellant’s view such claim limitations established what could only be the intended functional setting for the invention and anything short of such application was not a reduction to practice.

Appellant also notes, as he did before the board, that without the application of the diaper to an infant, one could not be sure that the crushing and twisting of the diaper when in place upon an active infant would not so distort the pouch that it would no longer function upon reversal to contain the excrement. Finally, appellant questions the effect of pinning the diapers to hold them on the infant, in an apparent belief that the pinholes would so tear the pouch as to make it unable to contain the diaper upon reversal. On both of these points, the crushing and pinning, appellant cites the testimony of appellee’s witnesses, elicited upon cross examination, questioning to some extent whether the invention would work under these conditions. As to the effect of pinning, appellant further notes before us that “on June 20, 1969, Wanberg filed an application * * * [on another invention] which issued as U. S. Patent 3,585,999 on June 22, 1971 — some two months after the oral argument below,” in which Wanberg noted that the disposable diapers “are subject to tearing during or after the operation of inserting safety pins, thus * * * causing points of possible leakage at the tears.” Appellant notes correctly that this patent is not in evidence, but urges the court to take “judicial notice of it as a public record since it belies Wanberg’s contention, as well as the Board’s conclusion, that pin tearing was not a problem which should be taken into consideration.” However, we will not take judicial notice of this patent, which is not of record in the case and was not considered by the board. In re Land, 402 F.2d 801, 805, 56 CCPA 724, 728 (1968).

TheBoard’s Decision

The above and other arguments were all considered by the board which concluded that they were matters relating to commercialization of the invention. As far as reduction to practice was concerned, the board was not convinced that they would so affect the operation of disposal of the diaper by reversing the pouch as to negate reduction to practice. With respect to putting the diaper on an infant with its concomitant effect on the diaper and its disposal, the board said:

We are not persuaded that the matter of pinning as distinguished from taping diapers in place and the possible tearability of the pouch are of any particular import with respect to reduction to practice of the article resulting from the addition of the pouch-forming sheet to a diaper as distinct from the basic commercial diaper. We are not concerned with a liquid-filled bag; we are concerned with a pouch for containing possibly, a very wet diaper, a very wet and solid-soiled diaper, a solid-soiled diaper or possibly only a slightly damp diaper. Therefore, we do not regard pin holes or tears that might appear in the additional pouch-forming sheet to be of such concern, as far as functioning as a pouch is concerned, as to negate its use in its intended manner as an enclosing pouch until final disposal can be effected. We can not accept the argument that the crushing of the article between the legs of an infant will so distort the pouch, having in mind the materials used and the thickness of the impervious sheets of the pouch, that the “effective reversal” of the pouch and diaper would be prevented or obstructed.

As to the law of reduction to practice and the nature of this invention, the board said:

However, we also appreciate the incontrovertible fact that the invention involved only the modification of a conventional disposable diaper in manner having no apparent direct effect on the article to perform the normal function of a diaper while at the same time providing a pouch for easy, transitory disposition or handling of the soiled diaper prior to its ultimate disposal. As Wanberg states at page 24 of his brief, and which is not denied by Gellert,
* * * the basic Kendall disposable diaper itself was a standard article of commerce which Wanberg modified * * *, thus providing an additional feature for an additional optional purpose.

Precisely the same thing could be said of the Proctor and Gamble Pampers and of Gellert’s activities.

We note that even in the case of Chittick v. Lyons et al., supra [26 CCPA 1382, 104 F.2d 818, 42 USPQ 132 (1939)], the court indicated that all that is required for actual reduction to practice is that it be shown that it be

reasonably certain that the subject matter will perform its intended function in actual service, (our emphasis)

In the case of Gordon v. Hubbard et al., 52 CCPA 1598; 347 Fed. [2d] 1001; 146 USPQ 303; 1965 CD 958 [(1965)]; citing White v. Lemmer-man [52 CCPA 968, 341 F.2d 110, 144 USPQ 409 (1965)] and Paivinen v. Sands, [52 CCPA 906, 339 F.2d 217, (1964)] both supra, our appellate tribunal stated,

In all of the cases in which this court has reviewed whether sufficient and proper testing had occurred to establish reduction to practice, we have taken pains to point out that the nature of the testing required depends on the particular facts of each case. A certain amount of ‘common sense’ must be applied in determining the extent of testing required. ******

Mindful of the standard that is to be applied in determining the matter before us and consonant with the rule applied and the conclusion reached in the case of Neufeld v. Marte, 45 CCPA 888, 254 Fed [2d] 164; 117 USPQ 291; 1958 CD 268 [(1958)], we hold that Wanberg has proven actual reduction to practice of the invention here in issue no later than the end of the year 1962.

The board’s reference, alluded to in the second paragraph of the above state-

ment, to the activities of Gellert and his assignee, was somewhat expanded in another portion of the board’s opinion where the reference was made to the activities of Gellert whose “early demonstrations” of his invention, initially relied upon by him for an actual reduction to practice, were performed in substantially the same way in which Wanberg demonstrated his invention to his superiors. However, we agree with Gellert that there is no indication that the board considered his activities material to its decision.

OPINION

,We agree with the board that the above described acts of Wanberg are sufficient to establish an actual reduction to practice. Under decisions of this court, as noted by the board, the nature of testing which is required to establish a reduction to practice depends on the particular facts of each case, especially the nature of the invention. Applying, in the words of the court in Paivinen v. Sands, supra, a “certain amount of ‘common sense’ ” to determine the extent of testing which is required to reduce a particular invention to practice, we hold that Wanberg’s corroborated acts are legally sufficient.

In White v. Lemmerman, supra, we recognize that an invention may be tested sufficiently for its reduction to practice where less than all of the conditions of actual use are' duplicated by the tests. We said that in order to show reduction to practice, “the evidence must establish a relationship between the test condition and the intended functional setting of the invention.” We think that for this invention, which resides, as noted by the board, not in the conventional disposable diaper but rather in its modification to provide a reversible pouch at the rear thereof, such a relationship has been established. We have considered all of the various factors, such as the effect which pinning the diaper on an infant might have on the operability of the invention, and agree with the board that they are not “of any particular import with respect to reduction to practice of the article resulting from the addition of the pouch-forming sheet to a diaper as distinct from the basic commercial diaper.” As we earlier stated in Neufeld v. Marte, 254 F.2d at 167-168, 45 CCPA at 892:

Without intending to detract in the slightest from the standards which have heretofore been applied by this court in particular cases, we would point out that a certain amount of common sense must be applied in determining the extent of testing required for a reduction to practice.

The decision of the board is affirmed.

Affirmed.

      . These acts by Wanberg are fully corroborated by the testimony of Bart O’Connor. We agree with appellant that corroboration is lacking as to the further allegation by Wanberg that he poured some water on the diaper prior to reversing the pouch, but under the view we take of the case that the acts of Wanberg without the addition of water constitute a reduction to practice, this lack of corroboration is not determinative of the issue before us.

      . Much has been made by appellee of statements which Gellert made in his preliminary statement and Rule 204(c) affidavits about his own acts of reducing the invention to practice, which appellee feels ought in some way to control the legal standards of judging the sufficiency of the acts of appellant for a reduction to practice or ought at least to be considered admissions against appellant’s interest in this matter. In his Memorandum in Support of Appellant’s Motion for Leave to File a Reply Brief, appellant stated that
      Nowhere in the Board’s decision below is there any reference whatsoever to appellant’s file wrapper, his preliminary statement or Rule 204(c) affidavits, or any indication that the Board considered any of these matters as material in reaching its decision, even though raised by appellee in his brief below and responded to by appellant.
      We agree with appellant and consider that the board’s reference to the acts of appellant was only to confirm that it had already correctly concluded that the acts of appellee were legally sufficient to constitute a reduction to practice. Compare Bennett v. Sero-ta, 477 F.2d 1385, 1390 (CCPA 1973).