author: ADAMS, Circuit Judge.

text:
    AMERICAN REALTY TRUST, Appellee, v. UNITED STATES of America, Appellant.
    No. 73-2488.
    United States Court of Appeals, Fourth Circuit.
    Argued April 3, 1974.
    Decided June 24, 1974.
    Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Jonathan Cohen, John A. Townsend, Attys., Tax Div., Dept, of Justice, Washington, D. C., of counsel; Brian P. Gettings, U. S. Atty., for appellant.
    Boothe, Prichard & Dudley, Fairfax, Va., by Arthur P. Scibelli and Carrington Williams, Fairfax, Va., for appellee.
    Before HAYNSWORTH, Chief Judge, and BUTZNER and ADAMS Circuit Judges.

       United States Circuit Judge for the Third Circuit, sitting by designation.

   ADAMS, Circuit Judge.

After the sale and lease-back of a particular piece of commercial real estate, who, as between the seller-lessee and the buyer-lessor, is entitled to claim, for federal tax purposes, a depreciation deduction for the property? That is the key issue in this case, and it arises from the attempt by a real estate investment trust to take a depreciation deduction on an apartment house that it purchased and then leased back to the seller.

The taxpayer, American Realty Trust (“ART”), is a real estate investment trust, that since its inception in 1961 has sought the favorable tax treatment afforded such trusts by the Internal Revenue Code. To qualify for such treatment under the Code, each trust must pay out at least 90 per cent of its taxable income each taxable year in dividends to its shareholders. If the trust qualifies, such income is taxed only to the shareholders. Failure to qualify results in the dividend income being subjected to taxation twice — once to the real estate investment trust, and once to its shareholders as dividends.

On January 29, 1965, ART entered into an agreement with one Harry Helmsley, a real estate entrepreneur. By the terms of the agreement, Helmsley conveyed to ART for seven million dollars a resort property in Palm Beach, Florida, called the Palm Beach Towers.

The sale price, seven million dollars, was composed of $2,500,000. in cash, and the balance by ART’s taking the property subject to a mortgage of $4,500,000. The agreement provided that if the mortgage were reduced to less than $4,500,000. by the date of closing, ART, the buyer, would still make cash payments totaling $2,500,000.

ART agreed to lease the property on a “net lease” basis to Palm Beach Towers, Inc., Helmsley’s wholly-owned corporation, with certain provisions under the lease to be undertaken or guaranteed by Helmsley personally. At the closing, ART was to provide Helmsley with a written option to repurchase the property.

On February 8, 1965, ART and Palm Beach Towers, Inc. entered into a lease of the Palm Beach property with ART as lessor and Towers as lessee. The lengthy and complex lease contained the following pertinent provisions:

(1) The rental term was to run until January 31, 1986, or 21 years, with two successive twenty-five year renewal options.
(2) A net rental averaging $645,000. per year was stipulated. Related provisions insured that every cost would be borne by the tenant. These costs included, inter alia, all operating expenses, taxes, levies, insurance, and repairs. In addition, Helmsley was to bear the cost of some capital improvements made to the property.
(3) The rental rate was to be reduced by 50 per cent of any reduction in the amount paid annually on the mortgage.
(4) In the event the mortgage was increased, the tenant, Palm Beach Towers, Inc., would be entitled to 50 per cent of the addition.
(5) Any condemnation award for the property was to be applied in the following manner: (a) to the mortgagee to the extent of the outstanding principal balance; (b) to the landlord up to $2,525,000; (c) to the tenant up to the value of its leasehold estate; and (d) the remainder to be shared by the landlord (60 per cent) and the tenant (40 per cent).
(6) If less than all the property were taken by condemnation, the net rent was to be reduced by an amount equal to 10y2 per cent of any sum received by the landlord and not applied to the reduction of the mortgage principal.
(7) The landlord, ART, was to com sent to any assignment of the lease, except that it could withhold its consent if any transfer prior to February 1, 1971, were to a corporation or partnership in which Helmsley had less than a 25 per cent interest.
(8) The lease incorporated Helmsley’s personal guarantee to meet the lease obligations through January 31, 1971, and bound Helmsley to own at least 25 per cent of the tenant organization, and personally to oversee the operation of the property.

Executed contemporaneously with the lease was a document styled “Option Agreement,” between Helmsley and ART, under which Helmsley was granted an option to repurchase the Palm Beach property. The option was to be exercisable only at one of the following times, and at the indicated price:

August, 1969 — $6,560,000.
August, 1970— 6,440,000.
August, 1971— 6,320,000.
August, 1972— 6,190,000.

The option price was to be paid by Helmsley’s assuming the mortgage as it existed at the time of exercise of the option, and by his paying the balance of the purchase price in cash.

On September 17, 1971, Helmsley assigned the option contract to his “Sub-chapter S” corporation, which proceeded to exercise the option. Helmsley testified that he was motivated to exercise the option by the sudden availability of “wrap around” financing, which enabled him, through his corporation, to acquire title with little cash outlay of his own.

ART elected to be taxed as a real estate investment trust for fiscal year 1968 under sections 856 through 858 of the Code. In its computation of its taxable income for that year, ART included in its gross income the rental payments from Palm Beach Towers, and took a large depreciation deduction for the Palm Beach property as well as a deduction for the interest payments it had made on the mortgage. ART computed its “overall” 1968 income on the same basis, and distributed to its shareholders 90 per cent of its computed “real estate investment trust taxable income,” so as to qualify for favorable tax treatment under the Code.

Upon audit of ART’S 1968 federal income tax return, the Commissioner determined that the “sale and lease-back” arrangement between ART and Helmsley did not result in a transfer of “true” ownership of Palm Beach Towers to ART, but rather constituted a “secured-lending arrangement” by which Helmsley retained ownership of the property, while ART acquired, in effect, only a security interest in it. The whole transaction, maintained the Commissioner, was thus in the nature of a “loan” by ART to Helmsley, secured by the Palm Beach property.

Accordingly, the Commissioner denied ART any deduction for depreciation on the Palm Beach property, and characterized Helmsley’s rental payments as “interest” on the ART loan. The disallowance of the depreciation deduction resulted in a substantial increase in ART’s taxable income and, consequently, caused the amount distributed to its shareholders to be less than the requisite 90 per cent of ART’s taxable income. The Commissioner therefore denied ART its status as a qualifying real estate investment trust under the Code, and levied an increased tax.

ART paid the tax, with interest, and filed a claim for a refund. Upon administrative denial of its claim, ART brought suit in the district court for the refund. The jury, by “special verdict,” found the ART-Helmsley transaction to constitute a “good faith” purchase and lease-back by ART, and not merely a “financial arrangement.” Based on that verdict, the trial court entered a judgment directing the government to pay ART a refund. The government has appealed.

I.

In this Court, the government again raises the contention, developed at trial, that the ART-Helmsley transaction was “in substance a secured loan transaction in which the taxpayer loaned money to the nominal ‘seller’ [Helmsley].” The second step in the government’s argument is, of course, that ART was not entitled to claim depreciation on the Palm Beach Towers, inasmuch as ART was not the “true” owner of the property.

In oral argument before this Court, government counsel suggested that the proper characterization of the “substance” of the transaction was essentially a factual matter. This suggestion is entirely consonant with the manner in which the government litigated the case in the district court. For example, in its trial brief, the government proposed that the “sole dispute” between the parties could be resolved by tendering the following factual question to the jury:

“Has plaintiff, American Realty Trust, proven by a preponderance of the evidence that the Palm Beach Towers transaction was a bona fide sale and leaseback, and not a financing arrangement?”

The issue was put to the jury in practically the form proposed by the government and a verdict favorable to ART was returned.

So viewed, it would seem that our primary function on this appeal is to determine whether there was sufficient evidence to support the jury’s verdict. We emphasize that appellate review of a jury verdict presents no occasion for the reviewing court to sift and weigh competing factual assertions, to draw its own inferences from contradictory evidence, or to choose between the more persuasive of two plausible but contradictory inferences. It is the jury which “weighs the contradictory evidence and inferences” and draws “the ultimate conclusion as to the facts.” Nor would the district court have been correct in granting the government’s motions for directed verdict or for a judgment non obstante veredicto, unless the proofs at trial that this was not a bona fide sale and lease-back had been “so clear that reasonable men could reach no other [conclusion].”

Applying these standards, we are disinclined to disturb the jury’s verdict. There was extensive testimony to the effect that the Helmsley-ART deal was not merely a tax avoidance device, that commercial considerations underlay it, and that the parties intended that the ownership of the Palm Beach property would pass to ART. In short, there was evidence that the transaction “was a good faith purchase and lease-back” and not a mere “financial arrangement.” Given the presence in the record of such evidence, we cannot say the jury’s verdict was clearly erroneous. Neither can we say that the record so overwhelmingly supported the government’s position that a directed verdict or a judgment n. o. v. should have issued.

II.

The Government presses upon us what amounts to a second contention, namely that ART’s right to claim depreciation on the Palm Beach property is essentially a question of law, not of fact, and that therefore this Court may consider the matter de novo, as it were. Stated otherwise, the government maintains that the question whether a sale-and-lease-baek is bona fide, and whether the buyer-lessor can therefore claim depreciation, is a legal one. Quite obviously, the government asks us to decide this “legal” issue adversely to ART.

The characterization of the question in issue as “legal,” not factual, admittedly has a basis in decisional law. In Helvering v. Lazarus & Co., the Supreme Court suggested that the determination of the bona fides of a sale-and-lease-back transaction involves, ultimately, a legal conclusion, albeit one grounded in underlying findings of fact. Thus, notwithstanding that the government has, until this appeal, consistently treated the pivotal issue in this case as a factual one, we shall consider whether, as a matter of law, the ART-Helmsley deal was a bona fide sale-and-lease-back, or was “actually a loan secured by the property involved.”

The Government urges upon us a congery of arguments in support of its position. It contends that “Helmsley retained all the significant burdens and benefits of ownership of the property,” that Helmsley was “economically compelled” to exercise his repurchase option, that the “rental payments” under the “lease” in fact constituted interest payments at a rate of 10i/2 per cent, and that these, together with other factors, indicated that the transaction was in “substance” a loan to Helmsley secured by the Palm Beach property. Additionally, the government maintains that the facts of this case do not differ materially from those in Lazaras, supra, and that we are thus bound by precedent to conclude that the sale- and-lease-back here was not bona fide.

We are not persuaded that the ARTHelmsley transaction must necessarily be characterized as a sham, as less than bona fide, or as, “in substance,” a secured loan. There was considerable evidence in the record to the effect that the intent of the parties, acting in complete good faith, was to undertake a sale to ART with a subsequent lease-back to Helmsley. There was testimony tending to show that Helmsley decided to exercise his option because of the sudden availability of “wrap-around” financing, not because there was any “economic compulsion” to repurchase inherent in the deal with ART. Moreover, there was testimony that the agreed upon purchase price — $7,000,000—was “fair,” and not an unduly low one as the government asserts. These factors appear to us to provide sufficient basis for the conclusion that the sale-and-lease-back was, in substance, a bona fide transaction. This is not to suggest, of course, that we believe that tax considerations played no part whatsoever in the ■planning of the deal. Merely because tax planning may have preceded a transaction, or because tax savings have flowed from it, we are not constrained to characterize the entire event as primarily, or even substantially, a tax avoidance device.

The details of the ART-Helmsley deal, too, are sufficiently distinguishable from those in Lazarus that the dictates of that case are not controlling here. Helmsley’s lease, for example, was for an initial term of only 21 years. The lease in Lazarus ran for 99 years. In addition, there were particularized findings of fact in the latter case that established the intent of the parties to clothe a loan in the superficial garb of a sale- and-lease-back. There were no such findings here, and thus there is no occasion to apply the Lazarus rule in the context of this litigation.

Accordingly, the judgment of the district court will be affirmed.

      . See 26 U.S.C. §§ 856-858.

      . 26 U.S.C. § 857(a)(1). Specifically, the Internal Revenue Code provides that the trust must pay out 90 per cent of its “real estate investment trust taxable income,” in order to qualify for the tax advantage in question. See 26 U.S.C. § 857(b)(2).

      . See 26 U.S.C. § 857(b)(2)(C).

      . There is legislation presently before Congress that would meliorate the tax plight of a trust that fails, unintentionally and with “reasonable cause,” to distribute 90 per cent of its taxable income in dividends. See H.R. 11083. 93d Cong., 1st Sess. (1973).

      . Helmsley could terminate liis obligation as guarantor of the lease by posting a $200,000. bond.

      . This sort of financing arrangement allows a borrower to give what is essentially a second mortgage on a property, but have it treated as a first mortgage.

      . 26 U.S.C. §§ 856-858.

      . Disallowance of the depreciation deduction caused ART’s taxable income to increase. ART had distributed 90 per cent of taxable income calculated with the deduction. The amount thus distributed was, of course, less than 90 per pent of taxable income calculated without the depreciation deduction. The difference between the dividend distribution and the amount ART would have had to distribute under the Commissioner’s computation of its taxable income was about $19,000. Art’s failure to pay out this amount resulted in a claimed increased tax liability of $279,642.66, exclusive of interest.

      . A single factual question was posed to the jury, the answer to which necessarily constituted the complete verdict. See discussion, infra.

      . It is settled that the right to claim depreciation for tax purposes does not necessarily follow the legal title to property, but rather flows to him who “bear[s] the burden of exhaustion of [the] capital investment.” Helvering v. Lazarus & Co., 308 U.S. 252, 254, 60 S.Ct. 209, 210, 84 L.Ed. 226 (1939).

      . The request for a jury trial was made by the government.
      The trial judge instructed the jury in part as follows:
      “The issue in this case is whether the transaction between the plaintiff, American Realty Trust, and Helmsley was a good faith purchase and leaseback or was it a financial arrangement.
      “By financial arrangement is meant this. Was this an arrangement which, regardless of its form, had as its purpose and effect the ownership of the property by Helmsley with American Realty Trust merely lending money secured by the property. To put it another way — in substance, as opposed to just form — • was American Realty Trust the real owner of the projierty which it leased to Helmsley or was Helmsley the real owner of the property on which American Realty Trust held in effect the mortgage.
      “In making this determination you should consider the following indicia of ownership— I mean, earmarks of ownership — no one of which is controlling:
      1. Who had the actual command or control over the property?
      2. What economic results were intended by the parties; and what were those economic results?
      3. Whether American Realty Trust paid a price for the property which was equal to its fair value? That is, $7 million — and insofar as this tends that $7 million was not the value of the property.
      4. Who was to bear the various expenses on the property including repairs, taxes, insurance, taintenance, and whether it was normal for that party to bear them.
      5. Who was to bear the risk of loss in event of destruction of the property?
      6. The length of the lease, and the length of the lease with reference to the useful life of the property.
      7. The option to repurchase — and its terms, including the amount to be paid if the option was exercised.
      8. Who would get the benefits of any appreciation that occurred in the value of the property ?
      9. Did the payments made by Helmsley resemble rent or did they resemble payments on a loan?
      10. For whom, Helmsley or American Realty Trust, was the equity by the amortization of the mortagage being built up — that is, who would get this equity in event of repurchase by Helmsley?
      “You should bear in mind in considering this issue and these factors, that there may be explanations of these factors, that I have just outlined that are as fully consistent with a good faith purchase and leaseback as they are with a loan. There is nothing inherently suspect in a purchase and leaseback, for example, and all leases to any tenant relinquish a certain amount of control and command of the property; also, the terms of the lease and option may as well have been the result of hard bargaining during negotiations as they were evidence of intentions to create a financing arrangement or financing arrangement results.
      “Xou are instructed that the determination of whether the transaction between the American Realty Trust and Harry Helmsley was a purchase of American Realty Trust and a leaseback to Helmsley or whether it was a loan to Helmsley by American Realty Trust and a mortgage put on by Helmsley in favor of American Realty Trust turns in part on the intention of the parties.”
      The government made no objection to the charge as given, either at trial or on this appeal.

      . Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 700-701, 82 S.Ct. 1404, 1411, 8 L.Ed.2d 777 (1962); Tennant v. Peoria & P.U.R. Co., 321 U.S. 29, 35, 64 S.Ct. 409, 88 L.Ed. 520 (1944).

      . Burcham v. J. P. Stevens & Co., 209 F.2d 35, 38 (4th Cir. 1954). The government, in moving for a directed verdict before retirement of the jury, preserved the opportunity to move for a judgment n. o. v.

      . See Note 11 supra,.

      . 308 U.S. 252, 60 S.Ct. 209, 84 L.Ed. 226 (1939).

      . Id. at 254, 255, 60 S.Ct. 207; Cf. Commissioner v. Court Holding Co., 324 U.S. 331, 333, 65 S.Ct. 707, 89 L.Ed. 981 (1945). Union Planters Nat’l Bank v. United States, 426 F.2d 115, 117 (6th Cir. 1970).

      . Lazarus, supra, 308 U.S. at 255, 60 S.Ct. at 210.

      . In this regard, the district court instructed the jury that:
      “A taxpayer is entitled to conduct his affairs so as to minimize his tax liability, provided he does not make a transaction appear to be something it is not simply to reduce or eliminate a tax liability.”
      We find no fault with this statement. Cf. Court Molding Co., supra, 324 U.S. at 334, 65 S.Ct. 707.

      . In Lazarus the Supreme Court noted that the Board of Tax Appeals had found “that the instrument under which the taxpayer purported to convey legal ownership to the trustee bank was in reality given and accepted as no more than security for a loan on the property; the ‘rent’ stipulated in the . . . ‘lease’ back was intended as a promise to pay an agreed five per cent interest on the loan; and the ‘depreciation fund’ required by the ‘lease’ was intended as an amortization fund . . . .” 308 U.S. at 254, 60 S.Ct. at 210.

      . ART has filed with this Court a motion to dismiss the government’s appeal, grounded in the government’s alleged failure to perfect the appeal by supplying a complete record. Because of our disposition of the merits of the ease, we find it unnecessary to dispose of ART’s motion.


source: Caselaw Access Project

author: KRAFT, District Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Ronald Anthony CAVALLINO, Defendant-Appellant.
    No. 73-3334.
    United States Court of Appeals, Fifth Circuit.
    Aug. 15, 1974.

      Robert L. Moore, Asst. Federal Public Defender (court-appointed), J. V. Eskenazi, Federal Public Defender, Miami, Fla., for defendant-appellant.
    Robert W. Rust, U. S. Atty., J. Daniel Ennis, Asst. U. S. Atty., Miami, Fla., for plaintiff-appellee.
    Before BYER and MORGAN, Circuit judges> and KRAFT, District Judge,
   KRAFT, District Judge.

Appellant, Ronald Anthony Cavallino (Cavallino), was indicted with John Edward Ames (Ames) and David Anthony Washburn (Washburn) for conspiracy to rob a federally-insured bank and for robbery of that bank. His pre-trial motion to suppress was granted in part and denied in part. His motion for severance was granted and he was tried alone to a jury, which found him guilty. Following the imposition of sentence he has appealed, alleging error both in the trial and in the partial denial of his motion to suppress.

Cavallino first contends that the trial court erred in refusing to suppress his incriminating statements as the fruit of a “sham” arrest. We disagree.

Louisiana officers, having Cavallino under surveillance as a suspect in bank robberies in that state, observed him load a substantial amount of clothing in a car in what appeared to be evident preparation to depart with a female companion. That observation was communicated to their superior, who, aware of Cavallino’s propensity to violate motor vehicle laws, directed the officers to follow Cavallino and arrest him, if they saw him violate the law. The officers did follow and, when Cavallino substantially exceeded the speed limit, they stopped him. Upon his refusal to produce his driver’s license, they arrested him for both offenses, misdemeanors under Louisiana law. In these circumstances the trial court found, upon ample evidence, that there was probable cause to arrest Cavallino for the two offenses.

Appellant argues that the motive for his arrest was not to prosecute him for these offenses, but rather to interrogate him about bank robberies and that the principle of Mills v. Wainwright, 5 Cir. 1969, 415 F.2d 787, should be extended to hold this to be a “sham” arrest.

As appellant concedes, the underlying arrest in Mills, supra, lacked any causal basis and was truly a sham employed by the police as an investigatory device. Where probable cause for the arrest exists, however, the motivation is immaterial.

“Whether the arrest was constitutionally valid depends in turn upon whether, at the moment the arrest was made, the officers had probable cause to make it. . . .” Beck v. Ohio, 379 U.S. 89, 91, 85 S.Ct. 223, 225, 13 L.Ed.2d 142 (1964).

This court said, of a similar contention in United States v. Seay, 5 Cir. 1970, 432 F.2d 395, 402:

“Since the cause must be remanded, we deem it appropriate to comment on a contention raised in the briefs of the parties in this court. The subjective intention of the city police to use Seay’s arrest only to hold him until federal officers could bring charges against him under the laws of the United States does not negate the objective validity of the arrest. If a police officer who makes a valid arrest thinks his jurisdiction will not ultimately continue with the processing of the arrest of a person, that thought on his part does not cause the arrest to then become illegal nor the charges to become pretextural or phony.”

Appellant’s second contention is that the trial court erred in refusing to suppress his incriminating statements relating to three Louisiana bank robberies. He asserts that these were made in response to police interrogation after-he had stated his desire to have a lawyer. Cavallino argues that once he expressed his' desire to have a lawyer, a knowing and intelligent waiver of his Miranda rights was impossible, or, alternatively, that such a waiver could be found only if he expressly stated he no longer desired a lawyer.

We reject appellant’s argument because the critical inquiry is whether the prosecution has sustained its heavy burden of establishing that Cavallino was fully informed of and understood his rights and whether, having once expressed his decision to exercise them, he later changed his mind and knowingly and understandingly declined to exercise them. Hill v. Whealon, 6 Cir. 1974, 490 F.2d 629; United States v. Anthony, 5 Cir. 1973, 474 F.2d 770; United States v. Collins, 2 Cir. 1972, 462 F.2d 792; United States v. Hopkins, 5 Cir. 1970, 433 F.2d 1041.

There can be no dispute that, as the trial court found, Cavallino was fully informed of his Miranda rights and fully understood them. Our review of the 427 page record of the proceedings on his motion to suppress reveals that he was first advised of his constitutional rights on the highway at the time of his arrest. He was again twice so advised at the police station, before any incriminating statement was made. Moreover, a sign posted in front of the detention cell block, in which he was temporarily confined, stated the same rights, as well as his right to use the telephone. There was testimony, too, to the effect that he had been “this route before” and knew “his rights”, in apparent reference to his prior conviction and imprisonment for armed robbery, to which appellant testified.

The trial court found that, despite his earlier expressed wish to talk to an attorney, Cavallino later changed his mind and voluntarily, knowingly and understandingly forewent his right to consult with or have an attorney present and made the statements now challenged. Our review of the evidence indicates that it fully supports those findings.

About 6:30 P.M. on May 31, 1973, Sgt. Lyons had Cavallino brought from the detention cell to another room, advised him of his constitutional rights, which appellant said he understood, and then informed Cavallino that he wanted to talk to him about a certain local bank robbery. They conversed for twenty or thirty minutes, Sgt. Lyons recounting details to indicate to Cavallino that the police had a very knowledgeable informer and Cavallino stating that he knew nothing about any robbery. Finally Cavallino said he wanted to talk to an attorney, whereupon Sgt. Lyons immediately terminated the interview and Cavallino was returned to the “booking cage”.

Cavallino’s companion, a married woman with whom he lived, known as Miss Ketchim, had been brought to the police station at her request, because the ear in which they were riding at the time of appellant’s arrest was to be towed from the scene. She was not under arrest. Miss Ketchim asked to speak to appellant, who was again brought to a room to enable them to converse in privacy. Following that meeting of five to ten minutes Cavallino was returned to the “booking cage”. Shortly, thereafter, around 8:00 P.M., Cavallino sent a message to Sgt. Lyons that he wanted to speak with him. In the interval of about an hour following Sgt. Lyons termination of the earlier interview, Cavallino made no request to use the telephone.

Upon receipt of Cavallino’s message Sgt. Lyons went to the “booking cage” and asked Cavallino what he wanted. He did not repeat the Miranda rights. Cavallino wanted to know what kind of a deal he could make, “if” he had done something and “if” he told about it. Sgt. Lyons told him he could make no deal. This conversation, interspersed with periods of silence, went on for nearly an hour, with Cavallino probing for possibilities of some deal on an “if” basis and Sgt. Lyons indicating his inability to make any deal and interjecting more details of the robbery to indicate to Cavallino the extent of the police informer’s apparent knowledge. Cavallino made no incriminatory statements. Sgt. Lyons finally terminated the conversation, telling Cavallino that he was wasting Lyons’ time, and walked away.

About half an hour later Miss Ketchim again asked to talk to Cavallino. The two were permitted to converse privately in a room for nearly ten minutes. At the conclusion of their conversation, about 10 P.M., Cavallino accosted Sgt. Lyons, who was nearby, and asked why Miss Ketchim was being held. Sgt. Lyons told him she was not under arrest and was not being held. Cavallino, who still had not availed himself of the right to use the telephone, told Sgt. Lyons that if Miss Ketchim was released he would tell them what they wanted to know.

Cavallino was then taken to another room. His constitutional rights were again read to him. With full knowledge and understanding of his rights he, nonetheless, told Sgt. Lyons and another officer that he had “pulled the job” in question with Washburn and Ames. He was placed under arrest on a warrant, which had arrived meanwhile, booked for robbery and transferred to the Detective Bureau at another police station. There, he was again read his constitutional rights, after which he orally recounted, with some hilarity, the details of three Louisiana bank robberies in which he had participated. Later, he signed written confessions to these robberies and a written waiver of his constitutional rights.

The trial court concluded that, after Cavallino first expressed his wish to see an attorney, he determined to and did engage in a course calculated to ascertain how much the police already knew and whether there were any prospects of some deal and whether, if he talked, he could limit the consequences of his admissions to the Louisiana crimes; that, having learned sufficient to decide what course he would pursue, he changed his mind about wanting to talk to an attorney and initiated the conversation embracing his incriminatory statements, which did not result from police interrogation. Waiver by a defendant of his constitutional right to consult with or to have an attorney present does not require an express statement or disavowal. Waiver may be inferred from the language, acts, conduct and demeanor of a defendant.

Appellant’s next contention is that the trial court erred in admitting evidence of numerous substantial cash payments made by Cavallino shortly after the Florida bank robbery, without first establishing a foundation of appellant’s prior impecuniosity.

This court said, in Self v. United States, 5 Cir. 1957, 249 F.2d 32, 34, 35:

“It is evident, also, that appellant misconceives the rule sometimes applied to reject evidence of possession of money after the commission of a crime without showing destitute circumstances of the party prior to the crime. The authorities cited do not tend to establish the rule as one of general or inflexible application. The most that can be said of it is that proof of the unexplained possession of unusual amounts of money after a robbery, standing alone, is not competent evidence to connect the possessor with the robbery; but it becomes competent provided it is further shown that he was impecunious prior thereto.” (emphasis supplied)

The vice of appellant’s argument is that he construes this, and similar language in other cases, to mean that only evidence of prior impecuniosity renders evidence of such possession admissible. To the contrary, while evidence of prior impecuniosity will render evidence of such possession admissible, it does not follow that other relevant evidence will not effect the same result.

We examine first the unchallenged details of the Florida robbery. About 10:30 A.M., May 2, 1973 the Barnett Bank at Midway, Miami, was robbed by two armed men, at least one of whom was white. Both robbers, who entered the rear door, wore jumpsuits, gloves and motorcycle helmets with dark-colored facial visors. The taller robber appeared to have a nylon stocking over his head and face beneath the helmet and carried a revolver. The other, who appeared “bulky” or “very chunky” had a sawed-off shotgun. Their disguises successfully precluded later identification. They had a pale green duffel bag, from which was removed a blue denim bag and a white sack. The latter was used to deposit money from the tellers’ drawers and the former for currency taken in the vault. While the taller robber was in the vault, his companion began aloud a “time count-down”, one of them having earlier stated they had only ten minutes to be out of the bank. After putting the bank’s personnel and customers in fear and taking the money from both tellers’ cage and the vault, the robbers left by the rear door and departed in a 1966 Pontiac car, license 10-52744, which was found later that day in the nearby Midway Mall shopping center. The vehicle had been stolen near that Mall on the previous night about 8 P.M. The bills taken from the vault included “bait” money, susceptible of later identification.

We next examine the trial record to determine whether other circumstances appear, which support the conclusion of the court below that the-circumstance of Cavallino’s post-robbery affluence did not stand alone in pointing to a connection between Cavallino and the robbery.

The prosecution offered to prove that appellant had no employment or earnings for the six years preceding May, 1972, by showing he had been in prison continuously for that period. The trial court sustained appellant’s objection to the offer, and, so, we do not consider it.

We do consider the evidence that:

Cavallino, with Ames and Washburn, robbed a Louisiana bank on February 9, 1973. On February 27, 1973 Cavallino, with Ames, robbed another Louisiana bank. Again, with Ames and Wash-burn, Cavallino robbed a third Louisiana bank on March 20, 1973.

Ames moved to Ormond Beach, Florida, with Janice Stinson and leased an apartment there on April 15, 1973. Four days later Washburn, with his wife and child, arrived and leased an apartment. Shortly thereafter, Cavallino rented a Chevrolet automobile at an airport rental agency in Jacksonville, Florida and drove to Ormond Beach. Around April 22, Washburn and Cavallino twice visited Ames’ apartment. Cavallino, during this period, also visited Washburn’s apartment, while Ames was there. Ames, Wash-burn and Cavallino were together twice in a car, during this period, conversing for periods of one to three hours. Neither Ames, Washburn nor Cavallino was then employed nor were they receiving money from other sources.

On May 1, between 7 and 7:30 A.M., Cavallino came to Ames’ apartment in his rented Chevrolet and Washburn arrived in a Cadillac. Ames got into Cavallino’s car and both cars drove away. At 8 P.M. that night the Pontiac used by the bank robbers was stolen. The following morning, May 2, the bank robbery occurred. That evening, about 8 P.M. Ames, Washburn and Cavallino returned to Ames’ apartment. Washburn carried a very large bag full of “something”. All three entered the bedroom and remained there about 45 minutes with the door closed. Cavallino then left the bedroom with a medium size suitcase. He returned, shortly, with the same suitcase. Soon thereafter all three came from the bedroom and ate dinner. After dinner Cavallino and Washburn left the apartment, one carrying the suitcase.

The next day, May 3, Janice Stinson saw two motorcycle helmets and two life jackets in the bedroom closet of Ames’ apartment, where she lived with Ames. She had never seen them before. She also saw a green bag on the dining room floor. Later that day she went with Ames to Tamoca State Park, where Ames threw the motorcycle helmets, and some jumpsuits and bags into the lake. On May 24, in Janice Stinson’s presence, police recovered a blue-green jumpsuit from the lake and, on May 25, they recovered a sawed-off shotgun, a blue denim bag and a white drawstring bag. These were among the articles thrown in the lake by Ames on May 3. The jumpsuit, the blue denim bag, the white bag and the sawed-off shotgun were similar to or identical to like items used by the robbers.

On May 4, while assisting Ames to pack, Janice Stinson saw a large amount of money in his suitcase. Ames left his Ormond Beach apartment on May 4 and was arrested in Massachusetts for motor vehicle violations on May 6. Found in Ames’ possession at the time of his arrest was $27,420 in currency and 101 motor vehicle master keys. The currency, which was approximately one third of the amount stolen in the Florida bank robbery, included 37 bills taken in that robbery. One of the master keys fit the stolen Pontiac used in the robbers’ flight.

On May 17, the police, searching the Ormond Beach apartment vacated by Ames, found a green bag, a nylon stocking and two life preservers. Janice Stinson testified the nylon stocking was not hers.

On May 5, the day before Ames’ arrest in Massachusetts, Cavallino was in Palm Springs, California, where he purchased a Pontiac automobile for which, with appurtenant charges, he paid in excess of $3,700, in cash, in bills of various denominations. He represented himself to be the owner of an electronics firm. On May 6, Washburn bought a Lincoln automobile in Palm Springs, California for $5,825, paying $500, in cash, that day and the balance, in cash, the next morning.

Cavallino next appeared in Metairie, Louisiana on May 10. He made successive purchases of jewelry, for cash on May 10 — $750, May 11 — $106.10, May 14 —$1,155.

On May 15 Cavallino appeared in Mobile, Alabama where he traded in a Pontiac car for another, paying the difference of $2,350 in cash. He directed that title be put in the name of R. H. Johnson, which he indicated, was the name of the woman who accompanied him. He was in Mobile for several days and made a $500 cash deposit on the purchase of a $42,500 home, which, he indicated, was to be bought in the name of Johnson. The transaction was never concluded.

On May 19, Cavallino was again in Metairie, Louisiana and bought a motorcycle for $610 in cash. Three days later he traded it in on another motorcycle and paid the difference of $132 in cash. Soon thereafter he made another such trade-in, again paying the difference of $172 in cash.

From the foregoing it is apparent that the evidence of Cavallino’s post-robbery affluence did not stand alone, but was supported by a number of other circumstances, which justified its admission, and the question thus became one of weight and not of admissibility. United States v. Falley, 2 Cir. 1973, 489 F.2d 33.

Appellant’s final contention is that the trial court erred in admitting evidence of his commission of the Louisiana robberies on the issues of (a) an intent to conspire to commit the instant offense and (b) identity as a participant in the instant robbery. Appellant argues that the evidence of similarity in the modus operandi was insufficient to be probative of identity or intent to conspire and, alternatively, that if it was relevant and probative, the probative did not outweigh the possibility of prejudice to appellant. We disagree.

As this court pointed out, in United States v. Goodwin, 5 Cir. 1974, 492 F.2d 1141 (decided April 19, 1974) and the eases therein cited, there are exceptions to the general rule that evidence of the commission of independent crimes is not admissible against a defendant on trial. Among the well-recognized exceptions are those which permit evidence of other crimes to show identity or intent. However, our cases also teach that before these exceptions are available to the prosecution several threshold inquiries must be made and resolved by the trial court.

Is there plain, clear and convincing proof of the commission of the other similar offenses by the accused?

Here there was. There was no dispute that three Louisiana banks were robbed. The appellant’s voluntary confession established his participation in these robberies in detail.

How recent are the other crimes, in relation to the one now charged ?

The other crimes were in February and March, 1973, the one here charged on May 2, 1973.

Are Cavallino’s “identity” as one of the Florida robbers and his “intent to conspire” material facts in issue ?

Both were in issue.

Has the prosecution actual need for such probative evidence?

In the case sub judice the prosecution’s need was critical. No witnesses could identify the Florida robbers nor could bank camera pictures enable identification, because of disguises so complete and misleading that the white color of one robber was perceived only by accident. No fingerprints were available, because the robbers wore gloves. Cavallino’s confession to this robbery was excluded by the trial court, because of police assurances that that confession would not be used against him. In short, no other evidence was available.

Considering the prosecution’s actual need on these contested issues and its lack of any other evidence, does the probative value of the proposed evidence outweigh its inherent prejudicial effect?

In this case it did. Absent the proffered evidence the prosecution’s case must fail, while, conversely, with the proffered evidence conviction was far from inevitable.

The threshold questions resolved, we consider, next, whether the proffered evidence fit the exceptions.

The “identity” exception was here employed to show similar “modus operandi”. In such circumstances a general similarity affords no key to the evidential gate. There must be sufficient similarity between the “modus operandi” in the former crimes and that in the crime charged to permit a jury reasonably to conclude from the former that the latter is the handiwork of the accused. The trial court, with commendable caution, limited, perhaps too severely, the elements of similarity which the prosecution was permitted to show.

The following similarities are disclosed by the evidence: Each robbery victim was a bank. The first robbery was committed, February 9, by Cavallino, Ames and Washburn; the second, February 27, by Cavallino and Ames; the third, March 20, by Cavallino, Ames and Washburn. The evidence that Ames left Ormond Beach two days after the Florida robbery, having meanwhile thrown into a lake the items heretofore mentioned, and was arrested in Massachusetts four days after the robbery with more than $27,000 in cash, including 37 identifiable bills taken in the robbery, and more than 100 automobile master keys, one of which fit the stolen Pontiac, points to Ames as one of the robbers. The evidence also indicates that there were two or, possibly, three involved, if one remained with a “cool” getaway car.

Before each of the former robberies the participants had a meeting. Before the Florida robbery Cavallino, Ames and Washburn had several meetings and were absent from their abodes, and apparently together, from about 7:30 A.M. the day before the Florida robbery until after their return to Ames’ apartment about ten hours after the robbery.

A stolen or “hot” car of General Motors manufacture was used to approach and to leave the bank in all instances. A rented or “cool” car (or cars), obtained at an airport rental agency, was used after the “hot” car was abandoned in each of the former crimes. In the Florida robbery the “hot” car was soon abandoned. Cavallino, accompanied by Ames, had left Ames’ apartment in his airport rental car the day before the robbery and returned there about 8:30 P.M. on the day of the Florida robbery.

In all four crimes, the “hot” ear was parked at the bank’s rear door and the robbers entered and departed by the rear door. All four robberies were committed between 9 A.M. and 11:30 A.M. In all four crimes one of the robbers was armed with a revolver and in the last Louisiana robbery and the Florida robbery another robber was armed with a sawed-off shotgun. Each of the four robberies was quick and apparently timed with precision.

Additionally, appellant’s confession of the Louisiana robberies stated the view that morning, between nine and eleven was the best time to rob banks and that “cool” cars were best rented at airport agencies.

We conclude that the elements of similarity admitted into evidence were more than a general similarity and were sufficient to permit the jury to determine whether the Florida robbery was, in part, the handiwork of Cavallino. Again, the question became one of weight, not of admissibility.

It was self-evident that those who robbed the Florida bank had conspired to do so. Since the evidence of other similar crimes was here admissible to establish the identity of Cavallino as a participant in the Florida robbery, it was likewise admissible to show an “intent to conspire” to commit that robbery.

The judgments are affirmed.

      . 18 U.S.C. §§ 371, 2113(a), 2113(d), 2.

      . The trial court suppressed appellant’s incriminatory statements relating to the Florida bank robbery sub judice, finding that the officers had given him assurance that his statement about that robbery would not be used against him.

      . United States v. Lawrance, 5 Cir. 1973, 480 F.2d 688; United States v. Broadway, 5 Cir. 1973, 477 F.2d 991; United States v. Boyd, 5 Cir. 1971, 446 F.2d 1267; Hamilton v. United States, 5 Cir. 1969, 409 F.2d 928.


author: WISDOM, Circuit Judge:

text:
    CONSOLIDATED-TOMOKA LAND COMPANY et al., Plaintiffs-Appellees, v. Earl L. BUTZ, as Secretary of the United States Department of Agriculture, Etc., et al., Defendants-Appellants.
    No. 73-1173.
    United States Court of Appeals, Fifth Circuit.
    Aug. 15, 1974.

      John L. Briggs, U. S. Atty., Jacksonville, Fla., Kendell W. Wherry, Asst. U. S. Atty., Orlando, Fla., Fred Harris, Jr., Regional Atty., U. S. Dept, of Agriculture, Atlanta, Ga., Michael Kimmel, Dept, of Justice, Wash., D. C., William Mount, Gen’l Litigation Section, Civ. Div., U. S. Dept, of Justice, Washington, D. C., Walter H. Fleischer, Dept, of Justice, Washington, D. C., for defendants-appellants.
    Charles E. Davis, Orlando, Fla., for plaintiffs-appellees.
    Before WISDOM, AINSWORTH and GEE, Circuit Judges.
   WISDOM, Circuit Judge:

This appeal is from an order entered by Judge Gerald B. Tjoflat granting the plaintiffs’ motion for summary judgment, declaring a producers’ referendum conducted under the Agricultural Marketing Act of 1937, as amended, 7 U.S.C. § 608c, invalid, because it was not conducted in accordance with the provisions of that Act and the regulations issued by the Department of Agriculture implementing it. The district court enjoined the defendants from enforcing the marketing order submitted in the referendum to the producers. In a well-considered opinion accompanying his judgment, Judge Tjoflat concluded that Seald-Sweet Growers, Inc., a cooperative association under Florida law that cast 1474 of the 4164 votes cast in the referendum, “is not a ‘cooperative association of producers’ within the meaning of the . . . Act and the regulations thereunder and, therefore, was not entitled to cast a ballot in the referendum”. The court held, “as an alternate ground for disqualifying Seald-Sweet’s ballot, that Seald-Sweet improperly permitted its board members from the Indian River District [a district not included within the territory governed by the proposed marketing order] to participate in the decision to cast the ballot approving the marketing order”. Consolidated-Tomoka Land Co. v. Butz, M.D.Fla.1972, 353 F.Supp. 683, 688. Judge Tjoflat further concluded that, “[s]ince the official ballots used in the referendum do not contain sufficient information to distinguish between [the] producers of covered and uncovered [i. e., ‘exempt’ fruit, not entering the fresh fruit market intended to be regulated by the proposed marketing order] fruit, there is no way of determining whether two-thirds of the producers engaged in the production of the commodity covered in the order approved its issuance” as the Marketing Act now requires. Id. at 690. We adopt the district court’s opinion as the opinion of this Court.

A few words, perhaps, should be said on two points Judge Tjoflat may have thought so obvious as not to merit discussion in his opinion. The Secretary has argued in this Court that the plaintiffs have no standing to seek judicial review of the procedure by which the marketing order in question was adopted. As the Supreme Court noted in Barlow v. Collins, 1970, 397 U.S. 159, 166, 90 S.Ct. 832, 837, 25 L.Ed.2d 192, 199, “preclusion of judicial review of administrative action adjudicating private rights is not lightly to be inferred. [Citations omitted.] Indeed, judicial review of such administrative action is the rule, and nonreviewability an exception which must be demonstrated. In Abbott Laboratories v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681, [686,] we held that ‘judicial review of a final agency action by an aggrieved person will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress.’ ” As we view the Agricultural Marketing Act, Congress intended not to foreclose judicial review at the instance of producers such as the plaintiffs, but, on the contrary, intended, through the device of a validly conducted referendum, to give decisive weight to their views. The Act, 7 U.S.C. § 608c(8), provides that no marketing order shall be effective unless the Secretary determines that the issuance of the order is approved either by two-thirds of the producers of the commodity proposed to be regulated by the order in the production area specified in the order, or by producers who have produced for market “at least two-thirds of the volume of such commodity produced for market within the production area”. In light of this deference the statute itself pays to the interests of producers, it is clear that those interests are “arguably within the zone of interests to be protected or regulated by the statute in question”, and hence meet the test for standing to secure judicial review set forth in Association of Data Processing Service Organizations, Inc. v. Camp, 1970, 397 U.S. 150, 153, 90 S.Ct. 827, 830, 25 L.Ed.2d 184, 188. It is true, as the Government notes, that 7 U.S.C. § 608c(15) establishes a procedure for “handlers” to challenge, first by petition to the Secretary, and then in the district courts, an order or “any obligation imposed in connection therewith” on the grounds that the order or obligation “is not in accordance with law and praying for a modification thereof or to be exempted therefrom.” But we cannot accept the Government’s argument that this provision of judicial review for handlers affected by the administrative action and seeking one kind of relief precludes an action by producers challenging primarily not the order, but the procedure by which it was promulgated. Preclusion of judicial review must be founded on a ground more firm than expressio unius exclusio alterius.

This observation leads us to the Government’s second point not dealt with explicitly in the district court’s opinion. The Government urges that our decision must be controlled by the following language of Freeman v. Hygeia Dairy Co., 5 Cir. 1964, 326 F.2d 271, 273:

It must necessarily follow from the complexities of administration of §§ 601 et seq. that the details of a referendum, and the manner in which it is conducted, must be left exclusively in the hands of the Secretary.

The Government neglected to put this statement in context by quoting the two sentences immediately preceding it and the one following:

Section 8c (19) . . . provides that in ascertaining whether the issuance of an order is approved by the requisite number of producers, the Secretary may conduct a producers’ referendum. Since such a referendum is within his discretion, he might ascertain whether the required percentage has been met in any way he deems appropriate. .
Any judicial review of an order which the Secretary has promulgated is limited to a review of the record from the administrative proceedings and to determination whether such order was issued in accordance with law. Id. (Emphasis supplied.)

After the events involved in the Hygeia case had transpired, Congress amended the Agricultural Marketing Act of 1937 to require producers’ referenda to approve marketing orders of the kind involved in the present case, to set forth the percentage of the vote required for approval, and to specify the content of the ballots and other particulars. See 75 Stat. 304 (§ 141(4)) (1961), codified at 7 U.S.C. § 608c(19). From the language of Hygeia quoted above, it follows, now that Congress has made the conduct of a referendum mandatory rather than discretionary with the Secretary, that these plaintiffs have standing to seek a judicial “determination whether such [marketing] order was issued in accordance with law.”

The judgment of the district court must therefore be affirmed.


text:
    David A. YOUNG, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
    No. 73-1621.
    United States Court of Appeals, Fifth Circuit.
    Aug. 15, 1974.

      Bruce Baldwin, Burleson, Bondies, Baldwin & Pate, Dallas, Tex., for plaintiff-appellant.
    Frank D. McCown, Fort Worth, Tex., Roger J. Allen, Asst. U. S. Atty., Dallas, Tex., Thomas W. Petersen, Court of Claims Sec., Civ. Div. U. S. Dept, of Justice, Washington, D. C., for defendantappellee.
    Before WISDOM, AINSWORTH and GEE, Circuit Judges.
   WISDOM, Circuit Judge:

In this suit, David A. Young, the plaintiff-appellant, sought judicial review of the action of the Army and Air Force Exchange Service, a non-appropriated fund instrumentality of the United States, separating (discharging) him from his position with the Exchange Service as architect. The district court dismissed the complaint on grounds discussed below. We reverse in part, and hold that the plaintiff is entitled to judicial review under the Administrative Procedure Act.

I.

The Complaint.

Young brought this action against the United States on September 24, 1971. On December 22, 1972, he filed his third amended complaint, consisting of five counts. Jurisdiction over the first count was grounded on the Tucker Act, 28 U.S.C. § 1346(a)(2) and 31 U.S.C. § 724a. Young alleged that on November 17, 1966, he was employed by the Army and Air Force Exchange Service “to perform general duties as an architect”. More specifically, he asserted: “Plaintiff had no fixed tenure of service, no fixed emolument, and no fixed duties to perform. He was responsible for such duties as the Exchange Service assigned to him, held his job at the will of the Exchange Service and discharged only such duties as the Exchange Service assigned him. He had no supervisory authority and all his work was reviewed by higher authority for approval or rejection prior to implementation.” The plaintiff was discharged from this employment on or about May 15, 1970.

The first count argues that the alleged “acts and omissions” of the Exchange Service constituted a breach of the “express or implied contract” of entployment which the plaintiff and the defendant entered into when the plaintiff joined the Exchange Service. Count one characterized the terms of this “express or implied contract” as follows:

“[I]n exchange for plaintiff’s services as an architect, defendant would act in substantial compliance with the laws and the rules and regulations defendant did promulgate from time to time and regulate the relationship between its instrumentality and/or agency, to-wit: the Exchange Service, with the employees of such Exchange Service, including plaintiff herein.”

Count one sought reinstatement to the position plaintiff held before discharge and damages, “measured by plaintiff’s annual salary with defendant,” of an amount “not to exceed at least $10,000”.

The second count sought to establish jurisdiction under the Federal Tort Claims Act, 28 U.S.C. § 1346(b) and 28 U.S.C. § 2671 et seq., and alleged the same factual basis as the first. It sought damages of “at least $20,000, which damages are continuing and measured by plaintiff’s annual salary”.

The third, fourth, and fifth counts, predicated on the same factual basis, sought to invoke jurisdiction under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. Count three alleged that the discharge was “arbitrary, capricious and an abuse of discretion, without observance of procedure required by law, and unsupported by substantial evidence”. Count four asserted a denial of due process under the Fourteenth Amendment of the United States Constitution, but made no mention of the Fifth Amendment. (The dismissal of this count has not been urged as error in this appeal.) Count five alleged, in addition, that:

“[P]laintiff [as a veteran] was a preference eligible employee within the meaning of 5 U.S.C. § 7512; by reason of such status, plaintiff could be discharged only for such cause as would promote the efficiency of the service. That such status of plaintiff was such a property right held by plaintiff in his continued employment as to entitle him to the due process guarantees of the Fifth Amendment to the United States Constitution. That contrary to such guarantees, as aforesaid, plaintiff was denied due process of law in that he was discharged without being allowed a full evidentiary hearing prior to termination he was denied the right to a list of specific charges against him; he was denied the right to be heard by an impartial hearing officer, but on the contrary, the same agency official that initiated the action against plaintiff did make the decision to remove plaintiff pending plaintiff’s formal grievance hearing; plaintiff was denied the right to confront and cross-examine adverse witnesses, and plaintiff was denied a written decision indicating the reasons for his discharge and the evidence relied thereupon; all such denials being made by defendant prior to plaintiff’s formal grievance hearing on his discharge.”

Included in the record and relevant to the first count is an affidavit of the plaintiff which states, in pertinent part:

“[W]hen plaintiff first became employed by the Army and Air Force Exchange Service, he was forwarded a letter offering him employment as an architect and he replied to such offer by a letter of acceptance sent to the Army and Air Force Exchange Service. Further, all reference checks were satisfactory and deponent completed his probationary period.”

On motion of the United States, the district court entered an order dismissing the action on the grounds (a) that the plaintiff’s employment relationship with the Exchange Service did not constitute a contractual relationship that could give rise to an action under the Tucker Act, 28 U.S.C. § 1346(a)(2), (b), that the action could not be maintained under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671 et seq., and (c) that the court had no jurisdiction over the matter either under the Administrative Procedure Act, 5 U.S.C. § 701 et seq., or 42 U.S.C. § 1983.

II.

Jurisdiction under the Tucker Act.

In 1970, Congress amended the Tucker Act, 28 U.S.C. § 1346(a), to provide, in pertinent part:

“(a) The district courts shall have original jurisdiction, concurrent with the Court of Claims, of:
(2) Any other civil action or claim against the United States, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidation or unliquidated damages in cases not sounding in tort. For the purposes of this paragraph, an express or implied contract with the Army and Air Force Exchange Service, Navy Exchanges, Marine Corps Exchanges, Coast Guard Exchanges, or Exchange Councils of the National Aeronautics and Space Administration shall be considered an express or implied contract with the United States.” (Matter added by 1970 amendments italicized.)

A similar amendment was made to 28 U.S.C. § 1491, the general jurisdictional grant to the Court of Claims. The legislative history indicates that these amendments were intended to fill a gap in the Tucker Act’s waiver of immunity of the United States to claims based upon contracts with certain nonappropriated fund instrumentalities of the United States, which were regarded as “anamol[ies] of the law.” 1970 U.S. Code Cong. & Admin.News p. 3478. Unfortunately, the history does not reveal the precise nature and extent of the loophole. The scope of the bill was narrowed considerably before passage, from coverage of any “nonappropriated fund activity of or under the United States or a department or agency of the United States” in an early version to the specifically enumerated instrumentalities under the aegis of the Defense Department or the National Aeronautics and Space Administration set forth in the amendments finally enacted, as quoted above. This constriction of scope reflected the traditional caution of Congress in waivers of sovereign immunity, coupled with a belief that the waiver in question should affect only instrumentalities that were capable of reimbursing the United States for money judgments incurred on their account and “ ‘subject to control by the responsible officials of the Government’ ” S.Rep.No.268 on S.980, 91st Cong., 1st Sess. (1969) at 5.

A parallel concern with defining the sort of “contract” that would be involved in the suits permitted by the amendments is, however, absent. There are scattered references in the House and Senate Reports and the appended documents submitted by interested federal agencies to “procurement activities,” “contractors,” “contracts with third parties,” and so forth. Similarly, there are passing references to employees of these instrumentalities, in such contexts as the assertion that “employees’ associations organized by employees for their benefit” under state law are not nonappropriated fund instrumentalities of the United States, S.Rep.No.268 on S.980, 91st Cong., 1st Sess. (1969), at 9, or the mention of the liability the United States presumably has under the Federal Tort Claims Act for torts committed by employees of nonappropriated fund instrumentalities acting in the scope of their employment, id. at 2. Nowhere in the history of the amendments is there any direct reference to the relationship between the instrumentalities and their employees, much less any language that would support an inference that Congress intended these amendments as a vehicle for redressing grievances of employees of these instrumentalities as well as settling claims of third parties with whom the instrumentalities contract for goods and services.

Nor is this all. This history of the statute itself is as relevant to our inquiry here as the history of its 1970 amendments. Prior to 1964, it provided (28 U.S.C. § 1346(d)(2)).

(d) The district courts shall not have jurisdiction under this section of:
(2) Any civil action or claim to recover fees, salary, or compensation for official services of officers or employees of the United States.

In 1964 subsection (2) was deleted. The negative pregnant is that the Tucker Act now provided a forum for such actions, but this conclusion finds scant support in the legislative history of the 1964 amendment. The Senate report noted (1964 U.S.Code Cong. & Admin. News p. 3255):

“By virtue of the act of October 5, 1962 [28 U.S.C. § 1361], it is now possible for Government emloyees who allege they have been improperly discharged to sue in their home districts for reinstatement, but under the prohibition of subsection (d) of 28 U.S.C. section 1346, the employee’s claim for back pay, which very frequently accompanies his claim for reinstatement, must be brought in the Court of Claims. Under these circumstances it is clear, that in order to do complete justice as efficiently and inexpensively as possible, the district courts should be given jurisdiction of the compensation claimed as well as the improper discharge, in order that they may be disposed of in a single action.”

The 1964 amendment of — or, more accurately, deletion of language from — 28 U.S.C. § 1346 thus must be read together with 28 U.S.C. § 1361, which provides :

“The district courts shall have original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff.”

The purpose of the 1964 amendment was to remove the bar of 28 U.S.C. § 1346 to monetary relief ancillary to relief that could be granted under 28 U.S.C. § 1361; the simple fact that the prohibition was deleted from 28 U.S.C. § 1346 does not in itself create new substantive rights in federal employees as against the United States, but indicates, rather, that the jurisdiction of the federal district courts is now fully concurrent with that of the Court of Claims to vindicate whatever rights they may otherwise have.

Moreover, Congress has on several occasions enacted legislation which deals with employees of the instrumentalities involved in this case in very direct and specific terms. Notably, Congress has provided in 5 U.S.C. § 2105(c) that:

“An employee paid from nonappropriated funds of the Army and Air Force Exchange Service ... is deemed not an employee [of the United States] for the purpose of—
(1) laws (other than subchapter IY of chapter 53 [dealing with the prevailing rate system] and sections 5550 [also dealing with that system] and 7154 [prohibiting, in certain contexts, discrimination based on race, color, creed, sex, or marital status] of this title) administered by the Civil Service Commission; or
(2) subehapter I of chapter 81 [dealing with compensation for work-related injuries] and section 7902 of this title [federal safety programs].
This subsection does not affect the status of these nonappropriated fund activities as Federal instrumentalities.”

In this provision, Congress has, among other things, withdrawn from employees of the instrumentalities in question the protection of the LloydLaFollette Act, 5 U.S.C. § 7501, which provides that “[a]n individual in the competitive service may be removed or suspended without pay only for such cause as will promote the efficiency of the service.” In addition, Congress has specifically made the provisions of the Longshoreman’s and Harbor Worker’s Compensation Act applicable to certain classes of Exchange Service employees, 5 U.S.C. § 8171. Congress has specifically defined employment for purposes of the Social Security Act so as to include Exchange Service employees within the ambit of that Act, 42 U.S.C. § 410(a) (6) (B)(iv). It has made Exchange Service employees eligible for unemployment compensation benefits, 5 U.S.C. § 8501. Congress has applied the minimum wage and overtime provisions to Exchange Service employees, 29 U.S. C. § 201. In construing the 1970 amendments to the Tucker Act, we cannot ignore the fact that, in the much larger statutory scheme embracing federal employment, Congress has, when it has thought such action appropriate, dealt with Exchange Service employees directly and specifically. In our view, this circumstance, coupled with the dearth of concern with employment relationships in the legislative history of the 1970 amendments, strengthens our conclusion that those amendments were not intended to extend Tucker Act jurisdiction to the sort of “contract” plaintiff asserts existed in this case. Accordingly, we need not consider the Government’s further argument that the plaintiff’s contract was one “implied in law” rather than in fact, and that, for that reason, it was outside the scope of the Tucker Act in any event.

III.

Jurisdiction under the Federal Tort Claims Act.

The plaintiff’s attempt to characterize his factual allegations so that they would be cognizable under the Federal Tort Claims Act must fail. In Blanchard v. St. Paul Fire & Marine Ins. Co., 5 Cir. 1965, 341 F.2d 351, 357-358, we stated:

The gravamen of Blanchard’s complaint is that “the United States Government through its agents, servants and employees wrongfully interfered with the performance of * * * [his] contract” with the United States by “hampering” him . . . from completing the work undertaken.
The Federal Tort Claims Act, 28 U. S.C. §§ 1346(b), 2671 et seq., was designed, with certain exceptions, to “remove the sovereign immunity of the United States from suits in tort. ***.... Uppermost in the mind of Congress when it waived this immunity were the ordinary common law torts. .
That claims based upon breach of contract are wholly alien to the Tort Claims Act is beyond question. [Citation omitted.]

The principle underlying Blanchard applies with equal force to employment relationships between the United States and its instrumentalities, and individuals employed by them such as the plaintiff here.

The present case makes all too evident the prevalence — and unreliability — of the labels parties often seek to impose upon the relationships between agencies and instrumentalities of government and their employees. Those relationships are primarily functions of statutes and regulations, and not creatures of the common law (federal or otherwise) of contract or tort. We do not mean to imply that a cause of action under the Tort Claims Act can never arise out of a federal employment relationship. We simply say that, on the basis of the record before us, the plaintiff’s claims seem to rest on the asserted failure of the Exchange Service to comply fully with its own procedures, the alleged bias that infected the decisionmaker, and certain defects in the prescribed procedures that in themselves constituted a denial of due process. They do not, therefore, fall within the language of the Tort Claims Act extending jurisdiction over claims “for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment”. 28 U.S.C. § 1346(b).

IV.

Jurisdiction under the Veterans’ Preference. Act of 1944.

The plaintiff contends that, as a veteran, he is protected against adverse action other than action taken for “such cause as will promote the efficiency of the service” under the Veterans’ Preference Act, 5 U.S.C. §§ 7511, 7512. Because these provisions are administered by the Civil Service Commission, see 5 U.S.C. §§ 3318, 7701, and because 5 U. S.C. § 2105(c)(1), set forth in Part II of this opinion, provides that employees of the Exchange Service are to be deemed not employees of the United States, with some exceptions, for purposes of statutes administered by the Commission, we conclude that these provisions are inapplicable to the plaintiff.

V.

Jurisdiction under the Administrative Procedure Act.

The action of the Exchange Service in effecting the plaintiff’s discharge is reviewable under the Administrative Procedure Act, 5 U.S.C. § 701 et seq.

There can be no doubt that the plaintiff had an interest in continuation in his position as architect sufficient to require the procedural due process guaranteed by the Fifth Amendment. It is true that the employment relationship of the plaintiff here, unlike that of the federal nonprobationary employee involved in the recent case of Arnett v. Kennedy, 1974, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15, is not governed by terms and conditions of employment which flow from a discrete federal statutory provision. But interests protected by the Fifth Amendment need not be, and in fact often are not, grounded in federal statutory law. In his analysis of the source of the right entitled to the due process guarantee of the Fifth Amendment in Arnett, Mr. Justice Rehnquist (with whom the Chief Justice and Mr. Justice Stewart joined), relied upon this statement in Mr. Justice Stewart’s opinion for the Court in Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548, 561:

Property interests, of course, are not created by the Constitution. Rather they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law —rules or understandings that secure certain benefits and that support claims of entitlement to those benefits.

Mr. Justice Rehnquist viewed the federal nonprobationary employee’s right to due process in Arnett in an action taken against him by the Office of Economic Opportunity to terminate his employment with that agency as stemming primarily from the Lloyd-LaFollette Act, 5 U.S.C. § 7501.

In the case before us, the nature of the relationship between the Exchange Service and its employees is governed primarily by a detailed set of Army and Air Force Regulations, AR 60-21/AFR 147-15, “Exchange Service Personnel Policies,” promulgated by the Departments of the Army and the Air Force, March 6, 1969, and effective when the events occurred that culminated in the plaintiff’s discharge. The provisions of these regulations which bear most directly on the plaintiff’s contentions in this case are set forth in Chapter 3 of AR 60-21/AFR 147-15, “Personnel Relations”. Section 3-7 provides that an employee may be separated (discharged) for “gross inefficiency” “only when the employee has, in the course of his employment, acted or failed to act with such utter indifference that the foreseeable and natural consequences seriously and adversely affect AAFES.” Section 3-8 provides that an employee may be separated for “conduct on the job involving insubordination, violation of laws, regulations, rules or procedures, or other conduct incompatible with maximum employee efficiency,” or “conduct off the job reflecting substantial discredit on AAFES,” and then only when counseling or lesser disciplinary measures “are determined to be inappropriate” or “have been utilized without apparent success,” and “the act or conduct is of such a major nature, or so reprehensible or so repetitious that retention of the employee in any capacity is determined to be incompatible with the best interests of AAFES.” Section 3-10 provides that employees may be separated for “unsatisfactory performance”. A finding of “unsatisfactory performance” may be made in response to an employee’s failure to remedy “performance deficiencies” that are “of a significant or material nature” and that have been the subject of previous counseling with his superiors and of a “warning letter” addressed to him and specifically apprising him of the “deficiencies”. Under section 3-13, an employee may be separated for “disqualification,” in the sense of failure to qualify for a fidelity bond, failure to make a required affidavit or submit a “security questionnaire,” or failure to qualify for a “security clearance”. Section 3-14 provides that a probationary employee may be separated simply upon a determination that continued employment “is not in the best interests of AAFES”. Section 3-15 provides for separation in the cases of employees “whose physical or mental condition renders them incapable of performing the duties of their assigned positions for an indéfinite period of time”. Other sections of Chapter 3 provide for separations “for reduction in force,” (section 3-16), “because of death,” (section 3-17), “upon expiration of the agreed period,” (section 3-18), “separation from on-call employment,” (section 3-19), “separation based upon resignation,” (section 3-20), separation based upon “declination of transfer” (section 3-21), separation because of maternity (section 3-22), and separation for retirement (sections 3-24 and 3-25).

Read together, these safeguards and standards establish protections against arbitrary dismissal. The plaintiff's interest in continuation in his position with the Exchange Service is characterized by those same “attributes of ‘property’ interests protected by procedural due process” described in Mr. Justice Stewart’s opinion for the Court in Board of Regents v. Roth, 1972, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548:

To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it. It is a purpose of the ancient institution of property to protect those claims upon which people rely in their daily lives, reliance that must not be arbitrarily undermined. It is a purpose of the constitutional right to a hearing to provide an opportunity for a person to vindicate those claims.

The plaintiff’s interest in continued employment in this case is well within the parameters defining property interests protected by the Fifth and Fourteenth Amendments in such recent cases as Goldberg v. Kelly, 1970, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (termination of welfare benefits); Morrissey v. Brewer, 1972, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484 (parole revocation); Bell v. Burson, 1971, 402 U.S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90 (revocation of driver’s license); Sniadach v. Family Finance Corp., 1969, 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (garnishment of wages).

The fact that Congress has provided that Exchange Service employees are to be included within the coverage of certain statutory provisions affecting federal employees generally and excluded from others, among them the LloydLaFollette Act, 5 U.S.C. § 7501, construed in Arnett, does not alter this conclusion. If anything, the plaintiff here has more of a claim of entitlement to continuation in his employment than the plaintiff in Arnett, because the Army and Air Force regulations summarized above provide standards for effecting separations which are more rigorous and more fully articulated than those contained in the Lloyd-LaFollette Act. Though the source of the power to promulgate these regulations which define the employment relationship is executive in nature and therefore different from the statutory nature of the standard involved in Arnett, this circumstance does not alter our conclusion that the relationship in fact established under those regulations is subject to the protection of the Due Process Clause of the Fifth Amendment. As Mr. Justice Black reasoned in holding that the Exchange Service, though itself a creature of regulations, was to be regarded as an integral part of the War Department and therefore entitled to all its immunities, “[t]hat the establishment and control of post exchanges have been in accordance with regulations rather than specific statutory directions does not alter their status, for authorized War Department regulations have the force of law.” Standard Oil Co. of California v. Johnson, 1942, 316 U.S. 481, 484, 62 S.Ct. 1168, 1169, 86 L.Ed. 1611, 1615. (citations omitted).

Where there is a right, so must there be a remedy as well. The plaintiff may vindicate his right to procedural due process by bringing an action under the provisions of the Administrative Procedure Act relating to judicial review, 5 U.S.C. §§ 701-706. The Government has contended in this Court and the court below that a suit like this is precluded under the Administrative Procedure Act by those portions of 5 U.S.C. §§ 553 (rule making) and 554 (adjudications) which except from their provisions “a matter relating to agency management or personnel” in the case of rule making and a matter involving “the selection and tenure of an employee” in every case of adjudications. This contention cannot be sustained. These exclusions have nothing to do with those sections of the Administrative Procedure Act dealing with judicial review of agency action, 5 U.S.C. §§ 701-706. Quite to the contrary of the Government’s position in this case, the courts increasingly over the past fifteen years have entertained actions to review the discharge of, or other adverse action taken against, federal employees. Professor Davis has noted in the 1970 Supplement to his Administrative Law Treatise:

During the 1960’s, the courts have uniformly been willing to review employee dismissal cases for (a) lack of statutory authority, (b) unfair procedure, and (c) arbitrary or capricious action or abuse of discretion. The problem about which the law has been confused during the 1960’s is whether or not the courts will review evidence to determine whether findings are supported by substantial evidence.

K. Davis, Administrative Law Treatise § 29.07, at 1109 (Supp.1970). See also Polcover v. Secretary of the Treasury, 1973, 155 U.S.App.D.C. 338, 477 F.2d 1223, 1225-1228. And it should be noted that this judicial scrutiny under the Administrative Procedure Act has been exercised in the area of federal employment despite the provision in 5 U.S.C. § 701(a)(2), which makes the judicial review provisions inapplicable to the extent that “agency action is committed to agency discretion by law.” See, e. g., Charlton v. United States, 3 Cir. 1969, 412 F.2d 390; Norton v. Macy, 1969, 135 U.S.App.D.C. 214, 417 F.2d 1161; Jaeger v. Stephens, D.Colo., 1971, 346 F.Supp. 1217; Mindel v. United States Civil Service Commission, N.D.Cal.1970, 312 F.Supp. 485. See also Saferstein, Nonreviewability: A Functional Analysis of “Committed to Agency Discretion,” 82 Harv.L.Rev. 367 (1968).

Because we have concluded that the plaintiff had an interest in his employment relationship protected by the Fifth Amendment, it follows, for purposes of determining whether the district court had jurisdiction, at least, that the plaintiff is “a person suffering legal wrong because of agency action” under 5 U.S.C. § 702. Accepting, as we must for the limited purpose of this appeal, the truth of the uncontested allegations of his complaint, we think they are sufficient to constitute a denial of due process under the Fifth Amendment. The plaintiff alleges, in effect, that the prescribed procedures were not fully complied with, that bias infected the decisionmaker, and that the discharge was not supported by substantial evidence but rather was of an arbitrary and capricious character. On these allegations, the plaintiff is entitled to judicial review of the administrative action whereby his' separation was effected.

The fifth count of the complaint also alleges a number of constitutional defects in the procedures prescribed by the regulations under which discharges are effected and reviewed within the Exchange Service. In light of the action we take with respect to the plaintiff’s other contentions, and with due regard for the lack of an adequate record at this stage of the proceedings and for the fact that these constitutional issues were neither argued nor briefed in the court below or in this Court, we decline to pass upon them at this time.

On remand, the district court will determine whether there has been compliance with the procedures for effecting and reviewing separations from the Exchange Service established in AR 60-21/AFR 147-15 of March 6, 1969, and, in accordance with the provisions of 5 U.S.C. § 706, whether there was sufficient evidence to support the discharge. In determining what remedies, if any, are appropriate, the district court will have due regard for the Army and Air Force regulation currently in force, AR 60-21/AFR 147-15, “Exchange Service Personnel Policies,” promulgated April 23, 1973, Ch. 1, Section 1-8 (k), which “authorizes payment of back pay, allowances or differentials, as applicable, for employees [of the Exchange Service] who have undergone unjustified or unwarranted personnel actions, less any amounts earned by the employee during the applicable period,” in accordance with the principles applicable to federal employees generally under 5 U.S.C. § 5596.

For the reasons stated, the judgment of the United States District Court for the Northern District of Texas is affirmed in part, and reversed in part, and the cause is remanded to that court for further proceedings consistent with the views expressed here.

Affirmed in part, reversed in part, and remanded.

      . The 1969 Senate report accompanying the proposed amendments to the Tucker Act, discussed below, noted of the instrumentality involved in the present suit: “The Armed Forces post exchange system — a prime example of a nonappropriated fund activity — is now the third largest department store chain with annual sales of over $4.5 billion, exceeded only Sears, Roebuck & Co. and J. C. Penney Co.” S.Rep.No.268 on S. 980, 91st Cong., 1st Sess. (1969), at 3. There is no statute specifically authorizing or appropriating funds for the Exchange Service, though, as noted below, Congress has on several occasions enacted legislation which makes Exchange Service employees subject to some of the provisions of the statutory scheme which embraces federal employees generally and excepting them from the scope of others. In Standard Oil Co. of California v. Johnson, 1942, 316 U.S. 481, 483-484, 62 S.Ct. 1168, 1169, 86 L.Ed. 1611, 1615, Mr. Justice Black analyzed the legal foundation of the Exchange Service as follows:
      On July 25, 1895, the Secretary of War, under authority of Congressional enactments [16 Stat. 315 (1870) ; 18 Stat. 337 (1875)], promulgated regulations providing for the establishment of post exchanges. These regulations have since been amended from time to time and the exchange has become a regular feature of Army posts. That the establishment and control of post exchanges have been in accordance with regulations rather than specific statutory directions does not alter their status, for authorized War Department regulations have the force of law. [Citations omitted.]

      . The first count narrates the events allegedly leading to the discharge as follows:
      Approximately a year earlier, in May 1969, plaintiff was rated by the Exchange Service on a personnel efficiency report, which rating plaintiff believes was in error. On or about June 11, 1969, plaintiff did offer a written defense to such efficiency report. Thereafter, the Exchange Service did begin a calculated plan of annoyance and harassment of plaintiff, all designed to force plaintiff’s resignation. During such period plaintiff did make various appeals to higher authority within the Exchange Service, all without avail. Subsequently, separation proceedings by the Exchange Service against plaintiff were begun which culminated in plaintiff’s discharge on May 15, 1970. Thereafter, a formal grievance hearing was held in July and August, 1970. Such grievance hearing ruling was adverse to plaintiff and plaintiff’s discharge from the Exchange Service was upheld. . . .
      . . . [D]uring all of the foregoing, defendant [the United States], acting through its instrumentality and/or agency, the Exchange Service, did commit certain acts and omissions as follows:
      (a) Did discharge plaintiff because plaintiff offered a defense to an adverse personnel efficiency report.
      (b) That prior to such discharge, defendant did transfer plaintiff to another department to give the “appearance” of impartiality when, in truth and in fact, such transfer was a subterfuge to gather additional false data to support the wrongful discharge of plaintiff.
      (c) Did prepare three false personnel efficiency reports.
      (d) Did abuse plaintiff with cursing and obscenities in various attempts to frighten plaintiff into resigning from the Army and Air Force Exchange Service.
      (e) That plaintiff’s immediate supervisors did demean, belittlé and insult plaintiff’s professional reputation and abilities, and did attempt to force plaintiff to do harm to the interest of defendant which plaintiff refused to do, thereby provoking such demeaning, belittling and insulting supervision of plaintiff’s work.
      (f) That prior to such grievance hearing, the defendant did give the “illusion” of a fair and impartial review of the grievances of plaintiff when, in truth and in fact, all such illusory reviews were subterfuges designed to expedite the discharge of plaintiff without regard to fairness, honesty or fair play.
      (g) That at such grievance hearing, unknown to the plaintiff, the members thereof should have disqualified themselves and refused to sit in judgment on plaintiff for the following reasons, to-wit:
      (i) One member of the grievance committee . . . had a similar grievance
      pending against him immediately before or during plaintiff’s grievance hearing;
      (ii) Counsel for the Army and Air Force Exchange Service at such grievance hearing did have private communications with the full grievance committee after the evidence closed; and
      (iii) During such grievance hearing, the defendant’s chief witness, Mr. O’Connor, the chief of the section in which plaintiff worked, was given an award and a check for a certain sum of money for outstanding performance by the Commanding General of the Army and Air Force Exchange Service. Key members of the section in which plaintiff worked, including actual and potential witnesses for the plaintiff, were called into the Commanding General’s office to be present at such presentation to Mr. O’Connor, which was designed to impress and intimidate such actual and potential witnesses for the plaintiff with the futility of plaintiff’s grievances while plaintiff’s grievance hearing was actually in progress.
      (h) That prior to such grievance hearing, defendant did fail to counsel with plaintiff prior to taking any adverse action [as required by the Army and Air Force Regulations then in force applicable to Exchange Service employees].
      (i) That defendant did fail to apply the Veteran’s Preference Act to plaintiff’s various appeals in this action.

      . A similar claim, advanced by a federal non-probationary employee under the Lloyd-LaFollette Act, 5 U.S.C. § 7501, not applicable to the employee here, was rejected by the Supreme Court in Arnett v. Kennedy, 1974, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15.

      . That the Act provides much protection to federal employees has been seriously questioned in a recent study commissioned for the Administrative Conference of the United States, and reprinted as Merrill, Procedures for Adverse Actions Against Federal Employees, 59 Va.L.Rev. 196 (1973). See also Arnett v. Kennedy, 1974, 416 U.S. 134, 206, 94 S.Ct. 1633, 1670, 40 L.Ed.2d 15, 63 (Mr. Justice Marshall, dissenting). Useful background material on the problems attending “adverse actions” taken against federal employees may be found in Johnson & Stoll, Judicial Review of Federal Employee Dismissals and Other Adverse Actions, 57 Cornell L.Rev. 178 (1971); Byse & Fiocca, Section 1361 of the Mandamus and Yenue Act of 1962 and “Nonstatutory” Judicial Review of Federal Administrative Action, 81 Harv. L.Rev. 308, 343-44 (1967); Heise, Civil Pay Cases Before the Court of Claims, 55 Georgetown L.J. 497 (1966) ; Chaturvedi, Legal Protection Available to Federal Employees Against Wrongful Dismissal, 63 Northwestern U.L.Rev. 287 (1968) ; Berzak, Rights Accorded Federal Employees Against Whom Adverse Personnel Actions Are Taken, 47 Notre Dame Law. 853 (1972) ; Note, Dismissal of Federal Employees — The Emerging Judicial Role, 66 Colum.L.Rev. 719 (1966).

      . We are aware that the Court of Claims has recently reached the merits in a similar case — or, more accurately, has noted that “since it is clear that plaintiff has no case on the merits we defer decision of this difficult jurisdictional question.” Travis v. United States, 1972, 199 Ct.Cl. 67, 70 n. 1, citing Judge Davis’s note in Monett v. United States, 1969, 419 F.2d 434, 190 Ct.Cl. 1, 5 n. 4:
      This is one of those cases in which it is easier for the court to decide the merits than jurisdiction. Cf. Brooks v. Dewar, 313 U.S. 354, 359-360 [61 S.Ct. 979, 85 L.Ed. 1399] (1941).
      It is impracticable or at least difficult to separate out from the merits the issues that we would have to decide in order to determine whether we have jurisdiction, assuming it turns on whether plaintiff makes a substantial claim of a violation of his constitutional rights. Of course it would have to be done if we contemplated a decision the other way.
      Whatever the merits of this approach, we think the Travis case is inapposite to the problem we have here, because the question of jurisdiction is the only one squarely raised, and there is little in the record before us bearing on the merits of the plaintiff’s discharge.
      We also realize that one case, Keetz v. United States, 1964, 168 Ct.Cl. 205, cited in the legislative history of the 1970 amendments to the Tucker Act, presented a factual context involving a discharged Exchange Service employee similar to that presented in this case; all the other cases cited in the legislative history, however, dealt with independent suppliers of goods and services, not employees, and, in light of the fact that these cases were cited as instances where sovereign immunity had been held to bar suits, and were not discussed on their facts either in the debates or the reports and other documents accompanying the proposed amendments, we think the mere fact that Keetz was cited is not enough to defeat our conclusion.

      . Mr. Justice Kehnquist noted that “[h]ere appellee did have a statutory expectancy that he not be removed other than for ‘such cause as will promote the efficiency of the service.’ But the very section of the statute which granted him that right, a right which had previously existed only by virtue of administrative regulation, expressly provided also for the procedure by which ‘cause’ was to be determined, and expressly omitted the procedural guarantees which appellee insists are mandated by the Constitution.” Mr. Justice Powell, with whom Mr. Justice Blackmun joined, concurring in part in the result, agreed that “the federal statute guaranteeing appellee continued employment absent ‘cause’ for discharge conferred on him a legitimate claim of entitlement which constituted a ‘property’ interest under the Fifth Amendment.” Mr. Justice Powell disagreed, however, with respect to the test to be applied to the procedures established by the statute:
      The plurality would thus conclude that the statute governing federal employment determines not only the nature of appellee’s property interest, but also the extent of the procedural protections to which he may lay claim. It seems to me that this approach is incompatible with the principles laid down in Both and [Perry v.] Sindermann [408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972)]. Indeed, it would lead directly to the conclusion that whatever the nature of an individual’s statutorily-created property interest, deprivation of that interest could be accomplished without notice or a hearing at any time. This view misconceives the origin of the right to procedural due process. That right is conferred not by legislative grace but by constitutional guarantee. While the legislature may elect not to confer a property interest in federal employment, it may not constitutionally authorize the deprivation of such an interest, once conferred, without appropriate procedural safeguards.
      Arnett v. Kennedy, 1974, 416 U.S. at 166, 94 S.Ct. at 1650, 40 L.Ed.2d at 40-41.
      Mr. Justice White, concurring in part and dissenting in part, shared these misgivings. He took it as a fundamental proposition that “where there is a legitimate entitlement to a job, as when a person is given employment subject to his meeting certain specific conditions, due process requires, in order to insure against arbitrariness by the State in the administration of its law, that a person be given notice and a hearing before he is finally discharged. . . . The fact that the origins of the property right are with the State [rather than in federal statutory law, for example] makes no difference for the nature of the procedures required.” Arnett v. Kennedy, 1974, 416 U.S. at 185, 94 S.Ct. at 1659, 40 L.Ed.2d at 51.

      . These provisions apply to the Exchange Service, because it has not been excluded from the otherwise comprehensive definition of an “agency” for purposes of judicial review contained in 5 U.S.C. § 701, which provides that “ ‘agency’ means each authority of the Government of the United States, whether or not it is within or subject to review by another agency.”
      This is not to imply that the plaintiff might not also have access to the courts by way of section 1361 of the Mandamus and Venue Act of 1962, 28 U.S.C. § 1361, a contention not present in this case. See generally Byse & Fiocca, Section 1361 of the Mandamus and Venue Act of 1962 and “Nonstatutory” Judicial Review of Federal Administrative Action, 81 Harv.L.Rev. 308, 342-44 (1967). See also Charlton v. United States, 3 Cir. 1969, 412 F.2d 390, 396 (Stahl, J., concurring) (collecting cases).

      . 5 U.S.C. § 706 provides:
      To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall—
      (1) Compel agency action unlawfully withheld or unreasonably delayed; and
      (2) hold unlawful and set aside agency action, findings, and conclusions found to be—
      (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
      (B) contrary to constitutional right, power, privilege, or immunity;
      (O) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
      (D) without observance of procedure required by law;
      (E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute;
      (P) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.