author: PER CURIAM.

text:
    FAIRWAY CONSTRUCTION COMPANY, Plaintiff-Appellant, v. ALLSTATE MODERNIZATION, INC., Defendant-Appellee. FAIRWAY CONSTRUCTION COMPANY, Plaintiff-Cross-Appellee, v. ALLSTATE MODERNIZATION, INC., Defendant-Cross-Appellant.
    Nos. 73-1757 and 73-1758.
    United States Court of Appeals, Sixth Circuit.
    Argued Feb. 7, 1974.
    Decided April 26, 1974.
    Irving M. Weiner, Southfield, Mich., for plaintiff-appellant; Arnold S. Wein-traub, Weiner, Basile & Weintraub, Southfield, Mich., on brief.
    Ralph M. Burton, Burton & Parker, Detroit, Mich., for defendant-appellee.
    Before PHILLIPS, Chief Judge, PECK, Circuit Judge, and McALLIS-TER, Senior Circuit Judge.
   PER CURIAM.

Plaintiff-appellant perfected this appeal from an order entered by the district court granting defendant-appellee’s motion for summary judgment, and ap-pellee perfected a cross-appeal from an order denying its motion for an award of attorneys’ fees against appellant.

The litigants herein are home improvement contractors operating in the Detroit, Michigan, area. In November of 1971 appellant instituted this action alleging that appellee’s construction of second story dormers in existing single story dwellings infringed appellant’s United States Patent No. 3,089,201. The patent was issued on May 14, 1963, on a continuation in part application filed on August 28, 1961. Basically, the patent shows how a low ceilinged attic of a single story dwelling can be enlarged into useful living space by cutting an opening in the roof inwardly from the walls of the house and building into the opening a dormer addition having a floor, walls and a roof, and not limited in elevation by the original ridge. The patent provides for the insertion of separate and higher joists for the dormer floor to rest on in order to relieve the stress on the joists from which the- ceiling below is suspended. The unique feature of the patent, ae-cording to appellant, is the method of construction which it proposes. The patented method provides that bearing blocks be placed on the existing lower walls, floor joists laid on the bearing blocks, and thereafter, the walls and roof of the dormer constructed.

The district court' granted a motion for summary judgment in favor of ap-pellee on the basis of an article in the magazine, “The American Builder,” which shows the construction of an identical dormer, and which is dated more than two years prior to the filing of the patent application. In the words of the court, “[T]he drawings in the article are identical with the drawings in the patent.” The court further found that a stipulation entered into by the parties established that the method of construction illustrated in the magazine article was the same method used in constructing the dormer in the patent. On the strength of these findings, the court held the patent invalid under 35 U.S.C. §§ 102(b) & 103.

Appellant, while not conceding that the article describes an identical dormer, places greater emphasis upon its contention that the district court erroneously used the stipulation as a basis for concluding that the method of construction provided in the patent was obvious. This assertion is based on three different theories: (1) that the stipulation was not entered into for the purpose used; (2) that it states a fact contrary to physical law and should therefore be disregarded; and (3) that appellant should be relieved from its operation because it worked a manifest injustice against appellant. In reference to the first theory, we note that there is no limitation on the use or application of the stipulation on its face or in the record of events leading up to the stipulation. Further, appellant has cited no authority to indicate that a general stipulation may be limited in application because it does not serve a party as well as expected. “When a man, or a witness, or an applicant for a patent, without knowing how it is going to affect his interest, makes a statement which he later attempts to deny when he has found it is against his interest, he will not be believed unless he produces convincing proof of his later assertion.” In re Ruff and Dukeshire, 45 C.C.P.A. 1037, 256 F.2d 590, 596 (1958).

The stipulation states that “it is physically impossible to lay down end bearing blocks . . . and floor joists . . . after the dormer room walls and/or roof are constructed . ” A supporting affidavit of a registered architect produced by appel-lee states that “it would be absolutely impossible to build the walls first and lay down the higher floor joists after the walls are built.” Appellant’s only suggestion pertaining to a different method of constructing the dormer in question is the possibility of building the walls and roof and thereafter laying the bearing blocks and joists upon which the walls bear. As appellee’s expert further stated, the walls of the dormer “cannot be erected hanging in the air.” If the new floor joists are to be higher than the ceiling joists of the floor below, they must be laid before the walls are built because the walls bear on the higher joists. The stipulation clearly does not state a fact contrary to physical law.

Appellant’s final argument is that the stipulation, entered into by an attorney, not an engineer, worked a hardship on appellant, and this court should relieve appellant from the burden of its statements to prevent an injustice. We recognize an appellate court’s ability to relieve a party from the operation of a stipulation. Swift & Co. v. Hocking Valley R. Co., 243 U.S. 281, 37 S.Ct. 287; 61 L.Ed. 722 (1917). However, the general rule is that stipulations entered into freely and fairly are not to be set aside except to avoid manifest injustice. Sherman v. United States, 462 F.2d 577 (5th Cir. 1972); Fenix v. Finch, 436 F.2d 831 (8th Cir. 1971). The instant stipulation was freely and fairly entered into and we cannot say that it worked a manifest injustice upon appellant.

In light of the above, it is clear that the district court’s finding of invalidity was not erroneous. The patent failing, summary judgment in favor of appellee was correctly entered.

On the cross appeal, appellee complains that the district court erroneously denied its application for an award of attorneys’ fees. 35 U.S.C. § 285 provides, “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” The application of the statutory provision for attorneys’ fees is discretionary with the district court. Uniflow Mfg. Co. v. King-Seeley Thermos Co., 428 F.2d 335 (6th Cir. 1970). We find no abuse of discretion herein.

The judgment of the district court is in all respects affirmed.

      . The stipulation, in pertinent part reads as follows:
      “4. Since it is physically impossible to lay down end bearing blocks on the upper edges of the lower floor walls and to thereafter lay down floor joists on such blocks as recited in both claims of patent 3,089,201 after the dormer room walls and/or dormer roof are constructed, therefore, any dormer addition structure which includes end bearing blocks lying on the upper edges of the lower floor walls and floor joists lying on such blocks haying their upper edges above the upper edges of the existing ceiling joists infringes the claims of said patent, if such claims are valid.”

      . 35 U.S.C. § 102(b) states that a person shall be entitled to a patent unless “the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for the patent in the United States ff

      35 U.S.O. § 103 provides that “[a] patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.”


source: Caselaw Access Project

author: CELEBREZZE, Circuit Judge.

license: Public Domain

text:
    Joseph W. JOHNSON, Jr. and Margaret A. Johnson, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. H. Clay Evans JOHNSON and Betty Mead Johnson, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. David F. S. JOHNSON and Elsie E. Johnson, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
    Nos. 73-1908—73-1910.
    United States Court of Appeals, Sixth Circuit.
    Argued Feb. 12, 1974.
    Decided April 9, 1974.

      Thomas Caldwell, Jr., Chattanooga, Tenn., for appellants; Thomas O. Helton. William C. Myers, Jr., Stophel, Caldwell & Heggie, Chattanooga, Tenn., on brief.
    Donald H. Olson, Tax Div., Dept, of Justice, for appellee; Scott P. Cramp-ton, Asst. Atty. Gen., Meyer Rothwacks, Jonathan S. Cohen, Attys. Tax Div., Dept, of Justice, Washington, D. C., on brief.
    Before CELEBREZZE, PECK and ENGEL, Circuit Judges.
   CELEBREZZE, Circuit Judge.

This case presents the question of a donor’s income tax liability upon the transfer to a trust of highly appreciated stock subject to debt, where the proceeds of a loan which the stock secures are received by the donor and a large portion of the proceeds is used to pay the donor’s gift taxes on the transfer.

Joseph W. Johnson, David F. S. Johnson, and H. Clay Evans Johnson developed Interstate Life and Accident Insurance Company into a successful enterprise. In March 1965, each taxpayer decided to give a substantial block of Interstate stock to his children. Dr. Joseph Johnson’s transactions will be described herein, as the prototype for what all three taxpayers did, with figures rounded off for purposes of simplification.

On March 9, 1965, Dr. Johnson obtained $200,000 from a bank by signing a note. The note was secured by 50,000 shares of Interstate stock, “without personal liability” of Dr. Johnson. On March 11, he established an irrevocable trust for his children’s benefit and transferred to it his rights in the 50,000 shares. His wife and the'lending bank were appointed trustees.

On April 8, the trustees executed a note which cancelled Dr. Johnson’s note and opened a $200,000 debit account in the trust’s name, with the 50,000 shares pledged as collateral.

When these transactions were completed, Dr. Johnson had $200,000 in cash, and the trust had stock worth over $500,000, encumbered by a $200,000 note. Dr. Johnson later paid gift taxes of $150,000, leaving him $50,000 of cash and no obligation on the note.

On August 13, 1969, the Commissioner of Internal Revenue mailed deficiency notices to the taxpayers, asserting that each had realized long-term capital gain in the amount that the loan proceeds exceeded the basis in the stock transferred ($200,000 minus $10,000). Taxpayers contested the deficiencies in the Tax Court, arguing that because the transfer of stock to the trust constituted a “net gift,” they “realized” no income upon the transfer.

The Tax Court rejected this argument, relying instead on “the Crane doctrine” — in broad terms, that the shedding of a liability constitutes the realization of income within § 1001, Int.Rev. Code of 1954. To reach this result, the Tax Court felt it necessary to decide whether the transfers of Interstate stock to the trusts were “in part sales and in part gifts” or “merely gifts of the difference between the fair market value of the stock transferred and the loans to which the stock was subject.” 59 T.C. at 806. The Tax Court concluded,

“We hold that the transfers in question constituted in part a gift and in part a sale. To the extent that the fair market value of the stock transferred by each of the petitioners exceeded the amount of his loan it was a gift subject only to the payment by him of the gift taxes thereon, which have been paid and are not an issue herein. To the extent the transfers were subject to the loans they were sales and petitioners each realized capital gains in the amount his loan exceeded his basis in the stock.” 59 T. C. at 812.

By arriving at its conclusion via this route, the Tax Court distinguished Turner v. Commissioner of Internal Revenue, 49 T.C. 356 (1968) aff’d per cur-iam, 410 F.2d 752 (6th Cir. 1969). Turner seems to have been interpreted for the proposition that when a donor makes a “net gift” to a recipient and requires the donee to pay his gift tax liability, the payment of the donor’s gift tax is not taxable as income to the donor. 49 T.C. at 363. In Turner, the donor required the donee to pay his gift tax out of the gift’s proceeds. In the instant case the Tax Court found that the transfers were not conditioned on the recipients’ payment of gift taxes, that the donors reserved no interest in the trust corpora, and that the loans herein were not to be equated with the gift tax liabilities in Turner (since the loan proceeds significantly exceeded the gift taxes paid). The Tax Court concluded,

“Finally, unlike in the Turner case, we have found, on the basis of all the facts presented and consonant with the authorities hereinbefore discussed, that the transfers here in question were in reality part sales and part gifts.” 59 T.C. at 813.

Taxpayers concede on appeal that the Crane doctrine applies to the extent of $50,000 received through Dr. Johnson’s transactions, but only to this extent. Asserting the familiar doctrine that “substance controls over form,” they argue that their intent and the results of their transactions are identical to the Turner situation, so long as they concede that the $50,000 received in excess of gift tax liability minus the basis of the transferred shares should be taxed as a capital gain. Thus, they argue that the $150,000 which was received and used to pay the gift tax liability should escape income taxation.

Were we to view the Turner case in such broad terms as taxpayers assert, it would be difficult to distinguish this case from Turner. To be sure, the factors which the Tax Court found distinguishing are present. But to the extent the loan proceeds were used to pay the gift tax on the transfer, these features have little distinguishing force. Indeed, to state that in this case the transactions were “in reality part sales and part gifts” is to do nothing more than assert a conclusion. The fact is that these taxpayers, assisted by attentive tax counsel, attempted to raise cash to pay their gift taxes without themselves incurring taxable gain from transactions needed to raise the cash. This is what the Turner taxpayers attempted to do and succeeded in doing. In the murky tax-planning days of the early 1960’s, the Turner lawyers advised one procedure, and the lawyers in this case advised another. For the results to diverge diametrically, we should be forced to this conclusion by the words or policies of the Internal Revenue Code. Because of our approach to this problem, we avoid the need to consider maintaining a distinction in result based on minor variations in tax planning to similar ends.

The substance of a transaction rather than its form must ultimately determine the tax liabilities of individuals. Gregory v. Helvering, 293 U.S. 465, 470, 55 S.Ct. 266, 79 L.Ed. 596 (1935); Commissioner of Internal Revenue v. Court Holding Co., 324 U.S. 331, 334, 65 S.Ct. 707, 89 L.Ed. 981 (1945); Foresun, Inc. v. Commissioner of Internal Revenue, 348 F.2d 1006, 1008 (6th Cir. 1965). When one overall transaction transferring property is carried out through a series of closely related steps, courts have looked to the essential nature of the transaction rather than to each separate step to determine tax consequences of the transfer. Commissioner of Internal Revenue v. Ashland Oil & Refining Co., 99 F.2d 588 (6th Cir.), cert. denied, 306 U.S. 661, 59 S.Ct. 786, 83 L.Ed. 1057 (1939); Kimbell-Diamond Milling Co. v. Commissioner of Internal Revenue, 14 T.C. 74 (1950), aff’d per curiam, 187 F.2d 718 (5th Cir.), cert. denied, 342 U.S. 827, 72 S.Ct. 50, 96 L.Ed. 626 (1951); American Potash & Chemical Corp. v. United States, 399 F.2d 194, 185 Ct.Cl. 161, pet. for rehearing, 402 F.2d 1000, 185 Ct.Cl. 161 (1968). The substance of the transactions in this case was a gift of $500,000 worth of stock in exchange for $200,000, $150,000 of which was used to pay the donor’s gift taxes.

Whether we describe this substance as a “part sale and part gift” or a “net gift” has no importance. The fact is that each taxpayer received something of value upon transferring his encumbered stock into trust. Dr. Johnson received $200,000, free and clear of any obligation to repay that amount from any property in his possession. This amount constituted gross income in the year of receipt, under the broad definition set forth in section 61 of the Code —“all income from whatever source derived.” It makes no difference to what use the $200,000 was put, whether to pay for food or to pay a gift tax.

The same result would be reached if we describe the $150,000 used to pay the gift taxes on the transfer into trust as equivalent to what happened in Turner (donees’ assumption of donor’s gift tax liability). If we view the $150,000 receipt as the payment of the donor’s gift tax by the donee, then the donor has nonetheless realized income. The gift tax liability is the donor’s legal obligation under section 2502(d) of the Code, and “[t]he discharge by a third person of an obligation to him is equivalent to receipt by the person taxed.” Old Colony Trust Co. v. Commissioner of Internal Revenue, 279 U.S. 716, 729, 49 S.Ct. 499, 504, 73 L.Ed. 918 (1929) (taxing as income employer’s payment of employee’s income taxes). Accord, Safe Harbor Water Power Corp. v. United States, 303 F.2d 928, 157 Ct.Cl. 912 (1962) (payment of income taxes); Schaeffer v. Commissioner of Internal Revenue, 258 F.2d 861, 864 (6th Cir. 1958) (net increase in accrual basis taxpayer’s reserve account with purchaser); Guarantee Title & Trust Co. v. Commissioner of Internal Revenue, 313 F.2d 225, 228 (6th Cir. 1963); Malone v. United States, 326 F.Supp. 106, 112 (N.D.Miss.1971), aff’d 455 F.2d 502 (5th Cir. 1972) (payment of mortgage). The payment of a donor’s gift tax liability by the donee constitutes income to the donor.

We note that the identical conclusion would be mandated if we focus upon Dr. Johnson’s shedding of the $200,000 debt by transferring the encumbered stock into the trust. Under Crane v. Commissioner of Internal Revenue, 331 U.S. 1, 67 S.Ct. 1047, 91 L.Ed. 1301 (1947), the taxpayer realized income in the amount or the debt disposed of, regardless of the fact that he was not personally liable on the debt. We believe that the transactions in this case fall within the parameters of Crane, especially in view of the fact that the taxpayers actually received cash without liability to repay the notes out of their own assets. See First National Industries, Inc. v. Commissioner of Internal Revenue, 404 F.2d 1182 (6th Cir. 1968), cert. denied, 394 U.S. 1014, 89 S.Ct. 1633, 23 L.Ed.2d 41 (1969) (donor charged with capital gain upon the gift of property subject to a mortgage); Simon v. Commissioner of Internal Revenue, 285 F.2d 422 (3d Cir. 1960); O’Dell & Sons Co., Inc. v. Commissioner of Internal Revenue, 169 F.2d 247 (3d Cir. 1948).

Taxpayers, on the other hand, cite no Code provision which exempts their receipt of $200,000 from taxation at the time of the transfers into trust. No “roll-over” provision exists to allow taxpayers to shift highly appreciated stock into a trust without incurring a capital gain tax on the amount realized by the donor through the donees’ payment of the gift taxes. Congress has stringently limited the transactions which merit “roll-over” treatment (allowing a transfer of property without triggering a taxable event.) See sections 1031-1038, Int.Rev.Code of 1954. The transactions engaged in here are not among those exempted from tax.

Thus, we find no basis whatsoever in tbe provisions of the Code for taxpayers’ assertion that a donee’s discharge of a donor’s gift tax liability does not constitute the realization of income if a donor’s tax attorneys structure the transactions in a certain manner. The donor must somehow obtain the cash necessary to pay his gift taxes. If he acquired the cash upon the transfer of the donated property, then he realized income, so long as the amount received exceeds his basis in the donated property. Section 1001(b). This is true whether we view the event triggering the realization of income as a sale or as the discharge of indebtedness or as something else. If, as the Tax Court held, the $200,000 in cash was received through a “sale” of the stock (the entire transaction constituting in part a sale and in part a gift), then the stock’s disposition is included in gross income under section 61 (a)’s general definition of income as well as the specific language of clause (3) (“gains derived from dealings in property”), the amount realized under section 1001(b) is $200,000 (“the sum of any money received [$200,000] plus the fair market value of the property (other than money) received [$0]”) minus $10,000 basis, and the tax would be imposed at capital gains rates under section 1201(b) (“gain from the sale . of a capital asset held for more than 6 months” within section 1222(3)). If we view the transaction herein as a discharge of gift tax indebtedness occasioned by the donees’ payment of the gift tax, as taxpayers contend, the $50,000 received in excess of gift taxes paid is taxable at capital gain rates (conceded by taxpayers and specifically taxable under section 61(a) (12) as “income from discharge of indebtedness,” inter alia), the $150,000 which was received by the donor and used to pay his gift taxes is taxable under Old Colony Trust, as well as Crane, the amount realized is [$50,000 plus $150,000] minus [$10,000 basis] = $190,000 under § 1001(b), (“gain from the . . . other disposition of property”), and the tax is imposed at capital gains rates under § 1201(b) (gain from the . . . exchange of a capital asset held for more than six months”). We find it immaterial whether the transaction is found to be “part sale and part gift.” This suggestive but artificial language should not obscure the essence of the transaction in which the taxpayers engaged — • the transfer of highly appreciated stock to a trust for their children’s benefit, with the funds to pay their gift taxes raised out of the transferred property, plus additional cash. The effect of imposing a capital gain tax at the time of the stock’s transfer is to collect the tax at that time, rather than to defer the tax until the trustees dispose of it through a taxable event. Since money can easily be obtained to pay the capital gains tax at the time of the transfer, we see no policy objection to imposing the tax at that time.

In view of our holding, we are obligated to comment specifically on the major case on which Appellants rely — Turner v. Commissioner of Internal Revenue, 410 F.2d 752 (6th Cir. 1969), aff’g 49 T. C. 356 (1968). Taxpayers cite Turner for the proposition that a donor realizes no income when he makes a “net gift” and requires the donee to pay his gift taxes. The source of this asserted principle lies in a maze of cases wherein the Commissioner tested out § 677(a) of the Code, which imposes a tax at ordinary income rates upon amounts retained or received by a grantor upon transfer of property into trusts. See Estate of Staley, 47 B.T.A. 260 (1942), aff’d 136 F.2d 368 (5th Cir.), cert. denied, 320 U.S. 786, 64 S.Ct. 196, 88 L.Ed. 473 (1943); Estate of Sheaffer, 37 T.C. 99 (1961), aff’d, 313 F.2d 738 (8th Cir.), cert. denied, 375 U.S. 818, 84 S.Ct. 55, 11 L.Ed.2d 53 (1963); Estate of Morgan, 37 T.C. 981 (1962), aff’d per curiam, 316 F.2d 238 (6th Cir.), cert. denied, 375 U.S. 825, 84 S.Ct. 68, 11 L.Ed. 2d 58 (1963); Estate of Sheaffer, 25 T.C.Mem. 646 (1966); Richard M. Turner, 49 T.C. 356 (1968), aff’d per curiam, 410 F.2d 752 (6th Cir. 1969); Victor W. Krause, 56 T.C. 1242 (1971), appeal dismissed (nolle pros), (6th Cir. June 27, 1972); Estate of Davis, 30 T.C.Mem. 1363 (1971), aff’d per curiam, 469 F.2d 694 (5th Cir. 1972). In none of these cases, however, did the Commissioner strongly argue, nor did the courts carefully consider, what the Commissioner argues here — that aside from section 677 certain amounts should be taxed. In fact, in Turner the Commissioner “conceded that the amounts paid by the trustees to the doner (sic) were not taxable to her. . . .” 410 F.2d at 753.

In addition, the Tax Court was concerned that- the Commissioner’s “part sale and part gift” contention would lead to a doubling of credit for the gift tax paid in the donees’ basis, under Section 1.1015-4, Income Tax Regs. 49 T.C. at 363-364. This concern was without justification, as analysis of the facts in this case demonstrates. Under that regulation, assuming it is relevant (rather than § 1.1015-2,) the donee’s basis would be $200,000 (the “amount paid by the transferee for the property”) plus $150,000 (gift tax paid), but limited to the fair market value of the gift (approximately $300,000 here). There is actually no “double credit” involved. The $150,000 received by the donor which was used to pay his gift tax is included as an increase to the donee’s basis because the donor will have paid a capital gain on that amount of appreciation of his stock and that portion of the stock’s increase in value should not again be taxed. The $150,000 increase in the donee’s basis which is attributable to gift taxes paid by the donor is independently proper. Its function, separate from that of the other $150,000 increase, is not to discourage gifts. Were basis not raised by the amount of gift taxes paid, a donor would recognize that a shift of resources to the donees would incur a tax without a corresponding adjustment in basis for the donees. Thus, Congress has authorized increases in a donee’s basis both by amounts of gain recognized upon transfers to trusts and by amounts of gift taxes paid, regardless of the fact that such amounts may superficially appear redundant. See section 1015(b), (d); § 1.1015-2, -4, -5, Income Tax Regs.

Thus, the Turner case does not support the taxpayers’ position. Turner has no precedential value beyond its peculiar fact situation, in view of the Commissioner’s concessions in that case both in the Tax Court and on appeal to this Court.

We conclude that the deficiencies assessed by the Commissioner must be allowed, for the reasons stated in this opinion. On this basis, the decision of the Tax Court is affirmed.

      . The Johnsons’ wives are parties to the litigation because joint returns were filed in each case.

      . The Tax Court’s Opinion, reported at 59 T.C. 791 (1973), describes the transactions in great detail.
      The actual figures are as follows:
      Fair Market Value of Stock Transf’d without debt Basis of Stock Loan Before Taken Transfer Out Gift Tax Paid (State and Federal) Capital Gain Asserted
      Joseph Johnson in excess of $500,000 $10,812.50 $200,000 $147,072.51 $189,187.50
      David in excess of $10,812.50 $200,000 Johnson $500,000 $125,177 $189,187.50
      Clay in excess of $10,812.50 $175,000 Johnson $500,000 $125,550 $164,187.50,
      Taxpayers concede on appeal that they have realized a capital gain equal to the excess of the loan proceeds not used to pay their gift taxes over basis. Thus, the only disputed deficiencies on appeal are those on capital gains equal to the amount of gift taxes paid by each taxpayer.

      . This conclusion has been reached by certain commentators, who see the tax-planning opportunity by this view of the Turner case. See, e. g., Kopp, “Gifts Subject to Donee Payment of Tax: Timing, Risks and Computations,” 27 N.Y.U.Inst.Fed.Tax, 275, 397 (1969). Other commentators have not viewed the Turner decision as standing for so broad a principle. See, e. g., Lowenstein, “Federal Tax Implications of Gifts Net of Gift Tax,” 50 Taxes 525 (1972). No difficulty of taxpayer reliance on Turner is involved herein, since the relevant events occurred four years before the Turner decision.

      . For examples of the guesswork of planners in this area, at the time the Turner and Johnson transactions were being undertaken, 1960-61 and 1965, respectively, contrast Comment, “Income Tax Consequences of Gifts of Property Encumbered in Excess of Basis,” 7 U.C.L.A.L.Rev. 770, 774 (1960), and Note, “Assumption of Indebtedness by a Donee — Income Tax Consequences,” 17 Stan.L.Rev. 98, 105 (1964) with Palmer, “Tax Saving Through Charitable Giving,” 36 Taxes 40 (1958), and Spears, “Mortgages in Excess of Basis,” 1959 So.Cal.Tax Inst. 883, 902.

      . Minor variations in form may mean dramatically different results in proper eases. The “substance over form” argument is not a magic incantation which makes a transaction tax-exempt at a taxpayer’s command (or taxable at the Commissioner’s wish). For example, suppose the taxpayers here had chosen to sell their stock to the trust for $500,000, and had then given the trust $500,000, on the condition that the trust give them $50,000 and pay their gift taxes. Aside from tax events the identical result would be reached between donors and do-nees. Yet, it would be a startling contention that the initial sale should escape taxation —and in a greater amount than imposed through Appellants’ transactions. See Ed-mister v. Commissioner of Internal Revenue, 391 F.2d 584 (6th Cir. 1968) ; Montesi v. Commissioner of Internal Revenue, 340 F.2d 97 (6th Cir. 1965).

      . Taxpayers point out that the original assessment of Tennessee and federal gift taxes was $208,497.51, which exceeds the loan taken out by Dr. Johnson. They argue that this undermines the Tax Court’s point that the $50,000 received over and above the eventual gift tax assessment indicates that taxpayers were “in reality” making a “part sale” of their stock rather than a “net gift.” This entire semantic discussion is irrelevant under our analysis of the ease.
      Were we to adopt the Tax Court’s reasoning that a “part sale, part gift” was involved in this case, we would be hard put to justify the Tax Court’s “finding” to that end. In Turner the Tax Court held that in cases where donees are obligated to pay gift taxes, courts have “looked at the facts of each case, including the close family relationship involved, and have determined what was in fact intended by the parties.” 49 T.C. at 362. It is difficult to find that the parties here actually intended a part sale, part gift, in view of the obvious tax implications of such an intention. It is better to apply the Tax Code equitably to basically similar transactions than to impose different results depending upon a hindsight determination of “actual intent.”

      . The donee may eventually become liable for the gift tax if the donor fails to pay when the tax is due and the Internal Revenue Service chooses to hold the donee rather than the donor. Section 6324(b). Donee liability is, however, in the nature of a lien rather than an alternative source of personal liability at the taxpayers’ option, at least before the tax is actually due and payable. See Estate of Sheaffer v. Commissioner of Internal Revenue, 313 F.2d 738, 741 (7th Cir. 1963).

      . There has been some question of whether the Supreme Court intended in Grane to establish the unwavering principle that the shedding of debt per force gives rise to taxable income. See Adams, “Exploring the Outer Boundaries of the Crane Doctrine; An Imaginary Supreme Court Opinion,” 21 Tax L.Rev. 159 (1966); Parker v. Delaney, 186 F.2d 455, 459 (1st Cir. 1950) (Magruder, J., concurring), cert. denied, 341 U.S. 926, 71 S.Ct. 797, 95 L.Ed. 1357 (1951).

      . The roll-over provisions present in Wood-sam Associates, Inc. v. Commissioner of Internal Revenue, 198 F.2d 357 (2d Cir. 1952), took one transaction therein outside the Crane doctrine. While a gift is specifically excluded from a donee’s taxable income, there is no authority that makes a gift transfer a non-taxable event as to the donor.

      . This language may be significant for determining tbe basis of donated property under the Income Tax Regulations, § 1.1015-4. But as discussed below, text at n. 12, the basis problem is easily solved without recourse to magic labels.

      . Indeed, in this case, the “extra” $50,000 retained by each taxpayer over and above his gift taxes is approximately the amount of capital gains tax assessed. The donor who chooses to require the donees to pay his gift tax could simply require the donee to pay his recognized capital gain tax as well, though this might lead to further difficulties. See Old Colony Trust Co. v. Commissioner of Internal Revenue, 279 U.S. 716, 49 S.Ct. 499, 73 L.Ed. 918 (1929); Safe Harbor Water Power Corp. v. United States, 303 F.2d 928, 157 Ct.Cl. 912 (1962).

      . Since the gifts in this case were “transfers in trust,” § 1.1015-2 would seem applicable. Section 1.1015-4 was designed to deal with problems peculiar to “part sale and part gift” situations in the nature of true “bargain sales.” Section 1015 itself was a response to the bargain sale problem. See Farid-es-Sultaneh v. Commissioner of Internal Revenue, 160 F.2d 812 (2d Cir. 1947).

      . The provision allowing an increase of the donee’s basis in donated property by the amount of gift taxes paid was added in 1958. The Senate Report recommending the change stated that the absence of such a provision ignored a “cost” of making a gift —the cost of the gift tax. “As a result, [the] committee has concluded that to properly reflect total ‘costs’ incurred with respect to donated property, it is necessary to increase the basis of the property by the amount of any gift tax paid with respect to it. . . . However, the basis of the property as a result of this addition of the gift tax to the basis is not to be increased to more than the fair market value of the property at the time of the gift. A limitation of this type means that cash will be treated no less favorably than other property, and that there will be no incentive to convert cash into securities in order to obtain an increase in basis above the fair market value of the property.” Sen.Rept.No. 1983, 85th Cong., 2d Sess., U.S.Code Cong. & Admin.News, pp. 4859-60 (1958).


author: LEWIS R. MORGAN, Circuit Judge:

text:
    The Reverend Temperance E. WRIGHT, Plaintiff-Appellant, v. The STATE OF FLORIDA et al., Defendants-Appellees.
    No. 73-2063.
    United States Court of Appeals, Fifth Circuit.
    June 13, 1974.

      Arthur W. Tifford, Ronald B. Gilbert, Ronald I. Strauss, Miami, Fla., for plaintiff-appellant.
    Robert L. Shevin, Atty. Gen., Richard Stanley Rachlin, Asst. Atty. Gen., Tallahassee, Fla., Allan H. Rothstein, City Atty., L. Joseph Hoffman, Asst. City Atty., Robert W. Rust, U. S. Atty., Raymond B. Ray, Asst. U. S. Atty., Miami, Fla., Elliot L. Richardson, Atty. Gen., Washington, D. C., Talbot D’Alemberte, Miami, Fla., Morton Hollander, Anthony J. Steinmeyer, Dept, of Justice, Washington, D. C., for defendants-appellees.
    Before BROWN, Chief Judge, and WISDOM and MORGAN, Circuit Judges.
   LEWIS R. MORGAN, Circuit Judge:

Rev. Temperance E. Wright brought this action in the United States District Court for the Southern District of Florida against the United States, the State of Florida, and numerous federal, state and local officials. In his complaint, as amended, Rev. Wright sought an injunction, declaratory relief and money damages for violation of his constitutional and statutory rights resulting from dissemination of certain information gained from allegedly illegal wiretaps. The district court, after a hearing on jurisdiction, dismissed the complaint without prejudice, and Rev. Wright has appealed. Finding that there are two causes of action' which plaintiff should have been allowed to prove at a hearing on the merits, we must reverse and remand for further proceedings.

In his complaint, Rev. Wright alleged the following facts: Some time between September and December, 1971, Bernard Garmire, chief of the Miami, Florida, police department, began an investigation of possible influence and corruption in the Dade County court system. In connection with that investigation, members of the department began a surveillance of Frank Martin, who is not a party to this action. In the spring of 1972, Garmire asked for and received assistance in his investigation from E. Wilson Purdy, Director of Public Safety for Dade County. In May, 1972, agents from the Department of Public Safety and the Miami Police Department observed Martin in activities which led them to believe that he was exerting influence on cases in the Dade County courts.

In June, 1972, as a result of the investigation, Garmire and Purdy asked Reu-bin Askew, Governor of Florida, to request authorization for the interception of wire communications, in compliance with state and federal statutes, F.S.A., Section 934.01 et seq., F.S.A., and 18 U. S.C. § 2510 et seq. (Ch. 119). Specifically, the two law enforcement officers wanted to tap a telephone in a service station at 2200 N.W. 12th Ave., Miami, where Martin is alleged to have been conducting his influence-peddling. Governor Askew, on the advice of his legal counsel, Edgar Dunn, refused the request because of inadequate compliance with the relevant statutes. A month or so later, Garmire and Purdy renewed their application, this time successfully. On July 26, 1972, Chief Justice James C. Adkins of the Florida Supreme Court approved a tap on the gas station telephone. The tap lasted until August 26, the maximum time allowed by 18 U.S.C. § 2518(5). On September 1, 1972, Justice Adkins approved a new tap on the same telephone, which lasted until September 14. In November, 1972, Justice Adkins extended for three months the time for formal notification of the existence of the first tap. See, 18 U.S.C. § 2518(8)(d).

About the same time, Garmire and Purdy asked Governor Askew to appoint a special prosecutor to act on the information gained in the taps, which the governor did on February 2, 1973.

Before the governor granted the request, his legal counsel, Dunn, examined some of the information contained in the taps. Some time between December, 1972, and February, 1973, the federal government entered the picture. Douglas McMillan, attorney in charge of the Justice Department’s Miami strike force, started investigating Martin, and gained access to the information in the taps. McMillan began presenting information to a federal grand jury in January, 1973. On .February 3, 1973, deputies of the Department of Public Safety began serving some of the subjects of the tap, including Martin and Rev. Wright, with inventories of information gained in the taps. On February 5, 1973, Purdy made statements to representatives of the media describing some of the information revealed by the wiretaps, and these statements received considerable publicity, which Rev. Wright alleges has injured his reputation and endangered his job.

Rev. Wright’s complaint contains four counts. Many of the allegations and requests for relief in the four counts are repetitious and confusing, but in essence Rev. Wright has asked for the following:

1. A declaratory judgment that F.S. A., §§ 934.02(8) and 934.07 are inconsistent with Title 18 U.S.C., Ch. 119, and the Fourth, Fifth and Fourteenth Amendments to the United States Constitution.

2. A declaratory judgment that Ch. 119 pre-empts the field of interceptions of wire communications.

3. A declaratory judgment that certain activities of the defendants, including the tap authorized July 26, 1972, violated the same federal statutes and constitutional provisions.

4. An injunction against any criminal prosecution of the plaintiff based on the taps.

5. An order sealing the results of the taps.

6. Compensatory damages of $50,000 and punitive damages of $1,000,000 to redress violations of plaintiff’s Fourth and Fourteenth Amendment rights, plus attorneys’ fees and costs.

. 7. Compensatory liquidated damages of $100 per day and punitive damages of $1,000,000 for violation of plaintiff’s rights under 18 U.S.C. § 2520, plus attorneys’ fees and costs.

After a hearing on jurisdiction, the district court dismissed the case without prejudice on the grounds (1) that the court lacked subject matter jurisdiction because no civil rights violation was alleged, (2) that the complaint failed to state a claim on which relief could be granted, and (3) that the cases of Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), Samuels v. Mackell, 401 U.S. 66, 91 S.Ct. 764, 27 L.Ed.2d 688 (1971), and Becker v. Thompson, 459 F.2d 919 (5th Cir. 1972), precluded equitable relief in the circumstances of this case.

In paragraphs 6 and 7 above, Rev. Wright asserts two causes of action for damages based on the illegal wiretapping of conversations to which he was a party. One cause of action (in Count III of the complaint) is based directly on the Fourth Amendment to the Constitution, and the other (in Count IV of the complaint) is based on 18 U.S.C. § 2520. The district court dismissed these two causes of action along with the claims for equitable relief without an extended discussion of the reasons.

Dealing first with the Fourth Amendment claim, Rev. Wright has cited no jurisdictional statute which would allow the court to grant any relief against the federal defendants. Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). With respect to the state defendants, 42 U.S.C. § 1983, cited by the plaintiff, provides a cause of action for violation of the Fourth Amendment, and 28 U.S.C. § 1343(3) provides jurisdiction. Therefore, the Fourth Amendment claim for' damages against the state and local officials should not have been dismissed either for lack of jurisdiction or failure to state a claim. See, Bivens, supra.

We now must face the question of whether the plaintiff has cited any jurisdictional statute which would allow the district court to award damages under 18 U.S.C. § 2520. The only possibly applicable jurisdictional statute cited by the plaintiff is 28 U.S.C. § 1343(4), and that statute applies only if § 2520 is held to protect “civil rights.” We hold, as has at least one other court, Kinoy v. Mitchell, 331 F.Supp. 379, 382 (S.D.N.Y.1971), that the right to be free from unauthorized or improperly authorized wiretapping, being one aspect of the right to be free from unreasonable searches and seizures, Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967), is a civil right, within the meaning of § 1343(4). Therefore, the district court did have jurisdiction to hear plaintiff’s claims under 18 U.S. C. § 2520.

Defendants argue strenuously that since the interceptions in question were all authorized by the order signed by Justice Adkins, they have a complete defense to the action. It is true that good faith reliance on a court order would be a defense both to the Fourth Amendment claims, Pierson v. Ray, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967), Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 456 F.2d 1339 (2nd Cir. 1972), rev’d on other grounds, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), and to the claims under § 2520. Nevertheless, the validity of the defense is not determined conclusively by the pleadings, and plaintiff should have the opportunity to prove his case. Abramson v. Mitchell, 459 F.2d 955 (8th Cir. 1972).

Having decided that this case must be remanded, we note in passing that since the district court held its hearing in this case, the Supreme Court has reversed this court’s decision in Becker v. Thompson, supra, relied on in part by the district court in dismissing plaintiff’s claims for equitable relief. Steffel v. Thompson, 42 U.S.L.W. 4357, 415 U.S. 452, 94 S.Ct. 1209, 39 L.Ed.2d 505 (1974). Therefore, the district court will reconsider its treatment of plaintiff’s claims for equitable relief in light of this reversal. See also, Wall v. American Optometric Ass’n. et al., - F.Supp. - (N.D.Ga.1974) (3-Judge court) [No. CA — 16414, April 19, 1974],

Finally, Rev. Wright has not made allegations of fact which would sustain a claim for relief against any federal official. Therefore, the federal officials’ motions to dismiss were correctly granted. F.R.Civ.P., Rule 12(b)(6); cf., United States v. Calandra, 42 U.S.L.W. 4104, 414 U.S. 338, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974).

Reversed and remanded.

      . 18 U.S.C. § 2520 provides :
      Any person whose wire or oral communication is intercepted, disclosed, or used in violation of this chapter shall (1) have a civil cause of action against any person who intercepts, discloses, or uses, or procures any other person to intercept, disclose, or use such communications, and (2) be entitled to recover from any such person — ■
      (a) actual damages but not less than liquidated damages computed at the rate of $100 a day for each day of violation or $1,000, whichever is higher;
      (b) punitive damages; and
      (c) a reasonable attorney’s fee and other litigation costs reasonably incurred.
      A good faith reliance on a court order or on the provisions of section 2518(7) of this chapter shall constitute a complete defense to any civil or criminal action brought under this chapter.

      . 42 U.S.C. § 1983 provides:
      Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.

      . The district courts shall have original jurisdiction of any civil action authorized by law to be commenced by any person:
      (1) To recover damages for injury to his person or property, or because of the deprivation of any right or privilege of a citizen of the United States, by any act done in furtherance of any conspiracy mentioned in section 1985 of Title 42;
      (2) To recover damages from any person who fails to prevent or to aid in preventing any wrongs mentioned in section 1985 of Title 42 which he had knowledge were about to occur and power to prevent;
      (3) To redress the deprivation, under color of any State law, statute, ordinance, regulation, custom or usage, of any right, privilege or immunity secured by the Constitution of the United States or by any Act of Congress providing for equal rights of citizens or of all persons within the jurisdiction of the United States;
      (4) To recover damages or to secure equitable or other relief under any Act of Congress providing for the protection of civil rights, including the right to vote.


author: PER CURIAM:

text:
    COALITION FOR EDUCATION IN DISTRICT ONE et al., Plaintiffs-Appellees, v. The BOARD OF ELECTIONS OF CITY OF NEW YORK et al., Defendants-Appellants, Carolyn Kozlowsky, Defendant-Appellant.
    Nos. 1017, 1018, Dockets 74-1204, 74-1296.
    United States Court of Appeals, Second Circuit.
    Argued April 8, 1974.
    Decided April 24, 1974.

      Doron Gopstein, New York City (Adrian P. Burke, Corp. Counsel, City of New York, Irwin L. Herzog, Jeffrey S. Karp, New York City, of counsel), for appellants.
    Joseph Frost, New York City (A. W. Sereysky, New York City, of counsel), for appellant Carolyn Kozlowsky.
    Charles E. Williams, III, New York City (Jack Greenberg, James M. Nabrit, III, Eric Schnapper, Fredrick E. Sherman, Ira S. Bezoza, New York City, of counsel), for appellees.
    Before FRIENDLY and TIMBERS, Circuit Judges, and THOMSEN, District Judge.

       Of the District Court for the District of Ma'ryland, sitting by designation.

   PER CURIAM:

The New York City Board of Elections, the Community School Board of School District One, and six members of the School Board elected on May 1, 1973 appeal from orders of the District Court for the Southern District of New York directing that a new election be held in District One and granting other relief.

In their complaint, filed on September 18, 1973, the Coalition for Education in District One, various unsuccessful candidates at the election and members of minority groups (black, Hispanic and Chinese) challenged the validity of the election under the Equal Protection clause of the Fourteenth Amendment and the Voting Rights Act of 1965 as amended in 1970, 42 U.S.C. §§ 1971, 1973 et seq. After extensive evidence had been taken on a motion for a preliminary injunction against certain actions of the school board which allegedly had been illegally elected, it was stipulated that the hearing so held should constitute a full hearing on the merits of the plaintiffs’ claims, F.R.Ciy.P. 65(a)(2). In an extensive opinion Judge Stewart found that various acts of employees of the Board of Elections had a discriminatory impact on the rights of minority voters that could have affected “several hundred” of the approximately 13,000 votes cast at the election. Because of the complexities of the method of counting votes under the system of proportional representation, see Campbell v. Board of Education, 310 F.Supp. 94, 98-100 (E.D.N.Y. 1970), Judge Stewart ruled that even this small percentage might have altered the result. He directed that the election be declared invalid and the positions of the elected members be declared vacant; that a new election be held; and that meanwhile the Chancellor of the City School District of New York should exercise the powers of the previously elected board. Later he fixed May 14, 1974 as the date of the new election and denied a stay pending appeal. Another panel of this court also denied a stay but expedited the appeal.

School District Number One, located on the lower east side of Manhattan, has been subject to considerable dissension, due in large part to an imbalance in ethnic composition between the district’s adult population, which is predominantly white, and its student population, which is 92.6% black, Hispanic and Oriental. Since New York allows parents of students to participate in school board elections even when they are not otherwise eligible to vote in the district, this imbalance carries over into the electoral process. Despite the absence of official slate affiliations on the ballots, the election of nine members of the school board on May 1, 1973, was in substance a struggle between two factions, one sponsored by the plaintiff Coalition for Education in District One, and the other sponsored by the Committee for Effective Education, an organization supported by the United Federation of Teachers. The Coalition slate was comprised of the then incumbent board, most of whom were members of minority groups. The slate put forward by the Committee for Effective Education was composed of eight white candidates and one black. There was a large turnout for the election, with 22.45% of the eligible voters casting ballots as against averages of 8.-29% for Manhattan and 10.38% for the entire city. Six members of the Committee’s slate and three of the Coalition’s were elected.

The picture of the May 1 election that emerges from the district court’s opinion is one of general confusion, with minority voters the primary victims of the disorder. Parent voters and non-English speaking voters were particularly disadvantaged by this. Materials arrived late at several polling places which predominantly served minorities, and at one site the parent voter materials failed to arrive at all. Bilingual instructions and other materials were not readily available at a number of polling sites, and there was substantial confusion as to where parent voters were supposed to vote. Most important, the court noted that election inspectors and interpreters were inadequately trained to handle the extraordinary difficulties of the May 1 election. In using alphabetized lists of the names of registered voters, for example, the inspectors often failed to locate Chinese and Spanish names, which the court found caused substantial delays and in some eases resulted in the denial of voting rights. In addition, the court found that the inspectors followed an inconsistent course with respect to requiring voter identification of all prospective voters: voters at many minority polling sites were required to produce identification, while at most predominantly white polls no such requirement was enforced. Besides these election-day irregularities, the court found that changes in election district lines between November 1972 and the May 1, 1973 election had resulted in changes of polling places for many minority voters, and that the Board of Elections had failed adequately to advise many of the voters of the location of their new polling sites. In addition, the court pointed out that six polling sites were conveniently located in large, predominantly white, middle-income housing projects, while no polls were located in predominantly minority-occupied buildings. Finally, the court found that although there was no pattern of intentional discrimination, there were scattered instances of discriminatory conduct by election inspectors, which contributed to the discriminatory impact of the election on minority voters.

Appellants have mounted a detailed challenge to the judge’s findings concerning the discriminatory impact of the various irregularities and the effect of these on the election. Pressing the latter point further, they contend that in any event complete invalidation of the election was unwarranted. They also argue that plaintiffs failed to display the pre-election and post-election diligence required to justify the relief granted. Pointing out that invalidation of an election is drastic action for a federal court to take, they urge that in effect the instant decision means few elections will be immune from challenge, and none can be regarded as final until months after the ballots are counted.

In answer to appellants’ first set of claims, appellees implant themselves solidly on the “unless clearly erroneous” rule, F.R.Civ.P. 52(a). Actually there is no serious dispute with regard to most of the basic facts that Judge Stewart found. The controversy relates rather to the inferences he drew concerning the discriminatory effect of the various irregularities on minority groups, what appellants claim to be his disregard of evidence contrary to these inferences, and his finding that the discrimination was sufficiently pervasive to have affected the outcome of the election. Many of these criticisms appear to us to have substantial force. We have serious doubt whether, if any of us had been sitting as the district judge, we would have entered the orders here under review, and we therefore do not wish our affirmance to be taken by district judges as any mandate to reach the same result on similar facts. But we have been instructed that the “unless clearly erroneous” rule “applies also to factual inferences from undisputed basic facts,” and that the consequent diversity in result is not too high a price to pay for the benefit of the greater time which a trial judge can give to a particular case and his advantage in having seen and heard the witnesses, C. I. R. v. Duberstein, 363 U.S. 278, 291, 80 S.Ct. 1190, 4 L.Ed.2d 1218 (I960). With respect to the inferences of discriminatory impact and consequent effect here drawn from the facts, we find ourselves unable to make the required pronouncement . of having a “definite and firm conviction that a mistake has been committed,” United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948).

Appellants’ attack on the scope of the remedy collides with another limitation on appellate review, namely, that the shaping of a remedy is largely for the district courts. Despite the vagaries of proportional representation and the method of tabulation here employed, we must confess most serious doubt that even the several hundred votes that Judge Stewart estimated to be affected by the discriminatory impact of the irregularities could have prevented the election of candidates like Mildworm, Price and Goodman, who made “quota” with first choice ballots of 1408, 1339 and 1273 respectively, and could have caused the election of tenth place candidate Beck who received only 563 first choice votes, and reached a total of 994 only after many lower choice ballots were transferred to him from candidates who had been elected or eliminated. It is even more unlikely that the extra votes could have appreciably helped Coalition candidates Cordero, Tam and Suarez, who received only 557, 310 and 185 first choice votes, respectively. In light of these figures, a decree invalidating the election of the two or three lowest scorers and directing a new election to fill their places would seem to have afforded ample relief. But we have also been instructed that, within the bounds of rationality, “[t]he framing of decrees should take place in the District rather than in Appellate Courts,” International Salt Co. v. United States, 332 U.S. 392, 400, 68 S.Ct. 12, 17, 92 L.Ed. 20 (1947). See Chance v. Board of Examiners, 458 F.2d 1167, 1178 (2 Cir. 1972); Vulcan Society v. Civil Service Commission, 490 F.2d 387, 399 (2 Cir. 1973).

The remaining issue is that of pre- and post-election diligence. We agree with the court’s conclusion that plaintiffs cannot be faulted for lack of. pre-election diligence. See Toney v. White, 488 F.2d 310 (5 Cir. 1973) (en bane). The only major problem of which they were aware before the election was the alteration in election district lines and the consequent change of polling places for many minority voters. However, plaintiffs cannot fairly be held lacking in diligence on that score, since the harm was not the change in polling sites simpliciter but the unanticipated failure of the Board of Elections to advise some voters where to go. Finally, while appellant Kozlowsky has claimed that appellees failed to exercise post-election diligence, appellees say that issue was not raised below, which Kozlowsky has not denied. We thus need not determine whether the four-month delay between the election and the filing of the complaint might otherwise have barred the relief here granted.

Affirmed.

      . Judge Stewart found that, with a few minor exceptions, the discrimination against minority voters was not intentional.

      . Since 93% of the district’s student population is of minority ethnic background, the parent voters were almost entirely minority group members.

      . For example, while appellants do not challenge the finding that on some occasions minority voters were asked for identification at the polls, they attack the court’s broad conclusion from rather scanty evidence that election officials followed a general pattern of requiring identification only at minority polling places. Appellants similarly challenge the court’s finding that changes in election district lines had a substantially discriminatory impact. An examination of the election districts in which all the voters were required to change polling sites shows that the impact of these changes was only slightly greater on minority than on white voters. Moreover, the evidence that some minority voters did not get adequate notice of the changes in poll locations was meagre, and the appellants suggest that the court should not have concluded from the evidence on the record that this factor had a substantial discriminatory effect on minority voters.

      . Among the factors that the appellants claim the district court improperly ignored were: (1) voting materials were late in arriving at several predominantly white polling sites, not just at minority polls; (2) the percentage of invalid ballots in District One was below the average for Manhattan in the May 1 election, indicating that the Board of Elections had been reasonably successful in educating the voters as to the proper means of casting their ballots; and (3) the change in election district boundaries, which the court characterized as largely unexplained, was made pursuant to a state-wide reapportionment plan mandated by “one man-one vote” principles.

      . Diverse results on essentially the same facts do appear much more offensive when the controversy is public in nature than in a private law question such as that presented in Duberstein, whether the transfer of an automobile was a gift or remuneration for services rendered. However, so far as we are aware, the Supreme Court has not indicated that the “unless clearly erroneous” rule is to be relaxed in constitutional or other public cases coming from federal district courts, as distinguished from its established practice of reexamining factual findings on review of denial of constitutional claims by state courts. See Stein v. New York, 346 U.S. 156, 181, 73 S.Ct. 1077, 97 L.Ed. 1522 (1953); Haynes v. Washington, 373 U.S. 503, 515-516, 83 S.Ct. 1336, 10 L.Ed.2d 513 (1963); Cox v. Louisiana, 379 U.S. 536, 545 n. 8, 85 S.Ct. 453, 13 L.Ed.2d 471 (1965). The conflicting attitudes as to the roles of the district court and the court of appeals displayed in the recent opinions in Mayor of Philadelphia v. Educational Equality League, 415 U.S. 605, 621 n. 20, 94 S.Ct. 1323, 39 L.Ed.2d 630 (1974), may presage, however, that the problem will receive further attention.

      . “Quota” is a figure determined by dividing the number of ballots by the number of offices to be filled, plus one. Written as a formula, it is
      Q = B n + 1

      . Plaintiffs also challenged the placement of six polling sites in predominantly white, middle-income housing units, and the Board’s failure to place polls in predominantly minority-occupied buildings. Although Judge Stewart found that this practice had a discriminatory impact, he did not appear to place great weight on it. Plaintiffs could have challenged the poll placement prior to the election, but their failure to seek pre-election relief on this point is not a sufficient basis to overturn the court’s finding of substantial discriminatory impact in the election process.


text:
    Dorothy HOOTS, Individually and as mother of her children Janelle Hoots et al., Appellees, v. COMMONWEALTH OF PENNSYLVANIA et al. Appeal of TURTLE CREEK AREA SCHOOL DISTRICT. Appeal of CHURCHILL AREA SCHOOL DISTRICT ALLEGHENY COUNTY.
    Nos. 73-1783, 73-1784, 74-1050, and 74-1051.
    United States Court of Appeals, Third Circuit.
    Argued Feb. 28, 1974.
    Decided April 18, 1974.
    M. E. Evashwiek; Evashwick, Brie-ger & Capone, James C. Evans, Pittsburgh, Pa., for appellant Turtle Creek Area School District.
    J. Robert Maxwell, Maxwell & Huss, Pittsburgh, Pa., for appellant Churchill Area School District, etc.
    R. Stanton Wettick, Jr., Neighborhood Legal Services Assn., Pittsburgh, Pa., for appellees.
    Before HUNTER and WEIS, Circuit Judges and BECKER, District Judge.
   OPINION OF THE COURT

PER CURIAM:

The underlying action which gave rise to these appeals is a class action brought against the Commonwealth of Pennsylvania, the Pennsylvania State Board of Education, the Allegheny County Board of School Directors, the Allegheny Intermediate Unit Board of School Directors and various individuals as officials of these bodies. • The complaint was filed on June 9, 1971 and alleged that the defendants intentionally and knowingly drew boundary lines for the new consolidated school districts in the central eastern area of Allegheny County, and specifically for the General Braddock Area School District, in a way that perpetuated and maximized racial segregation in violation of the equal protection clause. On May 15, 1973, the district court found in favor of the plaintiffs and ordered the Commonwealth defendants to prepare and adopt a comprehensive plan of school desegregation for that area of Allegheny County.

No appeal from this decision was filed by any of the named defendants, but on June 12, 1973, the Turtle Creek Area School District (“Turtle Creek”), a local school district likely to be affected by the desegregation plan, filed a petition to intervene in the case as a party defendant in order to take an appeal. On June 13, 1973, Churchill Area School District (“Churchill”), a similarly situated local school district, took the same action. These petitions to intervene were denied by the district court on June 13, 1973 and these denials as well as various exceptions to the May 15, 1973 judgment of the district court itself form the basis for appeals No. 73-1783 and No. 73-1784.

Subsequent to the filing of these appeals, the Commonwealth defendants submitted a proposed desegregation plan to the district court. Turtle Creek and Churchill as well as the other school districts affected under the plan, thereupon filed new petitions to intervene. The district court permitted intervention at this point for the limited purpose of presenting argument on the issues of 1) whether the Commonwealth’s plan complied with the district court’s order of May 15, 1973 and 2) whether the Commonwealth abused its discretion in choosing the plan it submitted for approval. However, it refused to permit the school boards to intervene as defendants for all purposes. This denial as it relates to Turtle Creek and Churchill, is the basis for appeals No. 74-1050 and No. 74-1051. These appeals and the earlier ones have been consolidated since they involve the same issues.

While the parties that have brought this appeal have undertaken a broad attack upon the district court’s judgment of May 15, 1973, the crucial threshold question is whether their petitions to intervene were properly denied. If they were, Churchill and Turtle Creek are not parties to the action and cannot appeal the judgment of the district court. We have concluded that the denial of these petitions was proper, and as a result, the appeals will be dismissed.

As the Supreme Court has recently made clear, it is within the discretion of the district court to deny a petition to intervene if it is not timely. NAACP v. New York, 413 U.S. 345, 93 S.Ct. 2591, 37 L.Ed.2d 648 (1973). In the instant case, the untimeliness of the various petitions is clear. The first petition was not filed until June 12, 1973, two years after the case was originally filed, six months after the trial, and almost a month after the district court’s opinion and order were filed.

Moreover, the petitioners could not reasonably claim ignorance either of the proceedings or the necessity for intervention at a much earlier date. On May 19, 1972, (more than six months before trial) the Attorney-General of Pennsylvania sent identical letters to Turtle Creek and Churchill that informed them of the suit and noted that the relief requested would have an important effect on the future of their districts. The letter then indicated that the Attorney-General’s position in the litigation would have to reflect the interests of the Commonwealth as a whole and that as a result it probably would not reflect the interests of the local school districts. It closed with the following suggestion:

“I, therefore, urge you to intervene in this action immediately if you wish the viewpoint of your school district and your constituents to be represented and presented before the trier of fact and of law.”

This letter, at the very least, put the school districts on notice to be alert to the likely necessity for intervention. Yet despite this clear warning, no petition to intervene was filed until June 12, 1973, six months after the December 1972 trial. Since the necessity for intervention was apparent at least by time of trial, the failure of Turtle Creek and Churchill to act until months later makes the petitions ultimately filed untimely. See NAACP v. New York, supra. The petitions for intervention filed in June and October of 1973 were properly denied.

The appeal will be dismissed.

      . Had general intervention been permitted, most of the school boards would have sought to reopen the record so that they could present arguments in opposition to the district court’s May 15, 1973 judgment of liability.

      . Naturally, since the plaintiffs have not filed an appeal, our decision in no way affects the district court’s order granting limited intervention.

      . While Churchill and Turtle Creek rely primarily upon their asserted status as interve-nors to establish their right to appeal the district court’s judgment, they also suggest that this right is established under Federal Rule of Civil Procedure 19 which provides for compulsory joinder of indispensable parties. This argument begins with the local school districts’ assertion that they are indispensable parties and that the district court erred when it rejected the named defendants’ motion to have them so named. They go on to contend that this question can be raised by this court sua sponte so that even if they do not qualify as intervenors, we should still bring them into the action under Rule 19 and permit them to attack the judgment of the district court.
      This argument is not meritorious. While courts of appeals have raised questions as to the absence of indispensable parties sua sponte, J. Moore, Federal Practice jf 19.19 at 2582 they have done so only when an appeal had already been properly brought by one of the parties to the action. See cases cited id. note 11. We do not feel that it is appropriate to take the same approach in cases such as this, where the only “appeal” to this, court has been initiated by non-parties. In these circumstances, we can reach the indispensable party question only if we reach out on our own initiative and upset proceedings before the district court that have proved satisfactory to all of the present parties to the case. This would create an unwarranted interference with the work of the district courts.
      It may be that a non-party’s rights are so affected in a particular case that he should have the right to initiate an appeal. However, he must first make himself a party to the action by filing a petition to intervene under Rule 24 and by meeting the requirements that exist for successful intervention. We will not create a procedure that would allow him to circumvent these requirements by petitioning this court directly for a decision that declares him to be an indispensable party under Rule 19.

      . A copy of the amended complaint accompanied the letter.

      . By that time the following papers were of record and available for the school districts’ review: Plaintiffs’ proposed stipulation of facts ; plaintiffs’ pretrial statement; County defendants’ pretrial statement; Commonwealth defendants’ pretrial statement; the pretrial stipulation; and plaintiffs’ summary of opinion evidence.


author: GEWIN, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Alvin R. JOHNSON, Defendant-Appellant.
    No. 73-3643
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    June 14, 1974.

      Ronald S. Galloway, Dallas, Tex. (Court-appointed), for defendant-appellant.
    Frank McCown, U. S. Atty., Ft. Worth, Tex., Charles D. Cabaniss, Asst. U. S. Atty., Dallas, Tex., for plaintiff-appellee.
    Before GEWIN, GODBOLD and CLARK, Circuit Judges.

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

   GEWIN, Circuit Judge:

Alvin R. Johnson, a tax preparer, was charged in a thirteen count indictment with wilfully aiding and assisting in the preparation of federal income tax returns which were false and fraudulent as to material matters, in violation of 26 U.S.C.A. § 7206(2) (1970). The 13 counts were based on returns either for different taxpayers or for the same taxpayer in different fiscal years. The jury exonerated him on the charges contained in counts 1-4 and 7-13 but found him guilty as charged in counts 5 arid 6 for the unlawful preparation of the tax returns of Pedro and Bertha Martinez in the years 1970 and 1971. On appeal, Johnson specifies 11 errors, each of which we deem to be without merit, and consequently we affirm.

Four of his contentions can be disposed of under the principle that if error was committed, it was harmless. These four contentions may be summarized as follows: the district court erred (1) in sustaining government objections to the admission of evidence despite the absence of any statement by goyernment counsel of the grounds therefor, (2) in admitting alleged “inflammatory” exhibits, (3) in failing to grant a motion to dismiss the indictment, a mistrial, or a motion to strike the testimony of a witness who had violated the trial court’s sequestration order, and (4) in admitting over objection a copy of Johnson’s own tax return. The first three assigned evidentiary errors each related to counts of the indictment upon which Johnson was exonerated. And since these counts were totally unrelated to those upon which he was convicted, we fail to perceive the manner by which the asserted evidentiary errors prejudiced his case. The government introduced Johnson’s own return as evidence of a similar offense, clearly permissible under United States v. Rodriguez, 474 F.2d 587, 590 (5th Cir. 1973). Since closer examination of the return revealed that Johnson did in fact take proper deductions, any error occasioned by its admission was invariably harmless. Indeed the fact that his own return was not found to be incorrect could have been helpful to his defense.

Johnson’s fifth contention is that the evidence was insufficient to support a conviction on counts 5 and 6. As support for this claim, he points to the equivocal response of Pedro Martinez to the question whether he had made a contribution to St. Joseph’s Hospital. Under controlling principles, “a jury verdict must be sustained if there is substantial evidence when viewed in a light most propitious to the government to support it.” United States v. Peterson, 488 F.2d 645, 649 (5th Cir. 1974). See Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942); United States v. Hernandez, 484 F.2d 86, 87 (5th Cir. 1973). Johnson’s argument that the evidence was insufficient to support his conviction rests on the premise that the equivocal response of Martinez to one question irretrievably impugns his testimony concerning the other claimed improper deductions catalogued in counts 5 and 6 of the indictment. Since we cannot accept this premise and feel that it was within the province of the jury to reject it, we hold that the evidence was sufficient to support a guilty verdict on counts 5 and 6.

Johnson’s next four contentions relate to events transpiring during the time when Pedro Martinez was on the witness stand. His sixth assignment of error, that the trial judge displayed impermissible bias in instructing the government to ask Martinez to estimate the value of clothing contributed to Goodwill Industries rather than asking him whether such value exceeded various amounts from $10 to $50 is controlled by United States v. Wilson, 488 F.2d 688, 691 (5th Cir. 1973). There, we noted that “[a] trial judge has the right and the duty to participate in the conduct of the trial proceedings to insure that justice is done.” His seventh grievance, that the trial judge erred in refusing to permit him to examine Martinez on “voir-dire” when the latter gave equivocal responses to questions concerning the amount of his contribution to St. Joseph’s Hospital, is also unavailing. Johnson’s attorney proffered no explanation for this request. In view of the avowed policy, as expressed in F.R. Crim.Pro. 26, in favor of taking testimony in open court, we fail to discern how error was committed.

The two other errors, specifications 8 and 9, allegedly committed while Pedro Martinez was testifying require more extended discussion. Johnson objected to one repetitive and two allegedly leading questions posed by the government attorney. The first leading question, relating to the value of clothing contributed by Martinez to Goodwill Industries, was cured by the trial judge’s instruction to the government attorney to ask Martinez the value of the clothing donated and not whether the value was of a certain amount at various intervals between $10 and $50. The second question, the thrust of which was whether Martinez had spoken to Johnson about expenses for work uniforms claimed on the return as deductions, does not appear to have been a leading question. Moreover, even if Johnson’s characterization of the question is correct, a trial judge has reasonable discretion to permit leading questions. Azcona v. United States, 257 F.2d 462, 466 (5th Cir. 1958); United States v. Bensinger Co., 430 F.2d 584, 591 (8th Cir. 1970); Esco Corp. v. United States, 340 F.2d 1001, 1005 (9th Cir. 1965), and such discretion is abused primarily where the question asked has the effect of supplying a witness with a false memory, United States v. Durham, 319 F.2d 590, 592 (4th Cir. 1963). Thus, even if the question asked concerning deductions for uniforms could be characterized as leading, it could not be deemed to have supplied Martinez with a false memory. Hence there was no abuse of discretion with respect to the allegedly leading questions. The posing of the so-called repetitive question was prompted by Martinez’ ambiguous response to a question regarding the amount of money he contributed to St. Joseph’s Hospital. There was some need to clarify Martinez’ answer and in any event, since defense counsel was free to probe his inconsistent statements on cross-examination, we fail to see how error inhered in permitting a repetitive question to be posed.

The additional evidentiary error allegedly committed while Martinez was testifying is characterized as the failure of the trial court to require a proper predicate to be laid before Martinez testified on the basis of a present recollection refreshed. Defense counsel’s objection to the trial court’s refusal to grant the motion to strike reveals the spurious nature of Johnson’s claim:

“Your Honor, may we let the record reflect that at the time a Motion was made that the prosecuting attorney was standing at the witness stand, that he had placed the Indictment open to Page 2 of said Indictment and that said Indictment was situated in such a manner, that it was immediately to the witness’s left and exposed in a manner so that it was readable from the angle in which the witness was sitting.”

As witnessed by its disposition of the motion, the district court refused to indulge in defense counsel’s speculative assertion that Martinez testified on the basis of the indictment within viewing distance and not on the basis of independent recall. Defense counsel had the opportunity to substantiate this assertion by cross-examining Martinez concerning the source of his testimony about the deductions. Nothing in the record indicates that Martinez was unable to testify based on independent recollection. Consequently, we fail to comprehend how this court may upset the trial court’s unarticulated but nevertheless unimpeached assumption that Martinez testified on the basis of an independent recollection and not one refreshed by the contents of the indictment handed down against Johnson.

Johnson’s tenth contention is that the trial court erred in granting the government’s motion to quash subpoenas duces tecum issued to 3 employees of the Internal Revenue Service, W. T. Coppinger, Tony Hunter, and Ann Lake, seeking copies of tax returns for Lee Jones and Robert Myers for the 3 years preceding 1973. The trial judge’s explanation for granting the motion to quash reveals that Johnson’s primary concern in issuing the subpoenas was not to examine the particular returns purportedly sought but to question the named parties concerning statements made to them by IRS agents. Moreover, Coppinger, Hunter and Lake had no demonstrable connection with either Johnson or Pedro Martinez. As this court noted in United States v. Moudy, 462 F.2d 694, 698 (5th Cir. 1972) Rule 17 of the Federal Rules of Criminal Procedure “leaves broad discretion in the district court by allowing the trial judge to weigh numerous factors, including materiality, relevancy, and competency, in deciding whether to grant the request for a subpoena.” See also United States v. Hathcock, 441 F.2d 197, 199-200 (5th Cir. 1971); United States v. Bearden, 423 F.2d 805, 809-810 (5th Cir.), cert. denied, 400 U.S. 836, 91 S.Ct. 73, 27 L.Ed.2d 68 (1970); United States v. Gurule, 437 F.2d 239, 241 (10th Cir. 1970), cert. denied, 403 U.S. 904, 91 S.Ct. 2202, 29 L.Ed.2d 679 (1971). Under the facts in this case, this discretion was not abused.

Johnson’s final contention is that the district court erred in overruling his motion for a new trial based upon alleged juror misconduct in reaching a compromise verdict. Although the record discloses that the jurors unanimously confirmed in open court that it was the verdict of each and every member of the panel on each of the counts, one member of the jury subsequently disclosed to the prosecuting attorney that the verdict was the product of compromise. This disclosure prompted the district judge to order a hearing designed to unearth the possibility of juror misconduct.

During the course of the hearing, two jurors gave testimony favorable to Johnson. The foreman, Gregory Baker, confirmed the allegation that the verdict was a product of a “trade out” or compromise. Tom Bellamy, a second juror stated his belief that Johnson was not guilty. The remaining ten jurors testified variously that they did not recall any compromise, that they had deemed him guilty prior to the alleged compromise, or that the alleged compromise did not cause them to change their initial vote of not guilty on counts 5 and 6 to guilty on these counts. In the face of this testimony, the trial judge denied Johnson’s motion for a new trial. His reasoning was as follows:

“I don’t imagine there ever was a jury verdict that wasn’t a result of some sort of compromise when you start talking to a jury about that. And sure, they compromise, they don’t always start out of the same mind. I’ve rarely seen one that did.
Now, I cannot find that the evidence preponderates here in favor of the proposition that there was a trade out, that there was a trade among the jurors to vote this way because somebody else voted that way. It seems obvious to me that they went down the line, when they found they were in disagreement, they went down the line with each Count and discussed it.
Now, where we draw the line is juror impeachment, asking what prompted him to vote this way, is a mental process and you can delve into that when there is some overt act of misconduct and I just don’t believe there was any here. I’m sure that every juror, Mrs. Erlanger and some of the others, felt that there was a compromise, but not the kind of compromise that I can hold as jury misconduct. So, that’s my ruling on it, Counsel.”

We agree with this reasoning. It is axiomatic that a jury verdict cannot be impeached by evidence of intrinsic as opposed to extrinsic influences on juror deliberations. See Stein v. New York, 346 U.S. 156, 178, 73 S.Ct. 1077, 97 L.Ed.2d 1522, 1539 (1952); Hyde v. United States, 225 U.S. 347, 383-384, 32 S.Ct. 793, 56 L.Ed. 1114, 1132 (1912); Luna v. Beto, 474 F.2d 95 (5th Cir. 1973); United States v. Blackburn, 446 F.2d 1089, 1091 (5th Cir. 1971), cert. denied, 404 U.S. 1017, 92 S. Ct. 679, 30 L.Ed.2d 665 (1972); United States v. Schroeder, 433 F.2d 846, 851 (8th Cir. 1970), cert. denied, 400 U.S. 1024, 91 S.Ct. 590, 27 L.Ed.2d 636 (1971); United States v. Betancourt, 427 F.2d 851, 854 (5th Cir. 1970). In the instant case, the only influence felt was that of the panel’s collective reasoning. No evidence of external influence was adduced. Consequently, this case is squarely within the facts of United States v. Schroeder, supra, and the principle established in the aforementioned cases. The jurors may not impeach their verdict in this case.

Thus, we hold that all of the myriad contentions raised by Johnson are without merit. Accordingly, the judgment of conviction is affirmed.

Affirmed.

      . The pertinent provisions of 26 U.S.C. § - 7206(2) (1970) are:
      “Any person who—
      (2) Aid or assistance. — -Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document;
      *****
      shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not more than 3 years, or both, together with the costs of prosecution.”

      . Counts 1 and 2 relate to tax returns of Ben and Mary Marcus for the years 1970 and 71, counts 3 and 4 relate to the returns of Roy Franklin for the years 1970 and 71. Counts 7-13 relate to different taxpayers for returns prepared by Johnson in 1971 and 1972.
      The appellant was given a 13 month sentence under counts 5 and 6, but the sentences were suspended and appellant placed on probation for a period of 18 months, the sentences to run concurrently.

      . An examination of the record reveals that Johnson did not question the trial court’s rulings on government objections unaccompanied by an explanation of the grounds therefor. Accordingly, this contention is governed by the plain error standard of F.R. Crim.Pro. 52(b).

      . Additionally, we would note that Johnson failed to object to the trial court’s action. Thus, even if we agreed that the trial court committed error in this respect, we would nevertheless conclude that it did not arise to the level of plain error under F.R.Crim.Pro. 52(b).

      . Defense counsel incorrectly characterized the indictment as a memorandum of past recollection recorded. Since Martinez did not prepare the indictment, it could not be introduced tinder the rubric assumed by defense counsel. We have taken the liberty of correcting the mischaracterization.