text:
    Dorothy I. MacPHERSON, Plaintiff-Appellee, v. Charles R. MacPHERSON, Defendant-Appellant.
    No. 73-1710.
    United States Court of Appeals, Sixth Circuit.
    Argued Feb. 7, 1974.
    Decided April 26, 1974.

      Charles F. Clarke, Cleveland, Ohio, for defendant-appellant; Squire, Sanders & Dempsey, Cleveland, Ohio, Vaden M. Lackey, Jr., Denny, Lackey, Chernau & Castleman, Nashville, Tenn., on brief.
    Robert I. Auler of Auler Law Offices,. Champaign, Ill., for plaintiff-appellee.
    Before PHILLIPS, Chief Judge, PECK, Circuit Judge, and Mc-ALLISTER, Senior Circuit Judge.
   PHILLIPS, Chief Judge.

In this conflict of laws case, we are called upon to interpret a separation agreement. The agreement provided, inter alia, that the husband (Charles MaePherson) was to pay $600.00 per month to the wife (Mrs. Dorothy MaePherson) until her remarriage. The wife remarried a bigamist and this marriage subsequently was annulled and declared void ab initio. Thereupon, the wife sued for payments under the agreement alleging that she had never remarried.

Jurisdiction is based upon diversity of citizenship. The Tennessee rule of conflict of laws controls.

The critical issue is whether the word “remarriage” means a valid marriage, as the District Court in essence held, or whether this word signifies a time at which the wife’s support would commence from a different source. We reverse the District Court and hold that the wife’s remarriage terminated the husband’s obligation under the agreement.

The parties to this suit were married in 1947 in Illinois, their native state. They remained in Illinois until 1950. Between 1950 and 1962, due to Mr. MaePherson’s employment, they lived in three other states. Their final move as a family was to Connecticut in 1962 when Mr. MaePherson was promoted to a position in New York. On December 15, 1966, Mr. MaePherson separated from his wife and moved to New York City.

During the next year, the parties negotiated a separation agreement. Mr. MaePherson signed the agreement in New York on October 13, 1967, and it was forwarded to Connecticut where Mrs. MaePherson signed it on October 31, 1967. The agreement provided, inter alia:

“FIRST: . . . that each may reside or acquire a domicile from time to time at such place or places as he or she may desire. .
“FIFTH: The Husband shall pay to the Wife for the support and maintenance of the Wife the sum of $600.00 per month . . . beginning July 1, 1967.
“All payments to be made to the Wife by the Husband under this Paragraph FIFTH shall cease upon her death or remarriage or upon the death of the Husband.
“SIXTH: . . . Simultaneously with the execution of this Agreement, the Husband agrees to execute and enter into an Insurance Trust, of even date herewith, the principal beneficiaries of which will be the Wife and the children of the parties hereto. . [A] 11 of the terms and conditions of the Insurance Trust are hereby incorporated herein by reference with the same force and effect as though the same were set forth herein in full.
“TENTH: . . . [I]t is further agreed to execute any and all further assurances, covenants, agreements or other documents necessary or reasonably required hereafter to effectuate or carry out the terms of this agreement.
“TWELFTH: ... In the event of the entry of a decree or judgment of divorce, this agreement shall survive as an independent document and shall remain in full force and effect . . . Each party agrees to execute such instruments as shall be necessary from time to time to fulfill the terms of this agreement.”

On December 15, 1967, Mrs. MaePherson’s attorney mailed the agreement to the attorney for Mr. MaePherson in New York, with instructions that:

“These documents are to be held in escrow by you subject to receipt at our office of properly executed trust agreement, check for $75.86 for taxes, check for $75.00 due Dorothy, check for $1000 payable to Wake, See & Dimes, and undertaking by you to get proper endorsements for the life insurance policies for the trust.”

Mr. MaePherson obtained a Mexican divorce on December 29, 1967. Mrs. MaePherson entered an appearance, through counsel, in those proceedings, and the validity of the divorce decree has not been challenged on this appeal. The decree provided that the separation agreement was approved, but not merged with the decree.

On April 3, 1968, at' Folkston, Georgia, Mrs. MacPherson entered into a purported marriage with Frank L. Miles, a/k/a Frank L. Mileski. They returned to Connecticut for two months, until June 15, 1968, when they moved to Florida. On October 22, 1968, Mrs. MacPherson discovered that Frank Miles had a wife from a prior marriage that had not been terminated. Mrs. MacPherson immediately moved to Illinois and remains a resident of Champaign County in that State.

Meanwhile, Mr. MacPherson remarried on January 26, 1968, and a son was born to that marriage on September 28, 1970. He ceased making the support payments under the agreement beginning on June 1, 1968. Mrs. MacPherson requested resumption of the support payments on November 12, 1968.

Mrs. MacPherson’s purported marriage to Frank Miles was annulled and declared void ab initio by the Circuit Court of the Sixth Judicial Circuit, Champaign County, Illinois, on November 2, 1971. Mr. Miles entered an appearance at the annulment proceeding, waiving any and all process, notice and procedural prerequisites to the -hearing. He did not file an answer.

Having considered the above stipulated facts, the U. S. District Court for the Middle District of Tennessee concluded that Connecticut law would govern the separation agreement, and, therefore, there was no “remarriage” because the bigamous wedding was void ab initio.

Under the doctrine of Klaxon Co. v. Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L. Ed. 1477 (1941), the Tennessee conflict of laws rule applies in determining what law governs the interpretation of the separation agreement. See also First American National Bank of Nashville v. Automobile Insurance Co., 252 F.2d 62 (6th Cir. 1958).

Tennessee law considers a separation agreement which is not incorporated into the divorce decree to be a contract. Brown v. Brown, 198 Tenn. 600, 614-615, 281 S.W.2d 492 (1955). The Tennessee conflicts rule is “that a contract is presumed to be made with reference to the law of the place where it was entered into unless it appears that it was entered into in good faith with reference to the law of some other state.” Deaton v. Vise, 186 Tenn. 364, 372, 210 S.W.2d 665, 668 (1948). See also Ohio Casualty Insurance Co. v. Travelers Indemnity Co., 229 Tenn.-, 493 S.W.2d 465, 467 (1973). At least with respect to torts, Tennessee has rejected the “center of gravity” or “dominant contacts” rule in favor of the predictable and uniform rule of lex loci. Winters v. Maxey, 227 Tenn. -, 481 S.W.2d 755 (1972).

We agree with the District Court’s choice of Connecticut as the law governing the agreement. The final signature on the document took place in Connecticut and both parties became bound at that time. Moreover, the facts and circumstances surrounding the parties and the agreement also support the presumption that they intended Connecticut law to govern their rights and obligations. The marital domicile had been in Connecticut, and Mrs. MacPherson and the five children remained there after Mr. MacPherson moved to New York City. Part of the subject matter disposed of pursuant to the agreement was located in Connecticut. Payments were made to Mrs. MacPherson in Connecticut for almost two years. The Insurance Trust which was incorporated by reference into the agreement provided that it would be administered in accordance with Connecticut law. Finally, since the first clause of the agreement specifically recognized that the parties may acquire other domiciles, the presumption is given added weight that the law of the place of making governs.

Mr. MacPherson contends that New York law governs because the escrow letter made delivery contingent on a number of occurrences, and the delivery was completed in New York. We hold that the escrow letter merely required Mr. MacPherson to do what he already had agreed to in the separation agreement and did not constitute a list of conditions precedent. To the extent that the letter mentions additional obligations, it only gives Mrs. MacPherson’s attorneys a cause of action against Mr. MacPherson and does not alter the separation agreement.

The parties are in agreement, and our research shows, that Connecticut has never passed on the question of whether a bigamous remarriage is sufficient to terminate support payments under a separation agreement. Under Tennessee conflicts law, there is a presumption that Connecticut law would be the same as Tennessee law. Marsh v. Fowler, 207 Tenn. 377, 381-382, 340 S.W.2d 881 (1960); Shepard & Gluck v. Thomas, 147 Tenn. 338, 347, 246 S.W. 836 (1922). Normally, we would follow that presumption. Float-Away Door Co. v. Continental Casualty Co., 372 F.2d 701, 704 (5th Cir. 1966), cert. denied, 389 U.S. 823, 88 S.Ct. 58, 19 L.Ed.2d 76 (1967); Gediman v. Anheuser Busch, Inc., 299 F.2d 537, 544 n. 6 (2d Cir. 1962). However, Tennessee law both common and statutory, is silent with respect to the issue at bar, and this presumption therefore is of no assistance in the present case. At any rate, the presumption based on the intent of the parties in having Connecticut law govern takes precedence over the presumption espoused in Marsh and Shepard & Gluck, supra. We note that the presumption based on the place of making is the more specific of the two and that Tennessee courts have placed great emphasis on interpreting contracts in accordance with the presumed intent of the parties. Ohio Casualty Insurance Co., supra; Deaton, supra. Therefore, we must exercise our best judgment as to how a Connecticut court would dispose of the issue at bar.

The state courts have not been consistent in their treatment of this issue. Many courts have rested their decision on whether the marriage was void or voidable. A voidable marriage differs from a void marriage in that in the case of the former the marriage is treated as valid and binding until its nullity is ascertained and declared by a competent court. Some courts allow recovery to a wife who entered into a bigamous marriage on the theory that a void marriage is ineffective to alter legal rights. Reese v. Reese, 192 So.2d 1 (Fla.1966); DeWall v. Rhoderick, 258 Iowa 433, 138 N.W.2d 124 (1965). Moreover, even when the marriage is voidable, recovery has been allowed by making use of the legal fiction of “relation back.” In those cases when the voidable marriage is annulled and declared void ab initio, it is given the same effect as a void marriage. However, many courts have rejected this “relation back” doctrine and deny recovery to the wife when her second marriage is merely voidable. See, e. g., Dodd v. Dodd, 210 Kan. 50, 499 P.2d 518 (1973); Flaxman v. Flaxman, 57 N.J. 458, 273 A.2d 567 (1971).

Some courts have abandoned the void-voidable distinction and, hinging their decision at least in part on equitable grounds, refuse the wife recovery. Beebe v. Beebe, 227 Ga. 248, 179 S.E.2d 758 (1971); Torgan v. Torgan, 159 Colo. 93, 410 P.2d 167 (1966); Denberg v. Frischman, 24 A.D.2d 100, 263 N.Y. S.2d 114 (1965), aff’d, 17 N.Y.2d 778, 270 N.Y.S.2d 627, 217 N.E.2d 675, cert. denied, 385 U.S. 884, 87 S.Ct. 176, 17 L.Ed.2d 111 (1966); Gaines v. Jacobsen, 308 N.Y. 218, 124 N.E.2d 290 (1954). In Beebe, the Supreme Court of Georgia noted that the distinction between void and voidable marriages was more imaginary than real. 179 S.E.2d at 760. In Gaines, the court said that it was unlikely the parties intended the outcome to turn upon whether the unsuccessful marriage was void or voidable. 124 N.E.2d at 293.

The equitable grounds for refusing the wife recovery were stated succinctly in Gaines:

“Rather, the understanding must have been that, upon the wife’s remarriage, the husband could regard himself as free of the duty to support her. He could then assume new obligations — he could himself remarry, if he were of a mind to, but his means limited — without remaining forever subject to the possibility that his first wife’s remarriage would be annulled and the burden of supporting her shifted back to him. And the wife, too, must have understood that by remarrying she abandoned her rights to support under the agreement, for better or for worse, in favor of whatever support would be furnished her by her second mate.” 124 N.E.2d at 293-294.

Equitable grounds favoring the wife’s recovery rest on the strong public policy of assuring the wife’s support coupled with the fact that her choice to enter into a bigamous marriage and forfeit her rights under the separation agreement was fraudulently procured and, therefore, involuntary. This latter ground squarely rejects the voluntary abandonment theory.

An analysis of Connecticut decisions and statutes forces us to conclude that Connecticut specifically has rejected the equitable grounds that would favor the wife’s recovery and the void-voidable distinction, and would hold the remarriage of Mrs. MacPherson to have terminated her rights under the separation agreement.

In Cary v. Cary, 112 Conn. 256, 152 A. 302 (1930), addressing itself to the abandonment theory in an alimony case, the Supreme Court of Connecticut stated:

“The better rule which we adopt, save in the most exceptional circumstances, draws from the voluntary action of the wife in remarrying the inference that she has elected to obtain her support from her second husband and has thereby abandoned the provision made for her support by the court in its award of alimony. In Stillman v. Stillman, 99 Ill. 196, 39 Am.Rep. 21, the Supreme Court of Illinois holds: ‘The divorced wife abandons the provision made for her sup- ' port out of the estate of her former husband by the decree of the court, for that adequate support which she contracts for by the subsequent marriage. It is a matter that affects her own happiness, and about which she is perfectly free and competent to make a choice. Whether she acts wisely in her election, or whether in every instance she obtains as good or as adequate a support by her marriage as that which she abandoned, are questions about which courts can have no concern. It is a matter of her own voluntary election.’ In Emerson v. Emerson, 120 Md. 584, 596, 87 A. 1033, 1038, it is said: ‘Although the better reasoning leads to the conclusion that, as a general rule, as the new husband is obliged to give entire support, therefore the former husband is to be thus relieved.’ ” 152 A. at 304.

See also Lasprogato v. Lasprogato, 127 Conn. 510, 18 A.2d 353 (1941).

Subsequently, in Perlstein v. Perlstein, 152 Conn. 152, 204 A.2d 909 (1964), decided on jurisdictional grounds, the Supreme Court of Connecticut rejected the void-voidable distinction and the legal fiction of “relation back” wherein it stated:

“A marriage ceremony, especially if apparently legally performed, gives rise to a presumptively valid status of marriage which persists unless and until it is overthrown by evidence in an appropriate judicial proceeding. No mere claim of bigamy, whether made in a pleading or elsewhere, would establish that a marriage was bigamous. See cases such as Roxbury v. Bridgewater, 85 Conn. 196, 202, 82 A. 193. Seldom, if ever, would a party to a bigamous marriage, in the face of the presumption of its validity, feel free to treat the marriage as a nullity without a decree of annulment. Nor do we believe any attorney would advise such a course of conduct. The state’s concern in the marriage status of its domiciliaries imperatively demands that the invalidity of' the purported marriage be judicially determined before that invalidity be accepted. See Williams v. North Carolina, supra, 317 U.S. 298, 63 S.Ct. 207, 87 L.Ed. 279; 4 Am.Jur.2d, Annulment of Marriage, § 2. If judicial action is needed, it must be because, in some degree at least a status of marriage exists.
* X X X X X
“ ‘Despite the legal fiction that a judgment in [an annulment] case relates back to the inception of the marriage, for some purposes, such a judgment involves and vitally affects the status of the parties from a logical, legal and practical standpoint.’ Buzzi v. Buzzi, 91 Cal.App.2d 823, 825, 205 P.2d 1125, 1126, cert. denied, 338 U.S. 894, 70 S.Ct. 244, 94 L.Ed. 549. The legal fiction that an annulment relates back to destroy the marriage ab initio is one applied only as the ‘purposes of justice’ require. Gaines v. Jacobsen, 308 N.Y. 218, 225, 124 N.E.2d 290, 48 A.L.R.2d 312. Certainly, neither justice nor this state’s interest in the marriage status of its domiciliary would be advanced by the application of such a legal fiction here.
“Our annulment statute itself (§ 46-28), although referring to ‘void or voidable’ marriages, provides that the court may grant alimony, and custody and support orders for any minor child, as in the case of divorce. Public Acts 1963, No. 105, amended the section by adding a sentence declaring that ‘[t]he issue of any void or voidable marriage shall be deemed legitimate.’ These provisions are irreconcilable with the theory that even a marriage claimed to be void is, or upon the rendition of a decree of annulment retroactively becomes, an absolute nullity ab initio so that nothing in the way of a status or res ever flowed from the marriage. See Gaines v. Jacobsen, supra.” 204 A.2d at 911-912.

As pointed out by the court in Perl-stein, supra, the Connecticut annulment statute specifically recognizes the status of a void marriage and its effect on legal rights and obligations. Section 28, Title 46, of the Connecticut Code, which was in effect at the time the separation agreement was made, provides:

“Whenever from any cause any marriage is void or voidable under the laws of this state or of the state in which such marriage was performed, the superior court may, upon complaint, pass a decree declaring such marriage void, and may thereupon make such order in relation to any child of such marriage and concerning alimony as it might make in a proceeding for a divorce between such parties if married. The issue of any void or voidable marriage shall be deemed legitimate.”

We agree with the court in Perlstein that § 28 is irreconcilable with the theory that a bigamous marriage is an absolute nullity. Additionally, Perlstein’s explicit reliance on the decision in Gaines, supra, forces us to conclude that Connecticut would adopt the holding and rationale of Gaines v. Jacobsen, supra, and deny the wife recovery, at least insofar as the “purposes of justice” require. However, as recognized in Perlstein and Cary, supra, “cases may arise where the court would not hold that the wife by remarriage had abandoned her right to support from her first husband, but cases will be exceptional and rare which will admit of a variance from the ordinary rule. The burden of removing the case from the operation of the ordinary rule will be upon the wife after the proof of the remarriage has been made.” Cary, supra, 152 A. at 304. Perlstein and § 28 make it clear that proof of a bigamous marriage, standing alone, is not sufficient to mandate resumption of support payments. It is clear that if the second marriage ended in a divorce, Mrs. MacPherson would not have been entitled to support from Mr. MacPherson. We see no reason to distinguish between a divorce and an annulment, since such a distinction is not recognized under Connecticut law as set forth in § 28.

Insofar as the equities of the case are concerned, they weigh heavily against Mrs. MacPherson. There is a strong public policy of providing for adequate support for a divorced wife. However, Mrs. MacPherson voluntarily elected to seek support from her second husband when she entered into the purported marriage. She held herself out as being remarried and abandoned her rights under the separation agreement. Often, as in this case, the first husband has remarried and has additional children. He is entitled to rely on his ex-wife’s new marital status, and it would be manifestly unfair to him and his family to allow his ex-wife to return later demanding support. The rights of innocent third parties must be considered in applying the “purposes of justice” test of Perl-stein, supra. Whether the ex-wife obtains “as good or as adequate a support by her [re] marriage . . . are questions about which [the] - courts' can have no concern.” Cary, supra, 152 A. at 304.

Additional factors militating against the wife’s recovery are present. When Mrs. MacPherson left her second husband, she could have returned to Connecticut, sought an annulment and been granted alimony from her bigamous husband. Moreover, even in Illinois, where the marriage was annulled, Mrs. MacPherson could have elected to seek a divorce on the grounds of bigamy and received alimony. Section 20 of the Chapter 40 of the Illinois Statutes (SmithHurd) provides in part:

“When a divorce is granted to a woman who shall, in good faith, have intermarried with a man having at the time of such marriage another wife or wives living, the court may, nevertheless, allow the plaintiff alimony and maintenance the same as in other eases of divorce. . . . ”

Instead, Mrs. MacPherson elected to pursue a path that would preclude her from obtaining support from her second husband. We do not think that she should have such control over her source of support. There is nothing in the separation agreement to indicate that the parties intended that she should be able to exert this control to the detriment of her former husband.

Finally, we note that Mr. MacPherson was not a party to the Illinois proceeding and should not have his obligations under the separation agreement determined by it. This is especially true where, as here, the second husband waived process and notice and failed to file an answer, and the proceedings essentially were uncontested.

Each party shall bear his own costs on this appeal.

Reversed.

      . See Annotation, 45 A.L.R.3d 1033.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    TRANSPORT INSURANCE COMPANY, a Texas corporation, Plaintiff-Appellee, v. MICHIGAN MUTUAL LIABILITY INSURANCE CO., a Michigan corporation, Defendant-Appellant.
    No. 72-1850.
    United States Court of Appeals, Sixth Circuit.
    Argued Feb. 12, 1974.
    Decided May 7, 1974.

      Lawrence A. Bohall, Detroit, Mich., for defendant-appellant; Martin, Bohall, Joselyn, Halsey, & Rowe, Detroit, Mich., on brief.
    William P. Cooney, Detroit, Mich., for plaintiff-appellee; Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen, Detroit, Mich., on brief.
    Before EDWARDS, McCREE and LIVELY, Circuit Judges.
   PER CURIAM.

This diversity action involves a dispute between two insurance companies growing out of a fatal highway accident which took place in 1959. A truck tractor owned by William Frost and leased to Allied Van Lines (Allied) collided with a small truck being operated by Emil Ketola, who died as the result of injuries received in the collision. Frost had completed a trip for Allied and unloaded in Minneapolis on Friday and agreed to pick up another Allied load in Minneapolis the following Tuesday. He left the trailer in Minneapolis and returned to his home in Sault Sainte Marie for the weekend. As he was returning to Minneapolis to pick up the next Allied load the accident occurred in Schoolcraft County, Michigan. He had planned to make a stop enroute to check on personal business, but had not reached the turnoff for this stop when he collided with the Ketola truck.

Transport Insurance Company (Transport) had in force a policy in which Allied was the named insured and agents “thereof . . . engaging in the business” of Allied were additional insureds. This policy provided coverage of $1,000,000 for bodily injury or death. Michigan Mutual Liability Insurance Co. (Michigan Mutual) also had in force a policy by which it provided Frost with liability coverage with limits of $25,000 for each bodily injury or death claim. In connection with its policy Michigan Mutual issued a certificate to Allied by which it agreed to conduct investigations, negotiate settlements and defend or settle suits brought against Allied “as the result of an occurrence arising out of operations conducted by the Named Insured [Frost] while not engaging in the business of [Allied].” The certificate also required Michigan Mutual to make certain payments in connection with such litigation. Frost was an agent of Allied within the meaning of the Transport policy.

Suit was filed in a Michigan court by Ketola’s estate against Frost and Allied and the Declaration alleged that at the time and place of the accident Frost “was engaged in carrying out the business and affairs of the said Allied Van Lines Inc. . . .” This particular allegation was denied by Allied and admitted by Frost in their separate answers. The jury returned a verdict for $75,000 in favor of the plaintiff and against both defendants. In denying Allied’s motion for judgment n.o.v. the trial judge held that Allied was an owner of the tractor by virtue of a Michigan statute which treated a lessee for a period of more than 30 days as the owner of a vehicle and that:

Since Allied Van Lines were deemed the owner, Frost was their agent. He was in the scope of his employment, returning to Minneapolis on a direct route at the time of the accident. He was engaged in service for them even though the cost of this trip would have to be borne by Frost himself. His riding on the road at this time and place, even though he had an incidental stop proposed at Ishpeming, was on a direct route and for the benefit of the owner, Allied Van Lines. Joint Appendix, p. 39a.

Both parties appealed to the Supreme Court of Michigan which affirmed in Ketola v. Frost, 375 Mich. 266, 134 N. W.2d 183 (1965). The Michigan Court held that Allied was liable as an owner under the statute “ . . . whether defendant Frost was or was not engaged at the time in carrying out a purely personal mission. . . .” 375 Mich, at 279-280, 134 N.W.2d at 190. Transport paid the judgment, interest and costs in the total amount of $88,275.76 and brought this action to recover this payment plus other damages, charging a bad faith refusal of Michigan Mutual to defend, negotiate or pay any part of the judgment and expenses. Michigan Mutual denied that it acted wrongfully or in bad faith, asserted that Transport was the primary insurer of the vehicle involved in the accident and denied that Frost was not engaged in the business of Allied.

In denying Transport’s motion for partial summary judgment, the district court held it to be a question of fact whether Frost was engaging in the business of Allied at the time. A trial was held limited to this issue and the jury-answered “was not” to the question, “Do you find that . . . [Frost] . . . was or was not engaged in the business of Allied Van Lines on December 7, 1959 at the time of his collision with the Ketola vehicle. . . . ” The jury was then dismissed and the district judge proceeded to try the issue of bad faith without a jury.

Transport introduced evidence, largely consisting of intracompany correspondence which indicated that certain claims personnel and the trial attorney employed by Michigan Mutual felt that Frost was engaged in personal business at the time of the Ketola collision: The failure to acknowledge this and to assume defense of the Ketola suit was the basis of the bad faith claim. The trial court concluded that Michigan Mutual had been guilty of bad faith in refusing to defend and to settle within its limits and entered judgment for the entire amount of the Ketola judgment, even though it was in excess of the limits of the Michigan Mutual policy. Judgment for Transport also included interest and costs and all of Transport’s litigation expenses. Transport Ins. Co. v. Michigan Mutual Liability Ins. Co., 340 F.Supp. 670 (E.D.Mich.1972). We affirm in part and reverse in part.

The trial court reasoned that Michigan Mutual was bound to abandon its legal position in the Ketola case because certain employees subjectively concluded that its position was not sound. Regardless of the opinion of these employees, the determination of which insurance company owed the duty to defend the Ketola case was dependent entirely on a resolution of the question of whether Frost was engaged in Allied’s business, and it remained unresolved until the jury decided it in the district court. It was not decided in the state courts, and was not so clear-cut as to require summary judgment in the district court. We note that the home office person in charge of the Ketola litigation for Michigan Mutual expressed the opinion early in the proceedings that while Frost went home over the weekend for personal reasons his return trip to Minneapolis (during which the collision occurred) was a business trip. If Frost were held to be engaged both in his own and Allied’s business, Transport would have had coverage and the duty to defend the Ketola claim. Its policy provisions cannot be read to require that agents such as Frost be exclusively engaged in Allied’s business to be covered. Furthermore, Michigan Mutual’s extension of coverage to Allied would not occur if Frost were engaged in a dual capacity, but only if he were not engaged at all in Allied’s business.

The first instance in which Michigan Mutual was required to decide whether its policy covered the Ketola claim came with the filing of the suit. As we have pointed out, the Declaration specifically alleged that Frost was engaged in the business of Allied at the time of the collision. The Michigan rule is that the duty of an insurer to defend a claim is measured by the allegations of the pleading in which its insured is sued. Guerdon Industries, Inc. v. Fidelity & Casualty Co. of N. Y., 371 Mich. 12, 123 N.W.2d 143 (1963); Space Conditioning, Inc. v. Insurance Company of North America, 294 F.Supp. 1290 (E.D. Mich.1968), aff’d., 419 F.2d 836 (6th Cir. 1970). The district court recognized this rule, but held that there is an exception which requires an insurer to defend when it knows that a true but unpleaded fact or set of facts brings the claim within coverage of the policy. In the present case, the facts known to Michigan Mutual were also known to Transport. It was not a case where an insured was left without insurance company defense at a time when the company had information which, though not pleaded by the plaintiff, it knew rendered it liable to furnish a defense. Rather, each company filed a separate answer for its primary insured and furnished counsel who together conducted the Ketola trial and filed a joint brief in the Supreme Court of Michigan. In view of the dispute between the carriers there was no inconsistency in each defending its named insured while insisting that the other owed the duty to appear and defend on behalf of both Allied and Frost. The admission of the allegations that Frost was engaged in Allied’s business was consistent with Frost’s statements to Michigan Mutual. We hold that Michigan Mutual was not guilty of bad faith in failing to defend Allied in the Ketola trial and, in insisting that Frost was engaged in Allied’s business.

While the appeal of the Ketola ease was pending in the Supreme Court of Michigan the plaintiff communicated to Transport an offer to settle for $65,000. Transport then contacted Michigan Mutual and offered to pay two-thirds of the $65,000 if Michigan Mutual would pay one-third. Since this amount was within its policy limits, the district court found Michigan Mutual’s refusal “wrongful, arbitrary and bad faith.” A jury had held both Frost and Allied liable to the Ketola estate, and the trial judge had ruled that Frost was “on a direct route and for the benefit” of Allied at the time of the accident. Furthermore, both insurers and their attorneys believed that they had a good chance of reversal on contributory negligence grounds. In fact, shortly before Michigan Mutual declined this offer, present counsel for Transport wrote to the attorney who had represented Transport in the Ketola trial: “The testimony set out in the record seems to conclusively establish that there were no factual questions as to negligence of defendant or contributory negligence of plaintiff, and, thus, the trial judge should have directed a verdict for you.” An earlier offer of the plaintiff to settle for $42,500 was met by a joint counter offer of $22,000, of which Michigan Mutual would have paid $15,000 and Transport, $7,000. Transport never offered the $17,500 which would have been required to bring the settlement within Michigan Mutual’s limits.

An insurance company which reasonably concludes, after investigation or following trial, that a legal defense exists which will preclude liability on the part of its insured is not guilty of bad faith in refusing to settle a case. In Wakefield v. Globe Indemnity Co., 246 Mich. 645, 225 N.W. 643 (1929), the Supreme Court of Michigan stated:

Undoubtedly, the insurer does not act in bad faith if it refuses settlement in the honest belief that it has a fair chance of victory, or of keeping the verdict within the policy limit, or, upon reasonable grounds, that the compromise amount is excessive, or if it has legal defenses, as. yet undetermined by a court of last resort, which fairly seem applicable. . . . 246 Mich. at 652-653, 225 N.W. at 645.

We conclude that the district court’s finding that Michigan Mutual was guilty of bad faith in refusing to pay one-third of the settlement offer of $65,000 is clearly erroneous in light of the settled law of Michigan. We believe the only conclusion which may be drawn from all the evidence is that Michigan Mutual’s refusal to accede to Transport’s demand with respect to the $65,000 offer was not a fraudulent act or one made in bad faith. Bentley v. Farmers’ Insurance Exchange, 289 F.2d 59 (6th Cir. 1961).

In the absence of bad faith, Michigan Mutual, as primary insurer is liable only for its policy limits of $25,000 of the $75,000 verdict for the death claim. However, the jury determination that Frost was not engaging in the business of Allied rendered Michigan Mutual liable to pay certain expenses as set forth in the certificate issued by Michigan Mutual .to Allied. The decisions on apportionment of defense costs cited by Michigan Mutual are not in point. This is not a case which turns on determination alone of.which insurer had primary coverage and which had excess. The extent of liability for expenses is determined by the certificate which provides that Michigan Mutual shall:

******
(2) pay all costs for investigation and litigation of claims or suits filed against Allied Van Lines, Inc., Allied Van Lines Terminal Company or Allied Van Lines, Inc. of Indiana.
(3) pay all premiums on appeal or attachment bonds for an amount not to exceed the applicable limit of liability stated in this policy, but without obligation to apply ' for or furnish such bonds.
(4) pay all litigation costs taxed against Allied Van Lines, Inc., Allied Van Lines Terminal Company or Allied Van Lines, Inc. of Indiana and interest accruing in any suits until the company has paid, tendered or deposited in court such part of the judgment up to the applicable limit of liability stated in this policy.

The judgment of the district court is affirmed with respect to the holding that Frost was not engaged in the business of Allied at the time of the Ketola collision. It is reversed with respect to the holding that Michigan Mutual was guilty of bad faith in failing to defend and to settle the Ketola claim within its policy limits. The case is remanded for determination by the district court of the amount due Transport as subrogee of Allied, limited to $25,000 of the Ketola verdict and such other amounts provided for in the certificate of insurance set out above. Each of the parties will pay its own costs.

So ordered.


author: WILLIAM E. MILLER, Circuit Judge.

text:
    John Brenton PRESTON, Plaintiff-Appellant, v. Arthur PIGGMAN et al., Defendamts-Appellees.
    No. 73-1859.
    United States Court of Appeals, Sixth Circuit.
    Argued Jan. 31, 1974.
    Decided April 18, 1974.

      Robert Allen Sedler, Lexington, Ky., for appellant; Richard N. Rose, Lexington, Ky., on brief.
    Thomas A. Ainley, Asst. Atty. Gen., for appellees; Ed W. Hancock, Atty. Gen., Frankfort, Ky., on brief.
    Before PHILLIPS, Chief Judge, MILLER, Circuit Judge, and MCALLISTER, Senior Circuit Judge.
   WILLIAM E. MILLER, Circuit Judge.

Recent decisions of the United States Supreme Court have recognized that parole cannot be revoked without affording the parolee the procedural fairness guaranteed by the due process clause of the fourteenth amendment. Morissey v. Brewer, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972); Gagnon v. Scarpelli, 411 U.S. 778, 93 S.Ct. 1756, 36 L.Ed. 2d 656 (1973). On this appeal we are called upon to decide whether certain revocation procedures of the Kentucky Parole Board comply with this standard.

In March of 1971 the appellant was paroled from a life sentence for armed robbery. His parole was conditioned on his not entering Johnson County, Kentucky, (the county in which he was tried and convicted) and the contiguous counties. Among these “forbidden counties” was Magoffin — appellant’s home county and the one in which his parents and relatives lived. The Parole Board placed him with his sister, Mary Lou Brown, who operated a restaurant in California. Appellant worked in the restaurant until it was sold by the sister when she decided to return to Magoffin County, Kentucky.

Appellant then petitioned the Kentucky Parole Board to allow him also to return. After considerable delay, the Board agreed but refused to allow him to enter Magoffin County. Instead, appellant’s new parole district was Lee County, Kentucky, where he was to work for and live with the Charles Brothers, a country music group. The playing engagements of the Charles Brothers were so few that appellant was unable to make a living from this association. Moreover, the housing conditions with the Charles Brothers and their families became so crowded that appellant eventually had to live in the back of an old station wagon.

Appellant notified his parole officer, Jesse Van Cleve, of his difficulties and requested that he be allowed to return to Magoffin County where there was work for him, and where he could live with either his mother or his sister. Van Cleve later testified before the district court that he and his supervisor, Tom Douglas, “talked about it that the boy just couldn’t survive where he was and there would have to be something done about it.” However, the Parole Board did not act on appellant’s request.

In May of 1972 appellant contacted an attorney to see whether legal action could be taken to have the conditions of his parole changed so that he could move to Magoffin County. As a result, in June of 1972 a suit was filed in the court below alleging that the Board had acted unconstitutionally in prohibiting appellant from entering Magoffin County. Before the court held a hearing in the case, appellant returned to Magoffin County to live with his mother and sister. While there he apparently did not report to his parole officer in Lee County. As a consequence, the Parole Board issued a notice of a preliminary hearing on the revocation of appellant’s parole. The reasons given for the hearing were that he had left the parole district without permission and had absconded— failed to report to the parole officer and make his location known to him. The hearing was to be held at the Estill County Jail on August 28, 1972. Appellant later testified that he feared going to the jail because he believed that the Board might have him incarcerated. So, instead of appearing at the preliminary-hearing, he went to Jackson, Michigan, and took a job there. The hearing was held despite appellant’s absence, and a parole violation warrant was issued for his arrest. He was soon found and returned to Kentucky.

On November 15, 1972, the Parole Board held a formal parole revocation hearing. Appellant’s written request for permission for his retained counsel to attend the hearing was denied, but no reason was given for the denial. According to the testimony of Mrs. Lucille Roebuck, chairman of the Parole Board, the revocation hearing lasted no longer than five minutes. The sole purpose of the hearing was to determine whether appellant had left the district without permission and had absconded. It was the Board’s fixed policy to revoke parole if the parolee violated any of the restrictions placed upon him. The proceedings made no provision for the parolee to offer evidence or testimony in mitigation of his offense. Appellant was asked to leave the hearing room, and the Board voted to revoke parole and defer any further action for two years. He was then imprisoned in the state pentitentiary at Eddyville.

Shortly after appellant’s lawyer learned that a parole violation warrant had been issued, he sought to amend the original complaint to add the members of the Parole Board as parties defendants and also to challenge the validity of the revocation proceedings. Additionally, he sought declaratory relief and a temporary restraining order to enjoin continuation of the proceedings. Although the court granted leave to amend, it denied the motion for a temporary restraining order. After the Parole Board had already made its decision and revoked parole, the district court held an evidentiary hearing on appellant’s amended complaint. Subsequently, the court dismissed the complaint. In its memorandum opinion the court held that the challenge to the conditions of parole were rendered moot by the subsequent parole violation and reincarceration of the appellant. Furthermore, due process was found to have been satisfied by the procedures followed by the Board in revoking appellant’s parole.

We first consider the two procedural issues raised on this appeal: first, whether the Parole Board should have made provision in its proceedings for the presentation by appellant of evidence of mitigating circumstances that might have justified a sanction less severe than revocation; and second, whether appellant should have been permitted to have the assistance of his privately retained attorney at the revocation hearing.

Parole is no longer a state of administrative grace that may be summarily and arbitrarily ended at the whim of a parole board. Gagnon v. Scarpelli, 411 U.S. 778, 782 n. 4, 93 S.Ct. 1756, 36 L.Ed.2d 656 (1973). Rather, a parolee has substantial liberty. Although such liberty is not the equivalent of that enjoyed by an ordinary citizen, it is greater than that enjoyed by one incarcerated for a crime. However this liberty may be restricted, it may not be terminated without the rudiments of procedural due process. Morrissey v. Brewer, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972). What is at stake is not simply technical legal notions of what steps must be followed in a revocation hearing. Instead, there is involved “a profound attitude of fairness between man and man, and more particularly between the individual and government. . ” Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 162-163, 71 S.Ct. 624, 643, 95 L.Ed. 817 (1951) (Frankfurter, J., concurring). The concept of fundamental fairness was obviously at the heart of its decision when the Supreme Court in Morrissey defined certain procedures that must be followed before parole may be revoked.

The Court spoke of revocation of parole as a two-step process. The first is a preliminary hearing at the time of arrest or detention to determine whether there is probable cause to believe that the parolee has violated the conditions of his parole. The second involves the more comprehensive revocation hearing itself. At this second hearing the Board must resolve disputed facts and decide “whether the facts as determined warrant revocation.” 408 U.S. at 488, 92 S.Ct. at 2603. Crucial to the issue now before us the following characterization by the Court of the revocation hearing:

“The parolee must have an opportunity to be heard and to show, if he can, that he did not violate the conditions, or, if he did, that circumstances in mitigation suggest that the violation does not warrant revocation.” 408 U.S. at 488, 92 S.Ct. at 2603.

Thus, due process requires that a parolee who has admitted violating a condition of his parole is still entitled to present evidence in mitigation. In consequence, the Board must consider and evaluate the mitigating circumstances before it decides whether revocation is appropriate. As the Court of Appeals for the Seventh Circuit has well said:

“Breach of parole conditions is a necessary but not sufficient ground for parole revocation, for the board is required to determine whether the violator is still a good parole risk, and he may bring extenuating circumstances to the board’s attention.” Caton v. Smith, 486 F.2d 733, 735 (7th Cir. 1973).

This rule is well designed to serve both the interest of the parolee in being fully heard before his ease is decided, and the interest of society in advancing the cause of rehabilitation by eliminating any reason for reaction to arbitrary decisions. 408 U.S. at 484, 92 S.Ct. 2593.

Had appellant been given the opportunity, it would appear that he could have presented evidence of mitigating circumstances. The job which he originally had in Lee County had become sporadic and did not provide him with a living wage. Moreover, the transcript of the testimony before the district court indicates that a job was difficult for appellant to find in Lee County since he knew no one there and was handicapped by an artificial leg that prohibited his doing certain kinds of strenuous work. As already mentioned, the parole officer agreed that appellant was in extreme difficulty and even discussed the matter with his superior, yet permission to leave the county was not forthcoming. These are the types of circumstances that are clearly relevant to a Board decision whether the violation of a restriction warrants revocation of parole.

We are not persuaded by the suggestion in appellees’ brief that appellant waived his right to present evidence of mitigating circumstances because he did not make an appropriate request at the hearing. The responsibility rests with the Parole Board to conduct a proper hearing no matter how informal, which meets the basic requirements of due process and which, more specifically, contains those procedures outlined by the Supreme Court in Morrissey, 408 U.S. at 487-490, 92 S.Ct. 2593. A waiver of a constitutional right, particularly one involving individual liberty, must be knowingly and intelligently given. Brady v. United States, 397 U.S. 742, 748, 90 S.Ct. 1463, 25 L.Ed.2d 747 (1970). In the present case there is no indication in the record that appellant was advised by the Board of his right to present mitigating evidence; nor is there any indication of a specific waiver. Certainly a waiver cannot be presumed from a silent record. Boykin v. Alabama, 395 U.S. 238, 89 S.Ct. 1709, 23 L.Ed.2d 274 (1969).

Of equal importance in rejecting the claim of waiver, is the inescapable conclusion that even had appellant presented evidence in mitigation, it would not have been considered by the Parole Board. Mrs. Roebuck, chairman of the Board, testified that it was the policy of the Board to revoke parole for all violations, no matter how technical. This policy was manifested in the summary, five minute proceeding held by the Board.

We hold that appellant is entitled to a revocation hearing that conforms to the principles of Morrissey v. Brewer, supra, including the right to introduce evidence of mitigating circumstances and the right to have that evidence considered by the Board before it reaches its decision. Although parole boards have wide discretion in fashioning appropriate conditions of parole, they may not impose restrictions that are arbitrary or unreasonable. Hyland v. Procunier, 311 F.Supp. 749, 750 (N. D.Calif.1970). Moreover, circumstances change. Conditions proper when imposed may, after the passage of time or the development of new situations, become unreasonable and unfairly burdensome. On remand the Parole Board should consider whether the admitted violation warrants revocation of parole, particularly in light of the parole officer’s statement that the original placement was not a suitable one and that the unavailability of work in Lee County forced appellant to “live off the land.”

At the revocation hearing appellant is entitled to be represented by his attorney who should be allowed to present witnesses and cross-examine those who testify against appellant. In Gagnon v. Scarpelli, 411 U.S. 778, 93 S. Ct. 1756, 36 L.Ed.2d 656 (1973), the Court held that although the assistance of counsel at a revocation hearing is not a constitutional right in all cases, the right does presumptively exist where “even if the violation is a matter of public record or is uncontested, there are substantial reasons which justified or mitigated the violation and make revocation inappropriate,” or where the reasons for mitigation are complex or otherwise difficult to develop. 411 U.S. at 790, 93 S.Ct. at 1764. We believed that this case meets these criteria. Counsel will be necessary to investigate and present to the Board in an orderly fashion the circumstances surrounding appellant’s employment and living difficulties in Lee County and also his communications with the parole officials. Undoubtedly, factual issues will be in dispute, and witnesses will be presented by both sides. Our reading of the transcript of the hearing before the district court convinces us that if these issues are to be thoroughly explored, appellant will need the assistance of an attorney.

One final matter remains before us. Appellant urges that the parole condition that prohibited his entering Magoffin County was unconstitutional. This question is not ripe for review. Compare, Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed. 2d 681 (1967) and Toilet Goods Association v. Gardner, 387 U.S. 158, 87 S.Ct. 1520, 18 L.Ed.2d 697 (1967). Appellees have stated repeatedly, both at the hearing and in their brief, that the bases for revocation were absconding and leaving the district without permission, not for entering Magoffin County. Even if the Board were to decide after the hearing that appellant may remain on parole, we have no knowledge whether it would reimpose the contested restriction. Naturally, if the Board were to give as one of its reasons for revoking parole that appellant entered Magoffin County or if it were to reinstate the prohibition, the issue would mature into a justiciable controversy. Adjudication of the issue at the present time would be premature.

Being of the opinion that the district court erred in dismissing the amended complaint, its judgment of dismissal is vacated and the action is remanded for proceedings consistent with this opinion. Judgment should be entered declaring the rights and duties of the parties and requiring the Parole Board to accord appellant a revocation hearing in complianee with the standards and principles herein stated. Pending such hearing, the district court will retain jurisdiction of the case to consider, if necessary, any further claims for relief. The issue as to the validity of any conditions of parole imposed by the Board will be reserved for later consideration by the district court if it should become necessary.

      . The automatic revocation of parole for every parole violation regardless of the mitigating circumstances clearly runs counter to the dictates of the Court in Morrissey v. Brewer, 408 U.S. 471, 92 S.Ct. 2593, 33 L. Ed.2d 484 (1972). See Caton v. Smith, 486 F.2d 733, 735 (7th Cir. 1973).


author: CELEBREZZE, Circuit Judge. McCREE, Circuit Judge

text:
    William SCOTT, Plaintiff-Appellee, v. ANCHOR MOTOR FREIGHT, INC., Defendant-Appellant. William SCOTT, Plaintiff-Appellant, v. ANCHOR MOTOR FREIGHT, INC., et al., Defendants-Appellees. William SCOTT, Plaintiff-Appellee, v. TEAMSTERS LOCAL UNION 377, Defendant-Appellant.
    Nos. 73-1703-73-1705.
    United States Court of Appeals, Sixth Circuit.
    Argued Dec. 11, 1973.
    Decided April 30, 1974.

      Paul H. Tobias, Cincinnati, Ohio, on brief for plaintiff-appellant; Goldman, Cole & Putnick, Cincinnati, Ohio, Niki Z. Schwartz, Cleveland, Ohio, Thomas P. Wellman, Youngstown, Ohio, of counsel.
    Bernard S. Goldfarb, Cleveland, Ohio, on brief for Anchor Motor Freight, Inc.; Goldfarb & Reznick, Cleveland, Ohio, of counsel.
    Eugene Green, Green, Schiavoni, Murphy & Haines, Youngstown, Ohio, for Teamsters Local Union No. 377.
    Before CELEBREZZE, PECK and McCREE, Circuit Judges.
   CELEBREZZE, Circuit Judge.

Consolidated herein are three appeals from a judgment against a company and a union. Plaintiff William Scott (Scott) sued his former employer and union representative under section 301 of the Labor Management Relations Act, claiming that Defendant Anchor Motor Freight (Anchor) had wrongfully discharged him and that Defendant Teamsters Local 377 (Local 377) had unfairly represented him in protesting the discharge.

Through special verdicts, the jury found that Scott had been wrongfully discharged and assessed damages against Anchor of $12,500. It also awarded Scott $12,500 from Local 377, which it found had failed to represent him properly.

Local 377 appeals the final judgment, as well as the District Court’s denials of motions for judgment notwithstanding the verdict and for vacation of the judgment. Anchor appeals on identical grounds, as well as appealing a denial of a motion for a new trial. Plaintiff Scott also appeals, claiming that the District Court’s denial of a post-trial motion for an award of attorney fees was erroneous.

Scott began driving trucks for Anchor in 1953. In 1964 Anchor shut down its Norwood, Ohio terminal, where Scott had been working. A new terminal was opened in Lordstown, Ohio in 1966, and Anchor offered Scott a job after a physical examination by a company doctor, who certified Scott under ICC rules though noting that he was a diabetic. Over two months later, Scott was discharged, on July 23, 1966. Anchor claims the discharge resulted from Scott’s physical problems while on the job in 1966 and a second letter from its doctor, stating that Scott was unfit to drive a truck. It argues that Scott was unfit under ICC rules, so that it was merely obeying the ICC when it discharged Scott. Scott claims he was fired because of his initiation of legitimate complaints against the Company. Scott introduced evidence that the company doctor had been pressured into changing his opinion as to Scott’s fitness, that Anchor officials acted out of personal hostility in discharging him, and that he suffered no blackouts or other uncontrollable problems from his diabetes, which was being treated by mild medication.

Soon after his discharge Scott sent two letters to Teamsters Local 377, complaining of pay shortages for completed work and of an unfair discharge. He did not file a standard grievance form, according to Local 377, nor did he appeal his discharge in writing to the Company within ten days of his discharge. Local 377 did not press Anchor about the discharge, and Scott introduced evidence that the Union handled his protest perfunctorily and in bad faith. In December 1966 or January 1967, Scott attempted to have Local 377’s steward and committeeman process a grievance concerning this discharge. There was evidence that because of the newness of the Lordstown operation, Local 377 did not have the requisite machinery to process a grievance within ten days of Scott’s discharge, a time limit imposed by the labor contract for appealing discharges thought to be unfair.

Receiving no relief from the Company and no significant help from the Union, Scott filed a complaint in District Court in April 1968, alleging an improper discharge and unfair representation by Local 377. The jury verdict followed.

The first issue we face is whether Defendants were entitled to judgment notwithstanding the verdict on the ground that Scott failed to invoke the grievance procedures set forth in the Local 377 — Anchor contract. If Scott’s efforts to invoke the contract grievance procedures were insufficient as a matter of law, he is barred from suing his employer and union. Republic Steel Corp. v. Maddox, 379 U.S. 650, 653, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965); Durham v. Mason and Dixon Lines, Inc., 404 F.2d 864, 865 (6th Cir. 1968).

The District Court let the jury determine whether Scott had complied with the terms of the collective bargaining agreement. It instructed the jury:

“The second question you will be asked to answer either yes or no, which, in either instance, has to be the unanimous opinion of you all, is:
‘Has the plaintiff properly filed or caused to be filed in his behalf a notice of appeal from discharge in writing within the time limitation, if any, set forth in the contract?’
In conjunction with that, you will be required to answer Question 2-A, which reads:
‘If the answer to Question No. 2 is in the negative, has the plaintiff been excused from compliance with any required notice by the conduct of the union ?’
The plaintiff must comply with all conditions precedent or requirements on his part of things to be performed by him under the contract before he can recover.
The contract provides in part: ‘Appeal from discharge, suspension or warning notice must be taken within ten days by a written notice.’
The defendants contend that the contract provides that a, copy of an appeal must be filed by the plaintiff with the company and the plaintiff has failed to comply with certain provisions of the contract.
The plaintiff states that the contract does not require that plaintiff file a copy of an appeal with the company and that the contract requires a filing with the union, and further, if the contract does require a filing with the company, that the plaintiff is excused from filing said appeal or grievance with the company as a result of the conduct of the union.
I state to you that it is for you to determine whether or not the contract requires that a copy of an appeal or grievance should be filed by the plaintiff with the company and, if you determine that the contract does require the filing by the plaintiff with the company, whether or not the plaintiff’s compliance with that provision is excused or waived by reason of the alleged conduct of the union.
I state to you that if the conduct of the union wilfully prevented compliance with the contract requirement that a copy of the appeal be filed with the company, such requirement can be waived.
Likewise, the defendants contend that the contract requires that any notice of appeal or protest or grievance shall be filed within ten days of the date of discharge and the plaintiff has failed to comply with said provision of the contract and, therefore, cannot recover.
It is for your determination as to the meaning of the contract and the time when the ten-day limitation starts to run and for you to determine the plaintiff’s compliance or noncompliance within the meaning of the provision of the contract, as you determine the meaning of said provision.”

It is clear from Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), that an “employee must at least attempt to exhaust grievance and arbitration procedures established by the [collective] bargaining agreement,” 386 U.S. at 184, before a court may entertain a claim of unfair representation against a union and wrongful discharge against an employer. “[U]nless the contract provides otherwise, there can be no doubt that the employee must afford the union the opportunity to act on his behalf.” Republic Steel Corp. v. Maddox, 379 U.S. 650, 653, 85 S.Ct. 614, 616, 13 L.Ed.2d 580 (1965). Whether a plaintiff has done this is a question of federal law, subject to proof at trial. The evidence in this case sufficed to support a finding that Scott made a good-faith effort to invoke' the contract’s grievance procedure.

On August 2, 1966, Scott sent a letter to Local 377, which stated that “I feel that I am a safe driver and should be reinstated with back pay” and requested a meeting and hearing as soon as a steward and representative committee for the Lordstown plant could be elected, none having been set up since the Lordstown operation’s opening. Assuming that this letter was timely sent and properly addressed, it was a sufficient attempt to invoke the collective bargaining agreement’s grievance procedure, under Republic Steel Corp. v. Maddox and Vaca v. Sipes, to give the District Court jurisdiction over the case. Contrast Steen v. Local 163, 373 F.2d 519 (6th Cir. 1967), where “plaintiff had made no effort whatsoever to comply with the grievance procedure,” 373 F.2d at 520; and Broniman v. Great Atlantic & Pacific Tea Co., 353 F.2d 559 (6th Cir. 1965), where “there was no real attempt to use the grievance procedure,” 353 F.2d at 563.

Given this conclusion, whether Scott actually wrote this letter and whether he complied with the terms of the contract in delivering it are questions of fact, subject to a jury’s determination.

When a contract is ambiguous, it is for the jury to determine the meaning of its terms, subject to proper instructions and based upon “evidence of the surrounding circumstances and the practical construction of the parties.” Tennessee Consolidated Coal Co. v. United Mine Workers of America, 416 F.2d 1192, 1198 (6th Cir. 1969); Goddard v. Foster, 17 Wall. 123, 142, 84 U.S. 123, 21 L.Ed. 589 (U.S. 1872); Local 783 v. General Electric Co., 471 F.2d 751, 757 (6th Cir. 1973). Article 32 stated that appeals from discharge “must be taken within ten days by a written notice.” The contract is ambiguous as to when the ten-day limit begins to run and whether notice must be sent by the discharged employee to the employer (rather than solely to the union). The District Court properly allowed the jury to resolve these ambiguities, and the jury resolved them in favor of Scott.

Thus, the District Court’s instruction to the jury on Questions 2 and 2-A is not reversible error, though it might have been more clearly stated and have better explained the legal principles that bound the jury’s quest for truth. Likewise, the jury’s conclusion is not reversible.

The second issue before us is whether Defendant Anchor was entitled to judgment notwithstanding the verdict or a new trial on the ground that, as a matter of law, Scott’s discharge cannot be deemed wrongful.

Anchor sought instructions from the District Court that would essentially have stated that if the jury found that the Company’s doctor in good faith refused to certify Scott as a fit driver under ICC rules, then it should find for Defendant Anchor. The District Court refused to give such a charge. Instead, it stated the following:

“The first question you will have to answer is:
'Do you find that the plaintiff has established by a preponderance of the evidence that Anchor Motor breached its contract with Local Union 377 by discharging Mr. William Scott in July, 1966’?
Under the contract, which you will have with you in- the jury room, the company had full power to discharge. It was agreed that this power to discharge shall be exercised with justice with respect to the reasonable rights of both the employee and the employer. The contract also requires that judgment be exercised with just cause.
You should take into account the reasonable rights of both the plaintiff and the company and all the facts you find to be pertinent to a determination of whether this discharge was with justice and for just cause.
You may also take into consideration what, if anything, the company records show as to the nature of the plaintiff’s physical condition and the duties required of the plaintiff.
You may take into consideration the company’s performance relative to other employees with disabilities.
You may also take into consideration whether or not a warning was served upon the plaintiff and the effect of the service or lack of service on the plaintiff and the effect of the same on the respective rights of the parties.
I have used the term ‘justice.’ . Justice means to act with equity, in fairness.
I have used the term ‘just cause.’ Just cause means a cause based upon reasonable ground and a fair and honest cause or reason regulated by good faith on the part of the party exercising the power to terminate.”

This charge allowed the jury to determine the meaning of “just cause” under the contract. The meaning of this phrase was hotly disputed by the parties. Anchor argued that a good-faith refusal of its doctor to certify a driver should amount to just cause, as a matter of law, even if the jury were to conclude that the doctor had made a mistake and that Scott, qualified under ICC rules. Scott argued the opposite, claiming that it is unjust to discharge an employee when the asserted reason is based on an error of a company’s agent.

Under Tennessee Consolidated Coal Co. v. United Mine Workers of America, 416 F.2d 1192, 1198 (6th Cir. 1969), ambiguous terms of a contract are to be construed by the jury, not by the judge. This rule makes sense particularly in the present context. “Just cause” was deliberately inserted into the collective bargaining agreement to give an arbitrator, the final forum envisioned under the contract, significant flexibility in adjusting the rights of employer and employee. When the arbitrator’s function is assumed by a court, because the grievance machinery has not functioned and an aggrieved employee asserts his right to a court test of his claim under Vaca v. Sipes, the job of interpreting “just cause” should be given to the jury. Based on evidence of company practice, treatment of similar employees, and other relevant factors, the jury should be free to exercise its judgment in determining whether the plaintiff employee’s discharge was “for just cause.” We consider the District Court’s description of that phrase proper and find no error in its charge to the jury on Question 1.

Finding the District Court’s instructions on apportionment of damages proper, the jury’s determination of the amount assessed against Anchor not unreasonable, and no other contentions of Defendants-Appellants meritorious, we turn to Plaintiff Scott’s appeal. Scott argues that the District Court abused its discretion in denying his post-trial motion for attorney fees.

In April 1972, the District Court allowed Scott to amend his complaint by approving the following request:

“Plaintiff further prays that after the trial of this action, the court award plaintiff reasonable attorney fees.”

Scott claims that in reliance on the Court’s action he did not present evidence at the August 1972 trial concerning attorney fees. After trial the District Court overruled a motion for attorney fees, stating that the jury verdict of $12,500 against Local 377 “must necessarily represent the jury’s finding as to the extent that said defendant’s conduct in refusing to handle plaintiff’s grievance added to the difficulty and expense of collecting from defendant Anchor Motor Freight.” The Court stated that the $12,500 verdict against Anchor necessarily represented the full extent of damages caused by its breach of contract (i. e., lost wages).

We agree with the District Court that an award of attorney fees against the employer in this case would be unjust, since the only damages for which an employer may be held are those . directly caused by the wrongful discharge — that is, lost wages and related items. Vaca v. Sipes, 386 U.S. at 197-198; Czosek v. O’Mara, 397 U.S. 25, 90 S.Ct. 770, 25 L.Ed.2d 21 (1970).

As to Defendant Local 377, however, the District Court’s conclusion must be reversed. The Court itself granted Plaintiff Scott’s motion to amend his complaint, thereby advising Scott that it would consider a motion for attorney fees after trial. By overruling Scott’s motion for an award of attorney fees (claimed to be in excess of $12,500) after trial on the ground that the jury must have included attorney fees in its estimation of damages, the Court foreclosed Scott from proving the amount of litigation costs incurred because of the Union’s breach of its duty of fair representation. Yet, the District Court charged the jury to award damages against the Union in an amount representing “the extent [to which Local 377’s] refusal to handle the grievance added to the difficulty and expense of collecting from the employer.” A reasonable juror would have assumed that this amount should include attorney fees.

The difficulty is that the jurors were presented with no evidence of what attorney fees were in this ease, though their charge comprehended determining an amount of attorney fees. Thus, through no fault of Scott’s, there was a complete absence of evidence concerning attorney fees, though they represented a major element of the damage incurred by Scott as a result of the breach of the Union’s' duty of fair representation. The $12,500 verdict against the Union necessarily rests on a sheerly speculative foundation and cannot stand. See Lavender v. Kurn, 327 U.S. 645, 653, 66 S. Ct. 740, 90 L.Ed. 916 (1946).

Because the error did not lie with Scott, we must afford him an opportunity to prove a proper amount of damages against the Union. We therefore vacate the award against Local 377 and remand to the District Court for a comprehensive determination of damages incurred by Scott as a result of the Union’s breach of its duty of fair representation, under the principles of Vaca v. Sipes, 386 U.S. at 196-98.

The judgments against Appellants Anchor Motor Freight and Local 377 in cases Nos. 73-1703 and 73-1705 are affirmed, with order that the damage award against Local 377 be vacated. Costs of these appeals are to be taxed equally between Anchor Motor Freight and Local 377. The order in case No. 73-1704 is reversed, and the cause is remanded to the District Court with instruction that the amount of damages properly attributable to the breach of Local 377’s duty of fair representation be assessed. Costs of this appeal are to be taxed to Local 377.

McCREE, Circuit Judge

(dissenting).

I respectfully dissent. The unambiguous terms of the collective bargaining agreement that governed appellee’s employment required him to give notice of his grievance to his employer within ten days of discharge, and failure to comply with this requirement defeats the action in this case. Article 32 of the agreement provides: “Appeal from discharge . must be taken within ten (10) days by written notice. ... If the employee involved is not within the home terminal area when the action of discharge ... is taken, the ten (10) day period will start from the date of his return to the home terminal.” Article 7 of the agreement, concerning grievance procedures, provides, in relevant part, “Disputes and grievances shall be put in writing and presented to the company within one (1) week whenever possible, but in no case later than thirty (30) days after the grievance arises.” (emphasis added).

If these two provisions are considered together, it is apparent that wrongful discharge is a particular type of grievance about which the employee must complain within ten days, a shorter period of time than that allowed for presenting other grievances that may be less costly for the employer to remedy if the complaint proves to be meritorious. Yet, as Article 7 makes clear, all grievanees must be put in writing and presented to the employer within a specified period of time after they arise. In the case of a discharge, the grievance arises at the moment the employee is discharged, not at the time written notice of discharge is received by both the employee and his union. Moreover, Article 32 refers to discharge and not to receipt of notice of discharge as the event that starts the ten day appeal period running. This interpretation is also supported by the special provision for an employee who is away from home at the time he is discharged. Although he and his union may receive notice of discharge and the employee may be actually discharged while he is on the road, the ten day appeal period does not begin to run until he is home and presumably able to press his appeal conveniently.

This interpretation of the contract, I believe, is the only one that can be made considering the instrument as a whole, and it follows that the running of appellee’s ten day appeal period commenced on July 23, the date of his discharge. It was not until the tenth day thereafter, on August 2, that appellee sent written notice of his grievance to his union. The union received this letter two days later. Appellee never notified his employer of his grievance within either the ten day period of time provided by the contract or within any reasonable period of time thereafter. Because of his failure to notify his employer of his grievance within the ten day period or even to request his union to act on his behalf at a time when it was still possible for the union to do so, he is precluded from recovering against either his employer or his union. Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965), Durham v. Mason and Dixon Lines, Inc., 404 F.2d 864 (6th Cir. 1968).

I believe that ambiguity can be found in the agreement only by a strained reading. However, even if the instrument were ambiguous and a jury might be permitted to determine the meaning intended by the parties to be placed upon unclear terms, reversal would still be required because the district court failed to give correct and sufficiently specific instructions to the jury about the legal rights and duties created by the instrument it was asked to construe. Although I agree that the meaning of ambiguous contractual provisions may present a question of fact to be resolved by a jury in appropriate cases, a jury, after factual ambiguity has been resolved, does not have the power to determine the legal effect to be accorded the provisions of the contract. It is a matter of elementary contract law that “[t]he determination of the legal operation of a contract, after the meaning of its language has been adopted by process of interpretation, is always for the court, because ‘legal operation’ is the result of applying rules of law to the facts. . . . [Construction is always a matter of law for the court.” 3 A. Corbin, Contracts §§ 534, 554 (1960).

Nor do I believe that under the circumstances of this case, the union could waive the employer’s contractual right to receive notice of an employee grievance. The employer bargained for this right, and although it might waive it, the union, the opposite contracting party, could not. The district court erred when it instructed the jury that the union could waive notice for the employer, and the majority opinion, by not discussing the issue, approves this error by silence. Certainly the Supreme Court’s decision in Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), does not authorize this instruction. The only question in that ease was whether an employee who charged his union with breaching its duty of fair representation, a matter cognizable by the NLRB as an unfair labor practice, was precluded by the preemption doctrine from pursuing directly his grievance in a judicial forum. Nothing the Supreme Court said in-that opinion supports the waiver instruction given by the district court because the conduct of the union in this case did not preclude or prevent appellee from giving notice of his grievance to his employer. It may be appropriate to hold that an employer may not assert improper union conduct as a shield against an action brought by an employee when “the union has sole power under the contract to invoke the higher stages of the grievance procedure, and if . the employee-plaintiff has been prevented from exhausting its contractual remedies by the union’s wrongful refusal to process the grievance.” Vaca v. Sipes, supra, at 185. This is not such a case.

I agree with the court’s determination that the damage award cannot stand. Nevertheless, I would reverse because I believe that the bargaining agreement can be interpreted in only one way and that appellee failed to comply with its requirements for presenting his grievance. At a minimum, appellants are entitled to a new trial because the district court failed to give proper instructions to the jury on the issue of liability.

      . 29 U.S.C. § 185.

      . When a contract is unambiguous, the judge must state its proper construction to the jury rather than allow it to adopt an erroneous view of the contract. See 4 S. Williston, Law of Contracts 303 (3d ed. 1961). “Where, however, the meaning of a writing is uncertain or ambiguous, the question of its meaning should be left to the jury.” 4 Williston, 652. Cf. 3 A. Corbin, Contracts 226-27 (1960).

      . Article 32 provides that “Discharge must be by proper written notice to the employee and the union affected,” so that the date of discharge could be construed to be the date on which the employee and the union had both received notice of the discharge. Here that date was July 26. Since Local 377 received word of Scott’s request for help no later than August 4, Local 377 would have had time to press his claim within the ten-day limitation, under this reading of the contract.

      . The District Court’s instructions on the amount of damages attributable to the union’s unfair representation were taken directly from Vaca v. Sipes, supra, and Czosek v. O’Mara, 397 U.S. 25, 90 S.Ct. 770, 25 L.Ed.2d 21 (1970).


author: EDWARDS, Circuit Judge.

text:
    Perry J. GAINES, d/b/a Growers Tobacco Warehouse Company, et al., Plaintiffs-Appellants, v. CARROLLTON TOBACCO BOARD OF TRADE, INC., et al., DefendantsAppellees.
    No. 73-1450.
    United States Court of Appeals, Sixth Circuit.
    Argued Dec. 14, 1973.
    Decided May 2, 1974.
    Joseph R. Huddleston, Huddleston Brothers, Bowling Green, Ky., on brief, for plaintiffs-appellants.
    John M. Berry, Berry & Floyd, New Castle, Ky., E. Gaines Davis, Jr., Frankfort, Ky., on brief, for defendants-appellees.
    Before PHILLIPS, Chief Judge, EDWARDS, Circuit Judge, and O’SULLIVAN, Senior Circuit Judge.
   EDWARDS, Circuit Judge.

This is the second appeal in this antitrust case. Preceding the first appeal the District Court had found and enjoined violations by defendants of the Sherman Antitrust Act, 15 U.S.C. § 1 et seq. (1970). The court had, however, refused plaintiffs any damages on the ground that plaintiffs’ conduct (in accepting the restrictions) had estopped them from claiming damages under the treble damages clause section of the Clayton Act, 15 U.S.C. § 15 (1970).

This court reversed as to the damage issue, holding that plaintiffs were not estopped and remanded the case to the District Court for trial of the damage issue. Gaines v. Carrollton Board of Trade, Inc., 386 F.2d 757 (6th Cir. 1967).

On remand the District Court took extensive testimony and found:

“It is undisputed that the plaintiffs were newcomers to the Carrollton Tobacco Market and their first year of operation was the 1962-1963 season. The Court is of the opinion that the evidence conclusively shows that the plaintiffs did not have a full floor of ‘customer’ tobacco during either of the subject selling years, and that they filled up their floor with ‘house’ tobacco, by actively entering into the tobacco market as buyers of tobacco.
“The evidence for the defendants further establishes that the plaintiffs’ failure to secure a full floor of ‘customer’ tobacco under the allotted floor space was occasioned by the fact that tobacco producers did not, for various reasons which were referred to in the evidence, choose to sell their tobacco with a new and unproven warehouse.
“The plaintiffs have made a strenuous effort to establish that they suffered damages by reason of the regulation in question, and the amount of those damages; and although they are entitled to greater latitude of proof in a case of this type, nevertheless the burden is on the plaintiffs to prove by a fair preponderance of the evidence: First, that they have sustained damages; and Secondly, the amount of those damages.
“In this case, the Court is of the opinion, upon the entire record, that the plaintiffs have failed to sustain the burden of proof by showing either that they suffered damages by reason of the regulation in question, or the amount of those damages, and any conclusion to the contrary would be based upon sheer speculation.”

After a review of this lengthy record, we are convinced that the crucial findings of fact of the District Court quoted above are clearly erroneous and we reverse and remand for computation of damages.

The background of these appeals is fully set forth in this court’s opinion in Gaines v. Carrollton Tobacco Board of Trade, supra, and in Bale v. Glasgow Tobacco Board of Trade, Inc., 223 F. Supp. 739 (W.D.Ky.1963), aff’d, 339 F.2d 281 (6th Cir. 1964). A brief description of the tobacco marketing system is nonetheless essential to an understanding of this case.

Under Kentucky law tobacco is sold by growers and bought by the tobacco companies on certain established markets. These markets are controlled by Boards of Trade established under state law (K.R.S. § 248.015). Because the number of tobacco auctioneers and buyers is limited on each market, selling time (the period of actual auctioning of tobacco with all buyers in attendance) is customarily divided in Kentucky between the warehouses in the market on the basis of the percentage of each warehouse’s floor space compared to total warehouse floor space in the market concerned.

In 1959, however, the Carrollton Tobacco Board of Trade adopted a resolution which limited any new warehouse entering the market to 20% of its normal selling time quota during the first year of operation, with that quota to be increased to 40%, 60%, 80% and 100% in succeeding years.

In 1962 when the Gaines warehouse was built, protests against the 20% restriction led to amendment of the Carrollton Tobacco Board of Trade resolution so as to provide 40% of quota of selling time for a new warehouse in its first year of operation, followed by increases of 12% in each subsequent year until 100% was reached. As the District Judge pointed out, since this resulted in lower quotas in the later years, it was hardly less restrictive than the original resolution.

Contrary to the findings of the District Judge quoted above, we believe that this record discloses that plaintiffs clearly suffered damages in both years at issue and that the record affords a basis for computation of those damages.

First, this record demonstrates conclusively that the specific purpose of the restrictions upon new warehouse operations imposed by the Carrollton Tobacco Board of Trade was to prevent competition. What District Judge Swinford said concerning a similar regulation at the Glasgow tobacco market was equally applicable to Carrollton:

“The record clearly reveals that the action of the Glasgow Tobacco Board of Trade is in positive, flagrant and direct disregard of the Sherman Antitrust Law. By combination and conspiracy the Board and its members have sought to place impediments and hazards in the way of persons who might seek to become new business competitors all to the injury of the farmers and other segments of the public in the Glasgow area. Their conduct has been in unreasonable restraint of trade. Far from offering to the farmers and others with whom the warehouses do business, the advantages of free and open competition for their business, the Board of Trade has secured to the existing warehouse operators an impunity in which they may repose oblivious of all demands and pressures for enhanced services or commuted charges.” Bale v. Glasgow Tobacco Board of Trade, Inc., 223 F. Supp. 739, 745-746 (W.D.Ky.1963).

Second, the Carrolltown Tobacco Board of Trade amended resolution which governed selling practices during the two years at issue herein, limited plaintiffs’ new warehouse to 40% of its normal quota (based on ratio of its warehouse floor space to the total floor space of all warehouses in the market) in the first year of operation, followed by 52%, 64%, 76%, 88%, and 100% in the succeeding years. The severity of this restriction serves to argue strongly as a matter of common sense that some damage must have resulted.

Third, the antitrust violation involved in the Carrollton Tobacco Board of Trade amended resolution is of the per se variety (see United States v. Topco Associates, Inc., 405 U.S. 596, 607— 608, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972)) in relation to which damages may be found on proofs which represent less than absolute certainty. Simpson v. Union Oil Co., 396 U.S. 13, 90 S.Ct. 30, 24 L.Ed.2d 13 (1969) (Black, J., concurring in part and dissenting in part); Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264-265, 66 S.Ct. 574, 90 L.Ed. 652 (1946); Story Parchment Co. v. Paterson Co., 282 U.S. 555, 562, 51 S.Ct. 248, 75 L.Ed. 544 (1931).

Fourth, this record demonstrates clearly that 1962-63 and 1963-64 (the years of operation here at issue) were record crop years and that sales pressures were greatest prior to Christmas.

Fifth, the nearest and closest yardstick shows that a new warehouse opened the same year in the Madison, Indiana, market without the anticompetitive restriction of Carrollton and sold its full quota of tobacco. It was operated by the same persons who are appellants in our instant appeal.

Sixth, the detailed comparisons of the sales of the Gaines Tobacco Warehouse in the two years operated under restrictions compared to subsequent years operated without them (as shown in plaintiffs’ exhibits) serve to demonstrate damages and may be used to compute same. We regard this basis for computation of damages as somewhat more definite than, and certainly consistent with the spirit of the most recent detailed treatment of antitrust damages in the Supreme Court of the United States. In Zenith Radio Corp. v. Hazeltine Research, Inc., the United States Supreme Court said:

“Trial and appellate courts alike must also observe the practical limits of the burden of proof which may be demanded of a treble-damage plaintiff who seeks recovery for injuries from a partial or total exclusion from a market; damage issues in these cases are rarely susceptible of the kind of concrete, detailed proof of injury which is available in other contexts.” Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 123, 89 S.Ct. 1562, 1576, 23 L.Ed.2d 129 (1969).

In comparision to these facts, we do not find the arguments for Carrollton Board of Trade to be persuasive. Appellees argue primarily that the fact that in the years 1962-63 and 1963-64 appellants used a portion of its restricted selling time for the sale of “leaf” tobacco was conclusive proof that as new entrants on the market appellants could not have gotten any more commission business than they did. “Leaf” tobacco is a term of art used to designate tobacco which the warehouse purchased from farmers and owned as opposed to tobacco owned by farmers upon which the warehouse would get a commission. Appellees contend that leaf tobacco selling was purely speculative and a poor business practice. This record, however, shows that appellants’ sales of leaf tobacco were generally profitable. It also shows that both under the restriction and afterwards appellants’ percentages of sales tended to approximate the percentage of selling time which was available to them.

This last fact we regard as specific confirmation of the position taken by appellee Carrollton Tobacco Board of Trade before this court in its brief amicus curiae in Bale v. Glasgow Tobacco Board of Trade, Inc., 339 F.2d 281 (6th Cir. 1964), after the events in this litigation had occurred. There appellees said:

“A new entrant without a single customer among the growers — indeed, one who is completely unknown to any grower in the area, and whose facilities and service are actually inferior —can (unless restrained in some way) acquire half the business of the market by merely building a warehouse containing as many square feet of floor space as is contained by all of the other warehouses combined! He can do this even though the existing warehouse space is more than adequate to handle the growers’ crops, since the grower is under heavy pressure to get an early sale of his crop. If half of the sales are to be held at the newcomer’s warehouse, he will quickly acquire half or nearly half of the market without the necessity of exerting any of the competitive forces (such as lower commissions or better services) which the Sherman Act sought to protect.” Brief Amicus Curiae of Carrollton Tobacco Board of Trade, Inc., at 14-15.

On remand we believe the District Judge could most effectively compute damages on the before and after method outlined in Elyria-Lorain Broadcasting Co. v. Lorain Journal Co., 358 F.2d 790 (6th Cir. 1966). See also Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 66 S.Ct. 574, 90 L.Ed. 652 (1946).

Reversed and remanded for computation of damages in favor of appellants, in accordance with this opinion.

      . The history of the litigation of the damage issue is as follows: The district court allowed the damages sustained by Zenith as estimated by their own experienced officials. Hazeltine Research, Inc. v. Zenith Radio Corp., 239 F.Supp. 51, 76 (N.D.Ill.1965) ; the appeals court reversed on this issue, holding Zenith had failed to prove the fact of damage with respect to the Canadian pools as a proximate result of the alleged unlawful conspiratorial activities. Hazeltine Research, Inc. v. Zenith Radio Corp., 388 F.2d 25, 35-39 (7th Cir. 1967); the Supreme Court reversed and remanded for the judgment of the district court to be reinstated. Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 116-125 (1969); on remand the appeals court formulated a “measure of proof,” Hazeltine Research, Inc. v. Zenith Radio Corp., 418 F.2d 21, 25-26 (7th Cir. 1969), but on appeal the Supreme Court, without discussion of this standard, ordered the court to reinstate the original district court judgment with respect to the Canadian market. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 349, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971).