text:
    Application of Guenter M. KUEHL.
    Patent Appeal No. 8815.
    United States Court of Customs and Patent Appeals.
    March 22, 1973.

      James F. Woods, New York City, attorney of record for appellant. Oswald G. Hayes, Raymond W. Barclay, New York City, John F. Witherspoon, Arlington, Ya. (Stevens, Davis, Miller & Mosh-er), Arlington, Va., of counsel.
    S. Wm. Cochran, Washington, D. C., for the Commissioner of Patents. Joseph F. Nakamura, Washington, D. C., of counsel.
    Before MARKEY, Chief Judge, and RICH, ALMOND, BALDWIN and LANE, Judges.
   RICH, Judge.

This appeal is from the decision of the Patent Office Board of Appeals affirming the examiner’s rejection for obviousness under 35 U.S.C. § 103 of claims 11, 12, and 13 in appellant’s application serial No. 651,108, filed July 5, 1967, entitled “Crystalline Aluminosilicate and Method of Preparing the Same.” We reverse.

The Invention

Appellant describes his. contribution to the “Useful Arts.” as a single invention or discovery having three aspects:

(1) Appellant has discovered and synthesized a novel zeolite identified by the symbol ZK-22 and described more fully by the following allowed claims of appellant’s application:

1. A solid crystalline aluminosilicate having the composition, in its dehydrated form, expressed in terms of approximate mol ratios of oxides as follows:
1. 0±0.2 [(1-x) [ca>)4 N]2 0:xM2 0]:A12 02:YSi02:ZP2 05
wherein M is selected from metal cations and positive ions and n is the valence thereof, Y is between about 2 and 7 and Z is between about .0.01 and Y + 2, said crystalline aluminosilicate 48
being capable of selectively sorbing straight chain hydrocarbons if the number of thermally stable cations per unit cell is 10 or less from admixture of the same with non-straight chain hydrocarbons.
6. A solid crystalline aluminosilicate according to claim 1, wherein the tetramethylammonium ion is substantially replaced by hydrogen.

Claims 1-4, 6, and 7 directed specifically to the zeolite composition stand allowed.

(2) The second aspect of appellant’s invention is the method for making ZK-22, and the Patent Office has also allowed claims in this application directed thereto.

(3) What appellant describes as the third aspect of his discovery is the subject matter of this appeal: claims 11, 12, and 13, directed to a hydrocarbon conversion process which involves the use of appellant’s novel zeolite as a catalyst to crack hydrocarbons. Appealed claim 11 reads:

11. A hydrocarbon conversion process which comprises contacting a hydrocarbon charge under catalytic cracking conditions with the composition of claim 6.

Claims 12 and 13 also call for cracking of hydrocarbons with the new zeolite catalyst material, differing only in the specific form of the zeolite catalyst employed. Instead of cracking being performed with the catalyst in a hydrogen form pursuant to claim 11, cracking according to claims 12 and 13 is performed with the catalyst in the rare earth metal form. Claims 12 and 13 are also both dependent upon allowed claims to the zeolite composition in this application. Appellant concedes that claims 12 and 13 stand or fall with our disposition of claim 11.

The Rejection and the Issues

The sole rejection of the appealed claims is for obviousness under 35 U.S.C. § 103 in view of a single reference, Frilette patent No. 3,033,778, issued May 8, 1962, which discloses the cracking of hydrocarbons using crystalline aluminosilicate zeolite catalysts which are similar to but patentably different from ZK-22 zeolite. Appellant admits that his zeolite is “useful in the cracking of hydrocarbons employing generally the same temperatures, liquid hourly space velocity and ratio of catalyst to hydrocarbon charge” taught by Frilette.

The examiner rejected the appealed claims “as the obvious use of the catalyst for the conversion of hydrocarbons.” In his Answer, the examiner further stated that “Applicant has not shown by comparative results with such crystalline alumino silicate that he obtains unexpected results and it is in [the?] view of the Examiner that in the absence of such a showing applicant is not entitled to the use claims for the cracking of hydrocarbons.” (Emphasis ours.)

The board noted that the examiner’s rejection of the claims as being directed to the obvious use of the claimed aluminosilicate was “necessarily under 35 U. S.C. § 103” and agreed with the examiner that to be unobvious there would have to be a showing by appellant that the use of his admittedly novel catalyst in the hydrocarbon cracking process of Frilette gave unexpected results. The board found there was “no evidence that anything other than the usual results will be obtained when the claimed zeolites are used to crack hydrocarbons” and therefore held the appealed process claims obvious under § 103.

Appellant's position is that the process is unobvious, that the contention that appellant must show unexpected results “is based upon the premise that the use claims need be patentable over the composition claims,” and that the board’s approach necessarily treats appellant’s own disclosure as “prior art” under 35 U.S.C. § 103, which it is not. Appellant contends further that he is entitled to claims directed to the process of using his ZK-22 zeolite, because the Patent Office found that zeolite to be new and unobvious, the hydrocarbon conversion process claims being just another method of expressing, with reasonable latitude, what appellant regards as his invention. Appellant’s position here is that the claims to the process of using the new and unobvious catalyst are necessarily directed to unobvious subject matter under 35 U.S.C. § 103 and therefore allowable. Appellant’s brief states:

Where, as here, the crystalline aluminosilicate is itself unobvious, its use in catalysis is likewise unobvious. The Board’of Appeals has not in this case asserted obviousness of the catalyst recited in the claims, although this constitutes the sole novelty of the claimed process. Allowance by the Patent Office of all claims in this application to the crystalline aluminosilicate as a new composition of matter is tantamount to a finding [that] the catalyst is unobvious.

The solicitor supports the view that the process invention is obvious in view of the teachings of Frilette since appellant has shown no unexpected result with the use of ZK-22 to crack hydrocarbons. He reasons as follows:

Appellant’s allowed claims 6 and 7 specify a shape-selective zeolite catalyst. His specification describes a zeolite having a three-dimensional network structure and states that it has a crystal structure similar .to zeolite A. The A zeolites are pointed out by Frilette as members of the class of zeolites which, by virtue of their crystalline structure, are useful as catalysts for cracking hydrocarbons. In the light of what is disclosed by Frilette, appellant’s zeolite obviously is analogous to the known zeolites of that class. One skilled in the art therefore would expect it to have the same catalytic effect that the known zeolites have.
Further, as pointed out by the Board * * * there is no evidence of any unobvious result obtained by using the zeolites of the allowed claims in the claimed process.

With respect to appellant’s argument that the board’s decision, in treating the process claims, necessarily considers appellant’s composition as though it were old and thus prior art under 35 U.S.C. § 103, the solicitor focuses upon the language of 35 U.S.C. § 103 which speaks of “the invention as a whole.” He states that “Here, the ‘invention as a whole’ is a process. All of the evidence bearing on the obviousness of the process under section 103 must be considered.” (Emphasis supplied.) The solicitor argues that the patentability of each statutory class of invention must be independently considered on its own merits in applying the test of § 103.

The solicitor continues with an explanation of the way he believes the obviousness of the appealed claims must be determined in view of several decisions of this court:

Whether or not the composition of matter used as the catalyst in the claimed process is new or old is not necessarily controlling. In re Saunders et al, 33 C.C.P.A. 1001, 154 F.2d 693 [(1946)]. In Saunders, claims to a hormone pellet had been allowed in the appealed application, and this Court affirmed a rejection of claims to a method of administering the hormones by subcutaneous implantation. The Court pointed out that:
Obviously, this invention was complete when the pellet was made and, given such a pellet, it could not require invention to implant it in the old manner (Emphasis * * * [by the solicitor]).
A similar rationale in analogous circumstances has been sanctioned by this Court in decisions rendered after the passage of the 1952 Patent Act. See, e. g., In re Hoeksema, 51 C.C.P.A. 1474, 332 F.2d 374; In re Albertson, supra [332 F.2d 379, 51 C.C.P.A. 1377]; In re Larsen, 49 C.C.P.A. 711, 292 F.2d 531. In Larsen this Court held a process to be obvious even though it produced an unobvious product. In Albertson, this Court, citing Larsen, held a process to be obvious even though both the final product and the starting material were unobvious.

Finally, the solicitor takes issue with appellant's contention that “appellant’s process-of-use claims should be allowed because he is entitled to ‘reasonable latitude’ in claiming what he regards as his invention.” The solicitor states that the reasonableness of claiming latitude was properly determined by the board’s finding that process of use claims are a “reasonable restatement of the invention if the process of use reflects an unexpected utility of the allowed composition.”

OPINION

The arguments of both appellant and the solicitor make much of the facts that there are allowed claims in the application to the zeolite and that the appealed claims represent the method of using the zeolite, a different statutory class of invention.

Appellant states as a broad proposition that the allowance of the composition claims here necessarily entitles him to claims in the same application directed to the method of using the zeolite, which the Patent Office found to be a new and unobvious composition of matter. We think this proposition is too broadly stated. See In re Albertson, 332 F.2d 379, 51 C.C.P.A. 1377 (1964). The unobviousness of the herein claimed method of cracking hydrocarbons using ZK-22 must be judged by applying to the facts of this case the statutory standard for unobviousness of § 103.

In Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 694, 15 L.Ed.2d 545 (1966), the Supreme Court construed the § 103 standard of obviousness as follows:

Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonobviousness of the subject matter is determined.

The issue here concerns primarily the meaning of the terms “prior art” and “subject matter as a whole” in § 103, and specifically whether appellant’s zeolite composition is in any way to be considered as “prior art” for the purposes of applying the statute. Appellant says that the board’s decision holding the claims to the method of using the zeolite obvious in view of Frilette “necessarily utilizes as ‘prior art’ appellant’s own disclosure” of the zeolite. To the extent that the board may have affirmed the examiner’s view that the process claims represented “the obvious use of the [ZK-22] catalyst for the conversion of hydrocarbons,” this appears to be the case. The examiner’s language does appear to treat incorrectly the ZK-22 zeolite as part of the prior art. The correct application of the test of § 103 requires that the claims on appeal not be judged against any prior art other than Frilette.,

In In re Prater, 415 F.2d 1393, 56 C.C.P.A. 1381 (1969), we considered the meaning of the “subject matter as a whole” as well as the fact that § 103 requires consideration of obviousness “at the time the invention was made.” Discussing the invention, we said “The invention includes both a method and apparatus.” In considering the obviousness of apparatus claim 10, we said:

Appellants’ discovery, discussed in the second paragraph under the heading “THE INVENTION,” supra, is, it seems to us, part of their contribution to the art. On that basis, appellants’ discovery should be considered as part of “the subject matter as a whole’’ and not part of the prior art. It is conceded by the Patent Office that that discovery is both new and unobvious. Thus, based on the record before us, we do not perceive any reasonable basis for concluding that “the subject matter as a whole,” as defined by apparatus claim 10, would have been obvious at the time of appellants’ invention.
We have carefully considered the basic position of the Patent Office that it would be obvious to program a general-purpose digital computer to practice appellants’ invention and that apparatus claim 10 reads on such a computer, as well as the disclosed analog device. We find that position fatally defective in that it, in effect, assumes the existence as prior art of appellants’ discovery * * *. Perhaps today, after reading appellants’ disclosure, the public dissemination of which the patent system fosters and encourages, it might be obvious to program a general-purpose digital computer to practice the invention. But 35 U.S.C. 103 requires an analysis of the prior art at the time the invention was made to determine whether the invention was obvious. Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). Assuming the existence, at the time of the invention, of general-purpose digital computers as well as typical programming techniques therefor, it is nevertheless plain that appellants’ invention, as defined in apparatus claim 10, was not obvious under 35 U.S.C. 103 because one not having knowledge of appellants’ discovery simply would not know what to program the computer to do. See Ex parte King, 146 USPQ 590 (Pat.Off.Bd.App.1964). [415 F.2d at 1405, 56 C.C.P.A. at 1397-1398.]

Similarly here, the process “invention as a whole” includes the use of the ZK-22 zeolite and one having no knowledge thereof would not find it obvious to crack hydrocarbons using it as a catalyst. To the extent, therefore, that the examiner and the board held appellant’s process-of-use invention to a more stringent standard of unobviousness by requiring appellant to show unexpected results in the use of ZK-22, as compared to the use of other zeolites in cracking hydrocarbons, in order to be “entitled to the use claims,” we consider that they erred.

The only prior art of record is Frilette and we must therefore determine the obviousness or unobviousness of the process invention in view of the disclosure of this reference.

Unobviousness in View of Frilette

Frilette discloses a class of crystalline zeolites useful as catalysts for cracking hydrocarbons, and described as crystalline metal aluminosilicates, known as molecular sieves, which have catalytic capabilities by virtue of their three-dimensional network structure made up of unit cells and a “geometric selectivity” dependent upon the relationship between the diameter of ports in the zeolite’s crystal structure and the diameters of the reactant and product molecules. Frilette specifically teaches molecular sieves of the “A” series as being members of the class of zeolites which are useful as catalysts for cracking hydrocarbons.

ZK-22 is not so similar to the zeolites of the “A” series identified by Frilette as to render the use of ZK-22 to crack hydrocarbons, albeit in the manner used by Frilette, obvious to one of ordinary skill in the art. ZK-22 is not a homologue, isomer, or chemical analogue of series “A” zeolites. Nor do Frilette’s teachings of zeolites broadly define a class, the knowledge of which would render ZK-22 or its use as a catalyst obvious. Furthermore, the differences therebetween appear significant. As appellant’s specification correctly notes, ZK-22 has a higher “silica to alumina mol ratio,” and “contains intercalated phosphate when crystallized from its reaction mixture.” All of these differences are uncontradieted by the Patent Office, the solicitor maintaining only generally that:

The A zeolites are pointed out by Frilette as members of the class of zeolites which, by virtue of their crystalline structure, are useful as catalysts for cracking hydrocarbons. In light of what is disclosed by Frilette, appellant’s zeolite obviously is analogous to the known zeolites of that class. One skilled in the art therefore would expect it to have the same catalytic effect that the known zeolites have.

Not only are the zeolites of series “A” structurally different from appellant’s ZK-22, but the test is not whether one “would expect it to have the same catalytic effect that the known [series “A”] zeolites have,” but whether it would have been obvious to one skilled in the art to use ZK-22 to crack hydrocarbons.

The Prior Cases

As noted earlier, the solicitor contends that prior decisions of this court are controlling on the facts here. He maintains that In re Saunders, 154 F.2d 693, 33 C.C.P.A. 1001 (1946), and In re Albertson, 332 F.2d 379, 51 C.C.P.A. 1377 (1964), mandate affirmance.

Saunders was decided prior to the 1952 Act, which inserted § 103 into the statutory law for the first time and made it clear that the test is obviousness of the invention as a whole to a person of ordinary skill in the art at the time the invention was made. Saunders, moreover, does not rest upon the firmest foundation. Of the six cases cited therein for the broad proposition relied on that “where an old method or process is used by an applicant in the administration of a new and analogous material, and the improved result is due solely to the quality of the material used, no inventive or patentable process is involved in what the applicant has done,” four of these eases dealt with a situation where the claimed process was a method of making, not using, the allegedly new material: In re Williams, 87 F.2d 499, 24 C.C.P.A. 861 (1937); In re Dreyfus, 65 F.2d 472, 20 C.C.P.A. 1204 (1933); In re Truslow, 104 F.2d 203, 26 C.C.P.A. 1292 (1939); and In re Williams, 89 F.2d 674, 24 C.C.P.A. 1175 (1937). The other two cases are In re Laughlin, 48 F.2d 921, 18 C.C.P.A. 1239 (1931) and In re Haller, 87 F.2d 520, 24 C.C.P.A. 887 (1937). Laughlin was a double patenting case, not an obviousness case. Haller involved a rejection for “lack of patentability in view of the patent to Baekeland.” This case does seem to support the broad proposition of Saunders as argued here. However , it should be noted that Haller et al.’s novel resin composition, which was used in the impregnation process claimed, was not claimed in the application on appeal but had been patented previously. Today in that situation we too would have problems with that case, but from a double patenting standpoint — giving Haller et al. a patent on a method of using their patented composition without a terminal disclaimer to prevent extension of the monopoly of the patent on the composition. The case here is different, however, since the method-of-use claims are in the same application with the composition claims and they will all expire together.

Returning to Saunders itself, we think the case no longer represents viable law to the extent that it supports the broad proposition that the obviousness of process claims drawn to a method of using a composition is determined by asking, in the fashion of the court in Saunders, whether “given” the composition the claimed process of use would be obvious. The test under § 103 is whether in view of the prior art the invention as a whole would have been obvious at the time it was made, and the prior art here does not include the zeolite, ZK-22. The obviousness of the process of cracking hydrocarbons with ZK-22 as a catalyst must be determined without reference to knowledge of ZK-22 and its properties. So judged, the process of the appealed claims would not have been obvious.

The solicitor also asserts that a rationale similar to that he finds in Saunders has been sanctioned by this court in decisions rendered after the effective date of the 1952 Act in “analogous circumstances.” The alleged analogous circumstance is where the court or the Patent Office has found that a composition or product is new and unobvious but has refused to allow claims to the process for making the unobvious product. The cases are In re Larsen, 292 F.2d 531, 49 C.C.P.A. 711 (1961); In re Hoeksema, 332 F.2d 374, 51 C.C.P.A. 1474 (1964); and In re Albertson, supra. The solicitor maintains by this reasoning that the claims calling for a process using an unobvious composition ought to be treated identically with claims calling for the process of making an unobvious composition. We disagree. The test of unobviousness is a statutory test and requires comparison of the invention with the prior art in each case, whether the invention be a process for making or a process of using, or some other process. We fully agree with the solicitor that “each statutory class of claims must be considered independently on its own merits” and likewise feel that each category of process claims must be similarly considered. No one rule controls them all.

While there may be some distinction between the Larsen line of cases which deal with the obviousness of a process of making a composition and the Saunders ease, the principal opinion in Larsen also appears to have erroneously approached the § 103 obviousness question by asking whether “given the idea of the compound” (our emphasis) the process for making it is obvious (see MPEP § 706.-03 (q)). To this extent, at least, Larsen and its progeny, Hoeksema and Albert-son, are inconsistent with the statutory standards of § 103.

Secondly, we do not read Larsen as ruling that an applicant cannot have claims to the method of making an admittedly novel product, but only that such an applicant does not get such claims just because the product is new and unobvious. In In re Neugebauer, 330 F.2d 353, 51 C.C.P.A. 1138 (1964), we considered the obviousness of claims for a method of making an electrophotographic material by a single step coating process, where claims were allowed to the electrophotographic material. The court considered the claimed invention in view of the’prior art cited and held the invention obvious. In Neugebauer, Larsen was relied upon to controvert an allegation of the appellant there that the fact that he had allowed claims to the electrophotographic material entitled him to claims to the method of making it. We said:

We agree with the board. Appellants’ coating process appears to be conventional and therefore obvious. The fact that the final product is novel is not controlling of obviousness of the method. In re Larsen * * *.

We say the same thing here, noting that allowability of the composition claims does not mandate reversal of the § 103 rejection.

In re Albertson, supra, is not inconsistent, that case stating the general proposition that “We must consider ‘the differences between the subject matter sought to be patented and the prior art’ under 35 U.S.C. 103.” The solicitor correctly states that “In Albertson, this Court, citing Larsen, held a process to be obvious even though both the final product and the starting material were unobvious.” The process invention there, however, was characterized as reducing the new starting material, A, with a well-known agent for reducing any compound having the characteristic reducible group, which the starting material had. The Albertson holding does not imply that all such processes are necessarily obvious, only that on the facts there and in view of the prior art of record the invention was obvious. The opinion says:

Even though no one ever produced A before, we are not satisfied that it is unobvious to reduce A with a standard reducing agent to produce reduced A. No reaction conditions are recited in the claims. No manipulative steps are claimed other than what is embodied in the word “reacting,” which is used in all of the claims. The results obtained by reacting with alkali metal aluminum hydride are entirely expected and obvious. Only the predicted reduction takes place.
We do not agree with appellant’s proposition that the “use of an unobvious starting material renders a process unobvious.” Were this true, every step, for example, dissolving or heating, when performed on a new compound would result in a patentable process. We reiterate that all of the evidence must be considered on the “subject matter as a whole,” from the viewpoint of one skilled in the art, in the determination of obviousness, and not simply the patentability of one of the starting reactants in a process.
In view of the prior art, we see nothing unobvious in reacting the compounds of the allowed claims with a reducing agent to produce the reduced derivatives. [332 F.2d at 381, 51 C.C.P.A. at 1381.]

We note that in the present ease the novel catalyst, ZK-22, is not merely itself reduced by a well-known reducing agent but itself catalyzes the hydrocarbon charge in the claimed process, a result that was not predictable until appellant had made his invention.

Finally, the solicitor takes issue with appellant’s contention “that his process-of-use claims should be allowed because he is entitled to ‘reasonable latitude’ in claiming what he regards as his invention.” Appellant maintains that “hydrocarbon conversion” is “the very purpose behind research directed to the synthesis of novel catalyst substances” and that the method-of-use claims represent part of what “applicant regards as his invention.” (See 35 U.S.C. § 112, second paragraph.) The solicitor says the question here “is what is a reasonable restatement of the invention” and he concludes, with the board, that the proeess-of-use claims are a reasonable restatement only “if the process of use reflects an unexpected utility of the allowed composition.”

We disagree with both premise and conclusion. The rejection here is under § 103 and the obviousness of the claimed process does not depend upon whether the claims are “a reasonable restatement of the invention.” We have concluded, for reasons stated above, that the process-of-use claims are patentable and that it was not necessary to show unexpected utility in order to show unobviousness. We would add, moreover, that in our view it is in the public interest to permit appellant to claim the process as well as the product. The result is to encourage a more detailed disclosure of the specific methods of using the novel composition he has invented in order to have support for the process claims.

We believe the constitutional purpose of the patent system is promoted by encouraging applicants to claim, and therefore to describe in the manner required by 35 U.S.C. § 112, all aspects of what they regard as their inventions, regardless of the number of statutory classes involved. The dependent claims on appeal to the use of the new zeolite in the same application with the composition claims do not materially increase the scope of protection of his inchoate patent property under 35 U.S.C. § 154, which already includes the right to exclude others from making, using, or selling the composition by allowance of claims thereon, but they do tend to increase the wealth of technical knowledge disclosed in the patent by encouraging description of the use aspects of his invention in the manner required by 35 U.S.C. § 112, paragraph 1.

For the foregoing reasons, the rejection of claims 11, 12, and 13 is reversed.

Reversed.

      . The application states that it is a “continuation-in-part of copending application Serial No. 523,936, filed February 1,1966, which is in turn a continuation-in-part of Serial No. 294,229, filed July 11, 1963, and now abandoned.”

      . U.S.Const. art. I, § 8, clause 8.

      . This statute reads as follows:
      § 103. Conditions for patentability; non-obvious subject matter

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

      . Further, the claims at issue covered a method for treating metal castings and the appellant had a patent on a method of treating car wheel metal castings.

      . The court in JIaller said :
      It appears to us that appellants have merely used a product invented by them, and for which they have received a patent, and have impregnated material with such a product, followed by steps of elimination of acid, washing and drying disclosed by Baekeland. We can see nothing inventive in merely bringing material to be impregnated into contact with appellants’ new product. While the decisions of the Patent Office tribunals are not very clear upon this point, we construe them to mean that, regardless of any differences between appellants’ process and that of the reference Baekeland, there was no invention involved in the use of appellants’ novel product, followed by conventional steps to eliminate the mineral acid, washing, and drying. (Emphasis ours.)

      . In re Saunders has been cited by this court five times, all prior to the 1952 Act, but we do not believe any of the cases citing it support the solicitor’s position on the facts here. In re Haney, 158 F.2d 296, 34 CCPA 767 (1946); In re Teter, 158 F.2d 1007, 34 CCPA 797 (1947); In re Gardner, 164 F.2d 363, 35 CCPA 753 (1947); In re Freedlander, 168 F.2d 535, 35 CCPA 1209 (1948); and In re Craige, 189 F.2d 620, 38 CCPA 1114 (1951). In Craige, for example, this court quoted what it referred to later as the “rule of the Saunders case” as follows:
      It is further well settled that the substitution of a new and analogous material in an old method or process does not render the process patentable where the improved result is due solely to the quality of the material used. In re Saunders et al. * * *.
      The court then went on to do exactly what we do here, that is, apply the art cited to determine if the method claim was obvious thereover. In doing so, even without the guidance of § 103 of the 1952 Act, the court found that the compositions used in the method of the claim were not only homologues and analogues of prior art compounds, and themselves unpatentable where separately claimed, but that the method of use invention was obvious. The converse is true here where the Frilette reference does not teach a homologous or analogous relationship of ZK-22 to the prior art such as might make the composition, let alone the method, obvious to one skilled in the art.


source: Caselaw Access Project

author: ALMOND, Senior Judge.

license: Public Domain

text:
    Application of Thomas Ellis DAVIES and Hubert Brian Hopkins.
    Patent Appeal No. 8836.
    United States Court of Customs and Patent Appeals.
    April 5, 1973.
    Bernd W. Sandt, Midland, Mich., attorney of record, for appellants.
    S. Wm. Cochran, Washington, D. C., for the Commissioner of Patents. Fred E. McKelvey, Washington, D. C., of counsel.
    Before MARKEY, Chief Judge, and RICH, ALMOND, BALDWIN, and LANE, Judges.
   ALMOND, Senior Judge.

This is an appeal from the decision of the Patent Office Board of Appeals sustaining the examiner’s rejection of claims 1-11 and 13-23, all the claims in appellants’ application entitled “Improved Polystyrene.” In their brief before this court, appellants “abandoned” their appeal insofar as it concerns claims 1-6, 8-11 and 14-18. Accordingly, the appeal is dismissed as to those claims. Claims 7, 13 and 19-23 remaining in the case stand rejected as unpatentable under 35 U.S.C. § 103. For reasons appearing hereinafter, we affirm.

Appellants’ invention relates to so-called “toughened styrene polymers.” According to their specification, such polymers are made by polymerizing styrene with a comonomer, if desired, in the presence of a suitable toughening agent. This agent, a preformed rubbery polymer, is dissolved in the monomeric styrene and comonomer, if used, and the resulting solution is polymerized by a suitably initiated free radical process. The process is carried out in such a way that the bulk of the styrene and comonomer are polymerized to form a solid matrix of either a homopolymer or co-polymer of styrene in which discrete particles of the rubber employed as a toughening agent are dispersed. A minor portion of the styrene is said to react with the rubber in a manner which cross-links the latter.

The appealed claims are limited to compositions in which the toughening agent is a rubbery copolymer of styrene and butadiene wherein at least 30 percent of the butadiene portion is in the “cis” configuration. Claim 7 is representative :

7. A composition comprising a major proportion of a styrene polymer selected from the group consisting of homopolymers and copolymers of styrene and copolymers of the nuclear methyl substituted styrenes having a softening point greater than 70°C., and as a toughening agent a minor proportion of a butadiene/styrene copolymer containing a major proportion by weight of polymerized butadiene units in which at least 30% of the polymerized butadiene units have the formula:
the stereo configuration about the double bond is cis.

The repeating polymer unit derived from butadiene is in the cis configuration as shown in the claim, frozen there by the carbon-carbon double bond. Butadiene can polymerize in two other possible configurations, shown below, designated “trans” and “vinyl.”

The other appealed claims are in dependent form, all but one of which ultimately depends from an abandoned claim. The limitations added by them are not relevant to our discussion of this case.

The examiner and board relied upon six references in reaching their conclusion that the invention was obvious. They are:

Appellants concede that the references make out a prima facie case of obviousness with regard to employing the co-polymer toughening agent defined by the claims. Nevertheless, they urge that the claims are patentable in view of alleged unexpected properties found for the new compositions. These include improved mechanical properties such as tensile strength, impact strength, elongation and the like, as well as improved gloss, transparency and processability. It is further alleged that improvement in mechanical properties is normally at the expense of gloss, transparency and processability and vice versa. Therefore, to achieve improvements in both sets of properties is unexpected.

Amos discloses that homopolymers and copolymers of styrene can be toughened by polymerizing the corresponding monomer (s) in the presence of any rubber soluble in the monomer(s) chosen. Enumerated toughening agents include copolymers of butadiene and styrene but there is no mention of a butadiene polymer having a specific cis content.

Greene describes polymers of butadiene and similar monomers which contain a “predominant” portion of polymerize monomers in the cis form. An example is directed to the preparation of a copolymer of butadiene and styrene, but the cis content of the polymer is not given. The reference does not disclose that these polymers can be used as toughening agents.

Baum discloses that styrene can be polymerized in the presence of rubbery polymers, including butadiene-styrene copolymers, but attributes improved clarity of the product to the specific mode of polymerization employed. This reference does not indicate that the butadiene rubbers used should have a specific cis content.

Lunk discloses that toughened styrene polymers have improved properties if the toughening agent is a butadiene rubber in which the cis content is at least about 90%. He does not disclose that butadiene copolymers of high cis content can be employed as toughening agents.

The Schramm patent suggests that butadiene rubbers of high cis content (75% or more) can be used to strengthen products of a graft polymerization. According to appellants’ specification, a graft polymerization is similar to the process described for toughening styrene.

Foster discloses rubbery butadienestyrene copolymers having a cis content of at least about 29% which appellants concede would include the toughening agents of their invention. However, their use in this manner is not suggested by the reference.

Claim 7 was rejected as obvious over the combination of Lunk with Schramm and Foster. All the claims were rejected in view of the six references relied upon. The board summarized these rejections in this way:

In essence, the Examiner holds that it would be obvious (35 U.S.C. § 103) to use the polybutadienes of Foster or Greene as the rubbery modifiers in the styrene compositions of Baum or Amos et al. This holding does not require reliance on Schramm or Lunk. However, the Examiner further holds that the latter patents suggest improvements in properties if butadienes of higher cis-1,4 content are used as modifiers.

We agree, and appellants concede, that a prima facie case of obviousness has been established which must stand unless sufficient rebuttal evidence is offered. From the references cited, it is clear that a process for toughening polystyrene employing a butadiene-styrene copolymer was known to the prior art. It was also known that a homopolymer of butadiene having a high cis content could be used to achieve improved properties. Therefore, if there were no evidence to the contrary, we are of the opinion that it would be proper to conclude that it would have been obvious to employ a butadiene-styrene copolymer of the type claimed as a toughening agent for polystyrene.

Because the prior art suggests that the improved properties obtained using polybutadienes of high cis content as a toughening agent are attributed to that content, appellants assert that one skilled in the art might conclude that improved properties could also be achieved using the copolymers claimed by them. Presumably it is their view that this artisan would expect a lesser improvement because the styrene content would dilute the effect of the butadiene portion of the toughening agent in a degree proportional to the relative amount of each. The ultimate conclusion appellants would have us reach is that the improvements in properties alluded to above, i. e., the combination of improved mechanical properties plus improved gloss, transparency, and processability, are unexpected ones and are sufficient to rebut the prima facie obviousness established by the prior art.

Appellants are correct in their belief that prima facie obviousness can be rebutted by evidence of unexpected properties. In re Papesch, 50 CCPA 1084, 315 F.2d 381, 137 USPQ 43 (1963). In this case, much of appellants’ evidence of unexpected properties, and particularly that relating to improvements in gloss, transparency and processability, was presented to the Patent Office in the form of affidavits summarizing tests made after the application was filed. The board objected to much of this evidence on technical grounds. However, it refused to consider that portion of those affidavits showing improved gloss, etc., for the reason that these advantages were not disclosed in the application as originally filed. The board’s authority for this was this court’s decision in In re Herr, 50 CCPA 705, 304 F.2d 906, 134 USPQ 176 (1962).

We believe the board’s decision is well founded. In reaching this conclusion, we note that appellants’ speification indicates that mechanical properties of the toughened polymer are improved whenever a rubber containing butadiene of high cis content is used. The specification makes no attempt to indicate that the copolymers as now claimed are preferred over homopolymers of butadiene. In fact, the claims eventually abandoned were directed to polystyrene toughened by butadiene homopolymers. These claims were abandoned in the face of the prior art cited by the examiner. Apparently it was only in the face of the rejections based on this art that appellants were moved to attempt to distinguish the properties obtained using the copolymer as a toughening agent versus using a homopolymer of butadiene.

Appellants urge that their affidavits should be considered notwithstanding the fact that the properties in question were not disclosed in their original application. They correctly point out that the opinion in Herr does not say that evidence of undisclosed properties cannot be offered. Instead it quotes In re Lundberg, 45 CCPA 838, 253 F.2d 244, 117 USPQ 190 (1958), for the proposition that in such a case if “that advantage is not disclosed in appellant’s application” he is “not in a favorable position to urge it as a basis for the allowance of claims.”

Appellants find support for the proposition that Herr does not absolutely preclude introduction of undisclosed properties as evidence of unobviousness in the decisions of this court in In re Zenitz, 52 CCPA 746, 333 F.2d 924, 142 USPQ 158 (1964) and In re Khelghatian, 53 CCPA 1441, 364 F.2d 870, 150 USPQ 661 (1966). However, we think their reliance upon those cases is misplaced. In Zenitz and Khelghatian the court accepted evidence of undisclosed advantages that “would inherently flow” from what was disclosed in the specification. We do not feel a similar situation exists here as we are of the view that the basic property or utility must be disclosed in order for affidavit evidence of unexpected properties to be offered. See In re Lorenz, 51 CCPA 1522, 333 F.2d 908, 142 USPQ 101 (1964).

It is difficult to see how one skilled in the art could conclude that the unexpected properties of improved gloss, transparency and processability find a basis in or inherently flow from the disclosure in the application that the toughened polystyrene has improved mechanical properties such as impact strength and the like. In the first place, the specification equates the effect of the homo-polymers and copolymers of butadiene having a high eis content as toughening agents, where as appellants now attempt to point out their differences. In the second place, appellants’ own argument in support of patentability is that it is unexpected to achieve both improved mechanical properties and improved gloss, etc., since it is the prior art experience that improving one set of properties came at the expense of the other. Therefore, it can hardly be said that there is a disclosure of the basic properties of gloss, transparency or ease of processability in the disclosure that the compositions have improved mechanical properties.

The specification discloses that the toughened polystyrene, whether the toughening agent is a homopolymer or copolymer of butadiene, can be used wherever “moldings are required to bear loads, e. g., refrigeration liners.” Particularly in view of the fact that the specification equates the homopolymers and copolymers as toughening agents, we do not consider this to be a statement of utility sufficiently clear to insure that others would be led to observe the improved properties which appellants now urge in support of their claims.

We think it necessary to note that there is no specific statutory requirement that compels an applicant to disclose all properties of chemical compounds or compositions in his application. Insofar as the statute is concerned, the only disclosure requirements are defined in the first paragraph of 35 U.S.C. § 112. There is no § 112 rejection in this case and, therefore, we assume that the specification satisfies the requirement that it describe the invention adequately to enable one skilled in the art to make and use it.

In effect, the holding of the board is an evidentiary ruling which must be supported, if at all, on considerations other than statutory requirements. Therefore, to be valid such a ruling must be supported by an interest strong enough to compel a recognition that, in at least certain cases, the disclosure requirements of § 112 are not the maximum that can be demanded in an application.

The solicitor, in his brief, suggests that the reason evidence of undisclosed properties should be excluded can be grounded upon public policy. In his view, if evidence such as that presented by appellants were allowed, patents would be granted without the necessary quid pro quo of disseminating the knowledge in that essential evidence to the public. That argument is weakened, however, by the fact that the evidence upon which nonobviousness is based does become public as a part of the available file history when the patent issues.

Nevertheless, the public will derive the most benefit from a patent when it discloses on its face those properties or utilitarian advantages which were ultimately persuasive on the question of nonobviousness. However, when, as here, an applicant has satisfied the requirements of § 112, we would be reluctant to require him to disclose more unless it could be done without prejudice to him. But if the applicant can be required to include the properties in his specification without prejudice to him, a compromise is reached upon which the evidentiary ruling can be based.

We think such a compromise is possible as we see no impediment to the present appellants’ refiling their application and incorporating a discussion of the allegedly unobvious properties while retaining the effective date of the application involved here through § 120. That section requires that the prior application comply with the conditions set forth in the first paragraph of § 112 as regards the invention claimed in the later application. See Martin v. Johnson, 59 CCPA 769, 454 F.2d 746, 172 USPQ 391 (1972). As we have already-noted, appellants’ application has ostentibly met the requirements of § 112 as no rejection has been made based upon that section. Since the subject matter to be claimed in a subsequently filed application would be identical to that claimed here, the later application would be entitled to the benefit of the filing date of the application we now consider. See In re Kirchner, 49 CCPA 1234, 305 F.2d 897, 134 USPQ 324 (1962). We certainly do not think the newly disclosed properties alter the subject matter sought to be patented.

In view of the fact that we agree with the board that the affidavit evidence relating to the after-discovered properties should not be considered in this case, the case of prima facie obviousness established by the references is not rebutted. Accordingly, the decision of the board is affirmed.

Affirmed.

      . Serial No. 851,660, filed July 7, 1967 as a continuation-in-part of application serial No. 89,-938 filed February 17, 1961.

      . Typically a polymer of butadiene -will contain at least some of each of the three types of repeating units. By varying the method of polymerization, one can be caused to predominate over the others.


author: WILLIAM E. MILLER, Circuit Judge.

text:
    ESTATE of Mary F. Colton PARK, Detroit Bank and Trust Company, Administrator with Will Annexed, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
    No. 72-1710.
    United States Court of Appeals, Sixth Circuit.
    Argued Dec. 14, 1972.
    Decided March 21, 1973.
    James E. Beall, Detroit, Mich., on brief, for appellant.
    Charles Anderson, Washington, D. C., for appellee; Scott P. Crampton, Asst. Atty. Gen., Tax Div., Dept, of Justice, Washington, D. C., on brief.
    Before WEICK, PECK and MILLER, Circuit Judges.
   WILLIAM E. MILLER, Circuit Judge.

This is an estate tax case in which the petitioner, the Detroit Bank and Trust Company, as administrator with will annexed, of the Estate of Mary F. Colton Park, challenges the Internal Revenue Commissioner’s determination, as affirmed by the Tax Court, that certain expenses incurred in the administration of the estate are not deductible under 26 U.S.C. § 2053(a) (1971). The petitioner challenges the Commissioner’s determination on the grounds that the regulations issued under 2053(a) (on the basis of which the claimed deductions were disallowed) are invalid, and that in any event the petitioner properly complied with them. For reasons set out below we hold that the Commissioner was in error and that the decision of the Tax Court must be reversed.

The basic facts are not in dispute. The Detroit Bank and Trust Company is the duly appointed administrator with will annexed of the estate of Mary F. Colton Park. The decedent died testate on March 1, 1968, and her will was admitted to probate on March 8, 1968. At the time of her death she owned two houses, one a residence located in Grosse Pointe Farms, Michigan (the residence), and the other a cottage located in Sanilac County, Michigan (the cottage). Her probate estate consisted of:

The residence and the cottage passed to the decedent’s four surviving sons under the residuary clause of her will. The four sons determined that they were not interested in retaining these properties and requested the administrator to sell them. The administrator was given the full power in the will to sell real estate. The cottage was sold on August 1, 1968, for $25,000. A $10,000 down payment was made and the remainder was to be paid in monthly installments of $150. In connection with this sale, $1,935 in expenses were incurred. The residence was sold on March 24, 1969, for $53,000. $50,000 was paid in cash, with the balance to be paid directly to the heirs. The petitioner incurred $2,350.30 in expenses in connection with this transaction. On September 16, 1968, the petitioner made a partial distribution from the estate to the four sons of $14,000. On April 7, 1969, the petitioner made another partial distribution to the sons of $40,000.

As of the date of decedent’s death the following were the claims against the estate:

The probate court in the annual accountings filed on March 1, 1969, and March 1, 1970, approved the deductions from principal of the estate for the following :

The administrative expenses listed in the probate accountings included the expenses incurred for property taxes and maintenance costs for the two properties, aggregating $2,237.88. Other items approved by the Probate Court as administrative expenses consisted of the amounts incurred in selling the properties, principally brokerage fees. These expenses, aggregating $4,285.30, were disallowed by the Commissioner and this ruling, challenged here, was affirmed by the Tax Court.

Section 2053(a) provides that “administration expenses” are deductible “as allowable by the laws of the jurisdiction, whether within or without the United States, under which the estate is -being administered.” Treasury Regulation 26 C.F.R. § 20.2053-3(a) provides:

(a) In general. The amounts deductible from a decedent’s gross estate as “administration expenses” of the first category (see paragraphs (a) and (c) of § 20.2053-1) are limited to such expenses as are actually and necessarily incurred in the administration of the decedent’s estate; that is. in the collection of assets, payment of debts, and distribution of property to the persons entitled to it. The expenses contemplated in the law are such only as attend the settlement of an estate and transfer of the property of the estate to individual beneficiaries or to a trustee, whether the trusted is the executor or some other person. Expenditures not essential to the proper settlement of the estate, but incurred for the individual benefit of the heirs, legatees, or devisees, may not be taken as deductions. Administration expenses include (1) executor’s commissions; (2) attorney’s fees; and (3) miscellaneous expenses. Each of these classes is considered separately in paragraphs (b) through (d) of this section.

Treasury Regulation, 26 C.F.R. § 20.-2053-3(d)(2) provides in part:

(2) Expenses for selling property of the estate are deductible if the sale is necessary in order to pay the decedent’s debts, expenses of administration, or taxes, to preserve the estate, or to effect distribution. The phrase “expenses for selling property” include brokerage fees and other expenses attending the sale, such as the fees of an auctioneer if it is reasonably necessary to employ one.

The Tax Court concluded that the petitioner failed to carry its burden of proof that the expenses incurred in the sale of the property were “necessary” for the administration of the estate, to pay debts or taxes, to preserve the estate, or to effect distribution, relying upon the regulations quoted above. It reasoned that the sale of the real estate was for the sole benefit of the beneficiaries and not deductible. Although the Tax Court did not pass directly on the validity of the regulations here involved, it had previously sustained their validity in Estate of David Smith v. Commissioner, 57 T.C. 650 (1972).

On appeal the petitioner relies primarily on the dissent expressed in the Smith ease. The petitioner argues that the regulations impose an invalid and impermissible restriction on the availability of a deduction provided in the Internal Revenue Code. Because Michigan law allows these expenses to be charged against the probate assets, Congress, it is argued, has determined under § 2053(a) that they should be deductible for federal estate tax purposes as well.

The respondent relies on the majority approach expressed in Smith, to the effect that the provisions of § 2053(a) establish only a threshold consideration. When state law fails adequately to coincide with federal estate tax policies, as reflected in the Treasury Regulations, then the deduction should not be allowed. Cf. Pitner v. United States, 388 F.2d 651 (5th Cir. 1967). Consequently, the regulations are valid and must be complied with in order for the expenses to be deductible.

In Estate of David Smith v. Commissioner, supra, a sculptor died possessing various art works, valued in excess of four million dollars. Some of these art works were sold in order to satisfy claims against the estate, while others were sold in order to fund certain trusts established for the artist’s daughters. The Tax Court disallowed the expenses for the sale of the art works whose proceeds were used to fund the trusts. The court reasoned:

The clause “as are allowable by the laws of the jurisdiction * * * under which the estate is being administered,” contained in section 2053(a), establishes a threshold and not an exclusive condition; the requirements of respondent’s regulations must also be satisfied. Pitner v. United States, 388 F.2d 651, 659-660 (C.A.5, 1967); Estate of Christine Swayne, supra [43 T.C. 190]. Compare Estate of James S. Todd, Jr., 57 T.C. 288 (1971), where we held that the claimed expense had both been allowed by the Probate Court and was necessarily incurred to preserve the estate. Compare also Dauphin Deposit Trust Co. v. McGinnes, 208 F.Supp. 228, 237-238 (M.D.Pa.1962), affirmed on another issue 324 F.2d 458 (C.A.3, 1963), and
In re Bartlett’s Estate, 153 F.Supp. 674, 678 (E.D.Pa.1957), both of which rested on a presumption of “necessity” under Pennsylvania law.
Clearly, there was no necessity under the will to sell the sculptures beyond the point necessary to discharge funeral and administration expenses and claims. Indeed, the will itself contemplated a distribution of the sculptures in kind to the trusts for the benefit of Smith’s daughters. Smith was under no obligation to support his daughters after his death nor were his executors under any such obligation. In re Garcy’s Trust, 19 A.D.2d 811, 243 N.Y.S.2d 464 (1st Dept. 1963). The trust was the vehicle for support and, if cash were necessary for that purpose, the trustees, not the executors, were the ones required to make the decision to sell and it is they who would have incurred the concomitant obligation to pay [the broker] its commission. To the extent that the executors made decisions to sell in order to provide support money, they were acting on behalf of the trust and not on behalf of the estate. Cf. Sharpe’s Estate v. Commissioner, 148 F.2d 179, 181 (C.A.3, 1945). 57 T.C. at 661.

We find this reasoning unpersuasive. First, it appears to have been recognized in this Circuit that the deductibility of an expense under 2053(a) (or its predecessor) is governed by state law alone. Union Commerce Bank v. Commissioner, 339 F.2d 163 (6th Cir. 1964); Goodwin’s Estate v. Commissioner, 201 F.2d 576 (6th Cir. 1953). Second, the law of Michigan has elaborate statutory provisions for the administration of estates and the responsibilities of fiduciaries. These duties include the responsibility to defend and preserve the estate's assets. See, e. g., Mich. Com piled Laws Ann. § 704.1 et seq. (1968). Michigan statutes also establish that certain specific expenses are allowable as charges against the probate assets, an example being attorney’s fees for the administrator. Mich. Compiled Laws Ann. § 704.33 (1968). The estate is under the supervision of the probate court during the probate period and annual accounting are required. Mich. Compiled Laws Ann. § 704.38 (1968). By the literal language of § 2053(a), Congress has left the deductibility of administrative expenses to be governed by their chargeability against the assets of the estate under state law. As otherwise stated, Congress has committed to the considered judgment of the states whether a particular expense is allowable as a proper or necessary charge against estate assets. In the situation before us, the expenses were admittedly allowable under Michigan law. They were paid out of probate assets and they were approved in two different accountings filed with the probate court. Hence they are deductible under § 2053(a).

The respondent would have us distinguish between what is necessary for the estate and what is for the individual benefit of the beneficiaries. We decline to draw such a distinction, primarily because it is not warranted by the wording of § 2053(a). Also the distinction is untenable because any action that benefits the estate will also in effect benefit the beneficiaries. The real estate was non-income producing property. It represented a drain on the estate’s other assets. A prudent fiduciary should be and perhaps is required to prevent the loss of probate assets when it may safely be avoided. If the fiduciary on the basis of his sound judgment, as approved by the probate court, feels that the estate would benefit by the sale of the real estate (regardless of the wishes of the beneficiaries) the availability of the deductions under § 2053(a) should not be denied because the respondent does not deem the sale to have been necessary. In view of our disposition of the case, we do not reach the petitioner’s argument that the regulations were complied with.

Accordingly, the judgment of the Tax Court is reversed, and the action is remanded to that court with instructions to enter an order allowing the deduction for the claimed expenses under § 2053(a).

      . The Tax Court’s opinion is reported at 57 T.C. 705 (1972).

      . The respondent does not question that these expenses are proper claims to be paid out of estate assets under Michigan law.

      . The respondent also relies on the fact that the regulations have remained substantially unchallenged since they were promulgated in 1919. Congress has reenacted § 2053(a) a number of times since 1919 in substantially the same form. The reasons that the regulations have been infrequently challenged appears to us to be speculative at best, and their longevity is not a persuasive factor where the statutory language is clear and unambiguous as we deem it to be in this case.

      . The respondent’s reliance on Pitner v. United States, 388 F.2d 651 (5th Cir. 1967), appears to ns to be misplaced.


author: HILL, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Ralph G. HERSHBERGER et al., Defendants-Appellees.
    No. 72-1416.
    United States Court of Appeals, Tenth Circuit.
    March 13, 1973.

      William S. Estabrook, III, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen.; Meyer Rothwacks and Richard W. Perkins, Attorneys, Tax Div., Dept, of Justice), Washington D. C., for plaintiff-appellant.
    Thomas A. Wood, Wichita, Kan., for defendants-appellees Hershberger.
    Before HILL, McWILLIAMS and BARRETT, Circuit Judges.
   HILL, Circuit Judge.

The United States of America appeals from a summary judgment dismissing its suit to foreclose federal tax liens against the interest of Ralph G. Hershberger in homestead property owned by him and his wife, Esther. The United States District Court for the District of Kansas, 338 F.Supp. 804, held that Esther’s homestead exemption under the laws of the State of Kansas prevented the United States from enforcing its tax lien against the homestead property. We agree.

Ralph and Esther jointly own real property of less than one acre in the city of Wichita, Kansas, which they occupy as their residence. After the United States obtained judgment against Ralph on August 3, 1970, for $28,778.48 in unpaid taxes for the years 1946 through 1967, the government undertook to satisfy its tax lien by selling this homestead property. Esther asserted her ownership of the property and her occupancy of the property as a homestead, claiming that the property and her interest therein were not subject to foreclosure and sale. Esther declares she is entitled to the peaceable possession of the property so long as she occupies it as a homestead.

Appellant expounds three arguments in support of reversal. First, §§ 6321 and 7403 of the Internal Revenue Code allow the government to foreclose its tax lien on all real and personal property belonging to the delinquent taxpayer. Second, under Kansas law Esther Hershberger does- not have an undivided one-half interest in the homestead property, and therefore cannot object to the tax foreclosure sale. Finally, although state law is applied in determining the property interest, state law cannot operate to bar the enforcement of federal tax liens.

The government first argues that federal law authorizes tax liens and tax foreclosure sales. Appellant contends that 26 U.S.C. § 6321 allows the government a lien on all real and personal property. Once this lien is established, 26 U.S.C. § 7403 authorizes a sale of the property to satisfy the delinquent taxpayer’s debt;

We agree that § 6321 imposes a lien upon delinquent taxpayer’s real and personal property, but it does not necessarily follow' that § 7403 requires the courts to satisfy this lien via a tax foreclosure sale. Section 7403(c) states in part that courts “may decree a sale of such property.” As the court emphasized in United States v. Boyd, 246 F.2d 477 (5th Cir. 1957), cert. denied, 355 U.S. 889, 78 S.Ct. 261, 2 L.Ed.2d 188, it is up to the courts to decide whether to foreclose a tax lien;

Indeed, broader language could hardly be suggested since the Court, Section 7403(e), is required to “ . proceed to adjudicate all matters involved therein and finally determine the merits of all claims to and liens upon the property. . . .” As though this were not enough, Congress, presumably conscious of the purpose of the change, amended the Act, 49 Stat. 1648, Sec. 802, to substitute the word “may" for “shall” in the predecessor to Section 7403, so that it now reads “. . . in all cases where a claim or interest of the United States therein is established, [the Court] may decree a sale of such property . . . and a distribution of the proceeds. . . . ”

Emphasized another way, when the matter is before the court, Congress intends the court to exercise equitable powers in rendering its decision. United States v. Morrison, 247 F.2d 285 (5th Cir. 1957); United States v. Boyd, supra. Having determined that § 7403 does not compel us to automatically decree a foreclosure sale, we must turn to Kansas law to determine what property rights Esther has in the homestead property.

It is appellant’s contention that Esther does not enjoy a vested property right in the homestead property, and therefore cannot object to the tax foreclosure sale. To determine whether Kansas grants the wife an undivided one-half interest in homestead property, we must look to the laws of that state. The Kansas Constitution, Article 15, § 9, allows a homestead of one acre within the city limits if occupied as a family residence. The property shall not be alienated without husband’s and wife’s joint consent. Kansas Statutes Annotated § 60-2301 (1964) is essentially a reiteration of Article 15, § 9.

Kansas case law sheds light on what rights are granted under the homestead law. As emphasized in Helm v. Helm, 11 Kan. 19 (1873), the wife has an existing estate in the homestead. She therefore has a right to immediate enjoyment in the homestead property. Another case supporting this conclusion is State ex rel. v. Mitchell, 194 Kan. 463, 399 P.2d 556, 558 (1965):

It suffices to say that Kansas has zealously protected the family rights in homestead property by liberally construing the homestead provision in order to safeguard its humanitarian and soundly social and economic purposes; and nothing less than the free consent of the resident owner of the homestead, and joint consent of husband and wife where the relation exists, will suffice to alienate the homestead, except under the specified exceptions provided in the constitution.

A case analyzing the purpose behind adopting the homestead provision in the Kansas Constitution is West v. Grove, 139 Kan. 361, 31 P.2d 10 (1934):

the manner and form in which the proposition was submitted to the electorate, warrants the conclusion that, although the provision itself uses the word “exempt,” it was intended to create and more was created than a simple exemption statute. The manner in which the homestead may be alienated is expressly stated, as are the circumstances against which the homestead right shall not prevail. It has been the settled course of the decisions of this court to construe liberally the homestead provision and not to restrict it.

Accord: Iowa Mutual Ins. Co. v. Parr, 189 Kan. 475, 370 P.2d 400 (1962).

The government nevertheless argues the Kansas Homestead Law does not provide Esther with a vested, undivided one-half interest in the property. The government insists there can be no vested property right in the wife because a court can divest either spouse of his or her homestead right in a divorce action. Supporting this argument the government cites Hamm v. Hamm, 98 Kan. 360, 158 P. 22 (1916). In Hamm the husband was granted a divorce from his wife. The wife was awarded the homestead subject to a lien in favor of the husband for $700. When the lien was not satisfied within the time prescribed, the court ordered the homestead property sold. We are convinced, however, that allowing one spouse to take the homestead property in a divorce action is not intended by Kansas law to imply the homestead prior to divorce was not a vested property right. As stated in Brandon v. Brandon, 14 Kan. 342 (1875):

The homestead of the plaintiff is not given to a stranger, destitute of all interests and rights therein, but the homestead of the husband and wife (for it is equally the homestead of each) is, upon their separation, assigned to one of them. There would be manifest impropriety in attempting to continue it as the homestead of each after the divorce; and in awarding it to the wife the court is but choosing between conflicting interests.

The next argument proffered by the government is that Esther cannot possess an undivided one-half interest because a homestead in Kansas may be sold to pay delinquent taxes. Constitution of the State of Kansas, Article 15, § 9; K.S.A. § 60-2301 (1964). Apparently there is little Kansas case law on this subject. The Kansas Supreme Court has emphasized that homestead property will be subject to tax foreclosure if the taxpayer fails to pay his taxes on the homestead property. In Re Estate of Dahn, 204 Kan. 535, 464 P.2d 238 (1970). There appears to be no case law, however, answering the question of whether a homestead can be sold to pay taxes not directly related to the homestead property. When the state law appears to be unsettled, the Court of Appeals will give great weight and credence to the federal district court’s interpretation. Binkley v. Manufacturers Life Ins. Co., 471 F.2d 889 (10th Cir. 1973); Sta-Rite Indus. Inc. v. Johnson, 453 F.2d 1192 (10th Cir. 1971), cert. denied, 406 U.S. 958, 92 S.Ct. 2062, 32 L.Ed.2d 344; Sutton v. Anderson, Clayton & Co., 448 F.2d 293 (10th Cir. 1971); Traders State Bank v. Continental Ins. Co., 448 F.2d 280 (10th Cir. 1971); Brennan v. Univ. of Kansas, 451 F.2d 1287 (10th Cir. 1971). The trial court in the instant case stated:

The taxes covered by the Kansas exception must relate only to taxes arising against the property involved. At the time the term was used in the Kansas Constitution there was no such thing as income, sales, etc. type of tax by the Federal Government or the State Government. Not only that, but in addition, the tax on the homestead property was not severable against any individual homesteader.

United States v. Hershberger, 338 F.Supp. 804, 808 (D.C.Kan.1972). Unquestionably the wife’s interest in the property is not subject to alienation without her consent, subject to several exceptions. Besides the tax exception, homestead property is not exempt from the payment of obligations contracted for the purchase of said premises, for the erection of improvements thereon, or for a lien given by the consent of both husband and wife. Upon analyzing the reasons for the provision granting property as a homestead, it can be determined that exceptions in the homestead law are the result of unjust enrichment to the homesteaders or voluntary alienation by the homesteaders. Logically, this philosophy would carry over into payment of taxes. Only when the homestead property does not pay its share for state protection should the court hold the homesteaders to have waived their right to constitutional protection. Otherwise the homestead law’s intent, as expounded in Morris v. Ward, 5 Kan. 239, 244 (1869), would not be effected:

It [the homestead] was not established for the benefit of the husband alone, but for the benefit of the family and of society — to protect the family from destitution, and society from the danger of her citizens becoming paupers.

Appellant’s final argument is that although state law is applied in determining the property interest, state law cannot operate to bar the enforcement of federal tax liens. United States v. Kocher, 468 F.2d 503 (2d Cir. 1972); United States v. Overman, 424 F.2d 1142 (9th Cir. 1970); In Re Ackerman, 424 F.2d 1148 (9th Cir. 1970); United States v. Trilling, 328 F.2d 699 (7th Cir. 1964); United States v. Heffron, 158 F.2d 657 (9th Cir. 1947), cert. denied, 331 U.S. 831, 67 S.Ct. 1510, 91 L.Ed. 1845. We do not disagree with the rule stated in the above cases; our disagreement arises in the application of the rule. As the Supreme Court emphasized in Aquilino v. United States, 363 U.S. 509, 80 S.Ct. 1277, 4 L.Ed.2d 1365 (1960):

[B]oth federal and state courts must look to state law [in determining to what extent the taxpayer had “property” or “rights to property” to which the tax lien could attach] for it has long been the rule that “in the application of a federal revenue act, state law controls in determining the nature of the legal interest which the taxpayer had in the property sought to be reached by the statute.”
However, once the tax lien has attached to the taxpayer’s state-created interests, we enter the province of federal law, which we have consistently held determines the priority of competing liens asserted against the taxpayer’s “property” or “rights to property.”

Although Aquilino dealt solely with claims of competing lienors, the rule of law therein expounded applies to our case. We have two competing claims, one by the federal government for delinquent income taxes and one by Esther for peaceful possession of the property so long as she occupies it as a homestead. Although there is an apparent conflict of authority as to whether a federal tax lien is valid upon a homestead interest, we believe resolution of the issue turns upon the nature of the interest created by state homestead laws. Homestead laws not creating a present property interest but rather conferring privileges and exemptions are subordinate to the federal tax liens. Shaw v. United States, 331 F.2d 493 (9th Cir. 1964); Weitzner v. United States, 309 F.2d 45 (5th Cir. 1962), cert. denied, 372 U.S. 913, 83 S.Ct. 727, 9 L.Ed.2d 720. But when the homestead laws expressly provide for a present property interest and confer more than merely an exemption, such as is found under Kansas law, the homestead interest is good against the federal tax lien. As our court emphasized in Jones v. Kemp, 144 F.2d 478 (10th Cir. 1944): “A wife is granted an indivisible and vested interest in homestead property, and one which cannot be subjected to levy and sale for the satisfaction of the Federal tax liability of her husband.” See also 9 Mertens Law of Federal Income Taxation, Ch. 54, at 205-207, § 54.52 (1971).

Appellee owned an undivided one-half interest in the property. This interest was separate and apart from her husband and therefore precluded the homestead from being part of the husband’s estate. The undivided one-half interest is immune from seizure and sale by the government. Carter v. United States ex rel. D. I. R., 399 F.2d 340 (5th Cir. 1968). Because Esther’s homestead interest is indivisible and extends to every part of the property, she is entitled to use it as a home as long as she meets the requirements of the Kansas homestead law. While Esther is living on the property, the government may not enforce its tax lien against the homestead. Morgan v. Moynahan, 86 F.Supp. 522 (S.D.Tex.1949).

Affirmed.

      . 26 U.S.C. § 6321 Lien for taxes. If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

      . 26 U.S.C. § 7403 Action to enforce lien or to subject property to payment of tax.
      (a) Filing. — In any case where there has been a refusal or neglect to pay any tax, or to discharge any liability in respect thereof, whether or not levy has been made, the Attorney General or his delegate, at the request of the Secretary or his delegate, may direct a civil action to be filed in a district court of the United States to enforce the lien of the United States under this title with respect to such tax or liability or to subject any property, of whatever nature, of the delinquent, or in which he has an'/ right, title or interest, to the payment of such tax or liability.
      (b) Parties. — All persons having liens upon or claiming any interest in the property involved in such action shall be made parties thereto.
      (c) Adjudication and Decree. — The court shall, after the parties have been duly notified of the action, proceed to adjudicate all matters involved therein and finally determine the merits of all claims to and liens upon the property, and, in all cases where a claim or interest of the United States therein is established, may decree a sale of such property, by the proper officer of the court, and a distribution of the proceeds of such sale according to the findings of the court in respect to the interest of the parties and of the United States.

      . Constitution of the State of Kansas, Article 15, section 9. Homestead exemption. A homestead to the extent of one hundred and sixty acres of farming land, or of one acre within the limits of an incorporated town or city, occupied as a residence by the family of the owner, together with all the improvements on the same, shall be exempted from forced sale under any process of law, and shall not be alienated without the joint consent of husband and wife, when that relation exists; but no property shall be exempt from sale for taxes, or for the payment of obligations contracted for the purchase of said premises, or for the erection of improvements thereon. Provided, the provisions of this section shall not apply to any process of law obtained by virtue of a lien given by the consent of both husband and wife. . . .

      . For a more thorough analysis into the purpose behind adopting the homestead provision in the Kansas Constitution, see West v. Grove, 139 Kan. 361, 31 P.2d 10, at 11-12 (1934).


author: PHILLIPS, Chief Judge.

text:
    INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW) and its Local 174, Plaintiffs-Appellees, v. ANACONDA AMERICAN BRASS COMPANY, Defendant-Appellant. INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW) and its Local 174, Plaintiffs-Cross-Appellants, v. ANACONDA AMERICAN BRASS COMPANY, Defendant-Cross-Appellee.
    Nos. 72-1818, 72-1819.
    United States Court of Appeals, Sixth Circuit.
    Argued Feb. 5, 1973.
    Decided March 28, 1973.

      Timothy D. Wittlinger, Detroit, Mich., for appellant; Thomas E. Coulter, Hill, Lewis, Adams, Goodrich & Tait, Detroit, Mich., on brief.
    M. Jay Whitman, Detroit, Mich., for appellees; Stephen I. Schlossberg, John A. Fillion, Detroit, Mich., on brief.
    Before PHILLIPS, Chief Judge, and PECK and MILLER, Circuit Judges.
   PHILLIPS, Chief Judge.

This litigation under § 301 of the Labor-Management Relations Act arose out of the permanent shutdown of two departments of the Anaconda Brass Co., Inc., at Detroit on August 30, 1971. Anaconda had a pension plan agreement which had been executed in addition to its collective bargaining agreement with the appellee labor, union.

The pension plan agreement provided that any employee under age 65 who shall have been “laid off because of a permanent shutdown of any operation, department or subdivision thereof may elect to retire . . . and receive a ‘75/80’ pension” if the employee had reached his 55th birthday with a stipulated minimum of continuous service with the company. The agreement also provides for “75/80” pension benefits to certain employees under 55 years of age with a stipulated minimum of continuous service. The text of the language in controversy is quoted in the opinion of District Judge John Feikens reported at 340 F.Supp. 651. His findings of facts and conclusions of law are made an appendix to this opinion. Reference is made to the reported opinion of the District Judge and to his findings of fact and conclusions of law (appendix hereto), for a more complete recitation of facts.

Thirty-two employees affected by the permanent shutdown met the qualifications for the 75/80 pension and requested early retirement. The company contended that they could not retire under the early retirement plan, and had only two choices: (1) to quit; or (2) to use their seniority to “bump” other employees with less seniority in other departments which had not been shut down. Faced with these alternatives, the thirty-two employees “bumped” other employees under protest, and this litigation followed. Also involved in the suit are the rights of a number of other employees affected by the shutdown, in addition to the thirty-two employees referred to above. Reference is made to the reported opinion and findings of the District Court (Appendix hereto) for details.

Judge Feikens decided practically all issues in favor of the Union. He held that the thirty-two employees had the right to elect early retirement; that “bumped” employees who are now retired on the “75/80” plan may elect to return to work or remain retired under the plan; and that employees “bumped” out of a job have a right to reinstatement with back pay. The company appeals. The Union cross-appeals on two issues: (1) the basis of computation of the pensions of the thirty-two employees found entitled to retire; and (2) the basis of computation of back pay of employees whose jobs are to be restored.

We agree with the Union on the first ground of its cross appeal and modify the judgment of the District Court accordingly. In all other respects we affirm the judgment of the District Court.

Anaconda contends that the interpretation of the pension plan by the District Court is contrary to the interpretation which the parties have placed upon the disputed language. It is asserted that “there never has been a situation in Detroit, or even corporate-wide, of an employee being granted 75/80 pension benefits in a situation where he could bump, but refused to do so.” This assertion is supported by an affidavit. However, the record also contains the following letter written to the District Judge:

“Hon. John Feikens March 8, 1972
Judge, U. S. District Court Eastern District
851 Federal Building Detroit, Michigan 48226
Re: United Automobile Workers v. Anaconda American Brass Company Federal District Court Eastern District of Michigan
Southern Division
Civil Action No. 37289
“Dear Sir:
“At the hearing on the Motion for Summary Judgment in the above matter, held on Monday, March 6, 1972, you requested that I check with the several Divisions of the Defendant to determine if there had existed a situation involving the permanent closing of a department which was similar to the factual situation in the issue being litigated.
“Such a check has been made, and I will inform you that we have been unable to determine the existence of any such similar incident.”

Anaconda further contends that at a negotiating session prior to the institution of this litigation, the Union requested a change in the language of the pension plan to make employees in the situation herein involved eligible for 75/80 pensions. We hold that this effort by the Union to effect a clarification of the disputed language is not a waiver of its position as to the meaning of the language in dispute.

All other contentions of Anaconda have been considered and found to be without merit.

We now come to the cross appeal of the Union.

The Union’s first contention is directed to the effective date as of which the 75/80 pension benefits for the thirty-two employees in question is to be calculated. In finding of fact No. 7 (Appendix hereto), the District Court held that “the pension rate which such employees receive will be the rate in effect on August 27, 1971.” The Union contends that the applicable pension rate should be that in effect on the date of their actual retirement. We agree with the Union. The judgment of the District Court is modified accordingly.

The Union further contends that the rate of backpay set forth in finding of fact No. 9 (Appendix hereto) should include a “reasonable estimate of incentive pay, overtime pay and other negotiated premiums.” We disagree and affirm finding of fact No. 9.

Modified and affirmed. Costs are taxed against Anaconda.

APPENDIX

OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW

U. S. District Court — Eastern District of Michigan — (Southern Division)

This opinion supplements the Memorandum Opinion issued by this Court on March 17, 1972, and disposes of all issues raised by the pleadings. It also sets forth Findings of Fact and Conclusions of Law as required by Rule 56 and is a final order of Summary Judgment.

As noted in this Court's Memorandum Opinion issued on March 17, 1972, the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) and Local 174 brings this action against Anaconda American Brass Company, Inc., under Section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185, and this Court has jurisdiction under that section to determine liability and to award actual and consequential damages and other appropriate relief in this dispute.

The original Memorandum Opinion sets forth the undisputed facts leading to this litigation. It is to be noted that the parties have negotiated amendments to said pension plan since the date of the departmental shutdown, granting increased 75/80 pension benefits to all such pensioners, but smaller increases to those employees who retired under the provision prior to October 1,1971.

For purposes of clarification, the following definitions are used:

Group I A — Employees in shutdown departments presently working in other departments and who Union claims should have been given an election to take 75/80 pensions.
Group I B — Employees still working whose jobs were amalgamated or job descriptions changed (primarily skilled trades).
Group II — Employees laid off and presently collecting 75/80 pensions.
Group III — Employees laid off.
Group IV — Employees laid off but later recalled to work.

No facts being in dispute, this Court finds the facts to be as outlined in its original Memorandum opinion.

Conclusions of Law

1. Group I-A employees are entitled to elect to retire and receive 75/80 pensions.

2. Group I-B employees are not entitled to elect to retire and receive 75/80 pensions.

3. Employees who did not sign the protest forming the basis of this lawsuit cannot now protest and be entitled to an election with Group I-A employees for 75/80 pensions.

4. Deceased employees have no further rights under the contract or pension agreement and will not be considered. Sick employees in Group I-A have an election now to retire on 75/80 pensions upon termination of sick leave or have a job available on return from sick leave (seniority permitting). Employees retired on 60/30 pensions must remain on those pensions and will not be given an election to return to work.

5. If any jobs are open due to Group I-A employees electing 75/80 pensions, then Group II and Group III employees will be called in (in seniority order from a combined seniority list of Group II and Group III) to fill said jobs. If any employees in Group II presently on 75/80 pensions, elect not to return to work, they will remain on said pensions.

6. The three Plate Mill employees, in Group II, who were bumped by Group I employees and who retired on 75/80 pensions, may, if reached in any recall procedure, elect either to return to work or to continue to receive 75/80 pension benefits if they do not elect to return to work.

7. Employees in Group I-A who elect to retire, will be deemed to have retired, for purposes of Section 2.4 of the Pension Plan, on August 27, 1971. Such employees will receive said 75/80 pension benefits on the first day of the month next following the month in which they actually terminate active employment with the company. The pension rate which such employees receive will be the rate in effect on August 27, 1971, provided that such employees shall also be entitled to receive any increases negotiated subsequent to such date, which are applicable to employees retiring on such date.

8. Jobs will be filled in accordance with established past practice, based on the determination of the Company as to the open job for which the returning employee is most qualified. There shall be no preference of job assignments by reason of seniority. If any employee is refused a job solely because of physical infirmity based on a report from the Company clinic, and said employee obtains a letter from his doctor stating that the employee is physically capable of performing the job, the question of employee’s physical competence shall be submitted to an impartial medical arbitrator appointed by the Company clinic and the employee’s doctor. Expenses of the independent physician shall be shared equally by the Company and the Union.

9. Employees in Group II, presently receiving 75/80 pensions, will not be entitled to any back pay if they elect to return to work. Employees in Group III eligible to receive back pay pursuant to paragraphs 5 and 12 hereof, will receive back pay at the average base rate of all jobs which Group I-A employees leave or which become available due to the retirement of Group I-A employees, and which are not filled by returning Group II employees. It is the order of this Court that such back pay be determined by 40 hours straight time, excluding any incentive pay, overtime or other premium, for each week laid off, provided that any increase in the applicable base rate occurring subsequent to August 27, 1971 shall be included in the computation of such damages, such increase being effective for the purposes of computing damages on the date it becomes effective as to all employees in the bargaining unit. Subtracted from this amount will be all outside earnings, Workmen’s Compensation, unemployment compensation and sick and accident benefits actually received by that employee eligible to receive back pay. If the State of Michigan recovers unemployment compensation or makes a demand on any employee for repayment thereof, the Company shall reimburse the employee for all such sums collected or pay the employee all sums for which demand for repayment has been made. Such payments shall occur within two (2) weeks after the Company has received notice from the employee that such recovery has occurred or that such demand has been made. The Company may require the employee to submit reasonable proof of such recovery or such demand.

10. Employees in Group III returning to jobs after having been laid off will be credited with service for the entire period of their absence both for purposes of pension and for purposes of all other contractual benefits including but not limited to vacation benefits. Regarding vacation benefits, said employees will receive their guaranteed vacation benefits in the calendar year u which they return to work. Such employees will retain their established seniority date. Employees in Group II returning to jobs after having been pensioned will be credited with service for the entire period of their absence for purposes of pension benefits, but for no other purposes. Said employees will retain their established seniority date.

11. Only those jobs still remaining on the date that all appeals from this order are exhausted are to be considered. No employees have recall rights or back pay rights to jobs eliminated after September 1, 1971 and before the date that all appeals from this order are exhausted.

12. This is a final order determining the rights of all parties on the question of liability. Defendant may have a stay of execution during exhaustion of all appeals. After said exhaustion of appeals, Group I-A employees shall be given 48 hours to elect to receive a 75/80 pension or to continue working. If no election is made, the employee will be deemed to have elected to remain working. All vacant jobs will be posted within the plant pursuant to the Collective Bargaining Contract and remaining working employees shall have 48 hours. to bid on these jobs. Registered letters, return receipt requested, shall be sent to the senior people in Group II and Group III for filling vacancies created. Said employees shall have five working days to respond to said letters and if no response is received, the employee shall be deemed to have elected to not return to work. If such an employee contacts the Company and expresses his intention to return to work, but indicates that it is impossible for him to report to the Company within the five day period, he shall be given a reasonable period of time within which to report. His failure to report within this extended time shall be deemed to be a waiver of his right to return. As soon as an election is made by any of these employees not to return to work, other registered letters will be sent out to the next senior employees in Group II and Group III and the above same procedure will be followed. Returning employees will be trained and placed as fast as possible, and employees in Group I electing to receive pensions will be retired as soon as their job has been filled with a trained man, but in no case later than the first day of the third month following the exhaustion of all appeals. If there are no jobs which a returning employee can perform, that employee must remain on layoff or pension, subject to the stipulated provisions regarding physical infirmity and disability set forth in the physical infirmity and disability provision of paragraph 5.

The Findings of Fact and Conclusions of Law of this Court on issues numbered 2, 3, 4, 5, 8, 11 and 12 are wholly based on the stipulation which the parties have made as to those issues to facilitate this litigation, and this Court, therefore, incorporates the same herein.

Wherefore, it is ordered by this Court that:

1. The parties shall comply with the provisions of paragraphs 1-12 of this opinion.
2. The Defendant shall pay damages to Plaintiff in the amount to be determined under the provisions of Paragraph 9.
3. The Defendant shall pay Plaintiff’s costs, but not attorney fees.
4. The Defendant shall have a stay of execution of this order pending exhaustion of all appeals, as provided in Paragraph 12 hereof.
/s,/ John Feikens
United States District Judge
Dated: June 9, 1972.

      . 29 U.S.C. § 185.

      . The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) and Local 174.