author: PER CURIAM: COOPER, Trial Judge:

text:
    Julius PETROFSKY, d/b/a Petrof Trading Company v. The UNITED STATES.
    No. 840-71.
    United States Court of Claims.
    Dec. 19, 1973.

      Robert Sheriffs Moss, Washington, D. C., atty. of record, for plaintiff.
    Steven J. Bercik, Elizabeth, N. J., with whom was Acting Asst. Atty. Gen., Irving Jaffe, for defendant.
    Before DAVIS, KASHIWA and KUN-ZIG, Judges.
   ON PLAINTIFF’S AND DEFENDANT’S MOTIONS FOR SUMMARY JUDGMENT

PER CURIAM:

This case comes before the court on the parties’ request for review by the court of the recommended decision, filed March 23, .1973, by Trial Judge Hal D. Cooper pursuant to Rules 166(e) and 54(b). The court has considered the case on the briefs and oral argument of counsel.

On the issue of the loading-charge refund, the court stresses, perhaps somewhat more than the trial judge did in his opinion, that the plaintiff should have been aware, from the time he received the invitation for bids for the contract in suit, that at the best (from his viewpoint) there was a very serious question whether the loading charge was to be assessed on a gross-weight or a net-weight basis. In the circumstances — including the various terms of the contract, the size of the loading charge, and the disparity between the price to be bid per unit of gunpowder and the loading charge — it was not reasonable to assume silently, without making any inquiry at all, that the loading charge would be imposed on the net-weight basis. This was clearly a ease in which, from the contractor’s standpoint, a pre-bid inquiry was mandated if he wished to have the issue resolved in his favor. See Space Corp. v. United States, 470 F.2d 536, 539, 200 Ct.Cl. 1, 5 (1972); Merando, Inc. v. United States, 475 F.2d 598, 201 Ct.Cl. 19 (1973).

Since the court agrees with the recommended decision of the trial judge, as hereinafter set forth, it hereby affirms and adopts the same, together with the above, as the basis for its judgment in this case. Therefore, plaintiff’s motion for summary judgment under Count I is granted, and defendant’s cross-motion is denied, for the purchase price refund in the stipulated sum of $570.18. Plaintiff’s motion for summary judgment with respect to the loading-charge refund is denied and defendant’s cross-motion is granted with the petition dismissed as to it. Defendant’s motion for partial summary judgment as to Counts II and III is denied and the case is remanded to the trial judge for trial on those two counts.

Opinion of Trial Judge

COOPER, Trial Judge:

This case arises out of a contract dated August 19, 1960, for the sale to plaintiff of 53,537,460 pounds of smokeless gunpowder at prices ranging from $0.-00001 to $0.001 per pound of powder for a total contract price of $2,318.70. Due to the hazardous nature of the materials, located at several different Naval Ammunition Depots (NAD), the contract made it “mandatory that loading be performed by the Government for the account of the purchaser.” The parties negotiated a schedule for the removal of the powder from each ammunition depot and under the terms of the contract, plaintiff agreed to pay the various holding activities, in advance, a fixed loading charge for their services.

Plaintiff removed 49,546,467 pounds of powder during the contract period of performance which expired on August 19, 1962. Since plaintiff paid for 3,990,993 pounds of powder he did not receive, defendant computed and refunded a portion of the purchase price. In addition, certain advance deposits that had been credited toward loading charges were also refunded. Plaintiff challenged the Government’s computation of both these figures and asserted that he was entitled to further refunds under the terms of the contract. His request for an additional refund was denied by the contracting officer and a timely appeal was filed with the Armed Services Board of Contract Appeals (hereinafter ASBCA or Board).

In Count I of the petition herein, plaintiff seeks review under Wunderlich Act standards of the decision of the ASBCA which sustained the actions of the contracting officer and denied plaintiff’s claims for further refunds of the purchase price and loading charges in the amounts of $570.18 and $66,525.69, respectively. In Count II of the original petition and Count III of the amended petition, plaintiff sues to recover the sums of $250,000 and $300,000, respectively, as damages suffered as a result of defendant’s alleged breach of its contractual obligations.

In its answer and by cross-motion for partial, summary judgment, defendant asks the court to sustain the administrative decision at issue in Count I and to rule in its favor on any of several affirmative defenses which would'in effect result in the dismissal of most of the claims set forth in Counts II and III.

It is concluded, for the reasons set forth below, that plaintiff’s motion for summary judgment under Count I should be granted for the purchase-price refund but denied with respect to the loading-charge refund and that defendant’s motion for summary judgment on Counts II and III should be denied.

The history of this controversy is set out in detail in the Board’s decision and only the pertinent facts need be summarized here before proceeding to a consideration of the merits of the motions.

In January 1960, the U.S. Naval Weapons Plant, Supply Department, Washington, D.C., advertised the sale of 112,000,000 pounds of smokeless gunpowder stored in several ammunition depots throughout the United States. In response, plaintiff, who was engaged in the business of purchasing Government surplus property, submitted a bid at prices ranging from $0.00001 to $0,001 per pound of powder. The defendant rejected most of the bids, apparently for the reason that the minute prices were too low to cover the Government’s cost of handling and loading the materials. As a result, only 10,500,000 pounds of the powder were sold, none of which was awarded to plaintiff.

On March 4, 1960, the Government published a Request for Quotations (RFQ) on 99,774,940 pounds of powder. Plaintiff again submitted a bid but, again, the bids submitted by plaintiff, and other contractors, were insufficient to cover the Government's handling costs and only 1,100,000 pounds of powder were sold, none to plaintiff.

In late April and early May 1960, plaintiff attempted to negotiate a contract with the defendant in Washington, D.C., by raising his prices slightly during several negotiating sessions. These efforts, however, proved to be unsuccessful.

Finally, the contracting officer informed plaintiff that the Government wanted to include a separate provision in the contract to cover its loading costs because previous awards with minute quotations were lower than it was costing the Government to load the materials. Eventually, the contracting officer obtained estimates of loading costs from the various depots and determined a fixed loading charge for handling the powder.

On May 31, 1960, defendant issued Sales Invitation No. B-80-60-171 (IFB) for the sale of 95,910,630 pounds of powder.

Item 1 of the IFB listed the powder for sale by caliber, type, location, and net pounds available in individual lots numbered (1) to (95). Item 2 solicited an aggregate bid for the whole quantity of powder.

On or about June 24, 1960, plaintiff submitted a bid for 53,537,460 pounds of the powder, in containers, at prices ranging from $0.00001 to $0.001 per pound of powder, for a total contract price of $2,318.70. On August 18, 1960, plaintiff attended a conference with the contracting officer and other officials in Washington, D.C., for the express purpose of negotiating a schedule for removal of the powder from the various depots, and assuring defendant that plaintiff was capable of complying with the terms and conditions of the contract. Plaintiff’s bid was accepted and Contract No. N-171-21478A was awarded on August 19, 1960. On or about this same date, plaintiff paid the full purchase price of $2,318.70.

Under the terms of the contract, plaintiff agreed, inter alia, to remove the purchased powder from all of the specified depots within a 12-month period (August 19, 1960 to August 19, 1961), except for Hastings, where a second-year period was provided (August 19, 1961 to August 19, 1962). Later the 1-year period was extended from August 19, 1961 to May 18, 1962, by several contract amendments.

Plaintiff proceeded to remove powder from the depots until May 18, 1962. At that time, defendant terminated the contract with respect to gunpowder remaining at all of the depots except Hastings. The contract was terminated with respect to gunpowder remaining at Hastings on August 19, 1962. Upon termination, plaintiff had removed a total of 49,546,467 pounds of powder, leaving some 3,990,993 pounds of powder for which plaintiff had paid but had not received.

With this historical background, the merits of the parties’ respective contentions under Count I will first be considered, followed by a consideration of the motion for summary judgment as to Counts II and III.

Loading-Charge Refund

The parties are in agreement that plaintiff was to pay defendant a fixed charge for loading the powder, pursuant to ft 21 of the contract, which reads in its entirety:

21. LOADING. Due to the inherently dangerous nature of the Smokeless Powder, it is mandatory that loading be performed by the Government for the account of the purchaser. The Government agrees to load on board carrier at location of material in carload or truckload lots and in one operation only unless the material sold hereunder is ordinarily shipped in less than carload lots. In the latter case the Government agrees to load on board carrier as the Purchaser’s shipping orders may direct. If the Purchaser’s shipping orders do not specify the freight classification or if the freight classification is incorrect, the Government is authorized to select the appropriate freight classification to carry out the Purchaser’s shipping orders. The cost to load will be $.0036 per pound. Loading charges will be paid by the Purchaser directly to the Holding Activity in advance. Payment will be cash, certified check, cashier’s check, or money order payable to the Treasurer of the United States. The Purchaser and the holding activity will arrange an acceptable loading schedule.

The issue presented is whether the loading charge of “$.0036 per pound” was to be assessed, as defendant contends, on a gross-weight basis, i.e., weight of powder plus weight of container, or, as plaintiff argues, on a net-weight basis, i.e., weight of powder only. Since this issue involves the interpretation of contractual provisions, it is basically a question of law on which the court may independently reach its own conclusion. J. W. Bateson Co. v. United States, 450 F.2d 896, 196 Ct.Cl. 531 (1971); Jamsar, Inc. v. United States, 442 F.2d 930, 194 Ct.Cl. 819 (1971).

In resolving this issue, it is fundamental that the provisions of a contract are to be so construed as to effectuate the spirit and purpose of the contract. Global Van Lines, Inc. v. United States, 177 Ct.Cl. 829, 836 (1966). Here, the purpose of the loading charge was well understood by both parties. As plaintiff testified:

He [the contracting officer] told me that the Government was interested in recovering what they figured it cost them to load out the powder, at least to recover that. He said they wanted to at least recover the amount of money that it cost them to load the stuff out. This is the way I interpreted it. This is the way I understood it.

Given then this mutually understood purpose of the loading charge, the question is what was plaintiff to pay for at the specified rate of “$.0036 per pound”? The answer, in simple terms, would appear to be that he was to pay at that rate for, and defendant could reasonably expect to be paid at that rate for, each and every pound loaded on board plaintiff’s carriers. Since, by specifying a “per pound” charge, the parties plainly intended the charge to be dependent on the weight of the goods physically loaded on board plaintiff’s carriers and, since the weight defendant was obliged to load consisted of both the powder and the containers in which the powder was stored, the “per pound” charge, would seem to apply to both. Most certainly, there is nothing in fí 21 that would limit the per-pound charge only to the weight of the powder.

Nor is there anything in any other of the provisions that would suggest the loading charge was to apply only to the weight of the powder. In fact, the contract language repeatedly couples the powder with the containers. For example, the heading to Item 1 in the IFB reads:

Item 1. Bid for any quantity of smokeless powder (in containers)' listed and described below. Bidder will indicate on following lines, exact quantity desired and amount of his bid; [Emphasis added.]

Immediately following the 95 lots of powder for sale, there appear instructions which read in pertinent part:

Item 1 (continued). Bid shall be made for any or all of the smokeless powder (in containers) listed in Item 1(1) to (95). * * * [Emphasis added.]

On the same page as the above, Item 2 states:

Item 2. Alternate Bid. This item consists of all smokeless powder (in containers) listed and described in Item 1(1) to (95) inclusive. * * * [Textual emphasis added.]

Under the heading ADDITIONAL INFORMATION, the weight of powder and containers, and the type of packing, were listed separately for each depot, as for example:

NAD HASTINGS, Nebraska:
1,000,000 lbs. are packed in wooden boxes, zinc lined net weight 150 lbs. each, gross 193 lbs. ea.
29,677,800 lbs. are packed in SP MK. 7 metal boxes, net weight 110 lbs. each, gross 148 lbs. ea.
10,000 lbs. are packed in 8"/55 MI 10-0 tanks, net weight 60 lbs. each, gross 92 lbs. ea.

And, on page 14, the contract expressly provides that:

No deduction will be made for the weight of containers. This property is offered for sale in containers, weight of material to include weight of containers.
* * *- * ->:• ->:•

Plaintiff argues that the loading provision (if 21) does not refer to the quoted clause on page 14 of the contract and that the terms and location of that clause indicate that it is not applicable to the loading charge.

However, it is settled that “[a] contract must be considered as a whole and interpreted so as to harmonize and give meaning to all of its provisions.” Victory Carriers, Inc. v. United States, 467 F.2d 1334, 199 Ct.Cl. 410 (1972). As this court stated in Hol-Gar Mfg. Corp. v. United States, 351 F.2d 972, 979, 169 Ct.Cl. 384, 395-396 (1965), “an. interpretation which gives a reasonable meaning to all parts of an instrument will be preferred to one which leaves a portion of it useless, inexplicable, inoperative, void, insignificant, meaningless or superfluous.” Plaintiff’s attempt to isolate If 21 from the other provisions of the contract is inconsistent with these settled principles.

Plaintiff further contends that since the loading charge does not specify net or gross weight of material, his interpretation of the contract as calling for loading charges on a net-weight basis was reasonable. In support of this contention, it is argued that all references in the contract to the word “pounds” denotes a net weight of material and this, together with the fact he was bidding for powder on a net-weight basis, made it reasonable to assume the loading charge would be assessed on a net-weight basis as well.

However, all references in the contract to the word “pounds” did not denote net weight of material for, as previously indicated, the weight of the containers and the gross weight of the powder were also set forth. Nor does the net-weight basis on which bids were submitted provide support for plaintiff’s position. The sale of goods and the loading of goods are two entirely different functions. As to the former, the sale price represents remuneration to the owner for the goods themselves while, as to the latter, the loading charge represents remuneration for the physical act of loading the goods, cf. The Bill, 55 F.Supp. 780, 783 (D.Md.), aff’d per curiam, Lorentzen v. Brazil Oiticica, Inc., 145 F.2d 470 (4th Cir. 1944).

As plaintiff well knew, the loading charge was a special charge based on considerations wholly independent of the sale price of the powder. As to the sale of the powder, the Government was willing to, and in fact did, sell at prices substantially below its actual cost. But, as to the loading cost, the Government insisted, as a precondition of sale, on recovery of those costs. To assume that the same net-weight basis would apply both to sale price and loading costs, despite the very different nature of the two and the very different considerations involved, was unreasonable.

Indeed, it would seem obvious, as a matter of common experience, that any charge, be it for hauling or loading assessed on a “per pound” basis, would apply to the gross weight of the goods to be hauled or loaded. Where the goods are stored in containers, and both the goods and the containers are to be hauled or loaded, it seems equally obvious that, in the absence of express language to the contrary, the per-pound charge would be levied on the combined weight of the goods and the containers.

It is also worthy of note that, in the IFB, the following notation appears on 12 separate pages:

ATTENTION IS INVITED TO THE CHARGE FOR GOVERNMENT LOADING. SEE PARAGRAPH 21 ON PAGE 4 OF THE INVITATION.

Notwithstanding these notable references, and in the face of a loading charge which, according to plaintiff’s testimony, he considered to be “inordinately high,” plaintiff never inquired, prior to award, either as to the basis for the $0.0036 figure or whether it would be levied on the gross or net weight of the powder.

Having adopted, without inquiry, an interpretation that, under the circumstances here present, was not a reasonable one, there is no basis for invoking the contra proferentem rule urged by plaintiff. Bishop Eng’r Co. v. United States, 180 Ct.Cl. 411, 416 (1967); Jamsar, Inc. v. United States, 442 F.2d 930, 194 Ct.Cl. 819 (1971).

Finally, plaintiff’s brief enumerates several factual findings by the Board that plaintiff contends are erroneous or unsupported by substantial evidence. After reviewing the entire record and each contention of plaintiff, it is concluded that it is unnecessary to discuss each and every one of these findings. There are sufficient undisputed findings of fact, together with the contract itself, to support the result reached by the Board.

Plaintiff’s motion, insofar as it seeks a loading-charge refund, is denied and defendant’s motion is granted.

Sales Price Refund

Plaintiff also asserts under Count I that defendant incorrectly computed a refund of the purchase price for powder he had paid for but did not receive.

In particular, it is contended that the powder was purchased on a netweight basis and that, in computing the refund, the net weight of powder delivered should be deducted from the net weight of the power purchased. Defendant, on the other hand, argues that plaintiff agreed to purchase the powder on a gross-weight basis and that the refund was correctly calculated by subtracting the gross weight of powder delivered from the net weight bid upon and applying the unit price to the difference.

Since this issue also involves the interpretation of contract language — a question of law- — the court is not bound by the Board’s legal determinations but may independently examine the provisions in dispute and reach its own conclusion.

There is no dispute that defendant’s objective in putting the powder up for sale was to dispose of the entire 95 lots of powder. Nor is there any dispute that the 95 lots itemized in the IFB listed the powder at its net weight. The record further establishes that both parties understood that the bids submitted were on a net-weight basis.

Under |f 19 of the section entitled “Additional Provisions,” the contract required that the successful bidder pay the full purchase price in advance of removal of the powder. In awarding the contract to plaintiff, defendant, in a letter dated August 19, 1960, listed the “[tjotal price of material” at $2,318.70. This figure represented plaintiff’s bid on a net-weight basis. As required by IT 19, plaintiff paid this full amount in advance and defendant stamped the award letter “Paid.”

From this brief recitation of undisputed facts, it is apparent that the net weight of the powder formed the basis on which bids were solicited and on which bids were submitted, as well as the basis on which plaintiff’s bid was accepted. It also formed the basis on which advance payment of the “full purchase price” (IT 19) was accepted by defendant.

Paragraph 20 of the contract specified how refunds were to be computed. That provision reads, in pertinent part:

* * * jn tjje eVent of a shortage the Government will refund to the Purchaser the difference between the quantity paid for and the quantity delivered, calculated upon the basis of the unit prices set forth in this contract.

Since both the “quantity paid for,” as represented by defendant’s acceptance of the full purchase price, and the “unit prices” bid were on a net-weight basis, it would seem logical that the “quantity delivered” should be computed on the same basis of measurement.

Both the Board and defendant rely heavily on the previously quoted clause on page 14 of the contract to support the contention that the sale of powder was on a gross-weight basis. However, that interpretation is plainly inconsistent with defendant’s acceptance of plaintiff’s payment of $2,318.70 as the “full purchase price” for 53,537,460 pounds (net) of powder. This contemporaneous construction of the contract, before it became the subject of dispute, is entitled to great weight. Pacific Far East Line, Inc. v. United States, 394 F. 2d 990, 184 Ct.Cl. 169 (1968).

Moreover, defendant’s present interpretation of the contract is inconsistent with its objective in placing the powder for sale. This objective was to dispose of a certain quantity of unwanted powder. By soliciting and accepting bids on a net-weight basis, defendant committed all of the powder itemized in the contract. Yet, if deliveries to purchasers were to be credited, as defendant now contends, on a gross-weight basis, this would mean that no purchaser would receive the quantity of powder for which he bid and paid, and defendant would be left with substantial quantities of unwanted powder.

In fact, consistent with the objective of the contract, the statement on page 14 that “[n]o deduction will be made for the weight of containers” suggests that the weight of the containers could not be used as a basis for reducing the amount of powder the successful bidder was obligated to remove.

It is concluded that the refund should have been computed on a net-weight basis, consistent with the basis on which the bids were solicited and accepted. Accordingly, plaintiff’s motion, to the extent it seeks a purchase-price refund, is granted, defendant’s motion is denied, and plaintiff is entitled to recover the stipulated amount of $570.18.

Breach of Contract Claims

Counts II and III of the original and amended petitions, respectively, allege breach of contract claims for damages suffered as a result of defendant’s activities, or lack thereof. In Count II, plaintiff contends that his failure to remove all the purchased powder from the depots within the time specified in the contract was without his fault or negligence but was directly attributable to the actions of the various depots. Such actions, plaintiff says, include, but are not limited to, delaying the loading of powder, granting loading preferences to other depots, and actively interfering with the removal operations. Thus, it is asserted that defendant breached its contractual obligations, thereby denying plaintiff the resale value and profits of the undelivered powder in the amount of $250,000.

Count III, framed as an alternative to Count II, alleges defendant failed either to place the unremoyed gunpowder in storage or to sell it for plaintiff’s account, contrary to the requirements of f[ 7 of the contract, thereby breaching the contract and denying plaintiff the resale value and profits of the undelivered powder in the amount of $300,000.

Defendant has asserted defenses of estoppel, waiver, and accord and satisfaction as to Counts II and III and has moved for partial summary judgment as to those defenses.

Plaintiff’s contract called for the removal of powder from all depots except Hastings within 1 year of August 19, 1960, the date of award. By amendment to the contract dated September 20, 1961, as revised November 17, 1961, plaintiff was granted an extension of 180 days for the removal of powder from all depots except Hastings. This extended the removal deadline to February 18, 1962, and established storage charges as authorized by jf 7 of the contract.

By letter of February 7, 1962, plaintiff requested a second extension of time, from February 18, 1962 to May 18, 1962, with respect to all depots except Hastings. This letter described the Government’s alleged interference with his orderly removal of powder and then stated as follows:

The Petrof Trading Company will give up all right and claim to any property not removed by the May 18 closing date without consideration for shortages or overages; packing shortages ; discrepencies [sic] in nomenclature presently known; packing containers etc. It is understood that property removal from other installations will not change the present final property removal date of Aug. 18, 1962 from NAD, Hastings, Nebraska. All catalogue quantities overages at NAD, Crane, Indiana are to be included as previously authorized. Rail cars are expected to be loaded to full capacity.
If the foregoing request is favorably acted upon and the orderly removal of the property is not seriously impaired by conditions beyond Petrof Trading Co., control, the Petrof Trading Co. agrees to request no further extensions, quantity adjustments or other considerations in the administration or completion of subject contract.

On February 16, 1962, the contracting officer, in a letter addressed to three contractors including plaintiff, extended the expiration date to May 18, 1962. Since defendant places heavy reliance upon this correspondence in support of its affirmative defenses, the entirety of the letter is set forth:

1. Consultation of Defense Supply Agency, Bureau of Naval Weapons Representatives, the Contracting Officer and certain contractors have recently been held in order to evaluate contractor(s) performance and Government caused problems in property removal under subject contracts. It has been decided to approve contractor (s) requests for an additional (second) extension for removal of residual quantities of Smokeless Powder included in these contracts. The new contract expiration date for property removal is Friday, 18 May 1962.
2. In consideration for this extension, the contractors have agreed to waive all other claims, other property removal date extensions or special considerations by the holding activities in completion of property removal. -
3. For those contracts which expired prior to 18 February 1962, there will be no storage charges assigned for Smokeless Powder retained in Government Magazines between the adjusted expiration date and 18 February. Storage charges will be assigned for property retained between 18 February and removal date.
4. The cooperation of contractors and holding activities in expediting the “clean up phase” of these contracts is earnestly solicited.

On May 18, 1962, the contract was terminated as to the remaining unre-moved powder.

Defendant first contends that plaintiff is barred from asserting the claim set out in Count II by the doctrine of equitable estoppel. Emphasizing plaintiff’s request for an extension of time in his letter of February 7, 1962, and his statement that he “will give up all right and claim to any property not removed by the May 18 closing date without consideration for shortages * * *,” defendant argues that, in reliance on this statement, the Government changed its position by agreeing to the amendment extending the contract expiration date and that plaintiff accepted the benefits of such an extension. This, defendant argues, should equitably estop plaintiff from presenting a claim for any shortage in the amount of powder received under the contract.

A close examination of the precise language of plaintiff’s February 7, 1962 letter reveals that plaintiff's statement that he will give up certain rights and claims is not an unequivocal, unconditional or unqualified declaration without any suggestion of reservation. The entire tone of the February 7 letter, read as a whole, appears to condition plaintiff’s statement in terms of future obligations on the part of the Government. In the beginning of the letter, plaintiff sets forth the alleged interfering activities of defendant which he says necessitated the request for a second extension. In the final paragraph, he speaks in terms of no additional requests if plaintiff’s removal of the property “is not seriously impaired by conditions beyond [his] control.”

The only fair and sensible reading of the correspondence is that plaintiff agreed “to waive all other claims * * * ” for unremoved powder in consideration for the second extension, provided his removal activities were not seriously impaired by the actions of the depots.

Neither party has pointed to any evidence, either in the administrative record or by affidavit, that would indicate whether the removal operations during the extended period were hampered by actions of the depots, although plaintiff does allege that they were.

The doctrine of equitable estoppel is founded on morality and justice with “conscience and equity its concern.” Harvey Radio Labs., Inc. v. United States, 115 F.Supp. 444, 449, 126 Ct.Cl. 383, 391 (1953), cert. denied, 346 U.S. 937, 74 S.Ct. 377, 98 L.Ed. 425 (1954). Here, unresolved issues of fact preclude a finding that either good conscience or concepts of fair dealing require invoking an estoppel against plaintiff. It is an implied condition of every contract that “neither party to the contract will do anything to prevent performance thereof by the other party or that will hinder or delay him in its performance.” Wah Chang Corp. v. United States, 282 F.2d 728, 733-734, 151 Ct.Cl. 41, 49 (1960). It is simply unknown whether, in fact, defendant did breach its implied obligation by interfering with plaintiff’s orderly removal of powder during the extended removal period. If it did, and this can only be determined at trial, there would be no basis for an estoppel.

Moreover, it is the usual rule that the acts, conduct or declaration of the party estopped must be such as to lead the other party in reliance thereon, to change his position to his detriment. Mahoning Inv. Co. v. United States, 3 F.Supp. 622, 629-630, 78 Ct.Cl. 231, 246-247 (1933), cert. denied, 291 U.S. 675, 54 S.Ct. 526, 78 L.Ed. 1064 (1934). Detrimental reliance is an essential element of the estoppel. Williamsburg Drapery Co. v. United States, 369 F.2d 729, 736, 177 Ct.Cl. 776, 789 (1966). The change of position here asserted by defendant is the grant of the extended removal period; however, it is not clear from the present record that this constituted any detriment to defendant.

Alternatively, defendant argues that plaintiff’s acceptance of the modification of the contract closing date constituted a waiver of whatever claims plaintiff might have had at the time the extension was granted. However, any waiver contained in the letter of February 7, 1962, was, at best, a conditional one. Whether the condition precedent to the promise to “give up all right and claim” to unremoved powder was in fact fulfilled is an unresolved issue of fact which precludes the grant of summary judgment.

Defendant further argues that it “might also be possible to view this transaction as an accord and satisfaction.” However, this is not a ease where the parties have completed performance of a contract and, after negotiations, executed a release of “all claims of any kind or description under or by virtue of” the contract, United States v. Wm. Cramp & Sons, 206 U.S. 118, 127-128, 27 S.Ct. 676, 678, 51 L.Ed. 983, (1907); nor is this a situation where the parties have bargained at length for additional compensation in satisfaction of all outstanding claims. Brock & Blevins Co. v. United States, 343 F.2d 951, 170 Ct.Cl. 52 (1965). At most, the contract amendment, to the extent it can be viewed as an accord, was partially ex-ecutory, depending in part for its completion on the future, unimpaired, orderly removal of the powder. Whether such removal was orderly and unimpaired remains to be determined at a trial.

Finally, defendant also asserts that plaintiff’s acceptance of a refund of a portion of the purchase price, together with the stipulation of the parties regarding the amount of the refund if plaintiff’s net-weight theory is sustained, now estops plaintiff from asserting Count III and, moreover, comprises an accord and satisfaction with respect to all claims.

Neither defense can be sustained. The stipulation, and the portion of the refund accepted by plaintiff, relate only to the amount of money due plaintiff as an adjustment for the variation in quantity delivered under [¶] 20 of the contract. Neither was intended to compensate plaintiff for alleged breach of contract. Nor is there anything in the terms of the stipulation that could be construed as a release of plaintiff’s claim for damages.

It is, of course, apparent that plaintiff’s claim for return of a portion of the purchase price is in the nature of a claim for restitution and it is generally the rule that restitution and a suit for damages are alternative remedies. Restatement of Contracts, § 384 (1932); 5A A. Corbin on Contracts § 1217 (1964). However, neither principles of election of remedies nor discharge by merger should preclude plaintiff from proceeding with his claim for damages in the circumstances of this ease. The claim for a refund was one that plaintiff had to pursue administratively, while the claim for damages for breach is one that could not have been pursued in that forum. Had the forum been the same for both claims, plaintiff could have pleaded both claims simultaneously but alternatively. There is no reason to place plaintiff under a greater handicap simply because of the bifurcated nature of the procedures under which those contracting with the Government must seek relief when both a disputes claim and a breach claim arise from the same contract. Rather, no prejudice to defendant being apparent from plaintiff’s withholding his claim for damages pending an administrative decision on his claim for a refund, plaintiff should be permitted to assert a claim for damages in his petition in this court. Cf. Air-A-Plane Corp. v. United States, 408 F.2d 1030, 1034-1036, 187 Ct.Cl. 269, 278-280 (1969); Nager Elec. Co. v. United States, 368 F.2d 847, 177 Ct.Cl. 234 (1966).

Based upon the foregoing, it is concluded that summary judgment on the affirmative defenses of estoppel, waiver, and accord and satisfaction should be denied.

Conclusion

Plaintiff’s motion for summary judgment under Count I is granted, and defendant’s cross-motion is denied, for the purchase price refund in the stipulated sum of |570.18. Plaintiff’s motion for summary judgment with respect to the loading-charge refund is denied and defendant’s cross-motion is granted with the petition dismissed as to it. Defendant’s motion for partial summary judgment as to Counts II and III is denied and the ease is remanded to the trial judge for trial on those two counts.

      . 68 Stat. 81, 41 U.S.C. §§ 321-322 (1964).

      . ASBCA No. 11863, 70-1 BCA If 8272. On Motion for Reconsideration, 71-2 BCA If 9074.

      . The parties entered into a posthearing stipulation (February 11, 1970), wherein the amount of each refund due plaintiff was agreed upon if the Board decided in plaintiff’s favor.

      . Plaintiff’s motion for a trial de novo on these two counts has been granted.

      . The parties have stipulated that on plaintiff’s net-weight theory, plaintiff would be entitled to a loading-charge refund of $66,525.69.

      . The record indicates that the powder had deteriorated to an unstable condition and it was for this reason that the Government sought, by sale, to dispose of the powder.

      . Defendant excludes from its motion the claim under Count II relating to the ammunition depot at Hastings, Nebraska. Although no formal motion has been filed with respect to Count III, defendant’s answer to that count incorporates by reference the motion as to Count II and the motion will be treated as extending to both counts.

      . Of course, plaintiff should not receive both the full value of the performance promised him as well as restitution of the full value of what he gave for it, so the refund should be credited against any damages plaintiff receives, should he make out a case for breach of contract.


source: Caselaw Access Project

author: J. JOSEPH SMITH, Circuit Judge:

license: Public Domain

text:
    Fergus M. SLOAN, Plaintiff-Appellant, v. NEW YORK STOCK EXCHANGE, INC., Defendant-Appellee. John J. VILLANI and Donald Eucker, Plaintiffs-Appellants, v. NEW YORK STOCK EXCHANGE, INC., Defendant-Appellee.
    Nos. 213, 343, 344, Dockets 73-1140, 73-1656, 73-1812.
    United States' Court of Appeals, Second Circuit.
    Argued Oct. 25,1973.
    Decided Dec. 11, 1973.

      Judith S. Kaye, New York City (01-wine, Connelly, Chase, O’Donnell & Wey-her, New York City, James E. Tolan and Joseph C. Kaplan, New York City,' of counsel), for appellant Sloan.
    Mark F. Hughes Jr., New York City (Kraft & Hughes, Newark, N. J.), for appellants Villani and Eucker.
    Russell E. Brooks New York City (Milbank, Tweed, Hadley & McCloy, New York City., David F. Jurca, New York City, of counsel), for appellee.
    Before SMITH, FEINBERG and OAKES, Circuit Judges.
   J. JOSEPH SMITH, Circuit Judge:

This is an appeal from a decision of the United States District Court, Southern District of New York, Morris E. Lasker, Judge, 348 F.Supp. 1185, October 3, 1972, as amended March 15, 1973, 367 F.Supp. 1124, denying appellants’ motions for preliminary injunc-tive relief. We affirm.

Until 1970, appellants John J. Villani, Donald Eucker and Fergus M. Sloan were partners in Orvis, a member firm of the New York Stock Exchange (Exchange). In the summer of that year, the Exchange ordered the liquidation of Orvis because the firm was in severe financial difficulty. During the Orvis liquidation, the Exchange determined that Orvis had a deficit of five million dollars, and pursuant to an agreement signed by the Orvis partners the Exchange began paying that money to creditor Orvis customers from the Exchange’s Special Trust Fund.

The Exchange next began an investigation of the Orvis collapse, which ended in charges being brought against the Orvis partners, including appellants. Appellants denied any guilt and asked to see all documents in the possession of the Exchange relating to their case. The Exchange refused to give them access to documents other than those which the Exchange planned to use against appellants.

One week after it brought charges against appellants, the Exchange commenced a civil suit against the Orvis partners to recover the five million dollars it had paid from its fund. The claims of misconduct in that civil suit are essentially the same as those directed against appellants in the disciplinary proceeding. Appellant Sloan and several other partners counterclaimed in the civil suit, alleging misconduct by the Exchange and Exchange liability to the extent of two million dollars.

After appellants began the instant legal action and before the court below rendered its decision, the Exchange amended its disciplinary rules, establishing a Hearing Panel of three persons, two who are Exchange members but not also members of the Exchange Board of Directors and a presiding Hearing Officer who is a member of the Exchange staff but who is unrelated to the prior proceedings or investigation. Two votes are necessary for disciplinary action, and any party can appeal the decision of the panel to the Exchange Board of Directors.

Appellants seek to halt the disciplinary proceeding because it is not impartial, gain access to documents in the possession of the Exchange, use Orvis assets now in the control of the liquidator for purposes of defending themselves in court, and obtain an order directing the Exchange to approve their applications for managerial positions with member firms. We agree substantially with Judge Lasker’s disposition of these claims, reported at 348 F.Supp. 1185, as amended re discovery, see n. 1, supra.

Appellants’ first contention is that the Exchange disciplinary proceeding must be halted because the panel is biased. The essence of this claim is that since the Exchange and appellants oppose one another in a separate civil action in which the charges brought in the disciplinary proceeding are material, the Exchange cannot render an impartial judgment as to those charges.

A combination of factors convinces us that this argument should be rejected. First, appellants are challenging a condition inherent in the Securities Exchange Act of 1934. While that statute guarantees parties subject to disciplinary proceedings the rudiments of fairness, Silver v. New York Stock Exchange, 373 U.S. 341, 83 S.Ct. 1246, 10 L.Ed.2d 389 (1963), Congress clearly intended that exchanges function as self-regulatory bodies. If disciplinary proceedings were to come to a halt whenever an exchange sought relief in a civil suit and the defendant counterclaimed, this regulatory framework would be undermined. Second, when appellants became members of the Exchange they consented, quite knowingly and intelligently to disciplinary procedures less generous than those they now challenge. Third and most significant, the interests of the panel members are sufficiently attenuated from the outcome of the proceeding to make the possibility of partiality quite remote. The panel sits in a representative capacity, and the outcome of the proceeding will of course not be admitted as evidence in the civil suit. Cf. Hyatt v. United Aircraft Corp., 50 F.R.D. 242, 246-247, n. 4 (D.Conn.1970).

Appellants also contend that the appeal procedure is biased. We agree with Judge Lasker that while this issue is troublesome, it is raised prematurely.

Appellants’ third argument is that the Orvis liquidator should be directed to allow appellants to use remaining Orvis assets to pay attorney’s fees incurred in appellants’ defense of the civil action. The court below rejected this claim, holding that the liquidation agreement signed by appellants provided otherwise. Appellants argue that principles of equity govern, not the agreement. However, the money appellants seek would come out of the pockets of disappointed Orvis customers, not from Exchange members. An argument based on principles of equity which reaches such a result must fail.

We must also reject appellants’ contention that the Exchange should be enjoined from denying appellants’ applications for managerial positions with member firms. Judge Lasker weighed the interests at stake, public and private, and found the balance to tip sharply against that request. We cannot say that he was mistaken in that decision.

Finally, appellants argue that they should be allowed access to Exchange documents relevant to the preparation of their defense in the disciplinary proceeding. The court below at first agreed with appellants on this point, 348 F.Supp. at 1192, but reversed this conclusion in its amended decision. In reversing itself; the court below felt bound by prior case law in this circuit. NLRB v. Interboro Contractors, Inc., 432 F.2d 854 (2d Cir.), cert. denied, 402 U.S. 915, 91 S.Ct. 1375, 28 L.Ed.2d 661 (1971).

If this were the only discovery available to appellants, we might agree with Judge Lasker’s initial analysis of the issue. However, we do not reach that issue since broad discovery has been and is available to appellants through the medium of the civil suit, and, we were assured on oral argument, has been extensively used, and the issue is therefore moot for all practical purposes.

Affirmed.

      . Lasker, D. J.
      The New York Stock Exchange (“Exchange”) seeks reargument of our order dated December 4, 1972, to the extent that it grants plaintiffs’ motions for preliminary injunctions by allowing plaintiffs to inspect all documents within defendant’s possession relating to defendant’s disciplinary charges against plaintiffs. Upon consideration of the briefs submitted by all parties, our order of December 4, 1972 is modified to delete the second and third ordering paragraphs. The court’s findings of fact and conclusions of law are modified accordingly.
      In N.L.R.B. v. Interboro Contractors, Inc., 432 F.2d 854 (2d Cir. 1970), cert. denied, 402 U.S. 915 [91 S.Ct. 1375, 28 L.Ed.2d 661] (1971), Chief Judge Lumbard, in rejecting respondent’s objection that the Board’s procedures denied him a fair hearing because he had no opportunity to depose the Board’s witnesses or review its documents prior to introduction of the testimony and documents at the hearing, unequivocally stated :
      “It is well settled that parties to judicial or quasi-judicial proceedings are not entitled to pre-trial discovery as a matter of constitutional right.” (At pp. 857-58.)
      Our attention is also drawn to the fact that the Securities and Exchange Commission, the federal agency which shares with the Exchange powers of sanction in the subject matter of this case, does not allow litigants the right to pre-hearing discovery in hearings before it. See 17 C.F.R. 201.11.1. The S.E.C. Regulations require it only to produce “Jencks Act material” after the direct testimony of the witness. 17 C.F.R. § 201.11.1, thus incorporating the substance of 18 U.S. C. 3500, and we do not understand the plaintiffs to contend that the regulations are constitutionally invalid.
      Were we to write on a clean slate, we might well adhere to our prior ruling since, as a matter of equity, we think a strong ar-
        gnment exists that a person subject to the possibly devastating result of disciplinary action, which may well cause loss of reputation and income, should be entitled to inspect the documents in the hands of his accuser — subject, of course, to the protective conditions specified in our original determination. We find considerable merit in the proposition that “Probably no sound reason can be given for failure to extend to administrative adjudication the discovery procedures worked out for judicial proceedings.” Davis, Administrative Law Treatise, p. 589 (1958 ed.) as quoted in Berger, 12 Ad.L.Rev. 28 (1959) “Discovery in Administrative Proceedings.” Any change in the law, however, must come from Congress or a higher court.
      The motion for reargument is granted. The order of December 4, 1972 is modified to delete the second and third ordering paragraphs.
      It is so ordered.
      Dated: New York, New York March 15, 1973.
      /s/ Mobbis E. Laskeb D.S.D.J.

      [footnote omitted]


author: JOHN W. PECK, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Melvin REYNOLDS and Herbert Brown, Defendants-Appellants.
    Nos. 73-1294 and 73-1295.
    United States Court of Appeals, Sixth Circuit.
    Argued Oct. 19, 1973.
    Decided Dec. 21, 1973.

      Joseph P. Zanglin, Detroit, Mich. (Court-Appointed), on brief, for Melvin Reynolds.
    Martin Reisig, Detroit, Mich. (Court-Appointed), on brief, for Herbert Brown.
    Ralph B. Guy, Jr., U. S. Atty., William C. Ibershof, Asst. U. S. Atty., Chief, Crim. Div., Detroit, Mich., on brief, for plaintiff-appellee.
    Before PHILLIPS, Chief Judge, and PECK and LIVELY, Circuit Judges.
   JOHN W. PECK, Circuit Judge.

Melvin Reynolds and Herbert Brown were arrested and charged with violating federal narcotic laws in 1970. A single indictment naming Reynolds in each of four counts and Brown in the latter two was returned. There was no connection between counts one and two, and three and four on the face of the indictment, nor was conspiracy charged. After an unsuccessful attempt by Brown to have the case severed for separate trials, the initial trial was begun in September of 1972. It ended in a mistrial. The second trial was commenced on October 11, 1972, and it resulted in a jury verdict of guilty on all four counts. Reynolds was sentenced to concurrent terms of ten years on each of the four counts, and Brown received fifteen year concurrent sentences on counts three and four. Both Reynolds and Brown join in this appeal, but the issues raised are not identical.

Brown raises the failure of the Trial Court to grant his pretrial motion for severance as prejudicial error. We find merit in this assertion. Rule 8(b) of the Federal Rules of Criminal Procedure provides in pertinent part as follows: “Two . . . defendants may be charged in the same indictment . if they are alleged to have participated in the same act ... or series of acts . . . constituting an offense . . . . ” In this case Reynolds was charged in counts one and two with the possession and sale of heroin in violation of 26 U.S.C. §§ 4704(a) and 4705(a), in that he sold heroin to an agent on March 5, 1970. In counts three and four Brown is charged jointly with Reynolds for illegal sale and unlawful possession of narcotics after illegal importation in violation of 21 U.S.C. § 174 in that they sold heroin to an agent on March 10, 1970. It is clear from the evidence offered by the government that Brown had no connection with the separate offenses charged in counts one and two.

“[T]he Rules do not permit cumulation of prejudice by charging defendants with similar but unrelated offenses.” Cupo v. United States, 123 U.S.App.D.C. 324, 359 F.2d 990, 993 (1966). “[W]here multiple defendants are charged with offenses in no way connected, and are tried together, they are prejudiced by that very fact, and the trial judge has no discretion to deny relief.” Ingram v. United States, 272 F.2d 567, 570 (4th Cir. 1959). The case before us is on all fours with Chubet v. United States, 414 F.2d 1018 (8th Cir. 1969), wherein two defendants were jointly tried on an indictment of six counts which named one defendant in all six counts and the other defendant in only two. The indictment alleged neither connection nor conspiracy. The Eighth Circuit held that the common thread in the indictment, the defendant named in every count, “is an insufficient basis for jointly trying the defendants.” Chubet v. United States, supra at 1020.

In denying the motion to sever in this case the trial judge allowed an impermissible joinder. The remedy is reversal of defendant Brown’s convictions with orders for a new and separate trial.

Defendant Reynolds attempts to take advantage of the severance issue by claiming prejudice to himself. We find no merit in this contention. Reynolds was charged in each count and the government offered evidence on each. No prejudice was possible in this situation.

Both defendants urge that their convictions and sentences be set aside arid vacated and the indictment dismissed because the government delayed the trial for over twenty-two months, thus denying their right to a speedy trial. In support of this contention they cite Barker v. Wingo, 407 U.S. 514, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972), wherein the Supreme Court set out certain factors to be used in determining the merit of an appeal based on the right to a speedy trial. The factors are length of the delay, reasons for the delay, assertion of the right, and prejudice to the defendant.

The delay in the present case was twenty-two months. “ [Bjecause of the imprecision of the right to speedy trial, the length of delay that will provoke such an inquiry is necessarily dependent upon the peculiar circumstances of the case.” Barker v. Wingo, supra at 530-531, 92 S.Ct. at 2192. In Barker a delay of five years was found tolerable under the circumstances of that case. A twenty-nine month delay was not a denial of the right to a speedy trial in United States v. DeLeo, 422 F.2d 487 (1st Cir.), cert. denied, 397 U.S. 1037, 90 S.Ct. 1355, 25 L.Ed.2d 648 (1970). The length of the delay is not the determinative factor in this case.

The government points out that the only reason for the delay in this case was the crowded court docket. The prosecutor did not ask for or receive any delays. We recognize the government’s ultimate responsibility in bringing defendants to trial, but in light of the circumstances we find that the delay was not caused by the government and was not prejudicial in this case.

Although a defendant does not waive his right to a speedy trial by his failure to assert it, the lack of prior assertion is a factor in determining whether he is entitled to the relief available when a violation is discovered. “[Fjailure to assert the right will make it difficult for a defendant to prove that he was denied a speedy trial.” Barker v. Wingo, supra, 407 U.S. at 532, 92 S.Ct. at 2193. In the case before us neither Reynolds nor Brown asserted this right until after the convictions were obtained. In fact, the issue first appeared on August 8, 1973, in a pro se brief filed by defendant Reynolds nine months after sentence was pronounced, and three months after his attorney filed his appeal brief. This hardly indicates that defendants found the delay a hardship, and in view of the above facts we are reluctant to find one here.

The critical factor is prejudice to the defendant. If a defendant is exposed to excessive pretrial incarceration, caused great anxiety or concern, or for any other reason or in any way is impaired in the preparation of his defense, the resulting prejudice gives rise to a violation of his rights. Here, however, neither defendant was incarcerated on the charges involved in this case, and if either was caused ánxiety or concern it is not reflected in the record. Further, neither defendant makes a serious argument that his defense was impaired by the delay. Defendants offered no evidence at trial, and the government’s case, based almost exclusively on the testimony of federal agents, was very strong. It is clear that defendants were not prejudiced by the delay.

We conclude, in light of the above analysis, that defendants were not denied their right to speedy trial in this case.

Reynolds’ main complaint is that the trial judge communicated with the jury outside the presence of defendant or his counsel. The record reveals that during jury deliberations the foreman asked the bailiff if the jury could have the height of defendant Reynolds. The bailiff relayed this inquiry to the judge’s secretary who in turn repeated it to the judge. The judge, using the same communication system in reverse order, informed the jury it could have no additional information.

Rule 43, Fed.R.Crim.P., explicitly states that “The defendant shall be present ... at every stage of the trial . . . . ” The cases hold that it is error for the court to instruct or communicate with the jury in the absence of counsel and without notice to them. Ah Fook Chang v. United States, 91 F.2d 805, 810 (9th Cir. 1937); United States v. Marken, 457 F.2d 186, 188 (9th Cir. 1972).

The rule requiring that a defendant be present at all stages of the trial must be considered together with Rule 52(a), Fed.R.Crim.P., which provides that harmless error is to be disregarded. United States v. Gradsky, 434 F.2d 880 (5th Cir. 1970); Yates v. United States, 418 F.2d 1228 (6th Cir. 1969). Thus, a forbidden communication does not constitute reversible error in every case. “The standard by which to determine whether reversible error occurred . . . is . whether there is ‘any reasonable possibility of prejudice.’ ” Wade v. United States, 142 U.S.App.D.C. 356, 441 F.2d 1046, 1050 (1971). In the present case the judge told the jury it could have no further information. This communication did not create a reasonable possibility of prejudice.

Reynolds also asserts that the District Court erred in denying his motion for new trial because the government failed to prove that the sales of heroin, as alleged in counts two and three, occurred without a written order blank issued for that purpose by the Secretary of the Treasury. Similar arguments were rejected in United States v. Peterson, 424 F.2d 1357 (7th Cir. 1970); United States v. Hooks, 359 F.2d 584 (3rd Cir. 1966); and United States v. Palmiotto, 347 F.2d 223 (2d Cir. 1965). We likewise reject this argument.

A number of contentions are raised with respect to statements made by the prosecuting attorney during the trial and a claim is made that the remarks were prejudicial. While some of the remarks made by the prosecutor were unwise, none rises to the level of prejudice sufficient to require reversal. Viewed as a whole the record shows that defendant Reynolds received a fair trial.

For the reasons stated herein, the judgment of conviction is reversed as to Brown, and the cause remanded for further proceedings consistent herewith. The judgment is affirmed as to Reynolds.


author: SKOPIL, District Judge:

text:
    HALLMARK INDUSTRY, Appellant, v. REYNOLDS METALS COMPANY et al., Appellees. HALLMARK INDUSTRY, Appellant, v. HARVEY ALUMINUM (INCORPORATED), Appellee.
    Nos. 71-1492, 26729.
    United States Court of Appeals, Ninth Circuit.
    Dec. 5, 1973.
    Rehearing Denied Jan. 18, 1974.

      Joseph L. Alioto, Peter J. Donnici, Joseph M. Alioto (argued), Lawrence J. Appel, San Francisco, Cal., for appellant.
    McCutchen, Doyle, Brown & Enersen, John N. Hauser (argued), James L. Hunt, San Francisco, Cal., for appellee, Reynolds Metals Co.
    Gibson, Dunn & Crutcher, John J. Hanson, Don J. Belcher (argued), Los Angeles, Cal., for appellee, Harvey Aluminum, Inc.
    Latham & Watkins, Max L. Gillam (argued), Michael J. Shockro, Los An-geles, Cal.; McDermott, Will & Emery, Samuel Weisbard, Chicago, 111., for ap-pellee, Stanray Pacific Corp.
    Before HAMLIN and CHOY, Circuit Judges, and SKOPIL, District Judge.

       Honorable Otto R. Skopil, Jr., United States District Judge, District of Oregon, sitting by designation.

   SKOPIL, District Judge:

This is an antitrust suit for treble damages brought under Section 4 of the Clayton Act. 15 U.S.C. § 15. Appellant Hallmark Industry charged appellees Reynolds Metals Co., Stanray Pacific Co., and Harvey Aluminum, Inc. with violations of Sections 1 and 2 of the Sherman Act. 15 U.S.C. §§ 1 and 2. Essentially, Hallmark’s claim is that, after Hallmark bid successfully on a United States Army contract to supply prefabricated aluminum buildings for use in Vietnam, Stanray, Reynolds, and Harvey conspired to thwart Hallmark’s efforts to obtain the necessary aluminum to perform the contract. Appellant also claims that Stanray attempted to monopolize the relevant market.

The case was tried by a jury. At the close of the evidence, defendants moved for a directed verdict on all issues. The trial judge directed a verdict for Stan-ray on the issue of its Section 2 attempt to monopolize; the remaining issues were given to the jury. The jury returned a verdict against Reynolds and Stanray for $211,800, which, when trebled, could result in a final judgment of $635,400. The jury found that Harvey was not a party to the conspiracy. Reynolds and Stanray then filed motions for judgment notwithstanding the verdict or, in the alternative, for a new trial. Fed.R.Civ.P. 50(b) and 59. The trial court granted the motion for a judgment n. o. v. and, if that ruling were reversed on appeal, a new trial. Hallmark appeals from that ruling in No. 71-1492, and from the jury’s verdict for Harvey in No. 26729. The cases were consolidated for hearing only. We affirm both.

Appellant again raises the issue of the District Court’s lack of jurisdiction to entertain appellees’ motions for judgment n. o. v. or for a new trial. The question was raised in this court previously and was denied. Hallmark Industry v. Peckham, No. 26915 (9th Cir., Feb. 11, 1971). We do not disturb that decision.

I

THE FACTS

Appellant Hallmark manufactures and sells prefabricated metal buildings. Ap-pellee Stanray manufactures and sells a diverse line of fabricated metal products, including buildings. Appellees Harvey and Reynolds compete in manufacturing, distributing, and selling of aluminum products.

In January, 1966, Reynolds and Stan-ray met, apparently hoping to promote an aluminum hut project for governmental use. It is not clear that an actual agreement was reached, as appellant urges. In March, 1966, the Army requested bids on a contract for 3,000 aluminum huts for use in Vietnam. The contract specifications were general. Each bidder was to provide his own concept of an appropriate design, price, and delivery date.

In April, 1966, 26 companies submitted bids on the government contract, including Hallmark, Reynolds, and Stan-ray. Hallmark’s bid, prepared for this contract, was the lowest. Stanray’s bid, based on a design it had sold earlier to the Atomic Energy Commission, was the second lowest. Reynolds’ bid proposed a design which was not acceptable to the Army. In May, 1966, Reynolds was notified its proposal was no longer under consideration.

Stanray was annoyed by Reynolds’ submission of a bid. Hallmark contends that this annoyance demonstrates that Stanray and Reynolds had agreed, in January, to conspire to insure that Stan-ray received the Army contract, and that the Reynolds’ bid was counter to the agreement. At the same time, Hallmark contends that the bid was part of a conspiracy to rig the bids and inflate the price paid by the government.

In addition to submitting a bid, Reynolds also began making contacts with potential awardees of the contract, hoping to supply the successful bidder with its aluminum requirements. In April, 1966, Reynolds’ representatives met with Hallmark personnel to determine whether Reynolds could supply Hallmark, if Hallmark received the contract.

On May 9, 1966, Reynolds offered its services to Stanray, again hoping to supply Stanray with aluminum if it obtained the contract. Reynolds’ engineers made a trip to Stanray’s Los Angeles plant to see if Reynolds could supply Stanray’s requirements. They determined that they could not. After leaving Stanray’s plant, the Reynolds’ engineers traveled to the Hallmark plant in Patterson, California. The Reynolds’ representatives examined Hallmark’s design and told Hallmark they could supply their aluminum needs for $1,900,000. Stanray heard about Reynolds’ efforts to aid Hallmark and contacted Reynolds to learn the nature of those efforts.

After inspecting Hallmark’s plant to determine its capability of fulfilling the contract, the government entered into final negotiations with Hallmark. Hallmark began making arrangements with suppliers to meet its raw materials requirements. Hallmark asked all suppliers to agree to a bank escrow, from which the suppliers would be paid as the government paid for the buildings. Reynolds, however, insisted on a letter of credit for the full amount of the aluminum it was to supply. On May 13, 1966, Reynolds informed the Army of its intention to demand the full letter of credit. Hallmark attempted to find an alternate source of supply for aluminum. On May 23, 1966, Hallmark notified Reynolds that it did not intend to buy from Reynolds.

Hallmark contends that the $1.9 million letter of credit was the result of the Stanray-Reynolds conspiracy and was really a subterfuge for refusing to supply Hallmark. Reynolds, on the other hand, says that it decided that full security was necessary to insure payment by Hallmark. Hallmark had substantial debts, lacked working capital, had never made a profit, and had no unencumbered assets. Reynolds was unwilling to risk not getting paid and, therefore, demanded the letter of credit.

Meanwhile, Stanray was trying to remain in contention for the Army contract by working with the George C. Widman Co., another aluminum supplier, to reduce the price of its design to make it more attractive to the Army. Nevertheless, the Army decided to purchase from Hallmark.

Having failed to obtain their aluminum requirements from Reynolds on Hallmark’s terms, appellant approached appellee Harvey. Harvey agreed to supply the aluminum for about $2,000,000, but it also requested a letter of credit for the full amount of the purchase. Appellant contends this demand was the result of a Reynolds-Stanray-Harvey conspiracy to secure the Army contract for Stanray. Hallmark finally obtained its aluminum needs from Ador-Hilite, but for substantially more than the Reynolds or Harvey quotations. Ador-Hilite also furnished Hallmark with the necessary financing.

The final contract between Hallmark and the Army required complete and accurate disclosure of the estimated costs for the performance of the work. 10 U. S.C. § 2306(f); 32 C.F.R. § 3°.807-3. On May 27, 1966, Hallmark’s president signed and sent to the government Form DD 663 containing the cost disclosures. The contract was signed on June 6, 1966, for the total amount appearing on Form DD 663.° The permissible net profit of 11% was allowed on that amount.

II

THE DIRECTED VERDICT FOR STANRAY

We turn first to appellant’s contention that the trial court erred in directing a verdict for Stanray on the issue of its alleged attempt to monopolize in violation of Section 2 of the Sherman Act. 15 U.S.C. § 2. At the heart of the issue here is Lessig v. Tidewater Oil Co., 327 F.2d 459 (9th Cir. 1964), later followed in Industrial Building Materials, Inc. v. Interchemical Corp., 437 F.2d 1336, 1344 (9th Cir. 1970), and Moore v. Jas. H. Matthews & Co., 473 F.2d 328, 332 (9th Cir. 1973). Appellant relies on Lessig’s holding that “when the charge is attempt (or conspiracy) to monopolize, rather than monopolization, the relevant market is ‘not in issue.’ ” 327 F. 2d at 474. In Lessig, Tidewater had argued that attempt to monopolize is established only if there is proof of “dangerous probability of success”, relying on Justice Holmes’ opinion in Swift & Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518 (1905). Tidewater’s contention was that such proof required an evaluation of its power in the relevant market. Lessig rejected the premise that probability of actual monopolization is an essential element of proof of attempt to monopolize. The court held that the “specific intent itself is the only evidence of dangerous probability the statute requires . . . .” 327 F.2d at 474.

This court has dealt with Section 2 attempt to monopolize claims several times since Lessig.

In Cornwell Quality Tools Co. v. C.T.S. Co., 446 F.2d 825, 832 (9th Cir.1971), Cornwell had terminated C.T.S.’s sole distributorship for California and Nevada and had opened its own distributorship. Vigorous competition ensued between Cornwell and C.T.S., which was then distributing the products of a competitor of Cornwell. Cornwell and C.T.S. each alleged restraints of trade by the other. On the issue of attempt to monopolize by Cornwell, this court held that the evidence and offer of proof on specific intent to monopolize was insufficient.

In Bushie v. Stenocord Corp., 460 F.2d 116 (9th Cir. 1972), Stenoeord had terminated Bushie’s distributorship contract and had begun selling through its own outlet exclusively. With respect to his claim of attempt to monopolize, Bushie contended that Lessig and Industrial Building Materials, supra, sup ported his position that intent was the sole essential element and that no proof of Stenocord’s power to monopolize the market was required. We distinguished both cases, finding that the attempted monopolization claims there were founded upon “a substantial claim of restraint of trade, from which we indicated the specific intent required for a claim of attempt to monopolize could be inferred”. 460 F.2d at 121. Bushie had failed to lay such a foundation.

Finally, in Moore v. Jas. H. Matthews & Co., 473 F.2d 328, supra, a cemetery monument dealer sued several cemeteries and a grave marker manufacturer, charging monopolization, attempts to monopolize, and restraints of trade. This court reversed summary judgment for the defendants. With regard to the claim of attempt to monopolize, the court reiterated the Lessig rule that proof of monopoly power is not required. 473 F.2d at 332.

Nonetheless, appellees in this case argue that dangerous probability must be shown through evidence of sufficient market power. Certainly market power may establish dangerous probability. However, Lessig, Industrial Building Materials, and Moore, supra, hold that dangerous probability may also be shown through proof of specific intent to set prices or exclude competition in a portion of the market without legitimate business purpose. This specific intent must be accompanied by predatory conduct directed to accomplishing the unlawful purpose. Ordinarily specific intent is difficult to prove and will be inferred from such anticompetitive conduct. Therefore, evidence of market power may be relevant, but it is not indispensable where a substantial claim of restraint of trade is made.

Hallmark has failed to produce sufficient evidence that Stanray had the specific intent to monopolize the market for aluminum huts in Vietnam. The only inference one could draw from the evidence before the court was that Stan-ray had the intent to obtain this particular contract from the Army. Therefore we find the directed verdict in favor of Stanray as to its unilateral attempt to monopolize to be correct as a matter of law.

Ill

THE JUDGMENT NOTWITHSTANDING THE VERDICT

In his opinion granting the Reynolds and Stanray motions for a judgment notwithstanding the verdict, Judge Peckham based his ruling on three grounds: First, there was no substantial evidence upon which a jury could find a conspiracy between Reynolds and Stanray. Second, assuming arguendo that the evidence supported the jury’s finding that a Reynolds-Stanray conspiracy did exist, Section 1 of the Sherman Act was not violated as a matter of law. Third, there was no prima facie evidence that the acts of the appellees caused damage to the appellant.

A. Was the evidence sufficient to sustain the jury’s verdict ?

The standard by which a judgment notwithstanding the verdict is measured is precisely the same as that for a directed verdict. Juhnke v. EIG Corp., 444 F.2d 1323, 1325 (9th Cir. 1971); 9 Wright & Miller, Federal Practice and Procedure § 2537 (1971). The plaintiff still has the burden of establishing a prima facie case although he is entitled to the benefit of all favorable inferences which can be drawn from the evidence. Independent Iron Works v. United States Steel Corp., 177 F.Supp. 743, 746 (N.D.Cal.1959), aff’d, 322 F.2d 656 (9th Cir.), cert. denied, 375 U.S. 922, 84 S.Ct. 267, 11 L.Ed.2d 165 (1963); Juhnke v. EIG Corp., supra, 444 F.2d at 1325.

The crucial issue here is whether the Reynolds’ demand for a $1.9 million letter of credit resulted from a conspiratorial agreement between Reynolds and Stanray. We agree with Judge Peckham that there were four essential facts before the jury: (1) Reynolds actively aided Hallmark in the preparation of its bid for an Army contract; (2) Reynolds also worked with Stanray on its development of a contract bid; (3) Stanray became aware of Reynolds’ efforts to aid Hallmark and contacted Reynolds to ascertain the nature and extent of those efforts; (4) Reynolds demanded a letter of credit from Hallmark for the full amount of the proposed aluminum supply contract. If the evidence showed: (1) that the Reynolds credit demand was unreasonable and (2) that Reynolds would benefit by refusing Hallmark’s aluminum order, then this, together with the facts outlined above, would provide a sufficient basis for a jury to infer that a Reynolds-Stanray conspiracy existed.

With respect to the credit demand, certainly Hallmark’s financial position of near insolvency provides a legitimate business motive for the credit requirement. See Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F.2d 71 (9th Cir. 1969), cert. denied, 396 U.S. 1062, 90 S.Ct. 752, 24 L.Ed.2d 755 (1970). Moreover, Reynolds had nothing to gain by an unreasonable refusal to deal with Hallmark. The credit demand actually resulted in the loss of a $1.9 million opportunity for Reynolds. There was no reason for Reynolds to favor Stanray over Hallmark since the Reynolds’ engineers had already determined that they could not supply Stanray with its needs. Even if Reynolds could have supplied the aluminum for Stanray’s design, there was no reason to expect that Reynolds’ refusal to sell to Hallmark would result in Stan-ray’s obtaining the contract. Several other companies could have supplied Hallmark with its aluminum requirements.

Given no contrary evidence, a jury question might be presented as to Reynolds’ motives in demanding the letter of credit, wholly apart from the wisdom of that decision. However, there were other non-conspiratorial motives involving the exercise of business judgment as to the attractiveness of the opportunity offered by Hallmark. Therefore, in view of the overwhelming contrary evidence, only one conclusion can be drawn; That Reynolds’ security requirements did not result from conspiratorial motives. First National Bank of Arizona v. Cities Services Co., 391 U.S. 253, 277, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968).

Since we have decided the evidence was insufficient to sustain the jury’s verdict, we need not reach the other two grounds upon which the trial judge based his opinion.

IV

HALLMARK INDUSTRY v. HARVEY ALUMINUM, INC.

No. 26729

We now turn to the appeal in No. 26729. Appellant here contends that the trial court committed reversible error in excluding at the trial the so-called “Shrank reports” and related deposition testimony.

The Shrank reports consist of forms entitled “Daily Sales Report” filled out by Donald Shrank, then Sales Engineer for Harvey, and submitted to Harvey’s district sales manager for the Los Ange-les area. Shrank purported to record the results of his calls upon prospective purchasers of aluminum. The particular reports in question deal primarily with conversations between Shrank and a representative of Stanray.

The trial court excluded the documents on the grounds that they were hearsay statements which were not admissible under any exception to the hearsay rule, that they could not be received for any non-hearsay purpose and that they contained undue opinions, conclusions, and impressions. Appellant contends that the excluded evidence was relevant and material, that it was admissible on several grounds, and that its exclusion was prejudicial to appellant’s ease.

We find it unnecessary to reach the issues raised by appellant’s claim that the evidence was improperly excluded. If the evidence had been admitted at trial, the evidence against Harvey, taken as a whole, would not have been sufficient to support a verdict in favor of appellant. Therefore, if any error was committed by the trial judge, it was harmless because it could not have prejudiced the substantial rights of appellant. Fed.R.Civ.P. 61; Veechio v. Anheuser-Busch, 328 F.2d 714, 719 (2nd Cir. 1964), cert. denied, 379 U.S. 831, 85 S.Ct. 60, 13 L.Ed.2d 39 (1964); Jones v. Mutual Life Ins. Co. of New York, 113 F.2d 873, 874 (8th Cir. 1940). Accordingly, we affirm in No. 26729.

      . Appellants make much of the fact that the cost of the original bid prepared by Reynolds’ engineer was raised substantially. However, the evidence was that one item, representing 12% of the entire bid, slated for a 100% increase, was reduced to a 50% increase. Even without this increase, it is unlikely that the Reynolds’ bid would have been more competitive.

      . Hallmark’s final net profit actually exceeded 11%.

      . The Cornwell opinion states that to establish attempt to monopolize, C.T.S. had to prove “specific intent to monopolize, and . . . sufficient market power to come dangerously close to success”. 446 F.2d at 832 (emphasis added). This statement was offered as a restatement of the holding in Swift & Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518 (1905). As we pointed out in Lessig, however, Swift spoke of “intent and the consequent dangerous probability”. 327 F.2d at 474 n. 46 (emphasis added in Lessig). The Cornwell dictum cannot be read to require proof of any particular degree of market power as an independent and necessary element of attempt to monopolize, for such a requirement would be contrary to the holding in Lessig, more recently reaffirmed in Industrial Building Materials, supra, and Moore, supra.

      . Although Hallmark lays stress on Stanray’s reaction to Reynolds’ bid for the contract, we do not consider that an essential fact. See the discussion of the importance of the Reynolds’ bid in § 3, infra.

      . The persons responsible for the Reynolds credit decision testified that the decision was based upon independent considerations and that they had no contact with Stanray prior to the decision.


author: PER CURIAM.

text:
    Deborah A. NORTHCROSS et al., Plaintiffs-Appellants, v. The BOARD OF EDUCATION OF the MEMPHIS CITY SCHOOLS et al., and City of Memphis et al., Defendants-Appellees. Deborah A. NORTHCROSS et al., Plaintiffs-Appellants, v. The BOARD OF EDUCATION OF the MEMPHIS CITY SCHOOLS et al., Defendants-Appellees.
    Nos. 73-1667, 73-1954.
    United States Court of Appeals, Sixth Circuit.
    Argued Oct. 1, 1973.
    Decided Dec. 4, 1973.
    See also 6 Cir., 489 F.2d 19.
    Norman J. Chachkin, New York City, and William E. Caldwell, Memphis, Tenn., for Deborah A. Northcross; Louis R. Lucas, Elijah Noel, Jr., Ratner, Sugar-mon & Lucas, Memphis, Tenn., Jack Greenberg, James M. Nabrit, III, New York City, on briefs.
    Ernest G. Kelly, Jr., Evans, Petree, Cobb & Edwards, Memphis, Tenn., for Bd. of Ed. of the Memphis City Schools.
    Frierson M. Graves, Jr., City Atty., Memphis, Tenn., for City of Memphis and others.
    Before WEICK, CELEBREZZE and PECK, Circuit Judges.
   PER CURIAM.

This appeal was perfected from the Memorandum Decision and order handed down by the United States District Court for the Western District of Tennessee on May 3, 1973, ordering the implementation of a plan intended to complete the desegregation process in Memphis. Appellants assert that the plan approved by the District Court does not achieve the degree of desegregation demanded by the Constitution and recent Supreme Court cases.

The history of this case is long and involved and need not be recounted here. For its history see the opinions of this Court in Northcross v. Board of Education of Memphis City Schools, 302 F.2d 818 (6th Cir. 1962); 333 F.2d 661 (6th Cir. 1964); 444 F.2d 1179 (6th Cir. 1971); 466 F.2d 890 (6th Cir. 1972). In the latter opinion we ordered the implementation of an interim desegregation plan and directed the District Court to ‘^prepare a definite timetable providing for the establishment of a fully unitary school system . . . . ” Northcross, supra, 466 F.2d at 895. On remand, the District Court ordered that the interim plan, Plan A, be put into effect for the Spring semester of 1973. Appellee carried out this order, necessitating extensive student and faculty reassignments and equipment transfers. In addition, the_Disirict Court directed, the Board of Education to prepare a 'further plan for desegregation designed to establish a fully unitary system.

The appellee created a bi-racial “Team” consisting of staff members to handle the task of drawing a new plan. Instead of proposing a single solution, the Team submitted a series of alternative plans to the District Court. The trial court conducted hearings on the various proposals, selected one of the Team’s plans, and ordered its implementation for the Fall semester of 1973. Expressing his desire for an end to this litigation, the District Judge designated the effort “Plan Z.” It is from the decision to adopt Plan Z that appellants bring this appeal.

The appellee’s desegregation Team submitted two sets of alternative plans. Plan I and Plan III constitute one total plan, and will hereinafter be referred to as Plan I — III. Plan II (elementary) and Plan II (secondary) taken together make up one plan, and will hereinafter be simply Pian II. In addition, appellants submitted a modified version of Plan III, and the Team suggested a possible variation of Plan II (elementary).

At the elementary level Plan I — III would provide for complete desegregation of every attendance unit. Plan II integrates all but nineteen all-black or predominantly black units, but includes no all-white units. Plan I — III would require substantially greater times and distances of transportation than Plan II. The District Court chose Plan II, re-designating it “Plan Z,” as hereinabove mentioned.

Plan I — III would desegregate all junior and senior high school units. Plan II leaves two all-black high schools _and 'four all-black junior high schools... Once again, Plan I — III would involve the greater degree of transportation. The District Court opted for Plan II- at this level.

It is estimated, based on projected figures, that Plan II will enable eighty-three percent of the Memphis public school students to attend school in a desegregated situation. To achieve this result, over 38,000 children will be bused to school. (23,000 of the 38,000 bused students are in the elementary schools.) Forty-four percent of the bused students will spend between 31-45 minutes in transit each way, but no ride will be over 45 minutes in length.

Appellants point out that Plan II leaves a number of black students in all-black or predominantly black schools, and complain that some of the very schools that were all-black at the inception of this litigation in 1960 will remain so under Plan II. The solution urged both here and below by appellants is the adoption of Plan I — III. Under this proposal ninety-seven percent of the students would be placed in desegregated units. This would require the busing of 48,000 children, the great majority of whom would ride for 31-45 minutes each way, although 9,700 would have to travel 46-60 minutes. The greater number of those involved in the 46-60 minute trips would be elementary students.

The District Court, sitting as trier of fact, reviewed the merits of the alternative plans submitted by appellee before reaching its decision. That decisión cannot be set aside unless clearly erroneous. Rule 52(a) Fed.R.Civ.P. In Goss v. Board of Education of Knoxville, 482 F.2d 1044, 1047 (6th Cir. 1973), this Court, faced with a similar question, stated that “An appellate court simply cannot violate this settled principle of our jurisprudence, no matter how desirable a particular result may appear to be.” We conclude that the District Court’s choice of Plan II was not clearly erroneous and must, therefore, be upheld.

The evidence consisted mainly of projected attendance, transportation and cost figures for the various plans, and the testimony of Team members and other experts. The basic figures for the different plans have been discussed heretofore. A review of the testimony reveals that for a variety of reasons a majority of the Team favored the adoption of Plan II. The lone psychological expert was of the opinion that a shortening of the times and distances of transportation would inure to the benefit of many school children, especially the younger ones. Plan II was also recommended by the school staff and the Board of Education.

The District Court relied heavily on a phrase from Davis v. Board of School Commissioners of Mobile, 402 U.S. 33, 37, 91 S.Ct. 1289, 1292, 28 L.Ed.2d 577 (1971). That phrase directs that district courts “make every effort to achieve the greatest possible degree of actual desegregation, taking into account the practicalities of the situation.” (Emphasis added.) To discover what constituted a “practicality,” the District Court referred to Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 91 S.Ct. 1267, 28 L.Ed.2d 554 (1971).

The practical considerations set forth in Swann which influenced the District Court’s decision in this case are as follows: First, the limited usefulness of racial quota ratios; secondly, the necessity of tolerating some one-race schools because minority groups concentrate in urban areas; thirdly, the logistical problems inherent in remedial alteration of attendance zones; and lastly, the limitations on travel that must be considered when transportation remedies are employed.

The clearest insight into the weight that the District Court gave to the practical considerations recommended by Swann and Davis is found in the following passage from the Memorandum Decision:

“The lesser degree of desegregation in combined Plan II is based primarily upon four factors pertaining to effectiveness, feasibility and pedigogical soundness. Those factors are time and distance traveled on buses, cost of transportation, preservation of desegregation already accomplished, and adaptability.”

The District Court’s analysis of the proposed alternatives was both thoughtful and thorough, and we do not find the conclusions reached to be clearly erroneous. As we stated in Goss, supra, 482 F.2d at 1047, “The experienced District Judge who has lived with this case from its inception analyzed the evidence in great detail. His findings are supported by substantial evidence and are not clearly erroneous.” The above statement has equal validity here. The May 3, 1973 Memorandum Decision of the District Court ordering the implementation of Plan II and designated Plan Z is hereby . affirmed.

No costs are taxed, and each party will bear their own costs on appeal.

      . Projections were based on the attendance figures for the Spring semester of 1973 when the system was operating under interim Plan A. At that time there were 131,268 students in the system.

      . The Team also worked out an alternative bus route system for both plans relying primarily on the use of expressways. The expressways result in a decrease in the transportation time for some students, although it has less effect on Plan II than on Plan I-III.

      . Using the expressways only 5,347 students would ride for 46-60 minutes. See footnote 2, supra.


text:
    Deborah A. NORTHCROSS et al., Plaintiffs-Appellants, v. BOARD OF EDUCATION OF the MEMPHIS CITY SCHOOLS et al., Defendants-Appellees, CITY OF MEMPHIS and Wyeth Chandler, Mayor of Memphis, et al., Third-Party and Added Defendants, Exxon Corporation et al., Added Defendants.
    Nos. 73-1953, 73-1955.
    United States Court of Appeals, Sixth Circuit.
    Dec. 4, 1973.
    Norman J. Chachkin, New York City, and William E. Caldwell, Memphis, Tenn, for Deborah A. Northcross; Louis R. Lucas, Elijah Noel, Jr, Ratner, Sugarmon & Lucas, Memphis, Tenn, Jack Greenberg, James M. Nabrit, III, New York City, on briefs.
    Ernest G. Kelly, Jr, Evans, Petree, Cobb & Edwards, Memphis, Tenn, for Bd. of Ed. of the Memphis City Schools.
    Frierson M. Graves, Jr, City Atty, Memphis, Tenn, for City of Memphis, and others.
    Before WEICK, CELEBREZZE and PECK, Circuit Judges.
   ORDER

These appeals were consolidated for hearing with Cases Nos. 73-1667 and 73-1954, 489 F.2d 15 (and also with Case No. 73-1666, 489 F.2d 19), and for further explanation of the factual background involved see the per curiam opinion filed therein this date and the earlier appeals arising out of the same general situation therein. At issue here is the validity of municipal action with motivation similar to that involved in Case No. 73-1666 and referred to in an order therein filed this date. The action herein considered is that of the City in failing to make an application of gasoline to the School Board required for the increased school bus operation under certain desegregation plans, and the District Judge concluded in effect that the City was guilty of obstructionist tactics with the intent to prevent integregation of the schools. This appeal followed, and we affirm on the ground that the action of the District Court was essential to the accomplishment of a constitutionally required goal.

For the reasons set forth in the order filed in Case No. 73-1666 this date, costs including an attorney’s fee of $500 is hereby assessed against the City of Memphis.


text:
    Deborah A. NORTHCROSS et al., Plaintiffs-Appellants, v. BOARD OF EDUCATION OF the MEMPHIS CITY SCHOOLS et al., Defendants-Appellees, CITY OF MEMPHIS and Wyeth Chandler, Mayor of Memphis, et al., Third-Party and Added Defendants, Exxon Corporation et al., Added Defendants.
    No. 73-1666.
    United States Court of Appeals, Sixth Circuit.
    Dec. 4, 1973.
    Norman J. Chachkin, New York City, and William E. Caldwell, Memphis, Tenn., for Deborah A. Northcross; Louis R. Lucas, Elijah Noel, Jr., Ratner, Sugar-mon & Lucas, Memphis, Tenn., Jack Greenberg, James M. Nabrit, III, New York City, on briefs.
    Ernest G. Kelly, Jr., Evans, Petree, Cobb & Edwards, Memphis, Tenn., for Bd. of Ed. of the Memphis City Schools.
    Frierson M. Graves, Jr., City Atty., Memphis, Tenn., for City of Memphis and others.
    Before WEICK, CELEBREZZE and PECK, Circuit Judges.
   ORDER

This case was consolidated for hearing with Cases Nos. 73-1667 and 73-1954, 489 F.2d 15 (and also with Cases Nos. 73-1953 and 73-1955, 489 F. 2d 18), and for further explanation of the factual background involved see the per curiam opinion filed therein this date and the earlier appeals arising out of the same general situation cited therein. At issue in the present appeal is the validity of a resolution adopted by the Memphis City Council directing the mayor and comptroller to withhold $250,000 from funds previously approved for use by the Memphis Board of Education. Said sum approximated the cost of the busing of school children ordered by the District Court, and in oral argument in this Court the City’s attorney frankly conceded that the City’s action was a protest against such Court ordered busing. The District Judge found that the City took such action in an effort to prevent busing as a means of desegregation and issued an order restraining such unlawful defiance of the Court’s orders. This appeal followed, and we affirm, holding that the action of the District Court was required to accomplish a constitutionally mandated result.

Appellees seek costs and attorneys’ fees in this case and in the dispute involving the School Board’s gasoline supply. In support of this request appellees cite Rule 38, Fed.R.App.P., which empowers an appellate court to “award just damages and single or double costs to the appellee” when the appeal is determined to be frivolous. Alternatively, appellees suggest the application of 20 U.S.C. § 1617, which entitles the prevailing party to attorneys’ fees in a suit against “a local educational agency, a State (or any agency thereof) for failure to comply with any provision of [Chapter 36 of the General Educational Provisions Act of 1972] . or for discrimination on the basis of race . . . [in] elementary or secondary education . . . .” Finally, appellees cite Northcross v. Memphis Board of Education, 412 U.S. 427, 93 S.Ct. 2201, 37 L.Ed.2d 48 (1973), to buttress their claim. In that case the Supreme Court held that attorneys’ fees should normally be awarded in discrimination cases, and that it required a special circumstance of unfairness to defeat this rule.

We find that the appeals in these eases are essentially frivolous in nature, constituting an attempt by appellant to interfere with the desegregation plans ordered by the District Court. Although appellant is technically neither a “State” nor “an agency thereof,” the spirit of 20 U.S.C. § 1617 and North-cross, supra, justify the award of costs and attorneys’ fees to appellees in this case. In addition, we are empowered to make this award under Rule 38, Fed.R. App.P.

Costs including an attorney’s fee of $500 is hereby assessed against the City of Memphis.