author: FRED M. TAYLOR, District Judge.

text:
    Susan GARFINKLE and Gary Garfinkle, Plaintiffs-Appellants, v. WELLS FARGO BANK, Defendant-Appellee.
    No. 71-2323.
    United States Court of Appeals, Ninth Circuit.
    Aug. 24, 1973.

      Gary Garfinkle (argued), Lafayette, Cal., for plaintiffs-appellants.
    Howard N. Ellman (argued), Edwin A. Frey, Jr., Alan F. Greenwald, of Bro-beck, Phleger & Harrison, San Francisco, Cal., for defendant-appellee.
   OPINION

Before TRASK and CHOY, Circuit Judges and TAYLOR, District Judge.

FRED M. TAYLOR, District Judge.

Plaintiffs-Appellants, Susan and Gary Garfinkle, have appealed from an order of the District Court dismissing their action against the Wells Fargo Bank (Bank) for want of subject matter jurisdiction. The complaint alleges that the California extra-judicial foreclosure procedure violates the Fifth and Fourteenth Amendments of the United States Constitution because it does not provide property owners with a meaningful opportunity to be heard before they lose substantial rights and interests. Jurisdiction is alleged under Title 28, U.S.C. § 1343 and under Title 28, U.S.C. § 1331.

On January 23, 1970, appellants purchased a family residence from Mr. and Mrs. Michael Lanning. The Lannings had secured a real estate loan on the dwelling from the Bank in the principal amount of $19,500 in April, 1967, to be repaid over a 25 year period at an annual interest rate of 6%%. The loan was évidenced by a promissory note secured by a deed of trust in favor of the Bank. After reviewing appellants’ credit information, the Bank offered to allow them to assume the Lanning loan at the then current rate of interest, 9%,%. The appellants declined to accept this proposal maintaining they had a right to assume the loan at the original rate of interest. Being fully advised of the Bank’s position concerning the loan, the appellants purchased the house and began making regular monthly payments under the Lanning payment schedule. The possession and monthly payments have been continuous to the present time.

The Lanning deed of trust contains a “due-on-sale” clause which reads as follows:

“in case any change is made in the title to the said property all sums hereby secured shall, at the election of the Bank, forthwith become due and payable . . . and the Bank may cause the said property to be sold in order to accomplish the object of these trusts.”

After the sale of the property to appellants, the Bank notified the Lannings and the appellants that it was accelerating the loan under the due-on-sale clause. On June 9, 1970, the Bank filed a notice of default, alleging that the Lannings had breached their obligation and that the property would be sold to satisfy the accelerated balance of the loan. The appellants then filed this action to (1) enjoin the Bank from selling the property; (2) obtain a declaratory judgment that the extrajudicial foreclosure procedure is unconstitutional, and (3) to redress the alleged injuries suffered by appellants as a result of the Bank’s alleged unconstitutional conduct.

The sole issue presented to this court is whether the district court erred in dismissing the action for lack of federal subject matter jurisdiction.

In our analysis of the jurisdictional issue, we have grave reservations that jurisdiction arises under 28 U.S.C. § 1343(3). However, we are of the opinion that federal jurisdiction does arise under 28 U.S.C. § 1331. For jurisdiction to arise under § 1331, two requirements must be met. First, the matter in controversy must exceed the sum or value of $10,000, exclusive of interest and costs.

The record reveals that at the time this action was filed, the Bank had an outstanding interest secured by the property of approximately $18,000. The appellants allege the market value of the property to be $34,000, which fact has not been denied by the Bank. If the Bank is allowed to proceed with the contemplated sale under the California nonjudicial foreclosure procedure, the property will be sold. The whole purpose of this action is to foreclose the Bank from selling this property in the manner contemplated. Based on these facts, this court has no difficulty finding that the matter in controversy has a value in excess of $10,000, exclusive of interest and costs.

The second requirement is that the complaint must present a substantial federal question. In Ex parte Poresky, 290 U.S. 30, 32, 54 S.Ct. 3, 4, 78 L.Ed. 152 (1933), the Supreme Court announced the following guidelines to be followed in determining whether a substantial constitutional question exists:

“The existence of a substantial question of constitutionality must be determined by the allegations of the bill of complaint. [citations omitted] The question may be plainly unsubstantial, either because it is ‘obviously without merit’ or because ‘its unsoundness so clearly results from the previous decisions of this court as to foreclose the subject and leave no room for the inference that the question sought to be raised can be the subject of controversy.’ ”

A reading of the complaint reveals that appellants have alleged that the Bank was acting under the color and authority of the California Civil Code, §§ 2932 and 2924-2924d (governing extrajudicial sales of real property security) and that these sections are unconstitutional on their face and are unconstitutional as applied in this case since “they authorize, encourage and facilitate: 1) the deprivation of property without necessary judicial safeguards, including notice and an opportunity to be heard on the right to cause such deprivation; 2) unreasonable and warrantless seizures; and 3) the deprivation of equal protection of the laws.” (complaint page 3)

We believe that the complaint clearly alleges the technical requirements to confer jurisdiction in the federal courts. It is also our opinion that the question raised is not “obviously without merit” in light of recent decisions concerning fundamental due process. See Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969); Warren v. Government National Mortgage Association, 443 F.2d 624 (8th Cir. 1971), cert. denied, 404 U.S. 886, 92 S.Ct. 220, 30 L.Ed.2d 169; Lake Arrowhead Estates, Inc. v. Cumming, 360 F.Supp. 1085 (U.S. D.C.Maine, 1973) and Randone v. Appellate Department, 5 Cal.3d 536, 96 Cal. Rptr. 709, 488 P.2d 13 (1971).

As a basis for affirming the judgment of the district court, appellee has spent a considerable amount of effort in an attempt to convince this court that appellants’ cause of action lacks ' merit. This same rationale was rejected by the Supreme Court in Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946), wherein the court stated:

“Jurisdiction, therefore, is not defeated as respondents seem to contend, by the possibility that the averments ’ might fail to state a cause of action on which petitioners could actually recover. For it is well settled that the failure to state a proper cause of action calls fór a judgment on the merits and not for a dismissal for want of jurisdiction. Whether the complaint states a cause of action on which relief could be granted is a question of law and just as issues of fact it must be decided after and not before the court has assumed jurisdiction over the controversy.” [See also Miller v. County of Los Angeles, 341 F.2d 964 (9th Cir. 1965)]

Since we are of the opinion that the trial court does have jurisdiction under 28, U.S.C. § 1331, we are faced with the additional question of whether the federal doctrine of abstention should be invoked. We believe it is appropriate here inasmuch as it does not appear that the precise constitutional questions, which have been asserted in this case, have been finally settled in the California courts. However, we are aware of the decision in Strutt v. Ontario Savings and Loan Association, 28 Cal.App.3d 866, 105 Cal.Rptr. 395 (1972), an intermediate appellate court, which holds that California Civil Code § 2924 is not unconstitutional on its face or as applied in a situation where real property was actually sold at a trustee’s sale. That case may be of assistance in deciding this case when tried on its merits, but in our opinion it is not disposi-tive of all the issues which may be presented. Furthermore, Strutt is no authority on the jurisdictional question presented on this appeal.

The doctrine of abstention is to be applied “only in narrowly limited ‘special circumstances.’ ” Zwickler v. Koota, 389 U.S. 241, 248, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967). One such circumstance arises when an issue of state lav/ is questionable, as we believe it is in this case. See Warren, supra and Harman v. Forssenius, 380 U.S. 528, 85 S.Ct. 1177, 14 L.Ed.2d 50 (1965).

The position that federal courts should take, concerning the applicability of the abstention doctrine is further clarified by the Supreme Court in City of Meridian v. Southern Bell T. & T. Co., 358 U.S. 639, 640, 79 S.Ct. 455, 456, 3 L.Ed.2d 562 (1959) wherein it is stated:

“Proper exercise of federal jurisdiction requires that controversies involving unsettled questions of state law be decided in the state tribunals preliminary to a federal court’s consideration of the underlying federal constitutional questions. [citations omitted] That is especially desirable where the questions of state law are enmeshed with federal questions, [citations omitted] Here, the state law problems are delicate ones, the resolution of which is not without substantial difficulty — certainly for a federal court, [citations omitted] In such a case, when the state court’s interpretation of the statute or evaluation of its validity under the state constitution may obviate any need to consider its validity under the Federal Constitution, the federal court should hold its hand, lest it render a constitutional decision unnecessarily.”

Further support for the position that the doctrine of abstention should be applied in this case is found in Warren, supra. In Warren, appellant contended that the Missouri non-judicial foreclosure statute was unconstitutional as vio-lative of the Fifth and Fourteenth Amendments to the United States Constitution. The district court invoked the doctrine of abstention and dismissed the action. On appeal, the United States Court of Appeals affirmed as to abstention and reversed as to dismissal, concluding that the district court should retain jurisdiction. In reaching the conclusion that the doctrine of abstention was appropriate, the Court of Appeals cited the following language from the trial court’s opinion, which language we feel is relevant to the issue before us:

“ ‘If there is any merit in the plaintiff’s position, the matter is most serious. This Court can take judicial notice that many thousands of titles to Missouri real estate have a trustee’s deed after foreclosure in their chain of title. This simple, speedy, and relatively inexpensive method of foreclosure has been used to almost the complete exclusion of the more expensive and time-consuming foreclosure by suit in the circuit court.
* * * * -X- *
* * x- N0t oniy would a number of property owners be adversely affected, but all building and loan and other lending institutions which loan money on real estate, as well as title insurance companies, would have foreseeable problems of magnitude. * * *« * »

Accordingly, the judgment of the district court, dismissing the action for lack of federal subject matter jurisdiction is reversed. Appellants are directed to institute an appropriate action in the state court to resolve the issues presented within thirty days from the date this opinion is filed and prosecute such action with reasonable diligence. If appellants fail to do so, the district court may make such further orders as it may deem appropriate in the premises.

The cause is remanded with directions to stay further proceedings consistent with the views herein expressed.

       Of the District of Idaho, sitting by designation.


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    Don ROTHMAN, Receiver in Bankruptcy of Gibralter Coach Manufacturing Company, Inc., Plaintiff-Appellant, v. DISTRICT DIRECTOR OF INTERNAL REVENUE SERVICE OF the UNITED STATES of America, Defendant-Appel-lee.
    No. 71-2341.
    United States Court of Appeals, Ninth Circuit.
    July 25, 1973.
    Richard M. Moneymaker (argued), of Tiernan & Moneymaker, Los Angeles, Cal., for plaintiff-appellant.
    Crombie J. D. Garrett (argued), Scott P. Crampton, Asst. Atty. Gen., Fred B. Ugast, Acting Asst. Atty. Gen., Tax Div., Dept, of Justice, Washington, D. C., Robert L. Meyer, U. S. Atty., Arthur M. Greenwald, Asst. U. S. Atty., Los An-geles, Cal., Meyer Rothwacks, Charles E. Anderson, Tax Div., Dept, of Justice, Washington, D. C., for defendant-appel-lee.
    Before BARNES and WALLACE, Circuit Judges, and TAYLOR, District Judge.

       The Honorable Fred M. Taylor, Senior United States District Judge for the District of Idaho, sitting by designation.

   PER CURIAM:

Appellant, Don Rothman, Receiver in Bankruptcy of Gibralter Coach Manufacturing Company, Inc. (receiver) is appealing from a final judgment of the trial court, granting a motion for summary judgment dismissing the preceding receiver’s claim for a tax refund with prejudice.

The material facts are not in dispute. Gibralter Coach Manufacturing Company, Inc. (bankrupt) was a manufacturer of camper bodies and accessories for use on pickup trucks. In the course of its business, the bankrupt paid manufacturer’s excise taxes in the amount of $57,563.74, imposed pursuant to Title 26, U.S.C. § 4061(a) and (b). On August 28, 1964, the bankrupt filed a voluntary petition in bankruptcy and was subsequently adjudicated a bankrupt.

On September 7, 1965, the decision in United States v. King Trailer Company, 350 F.2d 947 (9th Cir. 1965) held that the manufacturing of camper bodies and accessories were not “automobile truck bodies” and therefore not subject to the excise tax provisions of § 4061(a) and (b). The appellee concedes that the components .manufactured by the bankrupt were not subject to excise taxes as a result of the decision in King, supra. The receiver filed a claim for a refund of the illegally collected taxes. The claim was submitted, together with written consents totaling $6,510.97 which had been obtained from the ultimate purchasers of the camper bodies in accordance with 26 U.S.C. § 6416(a). On May 15, 1968 the Internal Revenue Service allowed the receiver a refund of $6,510.-97, the exact amount for which written consents had been obtained and submitted.. On May 18, 1970, the receiver filed the present action for the balance of the refund claimed in the amount of $51,052.-77. The district court dismissed the receiver’s cause of action on the ground he had not shown entitlement to a refund in excess of the amount of consents filed ($6,510.97) and entered judgment for the defendant-appellee.

The receiver is relying primarily upon the holding of Bank of Marin v. England, 385 U.S. 99, 87 S.Ct. 274, 17 L.Ed.2d 197 (1966) which implies that where an otherwise constitutional statute, under the particular facts of a case, creates an inequitable result, the court will avoid the harsh effect of the statute in order to do equity. It is the receiver’s contention that 26 U.S.C. § 6416(a) is such a statute when applied to the facts of this case and the trial court should have granted equitable relief.

The enactment of § 6416 (a) was directed toward the prevention of any unjust enrichment flowing to a taxpayer who has collected excise taxes for the government, but has at the same time passed the economic burden of the taxes on to his customers in the form of higher prices. In order for the taxpayer to qualify for a refund of an illegally collected excise tax, he must provide the government with written authority from the person or consumer who actually paid the tax. The receiver admits that he only submitted consents totaling $6,510.97, for which amount he was given credit. The receiver also concedes that the bankrupt collected the taxes and passed the economic burden on to the consumers, but denies that the bankrupt estate will be enriched by the refund since it will be distributed to those consumers who file a claim and the remainder will be distributed to creditors of the bankrupt.

The fallacy of the receiver’s argument lies in the fact that he stands in the shoes of the bankrupt taxpayer and any recovery would go to the bankrupt’s estate, thereby creating a windfall to the bankrupt since the economic burden of these taxes had been passed on to the consumers. In reality, the $57,563.74 paid to the government by the bankrupt never was the property of the bankrupt, but that of the persons actually paying it, the purchasers of the bankrupt’s product. This court cannot accept the argument that it is inequitable to deny a person the right to money which he in fact never paid and who does not have authority to collect it for the person actually entitled to it.

The receiver is also challenging the constitutionality of § 6416(a). Although he recognizes that the Supreme Court in United States v. Jefferson Electric Co., 291 U.S. 386, 402, 54 S.Ct. 443, 78 L.Ed. 859 (1933) upheld the constitutionality of § 424(a) of the Revenue Act of 1928, the statutory predecessor of § 6416 (a), he is now contending that the Supreme Court’s rationale in upholding the constitutionality of § 424(a) is no longer supportable. We find no merit in this argument. In Travel Industries of Kansas, Inc. v. United States, 425 F.2d 1297 (10th Cir. 1970), the court traced the entire history of § 6416(a) from its inception in § 424(a) of the Revenue Act of 1928 to its present form and concluded that there had been no material changes in the statute or its underlying policy. This court is of the opinion that the decisions in Jefferson Electric Co., supra and Travel Industries, supra are disposi-tive of this issue.

Finally, the receiver contests the government’s action whereby $4,364.60 for unpaid withholding taxes owed by the bankrupt to the government was offset against the allowed refund for excise taxes. The appellee contends that this issue was not properly submitted in the trial court proceeding. We agree. According to the receiver’s complaint, the action was instituted to obtain a refund of only the balance of the claim filed after deducting the $6,510.97. The re- . ceiver admits, in paragraph VII of his complaint, that said amount was refunded. The receiver never raised the issue of the offset in his complaint and never referred to it until he filed his brief in support of his motion for a summary judgment.

The receiver admits in his brief filed here that the Internal Revenue Service made the offset and that he received a refund of $2,852.23 in the bankruptcy proceedings. The reporter’s transcript indicates at page 11 that the receiver made an objection to the offset in the bankruptcy proceedings but when a certain sum of money was paid by the government, the objection was withdrawn. It is the opinion of this court that the issue of the offset by the Internal Revenue Service was not properly submitted to the trial court and that the trial court was correct in refusing to consider it. Accordingly, the issue cannot be considered here.

The judgment is affirmed.

      . Section 6416(a)(1) states: “No credit or refund of any overpayment of tax imposed by chapter 32 (manufacturers taxes) shall be allowed or made unless the person who paid the tax establishes, under regulations prescribed by the Secretary or his delegate, that he—
      (A) has not included the tax in the price of the article with respect to which it was imposed and has not collected the amount of the tax from the person who purchased such article;
      (B) has repaid the amount of the tax to the ultimate purchaser of the article;
      (D) has filed with the Secretary or his delegate the written consent of the person referred to in subparagraph (B) to the allowance of the credit or the making of the refund.”


author: CLARK, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Michael A. S. MAKRIS, Defendant-Appellant.
    No. 72-2915.
    United States Court of Appeals, Fifth Circuit.
    Aug. 14, 1973.
    Rehearing Denied Sept. 7, 1973.

      David H. Berg, Houston, Tex., for defendant-appellant.
    Anthony J. P. Farris, U. S. Atty., James R. Gough, Asst. U. S. Atty., Houston, Tex., for plaintiff-appellee.
    ' Before GOLDBERG, CLARK and RO-NEY, Circuit Judges.
   CLARK, Circuit Judge:

Michael A. S. Makris was convicted in a non-jury trial on three counts of perjury in violation of 18 U.S.C. § 1621. On appeal Makris makes three primary contentions: (1) his sworn answers to questions propounded by an examiner for the Securities and Exchange Commission were not perjurious; (2) the evidence was insufficient to support the court’s finding that he was sane at the time of the alleged offenses; and (3) he was improperly denied a hearing under 18 U.S.C. § 4244 to determine his competency to stand trial.

We find that the court below erred in denying Makris the full procedural rights mandated by 18 U.S.C. § 4244, and therefore remand for further proceedings in respect to the appellant’s ability at the time of trial to participate in his own defense. Regardless of the outcome of this required procedure, the remaining points raised ought to be reached now. If Makris was competent to stand trial, then such rulings end the cause. If he was not competent, the resolutions will guide any retrial that may be had.

PERJURY

In December 1970 Makris appeared before officers of the Securities and Exchange Commission to testify concerning his connection with National Bankers Life Insurance Company and Ling & Company. Information available to the Commission indicated that Makris had been a promoter of securities transactions involving the two companies under investigation. The first transaction involved Prank Sharp, a Houston banker, real estate developer, and principal party in both the Sharpstown State Bank and the National Bankers Life Insurance Company. The indications were that in contacts with Sharp, Makris had offered to obtain access to a large fund of bonds and other blue-chip securities of major American corporations which were reportedly held by bankers in Switzerland. The alleged scheme entailed the purchase of the securities, worth up to $20.0,000,000, for as little as ten percent of their face value. The SEC also thought that Sharp and Makris had contacted members of the Jesuit Order for the purpose of obtaining “seed” money for the purchase of the securities. The second and less grandiose transaction involved the purchase of control in a small West Virginia oil company, Red Rock Petroleum, and the fraudulent inflation of the market value of its stock in order to finance the acquisition of a Houston-based food processing company and restaurant chain.

Makris was convicted on three counts of perjury in regard to his testimony before the SEC. He now contends that as to each count the evidence was insufficient to establish the knowing falsity of his sworn responses required to sustain a conviction under 18 U.S.C. § 1621.

The basic element of the crime of perjury is that the challenged sworn testimony must be false. No one may be lawfully convicted of perjury where he gives an answer which is “literally accurate, technically responsive, or legally truthful.” United States v. Wall, 371 F.2d 398, 400 (6th Cir. 1967); Smith v. United States, 169 F.2d 118, 121 (6th Cir. 1948). It is the obligation of the government to prove to a moral certainty that the defendant “purposefully misstated the fact knowing it to be false and untrue.” Van Liew v. United States, 321 F.2d 674, 679 (5th Cir. 1963).

In Count I Makris was convicted on the basis of the following testimony concerning his business dealings with Frank Sharp:

Q. All right. In connection with— let’s call it the securities aspect here — have you ever indicated to Mr. Sharp — we were talking about this trust fund, so to speak, of securities allegedly deposited by refugees of Nazi Germany— that you might be able to obtain an interest for him in this or to bring these securities to the United States for his benefit ?

A. None at all.

Q. All right.

A. Not at all. Mr. Sharp, like I say, is a very quiet person.

Q. Yes.

A. I had no conversation with him about it.

Makris contends that the government failed to prove the falsity of his negative responses to the specific question propounded by the SEC interrogator. Precise testimony was adduced at the trial below showing that Makris had discussed with Frank Sharp a scheme to obtain an interest in securities Makris represented were deposited in European banks. However, the specific question which is the basis of Count I is whether Makris had promised to obtain an interest in, or to return to the United States, a particular group of securities, specifically characterized as “ . . . this trust fund ... of securities allegedly deposited by refugees of Nazi Germany. . . .” The immediately preceding portion of the transcript indicates that “this trust fund” refers to a group of securities “ . . . deposited in Zurich, Switzerland.”

During his extensive trial testimony, Frank Sharp was asked at least twice whether Makris had ever identified the location of the fund of securities discussed. On each occasion Sharp stated that Makris had merely said that the securities were “on the Continent.” Father Kennedy, who had been present on one occasion when Makris discussed the trust fund with Sharp, likewise testified that Makris described the securities as being “in Europe.” Furthermore, Sharp testified that Makris characterized the beneficiaries or depositors of this trust fund not as refugees of Nazi Germany but as persons who lived “behind the Iron Curtain.” The only other evidence bearing on whether Makris offered Sharp an interest in a Zurich-based trust deposited by refugees of Nazi Germany is the testimony of two agents, one a promoter and one a priest, whom Sharp directed to go to Switzerland to investigate the purported securiti.es-trove. Jimmy Day, the promoter, testified that Sharp had directed him to go to Zurich to arrange for the purchase of stocks and bonds. Similarly, Father Al-chediak testified that he had been instructed to travel to Geneva to assist Sharp and the Jesuit Order in obtaining securities which were held in Zurich. However, since neither Day nor Alche-diak was able to testify directly to discussions between Makris and Sharp, their testimony is at best inferential evidence that Makris may have indicated to Sharp that the interest he was discussing was in a trust fund located in Zurich. Furthermore, neither Day nor Al-chediak offered any evidence that Mak-ris had discussed with Sharp a trust “deposited by refugees of Nazi Germany.” To the contrary, both testified that when they received their instructions from Sharp to travel to Switzerland, they had been told that the trust property belonged to Makris’ family. To further wrap the riddle in mystery Day testified that he was approached in Zurich by a man identifying himself as a member of the Jewish underground who warned him to have nothing to do with the securities because they had been stolen from Jews by the Nazis and that these instruments belonged to the people of Israel.

At trial the government recognized the weakness of its proof of the specific falsity of the Count I testimony. The government contended, however, that it merely needed to show that the defendant intended to make a false and misleading answer to the substance of the question propounded, towit: whether he had offered Sharp an interest in any securities trust similar to the one described. This approach would, of course, eliminate the variance between the exact terms of the SEC interrogatory and proof of specific dealings between Makris and Sharp. See United States v. Laite, 418 F.2d 576 (5th Cir. 1969). Laite was the primary case relied upon by the court below. However, it is clearly distinguishable.

In Laite the defendant was convicted of perjury in a wage and hour proceeding for responding negatively to the question “Did you ever tell anybody that you would ... let them work more than eight hours and just pay them straight time?” This court held it to be legally immaterial whether or not Laite had used the exact words “more than eight hours” since the jury could reasonably infer that Laite had intended a false answer to the substance of the question, towit: whether he had told the workers that they could work “overtime” for straight time pay. In the case sub judice, Makris was indicted for a negative response to a question which described a particular trust fund with specific characteristics of ownership and location. The proof not only failed to pinpoint the location of the trust which Makris offered to Sharp, but also, more importantly, it described a different group of persons — communist interns — as the beneficiaries.

In argument to the court below, the government emphasized that the evidence strongly indicated that Makris had intended to deceive the Commission. The court obviously found this factor persuasive. In the interval between Makris’ conviction and this appeal, the Supreme Court has unanimously rejected the suggestion that a defendant may be convicted for perjury solely on the basis of his deceptive intentions. In Bronston v. United States, 409 U.S. 352, 93 S.Ct. 595, 34 L.Ed.2d 568 (1973), the defendant had given a sworn answer which was deliberately misleading but literally true. The court held that regardless of the defendant’s intention to deceive or mislead the examiner, there could be no perjury so long as the witness spoke the literal truth. In the present case, while the proof was clear that Makris had offered to obtain for Sharp some securities in Europe, the government failed to prove beyond a reasonable doubt that Makris uttered a falsehood when he stated that he had never offered Sharp an interest in a trust fund of securities deposited in Zurich by refugees of Nazi Germany.

In contrast to the situation in Bronston, 409 U.S. at 355, 93 S.Ct. at 598, the literal truth of Makris’ response is by no means certain. But, of course, Makris bears no burden to show that he spoke truthfully. Neither the trial court nor the prosecution had the benefit of Bronston when this case was tried. There well may have been some way to prove that the question as propounded was answered falsely. If such proof was available, it was not adduced. Knowing the test of Laite is inapplicable to the question involved here, the prosecutor may be able to develop the facts in a different fashion which will convince the trier of fact that Makris lied when he answered this question. The deficiency in the proof in this record of the falsity of Makris’ response to the question propounded requires reversal of his conviction on Count I, but since Makris moved for a new trial alleging the insufficiency of the evidence, a decision to retry is in province of the prosecution. Bryan v. United States, 338 U.S. 552, 70 S.Ct. 317, 94 L.Ed. 335 (1950); Montoya v. United States, 402 F.2d 847 (5th Cir. 1968); Wright, Federal Practice and Procedure: Criminal § 470 (1969).

In regard to Counts II and III, there is no similar deficiency of proof of the willful falsity of Makris’ sworn statements. Count II is based on the following testimony concerning Makris’ connection with Father Kennelly of the Jesuit Order:

Q. All right. Now, concerning this alleged trust fund of securities, we have information indicating that it’s alleged to have initially been an amount in excess of two hundred million dollars, and that there were arrangements made for the two hundred million dollars to be turned over to Catholic societies, principally Loyola University. Do you have any knowledge of that transaction ?

A. No.

Q. Have you ever had any dealings with Father Kennelly? Do you know Father Kennelly?

A. Yes, I know him.

Q. I believe its spelled K-e-n-n-e-l-l-y.

A. Yes, my son was going to go to his school.

Q. All right. And have you ever discussed this particular thing, this trust fund, with Father Kennelly?

A. No.

Q. What have been your conversations with Father Kennelly?

A. School.

Q. Just social conversations?

A. Yes, social.

Q. They haven’t involved any finances ?

A. Absolutely not.

Assuming arguendo that the first question set out in Count II suffers from the same type of overspecificity which created a variance between indictment and proof in regard to Count I, in the following series of questions the SEC interrogator bore down until Makris stated that he had absolutely no conversations with Father Kennelly involving “any finances.” The testimony of both Sharp and Kennelly shows beyond any reasonable doubt that Makris had conversations with Kennelly involving not only social pleasantries but also a plan for the Jesuits to finance the acquisition of European securities. To sustain a perjury conviction, the government need not show' that all the testimony set out in a single count of the indictment is false. It is sufficient to prove falsity in regard to one or more material particulars. Stassi v. United States, 401 F.2d 259, 262 (5th Cir. 1968), vacated on other grounds, 394 U.S. 310, 89 S.Ct. 1163, 22 L.Ed.2d 297 (1969); Arena v. United States, 226 F.2d 227, 236 (9th Cir. 1955), cert. denied, 350 U.S. 954, 76 S.Ct. 342, 100 L.Ed. 830 (1956). The proof of the manifest falsity of Makris’ assertion that he had absolutely no conversation with Father Kennelly involving finances is sufficient to sustain the conviction under Count II.

Count III alleged perjury in regard to the following testimony:

Q. All right. You are familiar with the name Bedrock Petroleum, is that correct?

A. No.

Q. Have you ever heard of it before?

A. No, I haven’t.

Testimony of numerous witnesses demonstrated that Makris had personally negotiated the purchase of the controlling stock of Bed Rock Petroleum, had issued additional stock certificates in the name of that corporation, and had used Bed Rock securities to acquire control of Youngblood’s Fine Foods, Inc. The evidence shows Makris’ negative response to the SEC questions regarding his knowledge of Bed Rock Petroleum to be false beyond a reasonable doubt. When these questions are viewed in context, the further contention that they are ambiguous (e. g. “Bed Rock Petroleum” might refer to a geological formation) is frivolous.

Makris additionally asserts that the government failed to prove that his testimony which was the subject of Counts II and III was material as required for conviction under 18 U.S.C. § 1621. See, e. g. Beckanstin v. United States, 232 F.2d 1, 3-4 (5th Cir. 1956). We find this contention without merit. As this court recently pointed out in United States v. Gremillion, 464 F.2d 901, 904 (5th Cir. 1972):

Under the perjury statute the false statement must be material to the matter in issue. See Williams v. United States, 239 F.2d 748 (5th Cir. 1957). The statements need only be material, however, to any proper matter of inquiry — not just to the main issue. United States v. Culverhouse, 436 F.2d 1068 (5th Cir. 1971) . The test of materiality is whether the false statement was capable of influencing the tribunal on the issue, Barnes v. United States [378 F.2d 646 (5th Cir. 1967), cert. denied, 390 U.S. 972, 88 S.Ct. 1056, 19 L.Ed. 2d 1184 (1968)], or whether the false testimony would have the natural effect or tendency to influence, impede, or dissuade [investigatory body] from pursuing its investigation. United States v. McFarland, 371 F.2d 701 (2d Cir. 1966), United States v. Marchisio, 344 F.2d 653 (2d Cir. 1965). The false statements need not actually impede the investigation. Vitello v. United States, 425 F.2d 416 (9th Cir. 1970).

At the time of Makris' SEC testimony, the Commission was involved in an investigation of corporations controlled by Frank Sharp. In particular the Commission had learned of an effort to bolster the financial status of National Bankers Life Insurance Company through the acquisition of securities purportedly held in trust in Switzerland. Information then available indicated that Makris and Sharp had offered a share in the trust fund to Father Ken-nelly and the Society of Jesus in return for the seed money necessary to obtain access to the securities. The Commission had an official interest in any conversations between Makris and Father Kennelly on financial topics which might be relevant to the investigation of National Bankers Life and related companies. There is no doubt that Makris’ false response that he had had absolutely no conversations concerning financial matters with Father Kennelly had the natural tendency to “influence, impede, or dissuade” the SEC examiner from probing more deeply into his involvement with Sharp and Kennelly.

As pointed out above, Makris was summoned to testify before the SEC not only in connection with National Bankers Life but also in regard to the activities of Ling & Company, a Dallas brokerage house. In particular, the Commission was interested in the role of Ling & Company as a dealer in Bed Rock Petroleum stock at a market price of seven to ten dollars per share. Since there was evidence that Ling & Company had been involved in making an inflated market in Bed Rock Petroleum stock preparatory to the acquisition of control in Youngblood’s through a stock transfer, Makris’ knowledge of Bed Rock Petroleum and transactions in its securities were highly material to the SEC investigation of the trading activities of Ling & Company.

INSANITY AND COMPETENCY TO STAND TRIAL

In April 1970, approximately eight months prior to his testimony before the SEC and over two years before the trial in the court below, Makris underwent brain surgery for the removal of a pituitary adenoma. Because of the size of the tumor and the location of the pituitary gland, the operation entailed extensive manipulation of the frontal lobes of the brain as well as destruction of the pituitary gland itself. Expert testimony indicates that this type of radical surgery will affect in varying degree the behavior, personality, and mental condition of the subject.

Prior to trial, the court on the government's motion appointed a highly qualified psychiatrist, Dr. Alfred Vogt, to examine Makris and report to the court on his competency to understand the proceedings against him and to properly assist in his own defense. The report made as a result of the order deals extensively with the appellant’s condition not only at the time of trial but also at the time of the alleged perjury. Dr. Vogt’s findings are the basis for the Makris’ arguments concerning both insanity at the time of the offense and competency to stand trial.

(1) Insanity at the time of the offense. Dr. Vogt’s report concluded that Makris at all times after the operation had the capacity to know right from wrong. However, it was his opinion that, as a result of a brain injury syndrome resulting from the tumor and consequent surgery, Makris was unable to control his conduct under stress. Although he was initially appointed by the court on the government’s motion, Dr. Vogt supplied the most cogent proof for the defense on its pretrial motion to suppress evidence of Makris’ testimony before the SEC. In effect, the hearing on this motion became a plenary hearing on Makris’ sanity at the time of the alleged perjury.

In oral testimony Dr. Vogt amplified the opinion expressed in his written report that Makris suffered from an aberrant capacity to deal with stressful situations. The doctor explained that, while in non-stress circumstances Makris would appear normal and respond rationally, a situation which his mind perceived as threatening danger might reduce Makris to a panic state in which his cognition of external stimuli would be reduced and his responses would become random, unpredictable, and not subject to control by his ego function. Dr. Vogt opined that the SEC hearing must have been just such a stressful experience and that under such circumstances he would expect that Makris had been incapable of comprehending the questions propounded. Further, in response to the questions framed in the language of this court’s test of legal insanity, Dr. Vogt stated his belief that Makris had lacked the capacity to appreciate the legal consequences of false answers made during the hearing and was then mentally incapable of conforming his testimony to the standard of veracity required by the law. Dr. Vogt also emphasized that in non-stress circumstances Makris had both the mental ability to conform his conduct to the requirements of the law and the mental capacity to formulate a culpable intent to lie.

The government called no expert witnesses to contradict Dr. Vogt's testimony. Instead the prosecution relied on testimony of lay witnesses, including the SEC examiner who observed Makris during the hearing and business associates who had dealt with the appellant after the operation and at about the time of the SEC hearing. On appeal, Makris argues that the trial judge committed error in disbelieving the expert testimony of Dr. Vogt in order to find Makris sane at the time of the offense. Upon a review of the record as a whole, we disagree.

Expert testimony bearing on sanity is not binding on the court; like other forms of expert testimony it may be rebutted by contrary evidence. Mims v. United States, 375 F.2d 135 (5th Cir. 1967); Breland v. United States, 372 F.2d 629 (5th Cir. 1967); see also United States v. Alvarez, 458 F.2d 1343 (5th Cir. 1972); United States v. Harper, 450 F.2d 1032 (5th Cir. 1971); United States v. Pitts, 428 F.2d 534 (5th Cir.), cert. denied, 400 U.S. 910, 91 S.Ct. 154, 27 L.Ed.2d 149 (1970); Cf. United States v. Collier, 453 F.2d 1173 (5th Cir. 1972); Nagell v. United States, 392 F.2d 934 (5th Cir. 1968); Brock v. United States, 387 F.2d 254 (5th Cir. 1967). Mims outlines some of the circumstances under which the government may meet its burden of proving sanity despite contrary expert testimony. 375 F.2d at 144-145. It is clear that the probative force of expert testimony is lessened when it is based on observations of the defendant at a time remote from the offense. The weight of expert opinion may be further reduced when the observed conduct of the defendant at the time of the offense does not correspond to that which is anticipated from an individual suffering from the type of defect diagnosed by the expert.

In the present case the opinion of Dr. Vogt was based on observations made more than 16 months after the SEC hearing. The government's lay testimony covered periods much closer to the time of the offense. Business associates testified that Makris had functioned responsibly and predictably while engaged in complex financial transactions. Mak-ris argues that to a mind such as his, which was accustomed to dealing in high finance, the transactions described were not sufficiently stressful to trigger the reaction predicted by Dr. Vogt. However, the government also produced two lay witnesses, one — an attorney who visited Makris on the night before his SEC testimony — who observed the appellant during the period when he was subject to the immediate pressure of his impending appearance and another — the SEC attorney who conducted the interrogation from which the perjury charges arose — who observed Makris precisely at the moment of the offense. Neither of these individuals observed the random, unpredictable behavior which according to Dr. Vogt’s diagnosis should have emerged when Makris was placed in what the psychiatrist thought would be a stressful circumstance. The examiner testified that Makris did appear to be tense during his testimony, but no more so than he had found to be normal among witnesses.

An examination of the entirety of the record of Makris’ testimony at the SEC hearing fails to bear out the psychiatrist’s hypothesis that Makris was in panic at the time of the offense. This transcript clearly confirms the testimony of the examiner that with the exception of a failure to remember certain names, Makris was uniformly responsive to the questions propounded. While evidence presented at trial showed that certain answers were factually false, there is simply no basis upon which it can be concluded that Makris failed to comprehend the questions or that his responses were random or ■ unpredictable. Contrary to Vogt’s hypothesis that Makris was in a state of stress during his SEC testimony, the transcript shows that he maintained an engaging sense of humor during the proceedings and retained the presence of mind to request the assistance of an attorney when he felt a need for legal counsel.

Thus the evidence concerning Makris’ actual conduct fails to bear out Dr. Vogt’s hypothesis that Makris’ false testimony to the SEC was produced by a mental impairment. The court was well justified in concluding that either Dr. Vogt’s diagnosis of a brain injury syndrome was wrong or alternatively, if the diagnosis was correct, that the SEC hearing was not such a stressful situation as to trigger uncontrollable prevarication or other irresponsible behavior.

(2) Competency to Stand Trial: 18 U.S.C. § 4244 provides for the appointment of a qualified psychiatrist to examine a person charged with a federal offense where there is reasonable cause to believe that the accused “may be presently insane or otherwise so mentally incompetent as to be unable to understand the proceedings against him or properly to assist in his own defense.” See generally, United States v. McEachern, 465 F.2d 833 (5th Cir. 1972). Section 4244 further provides: “If the report of the psychiatrist indicates a state of present insanity or such mental incompetency of the accused, the court shall hold a hearing, upon due notice, at which evidence as to the mental condition of the accused may be submitted, including that of the reporting psychiatrist, and make a finding with respect thereto.”

The report of Dr. Vogt made as a result of his appointment under § 4244 has been discussed above. In the conclusion of his report, Dr. Vogt stated:

In reviewing the order for examination I would have to say the patient is not insane, but I do believe he has a type of incompetency [under stressful circumstances]. I believe he is capable to understand the proceedings against him, but I am not too sure how well he can participate in dealing with counsel for the purpose of participating in his own defense.

The trial judge found that this report did not indicate a state of present insanity or mental incompetency as described in § 4244 and, therefore, deemed a hearing unnecessary. We can not agree. The excerpt from the psychiatrist’s report quoted above expressed the opinion that Makris had a type of incompetency which might affect his ability to stand trial; it put forward a well-documented doubt whether he was capable of participating in his own defense. This opinion is consistent with other aspects of the report which suggested that under stressful circumstances, which undoubtedly would include a criminal prosecution, Makris might behave irrationally or inconsistently in an attempt to avoid unpleasant consequences. Since the report as a whole indicated a substantial possibility that the defendant was then incapable “properly to assist in his own defense, . . .” under the mandatory provisions of § 4244 the court should have held a hearing specifically on the issue of the ability of the defendant to assist his counsel prior to beginning of trial.

The failure to conduct such a hearing does not, however, necessarily mandate reversal of Makris’ conviction. Only if the appellant was, in fact, incompetent at the time of trial could a failure to hold the hearing required by 18 U.S.C. § 4244 be an error which affected his substantive rights. Gunther v. United States, 94 U.S.App.D.C. 243, 215 F.2d 493, 497 (1954). Here the psychiatrist’s report, coupled with sworn testimony of defense counsel that the defendant had hindered their efforts by his inconsistent and unresponsible behavior, indicated that the defendant may have been incapable of effectively participating in his own defense. But these indications are by no means conclusive on that issue. The description of Makris’ conduct by his trial counsel is equally consistent with the behavior of a fully-rational and self-controlled individual who was .attempting to make useful suggestions to his attorneys.

In this judge-tried cause it borders on the anomolous to remand for a hearing especially in view of the lengthy suppression hearing which delved so deeply in Makris’ sanity and his competency to understand the warnings given to him at the time of the SEC proceedings. However, because of the lack of a hearing and specific findings on the mental condition of appellant on the date of trial, we are unable to make an adequate review of the decision by the district court to proceed with the appellant’s trial. Section 4244 commands that we remand for further proceedings on this issue. See United States v. McEachern, supra; United States v. Roca-Alvarez, 451 F.2d 843, 848 (5th Cir. 1971); Whalen v. United States, 367 F.2d 468, 470 (5th Cir. 1966); Lewellyng v. United States, 320 F.2d 104, 106 (5th Cir. 1963).

On remand it will first be the duty of the district court to determine whether it can conduct an adequate and meaningful hearing for the purpose of determining nunc pro tunc Makris’ competency to stand trial in June 1972. United States v. McEachern, supra, 465 F.2d at 839-840 (5th Cir. 1972) ; Lee v. Alabama, 386 F.2d 97, 108 (5th Cir. 1967) (en banc), on remand, 291 F.Supp. 921, 926-927 (M.D.Ala.1967), aff’d, 406 F.2d 466 (5th Cir.), cert. denied, 395 U.S. 927, 89 S.Ct. 1787, 23 L.Ed.2d 246 (1969). Despite the intrinsic problems of such a retrospective determination, see Dusky v. United States, 362 U.S. 402, 403, 80 S.Ct. 788, 789, 4 L.Ed. 824 (1960); Pate v. Robinson, 383 U.S. 375, 387, 86 S.Ct. 836, 843, 15 L.Ed.2d 815 (1966), in the present case the possibility of an adequate hearing at this time is greatly enhanced by the fact that the trial court will have the benefit of testimony from the court-appointed physician who examined the defendant shortly before trial as well as its own personal observation of the appellant during trial. See, e. g., United States v. Lewellyng, supra, on remand, 229 F.Supp. 458 (N. D.Tex.1963). These observations may, of course, be supplemented by such additional evidence as the prosecution and defense develops during the Section 4244 hearing.

If the district court concludes that it can not conduct a meaningful hearing to determine competency nunc pro tunc, or, if, after hearing is held, Makris is found to have been incompetent at the time of his trial, the court must grant him a new trial at such time he may be found to be competent. If the hearing confirms the court’s original determination of competency, Makris’ conviction on Counts II and III shall stand affirmed but the court shall document its determination of competency by specific findings.

Reversed, in part, and remanded.

      . In regard to the appellant’s additional contention, we find no abuse of discretion in the failure to disclose the presentence report. See United States v. Frontero, 452 F.2d 406, 411 (5th Cir. 1971).

      . Makris was sentenced to four years imprisonment on each of Counts I and II and to five years probation on Count III, all sentences to run consecutively.

      . “Whoever, having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed, is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true, is guilty of perjury, and shall, except as otherwise expressly provided by law, be fined not more than $2,000 or imprisoned not more than five years, or both. . . .”

      . The SEC examiner established his predicate for his question concerning “this trust fund” by stating: “We have information indicating there might have possibly been a trust fund accumulated by the refugees of Nazi Germany with bankers of Zurich, Switzerland.”

      . The motion to suppress alleged that Makris was legally insane and therefore unable to waive his right to counsel before the SEC. At the conclusion of the hearing on this motion, the court found, citing the prevailing legal standard for the defining of insanity, Blake v. United States, 407 F.2d 908 (5th Cir. 1908) (en banc), that Makris had the mental competency to validly waive counsel at the SEC hearing. The denial of the motion to suppress is not asserted as a ground of appeal.

      . This circuit’s en banc definition of insanity is as follows:
      “(1) A person is not responsible for criminal conduct if at the time of such conduct as a result of mental disease or defect he lacks substantial capacity either to appreciate the wrongfulness of his conduct or to conform his conduct to the requirements of law.
      “(2) As used in this Article, the terms ‘mental disease or defect’ do not include an abnormality manifested only by repeated criminal or otherwise antisocial conduct.”
      Blake v. United States, supra, 407 F.2d at 916. On the problems and propriety of permitting psychiatric experts to testify in the language of the legal test of insanity, see Goldstein, The Insanity . Defense, 98-105 (1967).

      . Under cross-examination, Dr. Vogt indicated that, on the basis of his diagnosis, he would have expected Makris to have committed more mistakes and prevarications in his testimony than were indicated by the transcript of the SEO hearing.

      . This court has consistently rejected the rule followed in the Ninth Circuit where a successful appeal from failure to comply the procedures set out in 18 U.S.C. § 4244 results in the vacation of judgment rather than remand for additional proceedings with respect to the appellant’s condition at the time of trial. United States v. Irvin, 450 F.2d 968 (9th Cir. 1971) ; Morris v. United States, 414 F.2d 258 (9th Cir. 1969) ; Meador v. United States, 332 F.2d 935 (9th Cir. 1964) ; also see Holloway v. United States, 119 U.S.App.D.C. 396, 343 F.2d 265, 267 (1964) ; tut see United States v. Taylor, 437 F.2d 371, 379 (4th Cir. 1971).

      . On appeal, Makris argues that the court should have made specific inquiry into the voluntariness of his waiver of jury trial. This issue is closely tied to the larger question of his competency to stand trial and participate in his own defense. If on remand Makris is found to have been competent to stand trial, we hold that he is bound by his written waiver of jury trial. If he is found to have been incompetent to stand trial, the waiver will not be binding at such time as he may be retried.


author: GIBSON, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Marion C. DENMON, Jr., Appellant.
    No. 72-1717.
    United States Court of Appeals, Eighth Circuit.
    Submitted June 11, 1973.
    Decided Aug. 14, 1973.

      James R. Wyrsch, Kansas City, Mo., for appellant.
    Anthony Nugent, Asst. U. S. Atty., Kansas City, Mo., for appellee.
    Before GIBSON, LAY and ROSS, Circuit Judges.
   GIBSON, Circuit Judge.

The defendant in a jury trial was convicted of selling, in violation of 18 U.S. C. § 641, three air drills owned by the United States and of a value in excess of $100. The District Court suspended sentence and placed the defendant on probation for three years.

On appeal, the defendant raises three basic arguments. First, the indictment was insufficient since it failed to charge that the defendant knew that the property sold belonged to the United States, that the property had been stolen from the United States, and that the defendant acted knowingly, unlawfully, and wilfully. Second, the defendant claims there was insufficient evidence that the air drills were the property of the United States and had been stolen from the United States. Third, the defendant maintains that the District Court made improper comments in the presence of the jury that violated the defendant’s Fifth and Fourteenth Amendments due process guarantees.

We hold that the indictment on the offense charged was legally insufficient since it failed to allege that the defendant acted knowingly, unlawfully, and wilfully. We, therefore, reverse the judgment of conviction.

On April 6, 1972, the grand jury returned the following true bill against Marion C. Denmon, Jr.:

“THE GRAND JURY CHARGES THAT:
“On or about the 3rd day of March, 1972, in the Western District of Missouri, MARION C. DEN-MON, JR. did sell and dispose of, without authority, three Aro one-fourth inch air drills, model number 8071C, bearing serial numbers 2896L71, 2897L1, and 2938L71, the same being the property of the United States having a value in excess of $100.00, all in violation of Section 641, Title 18, United States Code.”

The first two arguments advanced by the defendant concerning the insufficiency of the indictment merit brief comment. The defendant’s position, that the Government must charge in the indictment and prove at trial that the property sold belonged to the United States and had been stolen from the United States and that defendant knew these facts, finds support in the Tenth Circuit cases of Findley v. United States, 362 F.2d 921 (10th Cir. 1966) and United States v. Baltrunas, 416 F.2d 401 (10th Cir. 1969). However, the better reasoned cases in the Fifth and Ninth Circuits, United States v. Boyd, 446 F.2d 1267 (5th Cir. 1971) and United States v. Howey, 427 F.2d 1017 (9th Cir. 1970), hold that the facts that the defendant knew the property belonged to the United States and that it had been stolen from the United States were irrelevant to the crime of knowingly selling property, without authority, belonging to the United States.

The Ninth Circuit in Howey not only said that “[w]e think that Findley is wrong, and we decline to follow it . ”, but also that “ [i]t was not an essential part of the common law larceny-type offense that the thief knew who owned the property he took; it was enough that he knew it did not belong to him.” The Fifth Circuit in Boyd expressly refused to follow Findley, and held that the accused’s knowledge of the fact of United States ownership is irrelevant in a § 641 prosecution. The District Court’s instruction requiring that the defendant must have known that the property was owned by the United States was therefore unnecessary, but not prejudicial to the defendant because it imposed a greater burden upon the Government than was called for in a prosecution of this type. Therefore, the indictment in a § 641 case need not charge, nor must the Government prove, that the defendant knew that the air drills were United States property or that they were stolen from the United States. The requirement of § 641 relating to United States property is only a basis for federal jurisdiction. United States v. Howey, 427 F.2d 1017, 1018 (9th Cir. 1970).

However, the failure of the indictment to charge that the defendant acted knowingly, unlawfully, and wilfully is fatally defective to the Government’s prosecution of this indictment. Morisette v. United States, 342 U.S. 246, 72 S.Ct. 240, 96 L.Ed. 288 (1952), holds that a criminal intent is an essential element of an offense under § 641. Despite this fact, the Government contends that the trial court’s proper instruction requiring a finding of criminal intent has remedied the defect in the indictment. We think a defect of the type present in this case is more than a matter of mere form or technical pleading and constitutes a substantive defect in the indictment. It is elementary in American jurisprudence that an indictment must set forth the essential elements of the offense charged, and if it does not, a conviction' based thereon is fatally defective. Stirone v. United States, 361 U.S. 212, 80 S.Ct. 270, 4 L. Ed.2d 252 (1960); Cole v. Arkansas, 333 U.S. 196, 68 S.Ct. 514, 92 L.Ed. 644 (1948); Honea v. United States, 344 F.2d 798 (5th Cir. 1965); Walker v. United States, 342 F.2d 22 (5th Cir. 1965); Hughes v. United States, 338 F.2d 651 (1st Cir. 1964); Standard Oil Company of Texas v. United States, 307 F.2d 120 (5th Cir. 1962); United States v. Jordan, 284 F.Supp. 758 (D.Mass.1968). The specific reason for the requirement that the Indictment contain all of the essential elements of the crime charged in this case is that there could be no assurance that the grand jury would indict if it had not considered all of the essential elements of the crime. The defendant’s Fifth Amendment protection of being called to answer only upon a grand jury indictment would be eroded by allowing the courts to supply missing elements of the charged offense. This is not to be viewed in a technical sense as requiring complete and comprehensive allegations of all the sections of statutory language, but only as stating the essential elements so as to fairly apprise the defendant of the nature of the charge, protect against double jeopardy, and assure that the grand jury has considered the essential elements of the charged offense.

The Supreme Court when addressing itself to this issue has throughout the years held that an indictment must allege all of the essential elements of a crime in order to be sufficient. United States v. Debrow, 346 U.S. 374, 376, 74 S.Ct. 113, 98 L.Ed. 92 (1953); Morisette v. United States, supra at 270, 72 S.Ct. at 253, n. 30; Hagner v. United States, 285 U.S. 427, 431, 52 S.Ct. 417, 76 L.Ed. 861 (1932); United States v. Carll, 105 U.S. 611, 612, 26 L.Ed. 1135 (1881). The Government here, however, would remedy the defect of not alleging criminal intent or mens rea by applying the following “fairness test” enunciated by Professor Wright:

“The fundamental purpose of the pleadings is to inform the defendant of the charge so that he may prepare for his defense, and the test of sufficiency ought to be whether it is fair to the defendant to require him to defend on the basis of the charge as stated in the particular indictment or information. The stated requirement that every ingredient or essential element of the offense should be alleged must be read in the light of the fairness test just suggested.” C. Wright, Federal Practice and Procedure, § 125, at 233-34 (1969) (footnotes omitted).

In applying the “fairness test,” the Government points out that the District Court properly instructed the jury on specific intent and defined “knowingly,” “unlawfully” and “wilfully.” So it did and it is probable that the defendant was not mislead as to the crime charged, but we think the omission of an admittedly essential element of the offense in the indictment is a matter of substance and not form. Nor can the missing element here be properly implied or inferred from other elements and allegations of the indictment.

We heartily applaud the salutory trend in recent years to simplify the indictment, as embraced in Fed.R.Crim.P. 7(c) that only requires that “[t]he indictment or the information shall be a plain, concise and definite written statement of the essential facts constituting the' offense charged.” Yet we cannot go so far in economy of words as to approve the omission in an indictment of essential elements of an offense.

An analysis of the leading cases discloses the minimum allegations necessary for a valid indictment and examples of formal defects that may be corrected or disregarded. United States v. De-brow, 346 U.S. 374, 74 S.Ct. 113 (1953), which can be called an “essential elements” case, held that the name of the person who administered the oaths to the defendants for a senatorial subcommittee hearing was not an essential element of the crime of perjury and need not be included in the indictment. Hag-ner v. United States, 285 U.S. 427, 431, 52 S.Ct. 417 (1931), presents another type of case that may be called both an “essential elements” and a “formal defects” case. Hagner held that the failure of the indictment to specifically state, according to the words of the statute, that the defendants caused a letter to be delivered by mail was a non-prejudicial, formal defect that would be disregarded. Hagner v. United States, supra at 431, 52 S.Ct. at 419. The indictment did state that an envelope was deposited at the post office in Scranton, Pennsylvania.

Other eases concern the factual situation in which the indictment is expressly amended after the grand jury has passed upon it. In Ex Parte Bain, 121 U.S. 1, 7 S.Ct. 781, 30 L.Ed. 849 (1886), the leading case on sufficiency of indictments concerning amendments, the defendant was charged with making a false report “with intent to deceive the comptroller of the currency and the agent appointed to examine the affairs of said association.” The trial court, upon a motion by the Government, struck the above italicized words as surplusage. The Court in Ex Parte Bain adopted the absolute standard that an amendment to the body of indictment, as opposed to the caption, would be in itself prejudicial and a violation of the Fifth Amendment. Ex Parte Bain, supra at 6, 8, 13, 7 S.Ct. at 784, 785, 787; see Gaither v. United States, 134 U.S.App.D.C. 154, 413 F.2d 1061, 1072 (1969). Later cases, however, have limited the holding of Ex Parte Bain by applying a “formal-versus-substanee” dichotomy to all the terms of the indictment. E. g., United States v. Denny, 165 F.2d 668 (7th Cir.), cert. denied, 333 U.S. 844, 68 S.Ct. 662, 92 L.Ed. 1127 (1947). The Supreme Court in Russell v. United States, 369 U.S. 749, 770, 82 S.Ct. 1038, 8 L.Ed.2d 240 (1962), also read Ex Parte Bain as allowing changes of the indictment in matters of form.

Still other cases deal with a variance, in which the indictment remains unaltered by express amendment but the evidence at trial proves facts materially different from those alleged in the indictment. Gaither v. United States, supra at 1071 (variance defined). In Sti-rone v. United States, 361 U.S. 212, 80 S.Ct. 270, 4 L.Ed.2d 252 (1960), yet another twist was added to the increasingly knotty analysis of an indictment’s sufficiency. In Stirone, the defendant was charged in the indictment with interfering with interstate commerce by extortion concerning the importation of sand to be used in building a steel plant. The District Court allowed introduction of evidence concerning extortion connected with the importation of steel to be used in the building. The Court in Stirone held that the variance was “critical” and not “surplusage” and viewed it as an amendment that demanded application of Ex Parte Bain.

Due to the changing rationales and the closely analogous cases involving the sufficiency of indictments, one theory does not necessarily apply to the exclusion of others. However, one unchanging common requirement in the cases directly facing the issue is the necessity for the indictment to charge the essential elements of the offense. United States v. Carll, 105 U.S. at 612, 26 L.Ed. 1135; Hagner v. United States, 285 U.S. at 431, 52 S.Ct. 417; Morisette v. United States, 342 U.S. at 270, 72 S.Ct. at 253 n. 30; United States v. Debrow, 346 U.S. at 376, 74 S.Ct. 113; Russell v. United States, 369 U.S. at 763, 82 S.Ct. 1038; Gaither v. United States, 413 F.2d at 1070; Rood v. United States, 340 F.2d 506, 509 (8th Cir. 1965); C. Wright, Federal Practice and Procedures § 125, at 234, n. 90 (1969) (and therein cited cases); Moore, supra at § 7.04, at 7-15.

Admittedly criminal intent is an essential element of a § 641 offense. The Government’s suggestion for applying a “fairness test,” as discussed earlier, to determine whether the defendant was sufficiently apprised of the nature of the offense completely ignores the dictates of the Fifth Anendment. The major constitutional reason why the indictment was defective in this ease is the Fifth Amendment’s requirement that the defendant has the right to be tried upon charges found by a grand jury. Ex Parte Bain, supra at 12-13, 7 S.Ct. at 787-788; Stirone v. United States, supra at 215-217, 80 S.Ct. at 272-273; Russell v. United States, supra at 771, 82 S.Ct. at 1051. We cannot say that the grand jury would have returned a true bill against the defendant if the essential element of a criminal intent would have been included in the indictment. Stirone v. United States, supra at 217, 80 S.Ct. at 273. Of course, the instructions to the jury at trial could not have had any effect upon the prior grand jury indictment or supply missing elements thereof.

The defendant also suggests that the insufficient indictment violated the Sixth Amendment’s right to be informed of the nature and cause of the accusation in order to prepare a proper defense and the Fifth Amendment’s restriction against double jeopardy. Although these constitutional provisions are commonly argued by defendants and cited by courts in similar cases, this “essential elements” case more precisely raises the issue of the Fifth Amendment’s grand jury requirement. Therefore, we only hold that the indictment was legally insufficient to comply with the grand jury indictment clause of the Fifth Amendment. The indictment here was sufficient to generally charge on the nature of the offense and provide defendant protection against double jeopardy.

The “fairness test” urged by the Government fails to consider the necessity of the Fifth Amendment’s grand jury requirement. That “fairness test” only considers the application of the Sixth Amendment’s right to be sufficiently apprised of the nature of the offense charged. When a court decides, or the Government concedes as in this case, that an essential element of an offense has been omitted from the indictment, a violation of the Fifth Amendment’s grand jury requirement ensues. Certain cases, as United States v. Debrow, raise the issue of whether the omitted matter is an essential element, and in those cases “fairness” or a “formal-versus-substanee” test certainly could be employed to determine whether the omitted matter was an essential element. In cases, however, involving an omission of an essential element of an offnese in a Fifth Amendment frame, liberality or fairness in determining related Sixth Amendment issues is precluded. United States v. Tornabene, 222 F.2d 875, 878 (3d Cir. 1955).

Since we reverse on the basis of a fatally defective indictment, we need not discuss defendant’s other issues, which we have examined and found to be without merit.

Judgment reversed and cause remanded to the District Court to set aside the judgment, vacate the sentence, and quash the indictment.

      . That section reads in part:
      “§ 641. Public money, property or records.
      “Whoever . . . knowingly converts to his own use ... or without authority, sells, conveys or disposes of any . . . thing of value of the United States ... or any property made . for the United States .
      “Skall be fined not more than $10,000 or imprisoned not more than ten years, or both; but if the value of such property does not exceed the sum of $100, he shall be fined not more than $1,000 or imprisoned not more than one year, or both.
      “The word ‘value’ means face, par, or market value, or cost price, either wholesale or retail, whichever is greater.”

      . For an example of the formalistic pleading previously used, see Holtzoff, Reform of Federal Criminal Procedure, 3 F.R.D. 445, 448-449.

      . Stirone v. United States, supra at 218, 80 S.Ct. at 273.

      . For example, Moore has commented that the policy behind essential elements cases “ties in closely with the prohibition against amendment of an indictment.” Moore, supra at § 7.04, at 7-15, n. 6. Stirone evidences the close relationship between variances and amendments. Further, the “formal defect” cases are quite similar to Stirone’s analysis that the variance was “critical” and “not sur-plusage.” Also, in United States v. Carll, the Court, in addition to stating that “all the elements necessary to constitute the offense” had to be charged in the indictment, held that the omitted matter was “a matter of substance and not a ‘defect or imperfection in matter of form only,’ within the meaning of sect. 1025 of the Revised Statutes.” United States v. Carll, supra at 612, 613. Therefore, the eases and authorities recognize that the tests for the sufficiency of indictment cases are closely interrelated.