author: HOLLOWAY, Circuit Judge.

text:
    FIRST NATIONAL BANK IN DALLAS, a National Banking Association, Plaintiff-Appellant and Cross-Appellee, v. F. McQueen ROZELLE, DefendantAppellee and Cross-Appellant.
    Nos. 72-1864, 72-1865.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted May 23,1973.
    Decided Jan. 31, 1974.
    Rehearing Denied May 8, 1974.

      Peter B. Bradford, Oklahoma City, Okl. (Judson S. Woodruff, and McAfee, Taft, Cates, Mark, Bond & Rucks, Oklahoma City, Okl., on the brief), for plaintiff-appellant and cross-appellee.
    James D. Grigsby, Oklahoma City, Okl. (Andrew Wilcoxen, Muskogee, Okl., on the brief), for defendant-appellee and cross-appellant.
    Before PHILLIPS, HILL and HOLLOWAY, Circuit Judges.
   HOLLOWAY, Circuit Judge.

This diversity action by the bank seeks recovery on several notes and foreclosure against defendant Rozelle’s interest in oil and gas leaseholds and personal property thereon in Hughes County, Oklahoma. The trial court denied foreclosure, holding that a proper tender had been made on the indebtedness secured by the mortgage and that other indebtedness asserted by the bank was not covered by the mortgage, or had been paid. Recovery was also denied on Rozelle’s counterclaim for damages arising from allegedly wrongful refusal to release the mortgage on proper tender. Both parties have appealed. We are unable to agree with the conclusion of the trial court in ruling against the bank as to the coverage of the mortgage, but agree with the denial of recovery on the counterclaim.

The background facts concerning the transactions between the bank and Rozelle extend back for several years. The Hughes County mortgage, which is the focal point of this controversy, was executed in August, 1967, by Rozelle in connection with the borrowing of $40,000 for secondary recovery operations on the mortgaged leasehold properties in Hughes County. A note for $40,000 (note 1) was executed contemporaneously therewith. This debt was paid but additional borrowing occurred, evidenced by a $100 note (note 2) made in September, 1969, to keep the Hughes County mortgage alive, and a $15,000 note (note 3) executed in October, 1969. There is admittedly a balance owing of $9,100 on these notes.

• It is undisputed that Rozelle made a tender of this $9,100 balance before commencement of this foreclosure suit. Rozelle maintains the bank wrongfully refused the tender and refused to release, the mortgage for satisfaction of all the indebtedness covered by it. His counterclaim is premised on the statutory liability for refusal to release a mortgage as provided by 46 O.S.A. § 15. The bank maintains that it was entitled to reject the tender and to refuse release of the mortgage because a future advance clause and omnibus provision of the mortgage brought other unpaid indebtedness within the security of the mortgage.

The additional indebtedness in question was represented by three notes executed in September, 1969 — one for $109,580 (note 4); one for $50,000 (note 5); and a third for $2,500 (note 6). These funds were to be used in connection with Rozelle’s ranching operations on land in Pushmataha County, Oklahoma. A second mortgage was given by Rozelle on the Pushmataha County real estate to secure these notes.

In connection with the Pushmataha County ranching operations, Rozelle had borrowed larger amounts from Connecticut General Life Insurance Company and gave a first mortgage to the company as security. Connecticut General brought a foreclosure action in the trial court against Rozelle and also joined the bank. A decree for foreclosure of the first mortgage was entered, which has been affirmed. Rozelle v. Connecticut General Life Insurance Co., et al., 471 F.2d 29 (10th Cir.), cert. denied, 411 U. S. 921, 93 S.Ct. 1549, 36 L.Ed.2d 314. In that suit the bank cross-claimed against Rozelle for recovery on notes 4, 5 and 6 relating to the indebtedness incurred in connection with the Pushmataha County ranching operations. As reflected by the Court’s opinion and the brief of the bank on this appeal, judgment on those three notes was entered against Rozelle and in favor of the bank.

There was also an additional indebtedness of Rozelle and his mother which had been incurred in connection with cattle operations. In May, 1967, Rozelle and his mother borrowed $50,000 from the bank for the purchase of cattle. They gave a promissory note to the bank for this amount (the cattle note) and it was secured by a deed of trust on land in Garland, Texas. As will be detailed further, the bank did not seek recovery on this note in its complaint in this case, but there was a considerable amount of proof concerning this indebtedness at trial.

The foreclosure case before us now was tried to the court. The court found that in July, 1970, payment of the $9,100 balance due, plus interest, on the Hughes County indebtedness was tendered by Rozelle; that the bank refused this tender and the demand for release of the Hughes County mortgage on the ground that the bank considered the mortgage as security for all of Rozelle’s indebtedness to the bank which then was substantially in excess of the amount tendered; and that this refusal by the bank was made in good faith. The court found that Rozelle’s evidence was wholly inadequate to prove that at any time material to the case the bank had been guilty of bad faith or had intentionally acted in an arbitrary, capricious, malicious or oppressive manner toward Rozelle. The court concluded that the counterclaim was without merit and should be denied.

The court found further that Rozelle had executed the Pushmataha County notes (notes 4, 5 and 6) and that they were not paid when due; that these loans were not within the contemplation of the parties when the mortgage on the Hughes County property was given and were unrelated to the activity or interest of Rozelle in that property; and that there was no specific intent on Rozelle’s part that the omnibus provision of the Hughes County mortgage should include the loans on the Pushmataha County property. The court concluded that the security afforded by the Hughes County mortgage did not include notes 4, 5 and 6.

In connection with proof that concerned the cattle loan, the court found that the May, 1967, cattle note had been paid in full by Rozelle in January, 1968, and that the note was cancelled. The findings stated that, for reasons not satisfactorily explained by the bank, the entire amount of this obligation was transferred to the bank’s ledger sheet for Rozelle as an indebtedness of his to the bank, and that the bank deemed itself secured by the Hughes County mortgage for this debt also.

As to the bank’s right of foreclosure on the indebtedness that was held to be secured by the Hughes County mortgage, the court concluded that Rozelle was entitled to a reasonable period of 30 days from the entry of judgment within which to renew his tender of the balance due of $9,100. At the expiration of such period the court concluded that if payment was not made, the note and mortgage would then be due and payable and the plaintiff bank entitled to foreclose.

Three principal issues are presented by the appeal and cross-appeal, to which we now turn.

1. The Hughes County Mortgage and its future advance and omnibus provision.

Our first question is whether the obligations relating to the Pushmataha County ranching operations became part of the secured indebtedness of the Hughes County mortgage by operation of its future advance and omnibus provision. The mortgage was executed on August 31, 1967, to secure note 1 for $40,000 and contained the following provisions :

“ARTICLE I — Secured Indebtedness
“1.1 Provided, however, that subject to the limitation expressed in Section 1.2, this Mortgage is given to secure the following indebtedness, obligations and liabilities: (a) One certain promissory note of even date herewith executed by Mortgagor, payable to the order of Mortgagee at its office in Dallas, Texas, in the principal sum of $40,000.00,
******
“and any and all renewals or extensions of said note or notes, or any part thereof, (b) all indebtedness of Mortgagor to Mortgagee, arising pursuant to the provisions hereof, and any and all renewals or extensions of the same, or any part thereof, (c) all loans and advances which Mortgagee may hereafter make to Mortgagor, and any and all renewals or extensions of the same, or any part thereof,
******
“(f) all other and additional debts, obligations and liabilities of every kind and character of Mortgagor now or hereafter existing in favor of Mortgagee, regardless of whether such debts, obligations or liabilities be direct or indirect, primary or secondary, joint, several, or joint and several, fixed or contingent, and regardless of whether such present or future debts, obligations and liabilities may, prior to their acquisition by Mortgagee, be or have been payable to or be or have been in favor of some other person, or have been acquired by Mortgagee in a transaction with one other than Mortgagor, together with any and all renewals and extensions of such debts, obligations and liabilities, or any part thereof.
“1.2 The words ‘Secured Indebtedness,’ as used herein, shall mean all of the indebtedness, obligations and liabilities described or referred to above in paragraphs (a) through (f) of Section 1.1, provided however that the aggregate of the secured indebtedness exclusive of interest, attorneys fees and other charges shall never exceed the sum of $150,000.00, provided further that if the foregoing blank is not filled in such aggregate shall not exceed one million dollars.”
* * * * * *
“ARTICLE VI — Miscellaneous
“6.1 The rights, titles, interests, liens and powers hereunder are cumulative of each other and of all other rights, titles, interests, liens and powers which may now or hereafter exist to secure the payment of said indebtedness, or any part thereof. The security herein and hereby provided shall not affect or be affected by any other or further security heretofore or hereafter taken for the Secured Indebtedness, or any part thereof.”

As stated, the trial court found 'that the Pushmataha County loans (evidenced by notes 4, 5 and 6) were not within the contemplation of the parties when the Hughes County mortgage was executed and were unrelated to the activity or interest of Rozelle in the Hughes County property. And the court found there was no specific intent on the part of Rozelle that the omnibus provision should include those loans.

These findings are supported by direct testimony of Rozelle that he did not intend to finance any operation on the Pushmataha ranch when the Hughes County mortgage was made. He testified that the mortgage was not intended to secure the cattle loan. He also said in essence that he intended that the mortgage should be limited to loans for development of the single property (the Hughes County oil and gas leases described) .

In addition there was testimony by Rozelle and the bank officers that the loan made contemporaneously with the Hughes County mortgage was discussed as being for the purpose of secondary recovery operations on the Hughes County leaseholds. Mr. Patterson, who made the loan for the bank, testified that the inception of Rozelle’s borrowings under the mortgage was for oil and gas property development, although he could not say the funds were always used for those purposes verbally stated. And Rozelle testified that he discussed with Mr. Patterson his purpose that the loan was to pay for a “ . . . well which [he] had just completed in 1967, producing well on the property. It’s the principal purpose of the loan, the $40,000.”

In addition there was testimony by both Rozelle and Patterson relating to the $150,000 limit inserted in the “Secured Indebtedness” portion of the mortgage, quoted above. Patterson said the significance of this amount was that this was the anticipated maximum that would be borrowed under this particular mortgage; that it was not necessarily limited to that, but at the time for the purposes of the borrowings requested by Rozelle, the figure of $150,000 was used as an arbitrary one. Rozelle said the “ . . . $150,000 was the closest estimate [he] could come to at the time Mr. Patterson and [he] executed that deal as to what would be possibly required for the future development of that property.”

The bank argues that the mortgage is unambiguous and must be construed without resort to parol evidence, and that the narrow coverage given the mortgage by the trial court ignored the plain, valid provisions of the instrument. Rozelle says that all the proof of the surrounding circumstances and intent as outlined should be considered. He contends that the record supports the findings and conclusions in his favor that the Pushmataha County loans were not within the contemplation of the parties when the Hughes County mortgage was executed and were unrelated to the activity and interest of Rozelle in the Hughes County property. And he points out that the Pushmataha County ranching loans were secured by a second mortgage on the Pushmataha County property.

We must agree that the surrounding circumstances and the relationship of the parties should be taken into consideration. We must place ourselves as nearly as possible in the position occupied by the parties when the instrument was executed and then read the provisions within the four corners of the agreement. First National Bank v. Gillam, 134 Okl. 237, 273 P. 261, 265. The contract may be explained by reference to the circumstances under which it was made and the matter to which it relates. 15 O.S.A. § 163; see also Evensen v. Pubco Petroleum Corp., 274 F.2d 866, 871 (10th Cir.); Baca Land & Cattle Co. v. Savage, 440 F.2d 867, 872 (10th Cir.). And construing the contract in the light of the surrounding circumstances known to the parties at the time of its execution does not violate the parol evidence rule, even though the writing is not deemed ambiguous. Id. at 872, n. 2; Templeman v. Walker, 175 Okl. 366, 52 P.2d 737 (syllabus 2 of the Court). However, we feel consideration may not be given to the statements of either party as to their subjective intent in making the written contract. See Evensen v. Pubco Petroleum Corp., supra, 274 F.2d at 871, n. 5; Restatement of the Law, Contracts, § 230.

Thus we should consider all the proof outlined above as to the surrounding circumstances — the evidence of Rozelle’s operations and the transactions between the parties underlying the execution of the Hughes County mortgage, but not his statements merely of his own intent in giving the mortgage. The circumstances shown demonstrate that the1 $40,000 loan and the mortgage were undertaken to further the secondary recovery operations on the Hughes County leasehold. Moreover the $150,000 limit as to the “Secured Indebtedness” was related to the anticipated advances in connection with these oil and gas operations. Nevertheless the future advance and omnibus provisions in Article I are both clear and broad. By them the mortgage secures “all loans and advances which Mortgagee may hereinafter make to Mortgagor” and “all other and additional debts ... of every kind and character of mortgagor now or hereinafter existing in favor of mortgagee . . . ” We see nothing in the surrounding circumstances necessarily inconsistent with giving these terms their plain meaning and applying them so that the subsequent Pushmataha County loans to Rozelle are secured by the mortgage.

We feel the record does not support the conclusions reached by the trial court as to the limited scope of the mortgage. The finding that Rozelle had no specific intent that the omnibus provision should include the loans on the Pushmataha County property may not be sustained by his testimony as to such subjective intent on his part. Moreover the findings that Rozelle did not intend that the Hughes County mortgage would secure the Pushmataha County loans and that they were not contemplated by the parties to the mortgage are not controlling. Such an agreement to secure future advances must necessarily intend to secure sums that are indefinite and uncertain at the time the mortgage is executed. First National Bank v. Gillam, 134 Okl. 237, 273 P. 261, 265; Johnston v. American Finance Corp., 182 Okl. 567, 79 P.2d 242, 246.

A mortgage to secure future advances with terms extending the security to other obligations is recognized as valid in Oklahoma. See Gilpatrick v. Hatter, 258 P.2d 1200, 1203 (Okla.); Johnston v. American Finance Corp., 182 Okl. 567, 79 P.2d 242 (Syllabus 3 by the Court); First National Bank v. Gillam, 134 Okl. 237, 273 P. 261, 265; Paschal v. Bohannan, 59 Okl. 139, 158 P. 365. In construing a mortgage, any doubt or uncertainty as to the obligation secured operates against the mortgagee. First National Bank v. Gillam, supra, 273 P. at 265. And any fixed obligation, existing when a mortgage with such an omnibus provision is executed but not specified as secured by the mortgage, has been held not to be covered by such a provision. Id. 273 P. at 266. Nevertheless as to real and chattel mortgages, clauses of this nature have been upheld in Oklahoma and applied to subsequent indebtedness, as the authorities demonstrate.

In view of the clear provisions agreed to by the contracting parties here, and the subsequent indebtedness incurred by the mortgagor himself, we conclude that the omnibus provision brings the obligations of notes 4, 5 and 6 undertaken for the Pushmataha County operations within the “Secured Indebtedness” of the Hughes County mortgage.

2. The counterclaim for damages for refusal to release the Hughes County mortgage

Rozelle cross-appeals from the denial of recovery on his counterclaim. He argues that the record supports the trial court’s findings and conclusions that the bank should have accepted his $9,100 tender of payment on the Hughes County mortgage. He says the findings and conclusions made required a judgment in his favor for statutory damages under 46 O.S.A. § 15 for wrongful refusal to release the mortgage when the proper tender was made. And he argues that there was indifference, inadvertence and inattention by the bank as to its rights in improperly seeking foreclosure for additional indebtedness, some of which had been paid, and the remainder of which was not covered by the Hughes County mortgage.

While the trial court found that the proper tender had been made, it was also found that the bank refused the tender and the demand to release the mortgage on the ground that the bank considered the mortgage as security for all of Rozelle’s indebtedness to the bank which was substantially in excess of the amount tendered. And the court found that this refusal by the bank was made in good faith.

In view of our holding in part 1 of this opinion in favor of the bank the cross-appeal must fail. We have concluded that the bank was and is entitled to foreclosure of the Hughes County mortgage to satisfy the indebtedness on the Pushmataha County loans. Rozelle was not entitled to a release of the mortgage until all the secured indebtedness was paid, nor to damages for failure to release the mortgage. Paschal v. Bohan-nan, 59 Okl. 139, 158 P. 365, 367.

3. The cattle note

The bank argues that the trial court erred in making findings and a conclusion that the cattle note was paid. It says the issue was not within the pleadings and that the findings and conclusion may prejudice the bank in a foreclosure action in Texas relating to the loan.

The trial court found that on May 11, 1967, Rozelle and his mother executed and delivered to the bank their promissory note in the amount of $50,000 for the purpose of obtaining money with which to purchase cattle; that this note was paid in full by Rozelle on January 8, 1968, and the note was cancelled by the bank; and that for reasons not satisfactorily explained by the bank, however, the entire amount of this obligation was transferred to the bank’s ledger sheet for Rozelle as an indebtedness of his to the bank, which the bank deemed to be secured by the mortgage on the Hughes County property.

The bank’s complaint did not seek recovery on the May 11, 1967, note or any alleged renewal thereof. However, during cross-examination of the bank’s witnesses it was stated that the cattle loan indebtedness was part of the recovery sought against Rozelle and that the $50,000 loan was secured by the Hughes County mortgage. Following this testimony there was a substantial amount of proof by Rozelle tending to show that a renewal note on the May 11, 1967, note was paid and returned to him. During all such proof there was no objection or clarification by the bank that these matters were outside the issues.

After the findings and conclusions were made by the court, the bank did move to amend the findings on the cattle note as outside of the issues. The motion was denied and the findings and conclusions were not changed as to these matters.

While the point is not free from doubt, we feel the findings and conclusion concerning the note should not be disturbed. At trial the bank did not complain of surprise or inability to meet the issues or that the evidence was outside the issues. Baca Land & Cattle Company v. Savage, 440 F.2d 867, 874 (10th Cir.). In the posture of the record as the case was submitted to the trial court, it was reasonable to conclude that the status of the note was an issue tried out by consent. See Hopkins v. Metcalf, 435 F.2d 123, 124 (10th Cir.). In such circumstances the issue tried is treated in all respects as if it had been raised in the pleadings. Rule 15(b) F. R.Civ.P.

We believe the bank is not entitled to have the findings and conclusion on the note set aside. The trial court apparently felt the issue was properly before it, which was a reasonable conclusion. The findings on the point are amply supported by oral and written proof. Moreover we are satisfied that the findings and conclusion made did not make any determination adverse to the bank as to the existence of the indebtedness on the $49,900 and $100 notes which Rozelle admits he executed at about the time the $50,000 note signed by his mother and by him was found to have been paid.

For these reasons the judgment is affirmed as to the denial of recovery on the counterclaim; the findings and conclusion pertaining to the payment of the $50,000 note of May 11, 1967, are sustained and are not set aside; otherwise the judgment is vacated and the case is remanded for entry of judgment on the indebtedness remaining on notes 2 and 3; for a decree for foreclosure to satisfy the indebtedness remaining on notes 2, 3, 4, 5 and 6, and providing, however, that the “Secured Indebtedness” for purposes of such foreclosure shall not exceed the limitations provided by Article I of the Hughes County mortgage; and for further proceedings consistent with this opinion.

      . The figures of $40,000.00 and $150,000.00 are both typewritten in the original in the’blanks.

      . We note that the bank offered some proof itself as to the purposes of the loans and the surrounding circumstances and that no objection was made by the bank to the admission of testimony of Rozelle as to his subjective intent concerning the coverage of the Hughes County mortgage. However, the parol evidence rule is recognized in Oklahoma and by this court as one of positive or substantive law and not merely one of evidence. See Mid-America Corp. v. Miller, 372 P.2d 14, 18 (Okla.); Evensen v. Pubco Petroleum Corp., 274 F.2d 866, 873, n. 8 (10th Cir.); see also IX Wigmore, Evidence (3d ed.) § 2400. Thus we conclude we should hold the proof of subjective intent must be disregarded, despite the lack of an evidentiary objection, in view of the clear terms of the mortgage.

      . Such clauses have been scrutinized as suspect “dragnet” clauses, see First v. Byrne, 238 Iowa 712, 28 N.W.2d 509, especially where the mortgage is sought to be foreclosed to satisfy obligations acquired by the mortgagee from third parties. See 2 G. Gilmore, Security Interests in Personal Property 918 (1965); Wood v. Parker Square State Bank, 400 S.W.2d 898 (Tex.). The case before us involves no such indebtedness. Furthermore, the rights of third parties are not involved and thus the question of priorities does not arise.

      . Other objections were made but we feel the record does not fairly show an objection that the cattle note matter was outside the issues.

      . There was proof offered on behalf of Rozelle that the note of May 11, 1967, executed by Rozelle and his mother for the purchase of cattle, had been paid. Rozelle’s proof was that he sent a cheek forward paying the note and interest; that the note, returned to him and offered in evidence, showed that it was paid; and that copies of ledger sheets given him in March, 1970, did not reflect any continuation of this obligation. He conceded that at about this time other notes for $100 and $49,900 were executed by him, contending they were related to other operations.
      We note that Exhibit 25 offered by Rozelle was a note marked “Paid” for $50,000 dated October 30, 1967, by Rozelle and his mother to the bank, apparently a renewal note of the original cattle note of May 11, according to ledgers in evidence.
      The bank maintained that the cattle loan was never paid, since the identical $50,000 obligation was continued in force by renewal notes executed by Rozelle.

      . Judgment is not to be entered on notes 4, 5 and 6 since judgment for recovery on these obligations has previously been entered in favor of the bank in the Connecticut General case, as stated above, No. 70-137 in the district court.

      . The vacating of these remaining portions of the judgment will set aside the award of attorney’s fees in favor of Rozelle and will permit the court to reconsider the bank’s claim for an attorney’s fee in the light of this opinion. The additional provisions of the vacated judgment as to interest and funds in suspense may also be reconsidered and appropriate provisions made therefor when a new decree is entered.


source: Caselaw Access Project

author: EAST, Senior District Judge:

license: Public Domain

text:
    FORD WHOLESALE COMPANY, INC. OF SAN JOSE, a corporation, Appellant, v. FIBREBOARD PAPER PRODUCTS CORPORATION et al., Appellees.
    No. 72-2570.
    United States Court of Appeals, Ninth Circuit.
    Feb. 20, 1974.
    See also D.C., 319 F.Supp. 612.
    Maxwell M. Blecher (argued), of Blecher, Collins & Hoeeker, Hansen & Dolle, Los Angeles, Cal., Joseph M. Ali-oto, Peter J. Donnici, San Francisco, Cal., for appellant.
    E. Judge Elderkin (argued), Thomas A. Welch of Brobeck, Phleger & Harrison, San Francisco, Cal., for appellees.
   OPINION

Before CHAMBERS and KOELSCH, Circuit Judges, and EAST, District Judge.

EAST, Senior District Judge:

The plaintiff-appellant (Ford) instituted this private antitrust action for damages under Section 4 of the Clayton Act [15 U.S.C. § 15] against the defendant-appellee Fibreboard Paper Products Corporation (Fibreboard) and the remaining above-named defendants alleging that Fibreboard and the other defendants “combined and conspired to monopolize, attempted to monopolize and did monopolize trade and commerce in the relevant market in violation of Sections 1 and 2 of the Sherman Act [15 U.S.C. §§ 1, 2].”

The proceedings in the District Court progressed through a jury verdict in favor of Ford for a substantial amount.

Thereafter, the District Court, 344 F.Supp. 1323, upon various motions of Fibreboard concluded “that the evidence on the interstate issue [was] wholly insufficient, or at least so insubstantial and lacking in probative value, that there is no evidence whatsoever from which the jury might rationally have concluded that defendants restrained interstate commerce;”, set aside the jury verdict and judgment thereon in favor of Ford and on May 30, 1972, entered judgment for Fibreboard that the action be dismissed with costs to neither party.

Ford appeals and Fibreboard makes no cross-appeal from various adverse orders.

Ford asserts and we agree that “[t]he sole question before this court [on appeal] is whether the District Court was erroneous in ruling that interstate commerce was not involved in the defendants’ anticompetitive conduct which otherwise constituted a violation of Section 1 of the Sherman Act. [15 U.S.C. § 1.]”

Assuming arguendo then that there was sufficient material evidence in the record to support the jury’s finding on the substantive issue of Fibreboard’s anticompetitive conduct, we turn to the jurisdictional issue of interstate commerce involvement of Fibreboard’s anti-competitive conduct.

The record evidence on that issue is ably marshaled, surveyed and analyzed in the Memorandum of Decision of the District Court reported in Ford Wholesale Company, Inc. of San Jose v. Fibreboard Paper Products Corporation, et al., 344 F.Supp. 1323 (1972); and from our review of the record we are satisfied to refer to and rely upon that marshaling as a statement of facts herein.

We conclude for the same reasons and upon the same legal grounds set forth in the District Court’s Memorandum of Decision that the judgment entered thereon is correct in fact and at law.

Also, we are satisfied that the rationale utilized by the District Court for its judgment is wholly compatible with and justified under the test of the independent jurisdictional interstate commerce issue under the Sherman Act as correlated from prior authority and delineated in Rosen v. Rossmoor Corporation, Golden Rain Foundation, Leisure World Foundation, and Crestmark Carpet and Drapery Company, 9th Cir., 487 F.2d 373, 1973.

“The jurisdictional issue under the Sherman Act is distinct from the substantive issue of whether a given defendant’s conduct was of the kind prohibited by the Act. Rasmussen v. American Dairy Ass’n, 472 F.2d 517, 521-524 (9th Cir. 1973). The jurisdictional issue is one of constitutional power. Congress intended to extend the substantive prohibitions of the Sherman Act to the farthest reaches of its power under the Commerce Clause, thereby mandating for this nation a competitive business economy to the full extent that Congress could do so under its constitutional power to regulate interstate and foreign eom-merce. United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533, 558-559, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944). The jurisdictional question, therefore, is whether defendants’ conduct had a sufficient relationship to interstate commerce to be subject to regulation by Congress. Rasmussen v. American Dairy Ass’n, supra, 472 F.2d at 521. This, in turn, depends upon whether defendants’ conduct had a ‘substantial economic effect’ upon interstate commerce, or, ‘ “concerns more States than one” and has a real and substantial relation to the national interest’ in a competitive economy.” Citing authorities, at pages 375 and 376;
“Thus, although both the substantive ••and jurisdictional issues are often confusingly described in terms of the ‘effect’ of particular conduct upon commerce, as if a common question were presented, see, e. g., Las Vegas Merchant Plumbers Ass’n v. United States, 210 F.2d 732, 739-740, n. 3 (9th Cir. 1954), the substance of the two inquiries is quite different. An unreasonable restraint on competition may have no impact upon interstate commerce, or an impact so insignificant that regulation under the Commerce Clause is not justified as a means of protecting interstate commerce. Page v. Work, 290 F.2d 323, 331-332 (9th Cir. 1961).” and
“When the issue is whether jurisdiction exists, the focus is upon interstate commerce: whether the defendant’s conduct — unreasonably restrictive of competition or not — has a sufficient impact on interstate commerce to justify regulation under the Commerce Clause.”

It is manifest from the record that Fibreboard’s anticompetitive conduct had no significant impact on interstate commerce to justify regulation under the Commerce Clause.

When the test of Rosen was applied to the facts in that ease, it was apparent that the defendants’ anticompetitive conduct directly and substantially interfered with distribution of goods “in the flow” of interstate commerce in that carpeting coming into California from other states could not meet their destined use but remained in the warehouse of Rosen.

Likewise, the undisputed facts in Copp Paving Co., Inc. v. Gulf Oil Co., et al., 9th Cir., 487 F.2d 202, 1973, also relied upon by Ford, presented an anti-competitive conduct plagued interstate enterprise so patently diverse from Ford’s enterprise and its non-involvement in interstate commerce that further comment is not warranted except to say Copp was engaged in producing “in-strumentalities of interstate commerce.”

Affirmed.

      Honorable William G. East, Senior United States District Judge for the District of Oregon, sitting by designation.


author: JAMES HUNTER, III, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Donald Thomas MARGRAF, Appellant.
    No. 72-1331.
    United States Court of Appeals, Third Circuit.
    Argued Oct. 5, 1972.
    Submitted En Banc Jan. 3, 1973.
    Decided Feb. 14, 1974.
    Carl J. Melone, U. S. Atty., John T. Thorn, Asst. U. S. Atty., for appellee.
    Brian E. Appel, Segal, Appel & Na-tali, Philadelphia, Pa., for appellant.
    Before SEITZ, Chief Judge, FORMAN, VAN DUSEN, ALDISERT, ADAMS, GIBBONS, ROSENN and HUNTER, Circuit Judges.
   ORDER

JAMES HUNTER, III, Circuit Judge.

On November 24, 1971, Donald Thomas Margraf was convicted of a violation of 49 U.S.C. § 1472 (i) before a United States magistrate pursuant to 18 U.S.C. § 3401. On January 27, 1972, the conviction was affirmed by Judge Weiner, United States District Court for the Eastern District of Pennsylvania. 347 F.Supp. 230. On June 20, 1973, this Court, sitting en banc, affirmed the conviction (three judges dissenting). 483 F.2d 708.

Before the United States Supreme Court, the Solicitor General represented that the Federal Aviation Agency’s guidelines were not adhered to in this prosecution, and he therefore recommended that certiorari be granted and the case be remanded so that the government could dismiss the complaint.

On December 17, 1973, the United States Supreme Court granted certiorari and remanded the case to this Court to reconsider in light of the government’s present position, 414 U.S. 1106, 94 S.Ct. 833, 38 L.Ed.2d 734. No. 72-1331, filed Dec. 17,1973.

In his memorandum to the United States Supreme Court, the Solicitor General represented that

“[t]he FAA’s guidelines are not binding upon those addressed and leave room for the exercise of trained judgment in regulating the kinds of objects that passengers may carry on board aircraft. They do, however, represent an informed judgment by the expert federal agency charged with primary responsibility for assuring the safety of air commerce that only large knives or those considered illegal under state law should be considered weapons for this regulatory purpose. The Department of Justice has therefore concluded that prosecutions under Section 1472(i) should not be undertaken with respect to objects not proscribed under the guidelines, at least in the absence of unusual, aggravating circumstances, or where local law may be unduly lax in regulating the carriage of knives or other objects. Since the present case
presents no aggravating circumstances and involves no unduly lax local laws, petitioner should not be subject to prosecution.”
In accordance with the government’s current position it is therefore ordered and adjudged that this case be and is hereby remanded to the district court to allow the government to dismiss the complaint.

      “5. We do not, of course, concede that the decision of the court of appeals was wrong as a matter of law, or that the statute in question could never be applied to a knife such as petitioner’s, or that there is any requirement of specific intent or scienter.” \

      . The FA A guidelines are as follows:
      “The following guidelines are furnished to airport operators, air carriers, law enforcement personnel, and others involved in pre-board screening of passengers in making a reasonable determination of what property in possession of a passenger should be considered as a weapon or dangerous object. “FIREARMS — Including starter pistols, compressed air or BB guns and flare pistols.
      “KNIVES — All sabres, swords, hunting knives, and such other knives considered illegal by local law.
      “BLUDGEONS — Blackjacks, billy clubs, or similar instruments.
      “OTHER DEVICES OR OBJECT — Even though not commonly thought of as a dangerous weapon but the possession of which supports the reasonable presumption that it could be used as weapon, such as ice picks, straight razors, elongated scissors, and the like. Any questionable device or object to include toy or dummy weapons or grenades should be treated as a dangerous article.
      “The following objects should also be prohibited in the interest of air security: “EXPLOSIVES/AMMUNITION — -All types of explosives, ammunition, incendiaries, and fireworks whether commercially manufactured, homemade, or any combination of components to produce same.
      “GASES AND CHEMICAL AGENTS — All tear gas, mace, and similar chemicals and gases whether in pistol, pen, canister, or other container.
      “In those instances where an undeclared firearm or other obviously dangerous weapon is discovered concealed in a carry-on bag or on the person of a passenger, appropriate law enforcement authorities must be notified. ATA and AOCI requested to pass info through their channels.
      Original signed by, JAMES T. MURPHY.
      “8 February 1973.”


author: PER CURIAM:

text:
    UNITED STATES of America, Appellee, v. John L. IRELAND, Appellant.
    No. 73-1519.
    United States Court of Appeals, Fourth Circuit.
    Submitted Oct. 16, 1973.
    Decided Nov. 21, 1973.
    Thomas A. Rymer, Prince Frederick, Md., on brief, for appellant.
    George Beall, U. S. Atty., and Michael E. Marr, Asst. U. S. Atty., on brief, for appellee.
    Before WINTER, CRAVEN and BUTZNER, Circuit Judges.
   PER CURIAM:

John L. Ireland was charged with aiding and abetting the taking of migratory birds with the aid of bait on and over a baited area, in violation of 16 U.S.C. §§ 703-711 and 18 U.S.C. § 2. After a request for a jury trial was denied, Ireland was tried and found guilty by the district judge. Ireland then appealed the conviction. We affirm.

Ireland raises two grounds for reversal. The first is that sufficient evidence to permit a finding of guilt was not presented. The evidence adduced at trial was substantially conflicting. On appeal, however, the evidence to support the conviction must be viewed in the light most favorable to the government. Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942).

The case presented by the two principal government witnesses, one of whom was a federal wildlife agent and the other a state wildlife agent, may be briefly summarized as follows: The two agents heard shooting approximately a mile distant, and proceeded to the scene by boat at 30 miles per hour. At a distance of some 400 yards they saw an individual, riding alone in a green boat but too far to be identified, pull an object from the water which they claim appeared to be a dead duck. The individual, upon the agents’ approach, increased his speed and slipped into a boat blind. The agents then observed three or four ducks being thrown out of the boat blind onto the adjacent marsh. They then pulled up alongside the blind and saw Ireland in the green boat and one or two other persons on shore. While the agents lost sight of the boat and its occupant for a short time not exceeding thirty seconds after it went into the boat blind, each testified that it would have been impossible for anyone other than Ireland to have been the person in the boat who they had initially observed. Upon inspection, the agents discovered two scaup ducks in the green boat occupied by Ireland, and identified the ducks which had been thrown from the boat blind as four hen canvasbacks.

While it did not appear that Ireland himself had shot the ducks, this apparently having been done by several persons in a nearby shooting blind, this is not required by the statute for conviction. Nor is there any question that the statutory requirement that the area be baited was satisfied, since it was undisputed that the federal agent found approximately eighteen grains of com in near proximity. While there was some evidence that Ireland knew of the baiting or even baited the area himself, such knowledge is not a prerequisite for conviction. United States v. Tarmon, 227 F.Supp. 480 (D.Md.1964). Thus, since all the statutory requirements were satisfied, and since the evidence adduced was sufficient to allow the district judge to find Ireland guilty beyond a reasonable doubt, we refuse to overturn the verdict as based on insufficient evidence. United States v. Sherman, 421 F.2d 198 (4 Cir. 1970), cert. denied, 398 U.S. 914, 90 S.Ct. 1717, 26 L.Ed.2d 78 (1970).

Ireland’s second argument is that the denial of a jury trial was unconstitutional. The maximum penalty under the Migratory Bird Treaty Act is a fine not more than $500, or imprisonment not more than six months, or both. 16 U. S.C. § 707. This is statutorily classified as a petty offense. 18 U.S.C. § 1(3). The Supreme Court has held that jury trials are required only when an offense is held to invoke “serious” consequences. The dividing line determining whether an offense is serious or petty is whether imprisonment is authorized for more than six months. Duncan v. Louisiana, 391 U.S. 145, 88 S.Ct. 1444, 20 L.Ed.2d 491 (1968); Baldwin v. New York, 399 U.S. 66, 90 S.Ct. 1886, 26 L. Ed.2d 437 (1970). Ireland was thus not entitled to a trial by jury for this offense.

Accordingly, we dispense with oral argument and affirm the judgment of the district court.

Affirmed.


author: PER CURIAM.

text:
    UNITED STATES of America, Appellee, v. Eligh CLICK, Appellant.
    No. 73-1651.
    United States Court of Appeals, Eighth Circuit.
    Submitted March 15, 1974.
    Decided March 20, 1974.
    Webster L. Hubbell, Little Rock, Ark., for appellant.
    W. H. Dillahunty, U. S. Atty., and Gene O’Daniel, Asst. U. S. Atty., Little Rock, Ark., for appellee.

      Before GIBSON, BRIGHT, and STEPHENSON, Circuit Judges.
   PER CURIAM.

Defendant was convicted of possessing 22 Federal Reserve notes ($20.00 United States obligations') with intent to defraud in violation of 18 U.S.C. § 472. The District Court found defendant guilty and sentenced him to three years imprisonment.

Defendant raises one issue on appeal: the evidence was legally insufficient to support a conclusion that he possessed the counterfeit $20 bills. Rejecting that argument, we affirm the judgment of conviction.

On March 24, 1973, defendant drove two friends, Herman Lee Caldwell and John Clayborn Richardson, who were also charged with and convicted of the same violation as defendant, to Benton, Arkansas. They first visited a small cafe, the residence of a girl friend of Click, and then another restaurant. Defendant paid for a carry-out chicken dinner with a $20 bill at the second restaurant, but was later confronted in the parking lot by the owner, claiming that the $20 bill was counterfeit. Defendant returned the change given to him by the restaurant owner, whose husband meanwhile had called the police. The record does not indicate whether defendant or one of his companions paid for the dinner.

The Benton Police Department had received information concerning the passing of this counterfeit money and a description of the car defendant was driving. Sergeant Ray Richmond of the Benton Police Department observed defendant’s car and proceeded to stop it for investigation. As he was following the car driven by defendant, he noticed some paper fly out the window. Caldwell testified that he threw the counterfeit money out one of the back windows, since he learned from the restaurant owner that the money was counterfeit. A Secret Service agent, James Edward Haldeman, found $65 of legitimate currency on Caldwell after his arrest. Apparently, as the District Court found, Caldwell quickly separated, or had already separated, the legitimate currency from the counterfeit currency before tossing the bogus 22 bills out of the car’s window. Another officer, Ricky Hart, picked up the 22 counterfeit bills near the car defendant had been driving.

Defendant testified that he had earlier lost all of his “good money” in a craps game, that he borrowed $40.00 (two twenties from Caldwell), and that he lost one of these twenties in the same craps game. Caldwell testified that he had won approximately $500 in the game, much of it from a “dude” called Pine Bluff Slim, whom none of the defendants knew. Defendant stated that the $20 bill he gave the restaurant owner came from Caldwell (presumably Pine Bluff Slim lost the bogus twenties to Caldwell in the craps game) and that he did not know that it was counterfeit or that the 22 bills found outside the car were counterfeit. Defendant does not explain how a Secret Service agent found $18.00 of legitimate currency plus change on him later that evening after his arrest, when defendant, by his testimony, stated he had lost all of his legitimate money in the craps game.

Defendant argues that no evidence was introduced to demonstrate that he had possession of the counterfeit bills. We disagree.

Defendant had earlier passed a $20 bill to the restaurant owner, which appeared to her to be counterfeit. One police officer observed paper flying out of the window at the time of the investigative stop, and another officer retrieved the counterfeit bills. Defendant’s testimony concerning the legitimate currency he possessed was blatantly unreliable. This evidence was sufficient to conclude that defendant, in league with his confederates, possessed the 22 counterfeit $20 bills. It is apparent that the trio, all of whom were charged, had embarked on a program of passing the counterfeit bills. Defendant in making a small purchase proffered the $20 bill that the restaurant owner thought was counterfeit, when he also had legitimate currency and silver — three $5 bills, three $1 bills, and some change. All of these individuals, including the defendant, had access to and were jointly engaged in possessing the 22 Federal Reserve notes with intent to defraud.

We think that the evidence clearly indicates that defendant had knowledge of the presence of the contraband plus a share of the control over it, which is legally sufficient evidence to constitute possession. United States v. Hutchinson, 488 F.2d 484, 488 (8th Cir. 1973)

Judgment of conviction affirmed.

      . That section reads:

        Whoever, with intent to defraud, passes, utters, publishes, or sells, or attempts to pass, utter, publish, or sell, or with like intent brings into the United States or keeps in possession or conceals any falsely made, forged, counterfeited, or altered obligation or other security of the United States, shall be fined not more than $5,000 or imprisoned nor more than fifteen years, or both, (emphasis added).

      . The Honorable Oren Harris, United States District Judge, Eastern District of Arkansas, presidéd without a jury.


text:
    Elizabeth Jane HALL, Plaintiff-Appellee, v. UNITED STATES of America et al., Defendants-Appellants.
    No. 73-1614.
    United States Court of Appeals, Sixth Circuit..
    Argued Dec. 11, 1973.
    Decided March 12, 1974.
    Gary Allen, Dept, of Justice, for defendants-appellants; Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Crombie J. D. Garrett, Attys., Tax Div., Dept, of Justice, Washington, D. C., on brief; George J. Long, U. S. Atty., David L. Huber, Asst. U. S. Atty. of counsel.
    Edwin F. Kagin, Jr., Louisville, Ky., for plaintiff-appellee; Donald M. Heav-rin, Louisville, Ky., on brief; Michael D. Graves, Tulsa, Okl., of counsel.
    Before WEICK, EDWARDS and LIVELY, Circuit Judges.
   PER CURIAM.

This appeal is from a preliminary injunction granted by the District Court, restraining the sale of taxpayer’s automobile and the collection of a jeopardy assessment made without any notice of deficiency, which assessment is alleged to be invalid because it compelled taxpayer to pay the tax without affording her a remedy in the Tax Court to determine its validity.

The Director of Internal Revenue Service wrote to the taxpayer on February 1, 1973, stating that he found her involved in illicit drug activities tending to prejudice or render ineffectual the collection of 'income tax for the period January 1, 1973 through January 30, 1973. Accordingly, under the authority of Section 6851 of the Internal Revenue Code, he declared her taxable period commencing January 1, 1973 terminated as of January 31, 1973, and the income tax for such period to be immediately due and payable. He further stated that the tax for said period in the amount of $52,680.25, would be assessed immediately and he made demand for the payment thereof.

The fact is that the tax was assessed on February 1, 1973. The Director did not furnish to taxpayer any documents or papers to indicate how or in what manner the tax was computed.

Except for such short-term termination, taxpayer’s income tax return would not have been required to be filed until April 15, 1974.

Taxpayer was unable to pay the tax and Internal Revenue Service then levied on all of hér property, which included her Volkswagen automobile and her bank account. The bank paid the money out of the account to Internal Revenue Service. Internal Revenue Service proceeded to take bids on taxpayer’s automobile.

Taxpayer then instituted the present action in the District Court, which granted a temporary restraining order and then a preliminary injunction, from which the Service has appealed.

In granting the injunction the District Court relied on Rambo v. United States, 353 F.Supp. 1021 (W.D.Ky.1972) and Schreck v. United States, 301 F. Supp. 1265 (D.Md.1969).

The facts in Rambo are similar to the facts in the case at bar. This Court has since affirmed Rambo. Rambo v. United States, 492 F.2d 1060 (6th Cir. 1974). Rambo is decisive of all the legal questions involved in our case and we will follow it.

In the opinion in Rambo, written for the Court by Circuit Judge William E. Miller, it was pointed out that normally the taxpayer would have no recourse to restrain the collection of an invalid tax because of the provisions of Section 7421(a). Taxpayer’s only remedy would be to pay the tax, file her return, and then sue for a refund.

We rejected the contention of I.R.S. that the assessment was made under Section 6201 because the authority for assessing such a tax was derived from the provisions of Section 6861, not 6201. Section 6861 provides for the assessment of a deficiency and demand for payment. A deficiency notice to taxpayer must be given within sixty days after the assessment. No such notice was ever given to taxpayer. Had such determination been made and the deficiency notice given, taxpayer could have resorted to the Tax Court for determination of the validity of the tax.

It is very important to a taxpayer, particularly to one who does not have $52,000, that she have a right to litigate the validity of the tax before her property is levied upon and sold to pay the tax. The Tax Court of the United States was established for the very purpose of providing such a remedy for taxpayers. Because of the failure of I.R.S. to determine a deficiency and to give sixty days’ notice to taxpayer, as the law required, I.R.S. has prevented plaintiff from availing herself of the remedy in the Tax Court. Her only remedy, therefore, was to file the injunction suit in the District Court.

Affirmed.


text:
    Richard Page HARRIS, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
    No. 73-1852.
    United States Court of Appeals, Eighth Circuit.
    Submitted Feb. 15, 1974.
    Decided March 4, 1974.
    Certiorari Denied June 10, 1974.
    See 94 S.Ct. 3076.
    Michael H. Irvine, Cedar Rapids, Iowa, for petitioner-appellant.
    Evan L. Hultman, U. S. Atty., and Robert L. Sikma, Asst. U. S. Atty., Sioux City, Iowa, for respondent-appel-lee.
    Before GIBSON, STEPHENSON and WEBSTER, Circuit Judges.
   PER CURIAM.

Petitioner-Appellant, Richard Page Harris, contends that he was not made aware of the consequences of his guilty plea in violation of Fed.R.Crim.P. 11. The contention is raised on appeal from the denial of his motion to vacate sentence. 28 U.S.C. § 2255. We affirm.

Pursuant to a Writ of Habeas Corpus ad prosequendum, appellant was temporarily in the custody of the United States Marshal at Cedar Rapids, Iowa having been transferred from Bakersfield County Jail, California. He was then serving an indeterminate sentence of from one to fourteen years on state charges.

Harris pled guilty to the crime of interstate transportation of falsely made and forged securities. He was sen-fenced to 10 years imprisonment by United States District Judge McManus.

Harris, in substance, complains that because 18 U.S.C. § 3568 leaves a federal judge powerless to impose a federal sentence to run concurrently with any state sentence, the impact of that statute must be made known to the defendant when he pleads in order that he understand the “consequences of his plea.” Fed.R.Crim.P. 11. He cites United States v. Myers, 451 F.2d 402 (CA9 1972). Myers held that 18 U.S.C. § 3568 affects the maximum imprisonment and is therefore one of the consequences of the plea covered by Rule 11. The court held that Myers’ rights had been violated because he “had no reason to know that the sentencing judge did not have discretion to determine when the federal sentence would begin, nor to impose a federal sentence concurrent with any state confinement” and “the defendant was unaware of the facts which he needed to make an assessment (he didn’t know when his federal sentence would begin).”

Of course, compliance with Rule 11 depends in each case upon the complexity of the charge and the surrounding circumstances, including the defendant’s age and record and whether he was represented by counsel. Eagle Thunder v. United States, 477 F.2d 1326, 1328 (CA8 1973).

We impose no requirement “that the Judge mount the bench with a script in his hand.” Sappington v. United States, 468 F.2d 1378, 1380 (CA8 1972). However, there must be substantial compliance with Rule 11. This mandates that the district court must be satisfied that the defendant understands the consequences of his plea which includes an understanding of the maximum penalty possible for the offense. United States v. Richardson, 483 F.2d 516, 519 (CA8 1973).

We have not passed on the issue raised in Myers, supra, as to whether under Rule 11 a defendant in state custody must be informed that his federal sentence will not start to run until such time as he is released from state custody and received at the federal institution for service of such sentence. We find it unnecessary to reach that issue here.

We are satisfied from this record that the defendant, Harris, was fully aware that his sentence could run consecutively with his state sentence. He indicated to the court “I was hoping the sentence would run with the sentence in the state of California.” Prior to sentence his attorney made a plea for a concurrent sentence. Harris is a man in his forties with a criminal record extending back to his teen years. At the time of his guilty plea in Iowa appellant was faced with felony charges in at least three federal courts. Moreover, one of the charges was dismissed by reason of a plea bargain upon his guilty plea in Iowa.

Under all the circumstances we find there was substantial compliance with Rule 11 and that appellant fully understood the consequences of his plea. Richardson, supra, 483 F.2d at 519.

Affirmed.

      . Harris does not appeal the denial of his motion below on the additional ground that his plea was involuntary because of promises of a concurrent sentence and that other charges would be dropped. That issue was also decided against appellant by the United States District Court for the Eastern District of Virginia.

      . Chief Judge, United States District Court for the Northern District of Iowa.

      . The relevant portion of § 3568 states: “The sentence of imprisonment of any person convicted of an offense shall commence to run from the date on which such person is received at the penitentiary, reformatory, or jail for service of such sentence * *

      . In Chaney v. Ciccone, 427 F.2d 363 (CA8 1970) we held that absent clear intent to have defendant’s sentence run concurrently with any state sentence, the federal sentence did not begin to run until the United States Marshal assumed custody.

      . In addition the transcript of his hearing in the Eastern District of Virginia on his motion to vacate sentence there (made a part of this record) includes sworn testimony of the Assistant United States Attorney for the Northern District of Iowa that he advised defendant “that we could not in any way bind the court with respect to the amount of punishment or whether or not the court would give a concurrent or consecutive sentence in that regard.”


author: ALFRED T. GOODWIN, Circuit Judge:

text:
    UNITED STATES of America, Appellant, v. Ernest J. CALES, Jr., Appellee.
    No. 73-2931.
    United States Court of Appeals, Ninth. Circuit.
    Feb. 25, 1974.
    William C. Smitherman, U. S. Atty., Ronald A. Lebowitz, Asst. U. S. Atty., Phoenix, Ariz., Scott P. Crampton, Asst. Atty. Gen., Tax Div., U. S. Dept, of Justice, Washington, D. C., Meyer T. Roth-wacks, John P. Burke, Charles E. Brook-hart, Appellate Section, Tax Div., U. S. Dept, of Justice, Washington, D. C., for appellant.
    A. Jerry Busby, of Debus, Busby & Green, Ltd., Phoenix, Ariz., for appellee.
    Before MERRILL, GOODWIN and WALLACE, Circuit Judges.
   ALFRED T. GOODWIN, Circuit Judge:

The government appeals the suppression of evidence in a prosecution for income-tax evasion. Because the trial court held the government to a reasonable-doubt standard rather than a preponderance-of-the-evidence standard on the motion to suppress, we remand the case for another hearing using the correct burden of proof.

Based upon leads discovered, in part, from an illegal wiretap, an investigation was made and, in due course, Cales was charged with income-tax evasion for the years 1970 and 1971. Cales’ motion to suppress contended that information obtained from the illegal wiretap triggered an investigation that had been dormant. Relying upon United States v. Schipani, 289 F.Supp. 43, 62 (E.D.N.Y.1968), aff’d, 414 F.2d 1262 (2d Cir. 1969), cert. denied, 397 U.S. 922, 90 S.Ct. 902, 25 L. Ed.2d 102 (1970), the district court suppressed all evidence obtained by the Internal Revenue Service concerning the years 1970 and 1971.

The government asserts that the district court committed two errors in ruling upon the motion to suppress: (1) The court suppressed all the evidence collected subsequent to the receipt of the illegally obtained information, even though most of the evidence was allegedly developed from independent sources. (2) The court held that the government must prove beyond a reasonable doubt, rather than merely by the preponderance of the evidence, that the wiretap information was not used in the development of the government’s case.

Evidence need not be suppressed merely because it would not have come to light but for the illegal wiretap. The district court must seek to discover what kind of direction and impetus the illegal wiretap gave to the Cales investigation: did anything seized illegally, or any leads gained from that illegal activity, tend significantly to direct the investigation toward the specific evidence sought to be suppressed? Under this test the government should have the opportunity to establish that, even though the information in the wiretap may have been a factor in the decision to “target” Cales, the evidence which it intends to use at trial was obtained from sources sufficiently independent of the wiretap. See United States v. Brandon, 467 F.2d 1008 (9th Cir. 1972); United States v. Bacall, 443 F.2d 1050 (9th Cir.), cert. denied, 404 U.S. 1004, 92 S.Ct. 565, 30 L.Ed.2d 557 (1971). See also Carpenter v. United States, 463 F.2d 397, 400 (10th Cir.), cert. denied, 409 U.S. 985, 93 S.Ct. 337, 34 L.Ed.2d 251 (1972); United States v. Cole, 463 F.2d 163, 171-174 (2d Cir.), cert. denied, 409 U.S. 942, 93 S.Ct. 238, 34 L.Ed.2d 193 (1972); United States v. Jones, 457 F. 2d 697, 699 (5th Cir. 1972); United States v. Kennedy, 457 F.2d 63 (10th Cir.), cert. denied, 409 U.S. 864, 93 S.Ct. 157, 34 L.Ed.2d 112 (1972); United States v. Fike, 449 F.2d 191, 193 (5th Cir. 1971); United States v. Friedland, 441 F.2d 855 (2d Cir.), cert. denied, 404 U.S. 867, 914, 92 S.Ct. 143, 30 L.Ed.2d 111 (1971).

We are far from certain that the government did not actually have such an opportunity. Although the portion of the Schipani opinion quoted by the district court suggests that the court excluded all subsequently obtained evidence without making allowance for the possibility of an independent source, other parts of the record indicate that the government had ample opportunity to establish that the evidence which it sought to introduce arose from sources independent of the wiretap. For this reason, we are reluctant to conclude that the government did not have its day in court.

However, we agree with the government that the trial court did impose an erroneously high standard on the government’s burden of proof. The court held that the government must prove beyond a reasonable doubt that the wiretap evidence was not used in any way in the development of the government’s case. The proper test, as Cales concedes, is proof by the preponderance of the evidence. See United States v. Cole, 463 F.2d at 172. Cf. Lego v. Twomey, 404 U.S. 477, 487-489, 92 S.Ct. 619, 30 L.Ed.2d 618 (1972); United States v. Watson, 469 F.2d 362, 364 (5th Cir. 1972); United States v. Fernandez, 456 F.2d 638, 640 (2d Cir. 1972).

Cales contends that the trial court’s error was harmless because the government introduced no evidence at all of an independent source and, hence, could not have met either standard. We do not agree. The record contains some evidence of information entirely independent of the wiretap. Particularly in view of the possibility that the district court may have applied a test inconsistent with that mandated by Bacall and Brandon, we refuse to say that the trial court’s imposition upon the government of the wrong burden of proof was harmless.

The order of the district court is reversed and the case remanded to determine whether the government has proven by the preponderance of the evidence that the evidence intended for use at trial was obtained from sources independent of the illegal wiretap.

Remanded.

      . “If illegally secured information leads the government to substantially intensify an investigation, all evidence subsequently uncovered has automatically ‘been come at by exploitation of that illegality.’ * * * ” United States v. Schipani, 289 F.Supp. at 62.


text:
      George McMILLAN, Plaintiff, Appellee, v. Norman CARLSON, Director, Federal Bureau of Prisons, Defendant, Appellant.
    No. 74-1024.
    United States Court of Appeals, First Circuit.
    Submitted March 7, 1974.
    Decided March 20, 1974.
    Judgment Entered July 30, 1974.
    Irving Jaffe, Acting Asst. Atty. Gen., James N. Gabriel, U. S. Atty., Leonard Schaitman, and Neil H. Koslowe, Attys., Dept, of Justice on brief, for defendant-appellant.
    Herman Schwartz, Edward I. Koren, Amherst, N. Y., and John Reinstein, Boston, Mass., on brief, for plaintiff-appellee.
    Before COFFIN, Chief Judge, ALD-RICH and CAMPBELL, Circuit Judges.
   PER CURIAM.

Plaintiff McMillan is a recognized author who has a contract with an established publisher to write a biography of James Earl Ray, the convicted assassin of Martin Luther King. He wishes to interview Ray’s brother John, now in the Federal Penitentiary at Marion, Illinois. In accordance with standing prison rules he has been allowed to correspond with him, but the district court has found, on adequate evidence, that plaintiff has a reasonable belief that this is inadequate and that a personal interview would be more productive. The Federal Bureau of Prisons, represented by defendant, Director of the Bureau, has an absolute rule forbidding such interviews. It has no subjective objections to plaintiff, apart from this rule. The district court held that the rule unconstitutionally restricted plaintiff, and ordered defendant to permit an interview. Defendant appeals.

Both sides have girded themselves for a full scale battle. In the meantime the Supreme Court has noted probable jurisdiction and granted certiorari in two possibly pertinent cases. Hillery v. Procunier, N.D.Cal., 1973, 364 F.Supp. 196, probable jurisdiction noted sub nom. Procunier v. Hillery, 414 U.S. 1127, 94 S. Ct. 862, 38 L.Ed.2d 751 (Jan. 7, 1974), and sub nom. Pell v. Procunier, 414 U.S. 1155, 94 S.Ct. 912, 39 L.Ed.2d 108 (1974); Saxbe v. The Washington Post Co., cert. granted,-U.S.-, 94 S.Ct. 1482, 39 L.Ed.2d 571 (1974). In these circumstances little public benefit might result from either side’s winning such a battle, nor would it seem worth the cost, even to ourselves. On the other hand we do believe we should decide this particular case now, if it is reasonably feasible to do so.

The defendant raises a number of speculations of what would occur if we were to open the doors. Plaintiff makes the not unusual response that this is a parade of horribles. We have considerably more sympathy with this response than in the normal case. The viable possibilities of burgeoning demands for such access, under claims of equal protection and a fair application of the First Amendment, loom large. At the same time we are not prepared to support a rule of absolute exclusion under all circumstances. Assuming, as we do, that if any access is ever to be permitted, the hard core of allowed access would include a previously established author, under contract with a reputable publisher, wishing to interview a consenting prisoner who reasonably may be expected to contribute information on a subject of widespread interest, we hold that this case is within that core. On this basis, whatever should be the general limits, we believe the decision of the district court that denying access in this case would be unnecessary and unreasonable is supportable.

Affirmed.

JUDGMENT

Entered July 30, 1974

This court on July 2, 1974, directed the parties to file memoranda on the impact on this case of the Supreme Court of the United States opinions in Pell v. Procunier and Saxbe v. Washington Post Co. and upon consideration thereof,

It is now here ordered, adjudged and decreed as follows:

The judgment of this court entered on March 20, 1974, is hereby set aside; and The judgment of the district court is vacated and the cause is remanded to that court with directions to dismiss the complaint.

No costs.


text:
    James L. BAILEY, Petitioner-Appellant, v. PEOPLE OF the STATE OF MICHIGAN, Respondent-Appellee.
    No. 73-1392.
    United States Court of Appeals, Sixth Circuit.
    Argued Dec. 4, 1973.
    Decided Feb. 27, 1974.
    Deborah Cohn (Court Appointed) Detroit, Mich., for petitioner-appellant.
    Frank J. Kelley, Atty. Gen. of Mich., Thomas A. Carlson, Lansing, Mich., for respondent-appellee.
    Before CELEBREZZE, Circuit Judge, McALLISTER, Senior Circuit Judge and WILSON, Chief District Judge.

       The Honorable Frank W. Wilson, United States Chief District Judge, for the Eastern District of Tennessee, sitting by designation.

   PER CURIAM.

Appellant was convicted by a Michigan jury of arson and burning with intent to defraud. His conviction was affirmed by a Michigan Court of Appeals, 42 Mich.App. 359, 202 N.W.2d 557 (1972), and the Supreme Court of Michigan denied leave to appeal. The District Court denied Appellant’s petition for a writ of habeas corpus.

Among Appellant’s allegations is the contention that the prosecution failed to prove beyond a reasonable doubt the corpus delicti of the crime of arson. The case against Appellant was a combination of evidence regarding his need for money as a motive and testimony negating various natural causes of the fire. There is no such insufficiency of the evidence in this record as to present a constitutional issue. Having reviewed the entire transcript of the trial, it appears to us that there is sufficient evidence to support the conviction. The opinion of the Michigan Court of Appeals affirming the conviction provides us with an excellent summary of the incriminating testimony:

Expert testimony at the trial revealed the following: (1) the fire was not caused by lightning because the day was clear and cold; (2) the greatest damage from the fire was in the living room; (3) on the day of the fire, the kitchen stove was functioning normally; (4) defendant’s furnace was not the cause of the fire nor was the fuse box, any electrical source or outlet, the living room lamp or lamp cord, nor was any explosion the cause of the fire; (5) the dogs which died in the fire could not have caused the fire by biting on the electrical cords; (6) the lighting fixtures on the Christmas tree in defendant’s living room did not cause the fire; (7) careless smoking or neglect was not the cause; (8) the northeast corner of the living room was the point of origin of the fire, and there was a considerable amount of white ash in the corner which would be the residue of the newspapers defendant generally stored there; (9) electrical equipment in that corner did not cause the fire; and (10) the living room couch and chair were not source of the fire.
In addition, the people offered proofs to establish that defendant was in financial trouble; defendant was in the house alone some ten to twenty minutes before the fire started; defendant had stated that if a fire occurred in his house, he would need a good alibi; defendant tried to persuade witnesses not to testify against him; defendant was aware that the home was covered against fire loss, but told officers on the scene that he didn’t know whether he had insurance or not; defendant changed fuses in the fuse box after the fire as a “joke” on the investigating officer; defendant attempted to get a woman to go to Florida with him when he received the insurance proceeds; defendant almost doubled the insurance coverage not long before the fire; defendant stated that all he had left were the clothes on his back when in fact he had left clothing with a friend out of state prior to the fire; and that defendant had stated that if you want something done right, you had to do it yourself. People v. Bailey, 42 Mich. App. 359, 361-363, 202 N.W.2d 557, 559 (1972).

The evidence is essentially circumstantial and much of it is of a negative character, but the nature of the crime of arson is such that very rarely will it be possible to present direct proof of the crime. People v. Dorrikas, 354 Mich. 303, 92 N.W.2d 305 (1958); People v. Porter, 269 Mich. 284, 257 N.W. 705 (1934). See Carpenter v. Union Insurance Society of Canton, Ltd., 284 F.2d 155, 159 (4th Cir. 1960). We find that there was sufficient evidence presented from which the jury could find that the corpus delicti had been established.

The Appellant also seeks to raise an unlawful search issue with respect to the testimony of the fire marshal. However, the contention is without merit in the context of this lawsuit. Not only was the fire marshal’s war-rantless search shortly after the fire for the cause of the conflagration reasonable, see United States v. Green, 474 F. 2d 1385 (5th Cir. 1973), but the record in this case reflects that he was invited to return upon more than one occasion by the Appellant.

Appellant has raised other issues but we find them to be without merit. Accordingly, the order of the District Court, denying Appellant’s petition for habeas corpus, is affirmed.


author: BOREMAN, Senior Circuit Judge:

text:
    In the Matter of Mary Finley Davison, Bankrupt. Mary Finley DAVISON, Appellant, v. VIRGINIA NATIONAL BANK, Appellee.
    No. 73-2011.
    United States Court of Appeals, Fourth Circuit.
    Argued Dee. 6, 1973.
    Decided March 22, 1974.
    Osie H. Gay, Jr., Norfolk, Va., for appellant.
    Stuart D. Glasser, Norfolk, Va. (Glasser & Glasser, Norfolk, Va., on brief), for appellee.
    Before BOREMAN, Senior Circuit Judge, and RUSSELL and FIELD, Circuit Judges.
   BOREMAN, Senior Circuit Judge:

The question presented on this appeal is whether a discharge in bankruptcy should be delayed to enable a general creditor to proceed against the property held by a husband and wife as tenants by the entirety where only one spouse is bankrupt.

FACTS AND PROCEEDINGS

On September 5, 1972, Mary Finley Davison and her husband, David D. Davison, jointly made and executed a homestead waiving promissory note for $4,331.52 payable in monthly installments of $120.32 to Virginia National Bank (hereafter Bank), present holder of said note. The makers of the note having defaulted on their payments, on January 16, 1973, Bank filed in the Circuit Court of the City of Virginia Beach, Virginia, a Motion for Judgment against the Davisons, based on the said promissory note. Said proceeding in the state court is presently pending.

On February 26, 1973, Mary Finley Davison (hereafter Bankrupt) filed her petition in bankruptcy in the United States District Court for the Eastern District of Virginia and on the date of such filing there was a balance due and owing to said Bank on said note in the amount of $4,211.20 plus attorney’s fees. Bankrupt’s husband, comaker of the note, did not file a petition in bankruptcy.

At the time of the execution of the note, the filing of Bankrupt’s petition in bankruptcy and subsequent proceedings before the United States Bankruptcy Judge and the District Court, Bankrupt and her husband owned certain real estate in Virginia Beach, Virginia, as tenants by the entireties with the right of survivorship. On March 19, 1973, Bank filed its Petition for Stay of Bankrupt’s Discharge, seeking an order staying or suspending discharge until Bank had time and opportunity to prosecute to final judgment its suit in-the Virginia state court in order to obtain a lien against the said real estate. On April 4, 1973, the Bankruptcy Judge entered an Opinion and Order denying Bank’s petition for stay of discharge. -

Bank filed its Petition for Review by the United States District Court for the Eastern District of Virginia and said court reversed the Opinion and Order of the Bankruptcy Judge and granted Bank’s Petition for Stay of Discharge. Bankrupt has appealed.

DECISION

In rendering its decision the district court stated:

“The facts are undisputed. Likewise, all parties agree that under the law of Virginia, when an estate by the entirety is once established, neither spouse can sever it by his or her sole act; neither spouse singly can convey or dispose of any part of it so as to effect such a severance. The estate may be terminated by a joint conveyance. The estate is liable for the joint debts of both spouses and is reachable against them by proper process. However, the estate is completely immune from the claims of creditors against either husband or wife alone. Since husband or wife may not sell it, his or her creditors cannot sell it by resort to attachment and levy on an execution in an action at law. Neither tenant can force a partition, and since neither tenant can do so, a creditor has no greater right. A judgment against one spouse is not a lien against the property held jointly as tenants by the entirety. A judgment of the creditors of one spouse might be levied against the respective spouse’s interest if and when he or she should survive the other, but it would not prevent a joint conveyance of the property to a third party, or to the spouse who is not a judgment debtor, and each would take it completely free from the claims of the individual creditors of the husband and wife. Vasilion v. Vasilion, 192 Va. 735, 66 S.E.2d 599 (1951); Reid v. Richardson, 304 F.2d 351 (4th Cir. 1962); Phillips v. Krakower, 46 F.2d 764 (4th Cir. 1931).
“This very issue was before the United States Court of Appeals for the Fourth Circuit in Phillips v. Krak-ower, 46 F.2d 764 (4th Cir. 1931). There, the creditor sought a stay of the discharge of the bankrupt husband until judgment could be obtained against husband and wife. From the order granting the stay, the appeal was taken. About the only difference between that case and the case at bar is that the Phillips case arose under Maryland law and the case at bar arose under Virginia law. it

The district court quoted at length from the decision in Krakower, supra.

In writing for the court in Phillips v. Krakower, supra, the late Judge Parker stated that there is ample authority for the proposition that where property is not reachable through bankruptcy, but can be reached by a creditor under state laws, the court of bankruptcy should delay granting a discharge to the bankrupt to enable the creditor to proceed thereunder in the state courts. The order of the district court granting a creditor’s petition to defer the bankrupt’s discharge was affirmed.

In Reid v. Richardson, 304 F.2d 351 (4 Cir. 1962), Reid, husband, was adjudicated a bankrupt. Property owned jointly with his wife as tenants by the entirety was excluded as an asset of his estate. More than six months after his discharge his wife was adjudicated a bankrupt. In her petition the wife asserted that the property owned jointly with her husband as tenants by the entirety was not an asset of her estate. On petition of a creditor the bankrupt estate of the husband was reopened and the bankrupt estates of the husband and wife were consolidated. On appeal this court pointed out that the entireties property was not an asset of the husband’s estate and it could not become an asset of his estate unless the wife died within six months of the date his bankruptcy petition was filed; that a refusal to reopen husband’s estate and consolidate it with the wife’s would result in precisely the same type of “legal fraud” which the court decried in Krakower, and that only the bankruptcy court could avoid the plain injustice. The court went on to hold that the effect of a failure to delay the discharge “is to allow the tenants by the entire-ties to keep the entireties property secure from the claims of their creditors even though that property was never available in bankruptcy for the satisfaction of those claims. This is a result that the Bankruptcy Act certainly did not contemplate.” 304 F.2d 354-355.

We adhere to the reasoning and holding in Phillips v. Krakower, supra,, whch was restated and approved by this court in Reid v. Richardson, supra.

Affirmed.


text:
    LUNDY ELECTRONICS & SYSTEMS, INC., Appellant, v. OPTICAL RECOGNITION SYSTEMS, INC., Appellee. LUNDY ELECTRONICS & SYSTEMS, INC., Appellee, v. OPTICAL RECOGNITION SYSTEMS, INC., Appellant.
    Nos. 73-1998, 73-1999.
    United States Court of Appeals, Fourth Circuit.
    Argued Dec. 6, 1973.
    Decided March 25, 1974.

      George W. Whitney, New York City (Granville M. Brumbaugh, Jr., Richard S. Clark, New York City, Boothe, Pri-chard & Dudley, Alexandria, Va., and Brumbaugh, Graves, Donohue & Raymond, New York City, on brief), for Lundy Electronics & Systems, Inc.
    Jim Zegeer, Washington, D. C. (Martin Abramson, Browne, Beveridge, De-Grandi & Kline, Francis C. Browne, Washington, D. C., Dayton R. Stemple, Jr., Washington, D. C., Edward T. Colbert, Baltimore, Md., Larry Suiters, Kinney, Smith & Barham, Arlington, Va., Jack L. Lahr, Arent, Fox, Kinter, Plotkin & Kahn, Washington, D. C., on brief), for Optical Recognition Systems, Inc.
    Before HAYNSWORTH, Chief Judge, and CRAVEN and BUTZNER, Circuit Judges.
   PER CURIAM:

From a judgment holding Claims 1-4, 9, 11-16, 23, 24, 28, and 30 of Dykaar and Stein’s United States Patent No. 3,535,682 valid but not infringed, Lundy Electronics & Systems, Inc., the assignee and owner of all interests in the patent, appeals the ruling on the question of infringement. Optical Recognition Systems, Inc., the manufacturer of the accused device, appeals the declaration of validity. We affirm on the excellent opinion of the district judge. Lundy Electronics & Systems, Inc. v. Optical Recognition Systems, Inc., 362 F.Supp. 130 (E.D.Va.1973).

The claims in question disclose a method and apparatus for automatically reeogniring magnetic ink characters that are printed on documents. The most important example mentioned in the patent is the recognition of characters shaped in the type E-13 B font that are imprinted on the lower left-hand edge of bank checks and deposit slips.

The record depicts a crowded technical field in which advances over the prior art are very narrow. Dykaar and Stein’s departure from existing systems, though slight, is sufficient to justify the district court’s holding that their invention was neither anticipated nor rendered obvious by the prior art, and it properly held other attacks on the validity of the patent to be without merit.

Although the accused device performs the same ultimate function as that described in the patent, the district court found that it employs significantly different timing circuitry and means for establishing reference voltage levels. These findings are not clearly erroneous. Though the advance they achieve is slight, they are sufficient to negate the charge of infringement.

Affirmed.


text:
    SOUTHEASTERN LEASING CORP. et al., Plaintiffs, Appellants, v. STERN DRAGGER BELOGORSK Etc., Defendant, Appellee. DEEP, DEEP OCEAN PRODUCTS, INC., Plaintiff, Appellant, v. UNION OF SOVIET SOCIALIST REPUBLICS et al., Defendants, Appellees.
    Nos. 73-1318, 73-1319.
    United States Court of Appeals, First Circuit.
    Argued March 4,1974.
    Decided March 20, 1974.

      William T. Conlan and Richard A. Dempsey, Boston, Mass., with whom Ely, Bartlett, Brown & Proctor and Glynn & Dempsey, Boston, Mass., were on brief, for plaintiffs, appellants.
    DeLane E. Anderson, Jr., Boston, Mass., with whom William R. Vincent, Carmen Anthony Russo, Harry J. Hayes, Vincent, Berg & Russo, Jerome V. Flanagan, and Kisloff, Hoch, Shuman & Flanagan, Boston, Mass., were on brief, for defendants, appellees.
    Morton Hollander, Atty., Dept, of Justice, with whom Irving Jaffe, Acting Asst. Atty. Gen., James N. Gabriel, U. S. Atty., and Bruno A. Ristau, Atty., Dept, of Justice, were on brief, for United States, amicus curiae.
    Before COFFIN, Chief Judge, Mc-ENTEE and CAMPBELL, Circuit Judges.
   PER CURIAM.

The district court, acting upon a suggestion of immunity from the State Department filed by the Attorney General, dismissed the actions brought by appellants and ordered the release of the arrested vessel BELOGORSK. Appellants maintain that the vessel in question is neither owned nor controlled by the U.S.S.R. and that the suggestion of immunity was, therefore, improper. Faced with such allegations, the court erred, according to appellants, in accepting the executive suggestion of immunity without conducting an independent judicial inquiry. We could accept this argument only by deviating from oft-affirmed unequivocal doctrine:

“The certification and the request that the vessel be declared immune must be accepted by the courts as a conclusive determination by the political arm of the Government that the continued retention of the vessel interferes with the proper conduct of our foreign relations. Upon the submission of this certification to the district court, it became the court’s duty, in conformity to established principles, to release the vessel and to proceed no further in the cause.” Ex parte Peru, 318 U.S. 578, 589, 63 S.Ct. 793, 800, 87 L.Ed. 1014 (1943).

See Compania Espanola de Navegacion Maritima, S. A. v. The Navemar, 303 U. S. 68, 74, 58 S.Ct. 432, 82 L.Ed. 667 (1938); Isbrandtsen Tankers, Inc. v. President of India, 446 F.2d 1198 (2d Cir. 1971); Rich v. Naviera Vacuba, S. A., 295 F.2d 24 (4th Cir. 1961). We decline to depart from these authorities. In a recent case the fifth circuit also refused to countenance judicial review of the State Department’s determination of immunity despite a claim that the executive had acted arbitrarily. Spacil v. Crowe, 489 F.2d 614 (5th Cir. 1974).

We find no merit in appellants’ alternative contention that the U.S.S.R. waived sovereign immunity by agreeing in a treaty that Soviet vessels would enter United States ports “subject to the applicable laws and regulations of the United States.”

Affirmed.


text:
    John A. SCHULTZ, Appellant, v. UNITED STATES of America, Appellee.
    No. 73-1406.
    United States Court of Appeals, Fourth Circuit.
    Argued Nov. 5, 1973.
    Decided March 11, 1974.
    Gilbert Hahn, Jr., Washington, D. C. (Daniel G. Grove, Mark B. Sandground and Amram, Hahn & Sandground, Washington, D. C., on brief) for appellant.
    Ann Belanger, Atty., Tax Div., U. S. Dept, of Justice (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwaclcs and Jonathan S. Cohen, Attys., Tax Div., U. S. Dept, of Justice, and Brian P. Get-tings, U. S. Atty., on brief) for appellee.
    Before CLARK, Associate Justice, HAYNSWORTH, Chief Judge, and CRAVEN, Circuit Judge.

       Supreme Court of the United States, retired, sitting by designation.

   PER CURIAM:

On February 17, 1965, the taxpayer gave forty-four shares of Jersey Shore Steel Company, a closely held corporation, to each of his three children, and to each of the three children of his brother, Charles. On the same day, Charles gave the same number of shares to each of his children and to each child of the taxpayer. Similar reciprocal transactions were effected on February 4, 1966, and February 14, 1967.

The taxpayer claimed an annual $3,000 exclusion with respect to each year for each of the nephews and nieces. This claim was disallowed upon the basis that the primary purpose of the reciprocal transactions was for each brother to effect enlarged gifts to his own children.

Relying on United States v. Estate of Grace, 395 U.S. 316, 89 S.Ct. 1730, 23 L.Ed.2d 332 (1969), the district court held that “actual intent” was “immaterial” and that the only issue was the “nature and operative effect of the transfers themselves.” Thereupon, he directed a verdict for the government.

We need not reach the issue of whether this rule of Grace applies with equal force in the area of indirect gifts, for we hold that, on the facts of this case, a reasonable jury could have concluded only that the taxpayer intended to benefit his children, rather than those of his brother, by the gifts in question.

Affirmed.


text:
    H & M CAKE BOX, INC., Plaintiff, Appellant, v. BAKERY AND CONFECTIONERY WORKERS INTERNATIONAL UNION OF AMERICA, LOCAL NO. 45, Defendant, Appellee.
    No. 74-1004.
    United States Court of Appeals, First Circuit.
    Argued March 7, 1974.
    Decided March 20, 1974.
    Frederick T. Golder, Boston, Mass., for appellant.
    Warren EL Pyle, Boston, Mass., with whom Angoff, Goldman, Manning, Pyle & Wanger, Boston, Mass., was on brief, for appellee.
    Before ALDRICH, McENTEE and CAMPBELL, Circuit Judges.
   PER CURIAM.

After we remanded this case to the district court, 454 F.2d 716 (1st Cir. 1972), another judge, relying on intervening decisions of the Supreme Court and this circuit, granted summary judgment for the defendant union. The district court held that both the employer’s claim for damages for alleged violation of the no strike clause and its contention that the union had repudiated the collective bargaining agreement, or its arbitration provision, were issues for the arbitrator to decide. The court therefore dismissed the action brought by the company for damages for the union’s alleged violation of the agreement’s no strike pledge. We affirm.

The collective bargaining agreement in question calls broadly for “amicable settlement by arbitration of grievances and disputes arising under it.” Arbitration procedures are provided “[i]n the event a dispute or grievance arises as to the meaning, application or enforcement of this agreement. . ” Employer’s claim for damages would rather plainly fall within this “broad” clause. Similarly, and under the very rationale we adopted in General Dynamics Corp. v. Local 5, Marine & Shipbuilding Workers, 469 F.2d 848, 853-854 (1st Cir. 1972), the question of what conduct constitutes repudiation of the contract or its arbitration provision would be a “dispute or grievance . . . as to the meaning, application or enforcement . . . . ” Cf. Operating Engineers, Local 150 v. Flair Builders, Inc., 406 U.S. 487, 491-492, 92 . S.Ct. 1710, 32 L.Ed.2d 248 (1972).

Thus, following Flair and General Dynamics, both decided after our earlier decision herein, the district court properly concluded that the employer could not pursue its damages action in court, at least before a determination by the arbitrator of non-arbitrability or of repudiation. If plaintiff wishes to pursue the argument that breach of the no strike clause excuses compliance with the arbitration clause, he must address it to the arbitrator. Cf. Gateway Coal Co. v. United Mine Workers, 414 U.S. 368, 387, 94 S.Ct. 629, 639, 38 L.Ed.2d 583 (1974).

Appellant fears that should he now seek arbitration, the union will raise the defense of laches. It is doubtless true that appellant could not have predicted the legal fluctuations which resulted in our two disparate opinions and which may have prolonged these proceedings and tipped the outcome to appellant’s disadvantage. Presumably such circumstances tending to justify his initial preference for court proceedings in lieu of arbitration may be presented to the arbitrator in mitigation should laches be raised.

Affirmed.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS, Defendant-Third Party Plaintiff-Appellant, Leisure Systems, Inc., et al., Third Party Defendants-Appellees.
    No. 73-4039
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    May 9, 1974.
    Henry P. Dart, III, New Orleans, La., for appellant.
    Gerald J. Gallinghouse, U. S. Atty., Michaelle F. Pitard, John R. Schupp, Asst. U. S. Attys., New Orleans, La., Marlow R. Preston, Dallas, Tex., for plaintiff-appellee.
    Before COLEMAN, DYER and RO-NEY, Circuit Judges.

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

   PER CURIAM:

In this appeal from a bench trial the district court’s findings of fact are not attacked. After a careful review of the record we are satisfied that the court applied proper legal standards, and the judgment entered below should therefore be

Affirmed.

      . Although the district court made no finding or conclusion concerning the sufficiency of the service of the levy on the Bank’s Vice-President and Controller we find the Bank’s contention that the service was invalid to be without merit.


text:
    The UNITED STATES of America, Plaintiff-Appellee, v. Martin Chavez LOPEZ, Defendant-Appellant.
    No. 73-2077.
    United States Court of Appeals, Fifth Circuit.
    May 10, 1974.
    Gerald M. Birnberg, Houston, Tex. (Court-appointed), for defendant-appellant.
    Jamie C. Boyd, Asst. U. S. Atty., Ralph E. Harris, Asst. U. S. Atty., El Paso, Tex., for plaintiff-appellee.
    Before BROWN, Chief Judge, and GODBOLD and RONEY, Circuit Judges.
   PER CURIAM:

Treating this as an allowance by the Court of an out-of-time direct appeal (and not a § 2255 collateral attack), we hold that since the very same action by the Trial Court in this very same trial was held to be error as to his eodefend-ant Garza in United States v. Garza, 5 Cir., 1970, 426 F.2d 949, 953-955, reversal and remand for a new trial is likewise called for as to Lopez.

Reversed and remanded.


text:
    YU FUNG CHENG and Hi Pan Chan, Appellants in No. 73-1866 v. Dominick RINALDI, as District Director of the Immigration and Naturalization Service of New Jersey, and William P. Rogers, as Secretary of State of the United States of America. YEUNG YAN CHEUNG, Appellant in No. 73-1867 v. Dominick RINALDI, as District Director of the Immigration and Naturalization Service of New Jersey, and William P. Rogers, as Secretary of State of the United States of America. KAN KAM LIN et al., Appellants in No. 73-1868 v. Dominick RINALDI, as District Director of the Immigration and Naturalization Service of New Jersey, and William P. Rogers, as Secretary of State of the United States of America. LAM YI KAM, Appellant in No. 73-1869 v. Dominick RINALDI, as District Director of the Immigration and Naturalization Service of New Jersey, and William P. Rogers, as Secretary of State of the United States of America.
    (Civil Action No. 167-73)
    (Civil Action No. 282-73)
    (Civil Action No. 1823-72)
    (Civil Action No. 1862-72)
    Nos. 73-1866 to 73-1869.
    United States Court of Appeals, Third Circuit.,
    Argued March 14, 1974.
    Decided March 25, 1974.
    Lebenkoff & Coven, New York City, Allan S. Berger, East Orange, N. J., for appellants; Jules E. Coven, New York City, of counsel.
    Jonathan L. Goldstein, U. S. Atty., Newark, N. J., William T. Pizzi, Asst. U. S. Atty., on the brief, for appellees.
    Before ALDISERT, GIBBONS and ROSENN, Circuit Judges.
   PER CURIAM.

Appellants are Chinese seamen who, having requested and been denied asylum under the United Nations Protocol Relating to the Status of Refugees (Protocol), brought actions in the district court against Dominick Rinaldi, the District Director of the Immigration and Naturalization Service, seeking an injunction to restrain the defendant from deporting them on the ground that his denial of asylum was arbitrary, capricious and illegal. The district court granted summary judgment in favor of the director. The plaintiffs have appealed.

The Protocol went into effect in the United States on November 1, 1968. Article 32 of the Protocol provides in part that: “1. The Contracting States shall not expel a refugee lawfully in their territory save on grounds of national security or public order.” The district court concluded, and we agree, that the terms “lawfully in [the] territory” were intended to require that a refugee under the Protocol be in a country in compliance with the immigration laws of that country. Each of the appellants has had a deportation hearing at which he was found deporta-ble. No appeals were taken from the findings that each was unlawfully present.

We affirm the judgment of the district court for the reasons well stated in the opinion of Judge Lawrence A. Whipple, 361 F.Supp. 177 (D.N.J.1973). See also, Ming v. Marks, 367 F.Supp. 673 (S.D.N.Y.1973).

The judgment of the district court will be affirmed.


text:
    DOLLAR GENERAL CORPORATION, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
    No. 73-1784.
    United States Court of Appeals, Sixth Circuit.
    Argued Jan. 31, 1974.
    Decided April 5, 1974.
    D. L. Lansden, Ames Davis, Nashville, Tenn., on brief, for petitioner.
    Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, Jay E. Shanklin, Peter M. Bernstein, Attys., National Labor Relations Board, Washington, D. C., on brief, for respondent.
    Before PHILLIPS, Chief Judge, MILLER, Circuit Judge, and Mc-ALLISTER, Senior Circuit Judge.
   This is a petition for review by Dollar General Corporation, of Scottsville, Kentucky, and a cross-petition for enforcement of an order of the National Labor Relations Board, finding the company guilty of violating Sec. 8(a)(1) and 8(a)(3) of the National Labor Relations Act in discharging employees Billing-sley, Hurt, and Isenberg. The Board adopted the findings of the administrative law judge to the effect that these employees were discharged because of antiunion motives on the part of the company and because of the employees’ union activities. 204 NLRB No. 106.

In two prior cases, the Board found that the company had committed unfair labor practices at the Scottsville location. 189 NLRB 301.

In September 1969, three months after the last discharge for union activities, the company drivers began to discuss union organization. The company responded by interrogating them about these meetings, and warning them they would be fired if they did not stop their organizational activities. Shortly after the three drivers were discharged, the Board found that the discharge of the three employees violated Sec. 8(a)(1) of the Act by coercing the employees in their statutory right to self organization, and violated Section 8(a)(3) of the Act by discriminating in employment in order to discourage membership in a labor organization.

The Board entered a cease and desist order, and further ordered the company to offer the three employees immediate and full reinstatement in their former or substantially equivalent positions, and to make them whole for any loss of earnings resulting from the discrimination and to post the usual notices.

On an examination of the record, we find the order of the Board supported by substantial evidence on the record as a whole. The order of the National Labor Relations Board is, therefore, enforced.


text:
    George H. ELDRIDGE, Appellee, v. Caspar WEINBERGER, Secretary of Health, Education and Welfare, Appellant.
    No. 73-1864.
    United States Court of Appeals, Fourth Circuit.
    Argued Feb. 7, 1974.
    Decided April 1, 1974.
    James C. Hair, Jr., Atty., U. S. Dept, of Justice, (Irvin Jaffe, Acting Asst. Atty. Gen., Leigh B. Hanes, Jr., U. S. Atty., and Kathryn H. Baldwin, Atty., U. S. Dept, of Justice, on brief), for appellant.
    Donald E. Earls and Carl E. McAfee, Norton, Va. (Cline, McAfee, Adkins & Gillenwater, Norton, Va., on brief), for appellee.
   PER CURIAM:

Before BRYAN, Senior Circuit Judge, and BUTZNER, Circuit Judge.

Asserting that his action in terminating appellee George H. Eldridge’s medical disability payments, in July 1972, without a prior oral evidentiary hearing, was proper under the Social Security Administration’s regulations, the Secretary of Health, Education and Welfare now appeals the District Court’s injunction of the termination.

The point in this case is whether the procedure prescribed in the regulations —textually followed by the Secretary— afforded the recipient Constitutional due process in allowing his disability payments to be terminated without such an ore tenus hearing as is projected in Goldberg v. Kelly, 397 U.S. 254, 264, 267, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). On the District Judge’s opinion, we affirm. Eldridge v. Weinberger, 361 F.Supp. 520 (W.D.Va. 1973).

Affirmed.

      . 42 U.S.C. § 405(a) ; 20 C.F.R. § 404.1 et seq.

      . Disability Insurance State Manual, as revised February 25, 1972; and Claims Manual of the Social Security Administration.