author:
LUMBARD, Circuit Judge:
      TIMBERS, Circuit Judge

text:
    Steve A. ZIMAN, Plaintiff-Appellee, v. The EMPLOYERS FIRE INSURANCE COMPANY, Defendant-Appellant.
    No. 39, Docket 73-1265.
    United States Court of Appeals, Second Circuit.
    Argued Oct. 18, 1973.
    Decided Jan. 7, 1974.

      Robert Grussing, III, Brattleboro, Vt. (A. Luke Crispe, Brattleboro, Vt., on the brief), for plaintiff-appellee.
    William F. McNulty, New York City, (Dick, Hackel & Hull, Rutland, Vt., and Anthony J. McNulty, New York City, on the brief), for defendant-appellant.
    Before KAUFMAN, Chief Judge, and LUMBARD and TIMBERS, Circuit Judges.
   LUMBARD, Circuit Judge:

The Employers Fire Insurance Co. [“Employers”] appeals from a judgment in the sum of $78,277 awarded the ap-pellee, Steve A. Ziman, for personal injuries sustained in an accident on July 30, 1967, caused by the negligence of Employers’ insured, David Hodgdon. We reverse.

On July 30, 1967, a bulldozer negligently maintained by David Hodgdon struck the appellee, leaving his lower left leg crushed and mangled. Ziman shortly thereafter filed suit in the United States District Court for Vermont and when the defendant, Hodgdon, failed to appear or defend, obtained a default judgment against him. The ap-pellee then brought a diversity suit in the same district court against Employers, Hodgdon’s insurer under a policy of comprehensive general liability, to enforce the unpaid default judgment. Employers answered that it was under no legal obligation to compensate Ziman for the injuries sustained, since Hodgdon, its insured, had failed to supply it as soon as was practicable with information regarding time, place and circumstances of the accident on July 30, and the names and addresses of available witnesses, contrary to condition 4(a) of Hodgdon’s policy. Employers also claimed that the insured had failed to “cooperate” with Employers in its continuing investigation concerning the accident, in breach of condition 4(c), which provided that the insured was required to cooperate with the company and assist it in the making of settlements as well as in the conduct of any suit.

The trial commenced on October 3, 1972, and on October 6, 1972, after all the evidence had been presented, the trial judge charged the jury that

Since the plaintiff relies on the policy issued to Hodgdon, the burden is assigned to him to prove that Hodgdon complied generally with the terms of his policy, and now the defendant, after that, has raised and by way of defense the claim that Hodgdon failed to supply the information as to time, place and circumstances of the occurrence, and the names and addresses of available witnesses as soon as practicable. The defendant also claims by way of defense, as I have indicated that Hodgdon failed to cooperate with the defendant and its representatives within the terms and provisions of the policy.
The burden of proof on these issues, the matters of defense, rests with the defendant, and if the defendant sustains its burden on these points, it has the further burden of proving the failure to supply the information and the lack of cooperation on the part of Hodgdon was material and prejudicial to the defendant in the performance of its duties under the contract.

The defendant took timely exception to this charge on the ground that it placed “the burden of proof with reference to information and cooperation upon [it],” even though the burden should have been on the plaintiff since the policy made compliance with these requirements “conditions precedent to any action under the policy.” Employers took further exception to the charge for the reason that it placed upon the defendant the burden of establishing that it had sustained “material and substantial harm” or “prejudice” as a result of Hodgdon’s failure to comply with the conditions of the policy.

The jury retired at 11:40 a. m. to deliberate. At 2:50 p. m. the court received a note from the foreman asking:

Does the defendant have to show material damage and prejudice. Could we have some examples of what they would be if the answer is “yes” ? The jurors are unclear as to prejudice and material damage as they apply to this case, as there is little or no testimony in this regard. .

At 3:00 p. m., the trial judge, over the exception of defense counsel, instructed the jury that:

[Bjefore there can be a breach of duty to cooperate, the failure on the part of the insured must be material and substantial, and the presence or absence of harm and prejudice is normally determinative of whether there has been a substantial shortage in the insured’s duty to his insurance carrier.
The burden of proof is on the defendant to show that he has been harmed by the insured’s failure to cooperate.

The jury retired again at 3:02 p. m. and just eleven minutes later returned with a general verdict in favor of the plaintiff, who was awarded a judgment in the sum of $78,277.

Appealing from this judgment, Employers argues that Chief Judge Holden’s initial charge to the jury with regard to burden of proof and the necessity of material harm or prejudice to the insurer was so erroneous and prejudicial as to make it impossible for the defendant to obtain a fair verdict. We agree. As the Supreme Court of Vermont in Houran v. Preferred Acc. Ins. Co. of N. Y., 109 Vt. 258, 272, 195 A. 253, 259 (1937), stated:

[W]here, by the terms of the insurance contract, a specified notice of accident, given by or on behalf of the insured to the insurer, is made a condition precedent to liability on the part of the latter, the failure to do so will release the insurer from the obligations imposed by the contract, although no prejudice may have resulted.

Here, clause 4(a) by the unambiguous terms of the contract was clearly made a condition precedent. As such, the burden of proof under Vermont law was on the insured, and here on the plaintiff, Ziman, who stood in the place of the insured, to establish compliance with the notice of accident provision. Houran v. Preferred Acc. Ins. Co. of N. Y., supra, 109 Vt. at 371, 195 A. at 259, Hersey v. Northern Assurance Co., 75 Vt. 441, 444, 56 A. 95, 96 (1907). As the Houran decision also establishes, no showing whatsoever of material harm or prejudice to the insurer was required. 109 Vt. at 272, 195 A. 259.

Since the jury returned a general verdict, it is uncertain on what basis it reached its decision. Quite possibly, it relied on the court’s erroneous charge and incorrectly concluded that Employers had failed to establish that it had been materially harmed or prejudiced. The jury may even have reached its verdict on the basis that the defendant had not sustained its burden of proof on the issue of Hodgdon’s compliance or noncompliance with clause 4(a) of the insurance policy, the notice of accident provision, although under Vermont law that burden actually rested on the plaintiff, Ziman.

In his brief, Ziman concedes that “the law of Vermont is clear that a notice provision such as the one involved here is a condition precedent and that when the insured has breached such a condition material harm or prejudice is immaterial.” Nevertheless, he argues that the cases supporting this proposition have all involved the question whether the insurer was given timely notice that an accident had occurred and not whether the further information regarding time, place, and circumstances-of the accident and witnesses thereto called for in clause 4(a) was also adequately reported. Moreover, he maintains that this additional information was at least partially provided by the insured in the present case, so that the gist of Employers’ argument is not so much that Hodgdon breached clause 4(a) but rather that he did not make available as detailed information as was desired by Employers. According to the appellee, this argument is in essence a claim of noncooperation, in breach of clause 4(c). Under Vermont law, a cooperation clause is considered a condition subsequent and, unlike a notice of accident provision, it places the burden of proof on the insurer to establish noneompliance.

The appellee is correct in stating that the issue of compliance with a notice of accident clause has generally arisen in the context of whether notice has been timely given. Neverthless, the Vermont Supreme Court has not limited its decisions exclusively to this portion of standard notice clauses such as the one here. Rather, the language of these decisions indicates that the burden is on the party seeking relief, here Ziman, to demonstrate compliance with the entire clause. The purposes served by a prompt notification of accident, the facilitation of an early investigation of the occurrence and the avoidance of fraudulent claims, Houran v. Preferred Acc. Ins. Co., 109 Vt. at 271, 195 A. at 259, are no less advanced by information regarding the time, place, and circumstances of the mishap as well as the names and addresses of any available witnesses. Moreover, Hodgdon conceded that, in sending notice of Ziman’s accident to Employers, he was not providing all this information. Although Ziman attempts to characterize this apparent failure to provide all the information required as a possible lack of cooperation, we believe it raises the question, whether Hodgdon fully complied with the notice of accident clause. This question was one for the jury and one regarding which the burden of proof should have been placed on the plaintiff, Ziman.

The appellee also argues that the supplemental charge to the jury was not erroneous since the trial judge stated only that the burden was on the insurer to show material harm or prejudice with regard to the cooperation clause. No mention was made by the judge of the notice of accident provision. Although this is technically true, it fails to take account of the fact that on two occasions during his original charge to the jury, the trial judge did indicate that a showing of material harm or prejudice was likewise necessary with regard to the notice of accident clause. How much weight the jury gave these earlier instructions is uncertain. At any rate, nothing in the supplemental charge suggested that they were to be disregarded.

Because the jury may have relied upon the erroneous instructions of the trial judge in reaching its verdict, we reverse and remand for a new trial.

TIMBERS, Circuit Judge

(dissenting) :

In this diversity action, it seems to me that the majority has strained to read the standard notice provisions of this comprehensive general liability insurance policy — in the context of the undisputed relevant evidence — for all that they might be worth, rather than for the least that they have to be worth, from the point of view of bailing out this insurance company that refused to defend its insured in accordance with the terms of its policy. The result is that this plaintiff, whose leg was crushed and mangled by a bulldozer negligently maintained by the insured and used in the insured’s contracting business, has been stripped of a $78,277 judgment— admittedly through no fault of the plaintiff but because of the alleged failure of the insured to comply with the notice provisions of the policy. In view of the fact that no member of this panel of our Court is a member of the bar of the State of Vermont whose law is being applied in this diversity action, I should have thought that great weight would be given to the determination of the Chief Judge of the District of Vermont in applying here the law of Vermont whose Supreme Court in very recent decisions has made it abundantly clear that provisions of an insurance policy, including specifically the notice provisions, are to be liberally construed with respect to the insured and strictly construed with respect to the insurer. Since I believe that the majority, in substituting its interpretation of controlling Vermont law for that of the district court, has almost precisely turned about this rule of construction, I respectfully dissent.

The most critical fact in this case is that there was no real controversy with regard to notice of the occurrence of the accident having been given to the insurer as soon as practicable in accordance with clause 4(a) of the policy. The insurer so conceded.

The evidence was undisputed that the accident occurred on Sunday, July 30, 1967, at Hinsdale, New Hampshire. Zi-man was operating a bulldozer owned by Hodgdon on the latter’s property. Zi-man alighted from the bulldozer to inspect it. The bulldozer started backwards. It struck Ziman, leaving his lower left leg crushed and mangled. No one other than Ziman was present at the time of the accident. There were no witnesses other than Ziman. Hodgdon, who was not present at the scene of the accident, first heard about it from his sister-in-law who in turn had heard about it on the radio. As soon as he heard about it, Hodgdon went to the hospital to visit Ziman. Shortly thereafter Hodgdon reported the accident to Kenworthy, his insurance agent. Ken-worthy testified that Hodgdon had reported the accident to him and had told him all he knew about it. (Transcript, 147-48).

Thus, upon the uncontroverted evidence in the trial coui’t, each of the essential provisions of clause 4(a) of the policy regarding notice of the occurrence of the accident was fully complied with:

(1) “Written notice” of the “occurrence” of the accident was given “by . . ■ . the insured”, Hodgdon, through Kenworthy, the insurance agent, “to the company”.

(2) Such notice was “sufficient to identify the insured”, Hodgdon.

(3) Such notice included “reasonably obtainable information with respect to the time, place and circumstances thereof”, i. e., according to Kenworthy, Hodgdon told him all he knew about it.

(4) Such notice included “the [name and address] of the injured”, Zi-man.

(5) Such notice included “the [name and address] of available witnesses”, there being only one witness, Ziman.

(6) Such notice was given “as soon as practicable”, there being no claim by the company to the contrary.

On this state of the record, I think that no reasonable person could say that there was any real controversy with regard to notice of the occurrence of the accident having been given to the insurer in accordance with clause 4(a) of the policy.

The only real issue tried in the district court was whether Hodgdon, the insured, had' fully cooperated with the company. The latter complained that it could not locate the insured to obtain a. statement from him, and that he did not return its telephone calls or answer its letters. The entire trial was concerned with, not whether timely notice was given to the company, but whether Hodgdon had cooperated with the company, as required by clause 4(c) of the policy.

This distinction is vital from the standpoint of understanding the applicable Vermont law and the district court’s charge to the jury, including its supplemental charge. -As the majority correctly states, under Vermont law the burden is on the insured to prove compliance with the notice of accident provision of the policy (clause 4(a)), that provision being a condition precedent, Houran v. Preferred Accident Insurance Company of New York, 109 Vt. 258, 271, 195 A. 253, 259 (1938); but the burden is on the insurer to establish noncompliance with the cooperation provision of the policy (clause 4(c)), that provision being a condition subsequent. Francis, supra, 100 Vt. at 429, 138 A. at 781; Houran, supra, 109 Vt. at 271, 195 A. at 258. A showing of material harm or prejudice to the insurer is required to establish noncompliance with the cooperation clause, Houran, supra, 109 Vt. at 270, 195 A. at 258; Francis, supra, 100 Vt. at 430, 138 A. at 781, but it is not required to establish compliance with the notice of accident clause. Houran, surpra, 109 Vt. at 272, 195 A. at 259.

In view of this applicable Vermont law and the state of the trial record indicating that the only real issue was whether Hodgdon had adequately cooperated with the insurer, I think the jury’s question to the court át 2:50 P.M. can be taken to refer to the cooperation issue and nothing else:

“Does the defendant have to show material damage and prejudice? Could we have some examples of what these would be if the answer is ‘yes’? The jurors are unclear as to prejudice and material damage as they apply to this case, as there was little or no testimony in this regard. Signed, John Barnett, Foreman.”

In responding to this question, the trial judge obviously directed his supplemental instruction to the cooperation issue and nothing else:

“The Court will repeat this part of its prior instructions on this point when the Court stated that it instructs you that (384) before there can be a breach of duty to cooperate, the failure on the part of the insured must be material and substantial, and the presence or absence of harm and prejudice is normally determinative of whether there has been a substantial shortage in the insured’s duty to his insurance carrier.
The burden of proof is on the defendant to show that he has been harmed by the insured’s failure to cooperate. So, the answer is ‘yes’.
Now prejudice in this context means harm or damage in some significant way. It means deprived of an advantage which otherwise it might have had. The requirement of cooperation on the part of the insured in supplying information is for the purpose of enabling the insurance carrier to make an early investigation while the evidence is available. So the burden is on the defendant to show that by reason of lack of cooperation in the context of this case, that it has been unable to procure evidence which was otherwise not available to it.”

Indeed, if we read the charge as a whole and in the context of the uncon-troverted state of the record that there simply was no issue with regard to the notice of the occurrence of the accident having been given to the insurer in accordance with clause 4(a) of the policy, then the distinctions drawn by the majority between the burdens of proof which the trial judge is said to have charged with respect to the notice clause and the cooperation clause become harmless at worst.

In the last analysis, what is here involved is simply this: That an insurer can avoid its liability when it has not been informed of the occurrence of an accident is the law of Vermont and certainly is reasonable; but to say, when it has had reasonable notice of the occurrence and therefore the opportunity to investigate, that an insurer can avoid responsibility by asserting that the original information was scant, even when there is no showing of harm or prejudice, is certainly unjust and contrary to the law of Vermont.

The experienced trial judge below, in charging the jury as he did in the context of the undisputed relevant evidence which established that there was no real controversy with regard to notice of the occurrence of the accident having been given to the insurer, did so in accordance with the public policy of the State of Vermont with respect to the construction of policies of insurance:

“It is a fundamental rule that a policy of insurance must be construed liberally in respect to the person insured and strictly with respect to the insurer.” Valente, Guardian v. Commercial Insurance Company, 126 Vt. 455, 459, 236 A.2d 241, 243 (1967).

And this applies specifically to notice provisions of policies of insurance:

“Generally speaking, provisions for the giving of notice of loss . to an insurer will be liberally construed in favor of the insured, and a substantial compliance therewith, as distinguished from a strict compliance, will suffice.” (quoting from 44 Am.Jur.2d Insurance § 1482). Stonewall Insurance Company v. Moorby, 130 Vt. 562, 566-67, 298 A.2d 826, 829 (1972).

Finally, having in mind that this is a diversity action where we are reviewing the application of the law of Vermont by the Chief Judge of the District of Vermont in charging a jury regarding the provisions of an insurance policy in the context of a trial record that for all practical purposes was devoid of any issue of notice of the occurrence of the accident having been given to the insurer, I cannot say that the majority’s analysis of the charge in light of the record is an unreasonable one. I do suggest, however, with the utmost deference, that this would be an appropriate case in which to exercise the commendable restraint so well expressed just a few years ago in a like situation:

“In a case like this one, where a question of state law must be determined in a diversity case, great weight should be given the determination of a district judge sitting in that state. A court of appeals should not reverse the considered judgment of the district court on the law of its state unless it believes it to be clearly wrong. E. g., Bernhardt v. Polygraphic Co., 350 U.S. 198, 204-205, 76 S.Ct. 273, 100 L.Ed. 199 (1956); People of State of California v. United States, 235 F.2d 647, 653-654 (9 Cir. 1956); Mitton v. Granite State Fire Ins. Co., 196 F.2d 988, 992 (10 Cir. 1952).

Lomartira v. American Automobile Insurance Co., 371 F.2d 550, 554 (2 Cir. 1967) (Lumbard, Ch. J.).

A fortiori, “[t]hat is the case here.”

I would affirm the judgment of the district court in all respects.

      . Jurisdiction was grounded on diversity of citizenship, 28 U.S.C. § 1332, Ziman being a citizen of New Hampshire.

      . Also named as defendants in the action were Alonzo Hodgdon, co-owner of the bulldozer, and the Hodgdons’ company, H & W Contractors. Subsequently, the plaintiff voluntarily dismissed the complaint against Alonzo Hodgdon.

      . Hodgdon’s insurer, Employers, had refused to defend.

      . Clause 4(a) of the policy provided that
      In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable. The named insured shall promptly take at his expense all reasonable steps to prevent other bodily injury or property damage from arising out of the same or similar conditions, but such expense shall not be recoverable under this policy.

      . Clause 4(c) of the policy provided that
      The insured shall cooperate with the company and, upon the company’s request, assist in making settlements, in the conduct of suits and in enforcing any right of contribution or indemnity against any person or organization who may be liable to the insured because of bodily injury or property damage with respect to which insurance is afforded under this policy; and the insured shall attend hearings and trials and assist in securing and giving evidence and obtaining the attendance of witnesses. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation of (sic) incur any expense other than for first aid to others at the time of accident.

      . The $78,277 judgment consisted of the default judgment of $65,000 against David Hodgden, and interest thereon.

      . See Houran v. Preferred Acc. Ins. Co., 100 Vt. at 271, 195 A. at 258; Francis v. London Guar. & Acc. Co., 100 Vt. 425, 429, 138 A. 780, 781 (1927).

      . Clause 4(a) closely resembled the notice of accident clause in Ilouran, which provided that
      In the event of accident written notice shall be given by or on behalf of the Assured to the Company or any of its authorized agents as soon as is reasonably possible thereafter. Such notice should contain information respecting the time, place and circumstance of the accident, with the name and address of the injured and any available witnesses. If such information is not reasonably obtainable, particulars sufficient to identify the Assured shall constitute notice. The Assured shall keep the Company advised respecting further developments in the nature of claims and suits when and as they come to his knowledge.

      . In Houran, tlie court took care to note that the notice clause was not unreasonable, and that, having agreed to it, the insured and any party standing in his place would be bound by its provisions. 109 Vt. at 273-274, 195 A. at 260.

      . Our dissenting brother relies heavily on Hodgdon’s testimony for the proposition that there were no questions of fact concerning compliance with clause 4(a). We do not, however, find the record conclusive on this point. Hodgdon’s testimony, as quoted in the dissent, left totally unresolved the question whether he had supplied sufficient information regarding the time, j)lace, and circumstances of the accident and the availability of witnesses.

      . With regard to a cooperation clause, the burden does, in fact, rest on the insurer to show material harm or prejudice. Francis v. London Guar. & Acc. Co., 100 Vt. 425, 429, 138 A. 780, 781 (1927) ; Houran v. Preferred Acc. Ins. Co., 109 Vt. at 270, 195 A. at 258.

      . Clause 4(a) of the policy is set fortli in full in footnote 4 of the majority opinion.

      . The uncontroverted trial testimony by Hodgdon regarding his reporting the occurrence of the accident was as follows (Transcript, 62-63):
      “Q. But, you say that after you learned of the accident and the injuries of Mr. Zi-man, that you started out for the insurance company and go ahead and tell us in your own words what happened.
      A. I was in the hardware store and I see Kenworthy walking by, and I met him on the sidewalk and walked down with him; went to the office, and I told him a man had been hurt; told him Mr. Ziman’s name. He wrote it on a piece of paper and said, ‘Don’t worry about it, I will take care of it, and if things develop, you are all covered.’ That is about the extent of it.
      Q. And he filled out a paper for you?
      A. He wrote on a piece of, you know regular scratch paper, on a regular pad.
      Q. He wrote the information down?
      A. Right.
      Q. Now, at that time did you tell him whether or not you knew anything about the accident? What did you tell him about that?
      A. Well, I told him it had happened, but I didn’t know how it had happened. There was no way of knowing because I wasn’t there. I don’t know whether he got hurt by my dozer or by his. I don’t know.
      Q. You told this to Mr. Kenworthy?
      A. Yes.
      Q. Did Mr. Kenworthy ask you if there were any witnesses to the accident?

        A. I don’t remember if lie did. There was none that I know of. The only one that was there was Mr. Ziman. He was tiie only one there.
      Q. He was the only one there as far as you could learn from checking into it?
      A. Yes.
      Q. And, had Mr. Kenworthy been the man you had bought the policy from and done business with right along up to that time?
      A. He is the only one, yes.”

      . The Vermont Supreme Court has made it very clear that this is what the cooperation clause of the policy is all about:
      “Under the cooperation clause of the policy, it was the duty of [the insured], in good faith to aid and assist the company in its defense of the . . . suit. The very first obligation he was under was to give defendant’s counsel a full and truthful account of the circumstances leading up to and attending the accident .... This he did not do.” Francis v. London Guarantee & Accident Company, 100 Vt. 425, 430, 138 A. 780, 781 (1927). ■

      . Clause 4(c) is set forth in full in footnote 5 of the majority opinion.

      . Not infrequently, no member of the panel of a court of appeals is a member of the bar of the state whose law is in question. That is the case here.”

      . Chief Judge Holden, the trial judge below, aside from having been a member of the Vermont bar for some 35 years, has the unique distinction in the federal judicial system of having served, prior to his appointment to the District Court of Vermont, for many years as a Vermont state court judge, including distinguished service as a Superior Judge and as Associate Justice and Chief Justice of the Vermont Supreme Court.


source: Caselaw Access Project

author: ALDRICH, Senior Circuit Judge:

license: Public Domain

text:
    Thomas J. McDONALD, Petitioner-Appellant, v. Louie L. WAINWRIGHT, Respondent-Appellee.
    No. 73-1656.
    United States Court of Appeals, Fifth Circuit.
    April 26, 1974.

      Timothy J. Armstrong, Miami, Fla. (Court-appointed), for petitioner-appellant.
    Robert L. Shevin, Atty. Gen., Tallahassee, Fla., Fredric J. Scott, C. Marie Bernard, Asst. Attys. Gen., W. Palm Beach, Fla., for respondent-appellee.
    Before ALDRICH, Senior Circuit Judge, and BELL and GEE, Circuit Judges.

       Hon. Bailey Aldrich, Senior Circuit Judge of the First Circuit, sitting by designation.

   ALDRICH, Senior Circuit Judge:

This is an appeal from the denial of a petition for habeas corpus. Thomas McDonald, hereinafter defendant, was charged in the Florida state court with breaking and entering with intent to commit rape, and, by separate indictment, with assault with intent to commit rape, and rape. The first charge was postponed, and the remaining two tried together. At this trial the court charged the jury that it could convict defendant for either of the two specified offenses, or for attempted rape, as a lesser included offense. The jury found him not guilty.

The evidence at the trial, which came from the alleged victim, a Mrs. Certain, the police, and a co-defendant, Taylor, was to the effect that Taylor and defendant in the nighttime broke a rear door of, and entered, Certain’s apartment, where each defendant had intercourse with her. Certain testified that it was against her will; Taylor testified that she consented. Defendant did not take the stand. The state agrees with defendant that the jury must have found consent.

Thereafter defendant was tried to another jury on the charge of breaking and entering with intent to commit rape. Except that the evidence as to the breaking was more detailed, it is eonceded that, as the district court found, the evidence at this trial was “basically the same” as at the first trial or including Certain’s testimony that she did not consent. Defendant was convicted, and on appeal the judgment was affirmed. McDonald v. State, 249 So.2d 451 (4 D.C.A.Fla.1971), cert, dismissed, 253 So.2d 708 (Sup.Ct.Fla.). The court took the position, with which the district court subsequently agreed, that defendant could well have entered with intent to commit rape even though, because Certain proved to be willing, he had no occasion to carry out his purpose. The state’s brief puts it, “Although the rapor had the requisite intent upon breaking and entering to commit rape, he was thwarted before attempting the act of rape.” Although we have seen the proposition more felicitously expressed,the state’s logic is impeccable. There are, however, a number of difficulties.

The most obvious difficulty is that the state did not try its case on that theory. Faced with the burden of showing defendant’s intent at the time of entry, which, unexplained, might equally have been simply to attempt to persuade, the state, both by evidence and oral argument, sought to prove an initial intent to rape by the alleged circumstance that a rape occurred. But whether one call it double jeopardy, or collateral estoppel by judgment, this was a naked and impermissible attempt to convict defendant for one crime by proof of another which, as between defendant and the state, it had been conclusively determined defendant did not commit. The evidence of non-consent was constitutionally inadmissible, Ashe v. Swenson, 1970, 397 U.S. 436, 446, 90 S.Ct. 1189, 25 L.Ed.2d 469; Turner v. Arkansas, 1972, 407 U.S. 366, 92 S.Ct. 2096, 32 L.Ed.2d 798 (per curiam), and clearly prejudicial. The verdict was fatally tainted. Burgett v. Texas, 1967, 389 U. S. 109, 88 S.Ct. 258, 19 L.Ed.2d 319; Bumper v. North Carolina, 1968, 391 U. S. 543, 550, 88 S.Ct. 1788, 20 L.Ed.2d 797. Indeed, with this evidence excluded, it may be asked on what basis could a jury, simply because defendant made a felonious entry of one character, find beyond a reasonable doubt that at the time he intended another ?

Defendant goes further, and asserts not merely trial error, but that he can not even be tried for breaking and entering with intent because he has been acquitted, not only of rape, but of an attempt to commit rape under circumstances where such an attempt would have had to have been found if he had committed the alleged breaking and entry with the requisite intent. The state initially sought to answer this by saying flatly that “neither breaking and entering nor intent while doing so were before the first jury,” but it later realized that this allegation was more easily made than proved. The evidence of breaking and entering was introduced before the first jury, and the court specifically instructed the jury as to an attempt, and as to the necessity for both an intent to commit the crime and an overt act. See Groneau v. State, 201 So.2d 599, 603 (4 D.C.A.Fla.1967), cert. denied, 207 So.2d 452 (Sup.Ct.Fla.). The state is reduced to arguing that breaking and entering was merely “preparation,” and not an overt act sufficient to constitute an attempt. Passing the fact that in any event defendant was placed in jeopardy for an attempt, we cannot think of any more classic overt act than something which, like breaking and entering with intent, is a felony itself. Charging the jury on this evidence as to attempted rape necessarily placed before it the question whether defendant broke and entered with intent to rape.

On this record the state not only violated basic principles of collateral estoppel, but of double jeopardy. Having failed to prove certain illegal acts once, it cannot be permitted to prove them again simply by changing the name of the crime. Harlow v. United States, 5 Cir., 1962, 301 F.2d 361, 375, cert. denied, 371 U.S. 814, 83 S.Ct. 25, 9 L.Ed. 2d 56, reh. denied, 371 U.S. 906, 83 S.Ct. 204, 9 L.Ed.2d 167; United States v. Sabella, 2 Cir., 1959, 272 F.2d 206, 210-212.

Reversed and remanded with instructions to grant the writ.

      . “[H]e in a few minutes ravished this fair creature, or at least would have ravished her, if she had not, by a timely compliance, prevented him.” H. Fielding, Jonathan Wild, Book III, ch. 7.

      . We may add that if the jury were to learn of defendant’s conduct once within the apartment, he would be entitled to an instruction that it had been conclusively found to have been consented to.

      . “[A]ny act toward the commission of such an offense.” Fla.Stat.Ann. § 776.04 (1965).

      . “[C]ommencement of the consummation . . . . [S]uch progress that it would be consummated unless interrupted by circumstances independent of the will of the attempter.” Groneau v. State, 201 So.2d at 603. Cf. fn. 1, ante.


author: GARTH, Circuit Judge. JAMES HUNTER, III, Circuit Judge

text:
    Antonio LIPARI, Appellee, v. MARITIME OVERSEAS CORPORATION, Appellant.
    No. 73-1448.
    United States Court of Appeals, Third Circuit.
    Argued Nov. 5, 1973.
    Decided Feb. 7, 1974.

      Mark D. Alspach, C. A. Putz, Krusen, Evans & Byrne, Philadelphia, Pa., for appellant.
    William Goldstein, Paul M. Goldstein, Philadelphia, Pa., for appellee.
    Before VAN DUSEN, HUNTER and GARTH, Circuit Judges.
   GARTH, Circuit Judge.

This appeal involves a claim for maintenance and cure brought by the plaintiff (appellee) seaman Lipari, against the defendant (appellant) shipowner Maritime Overseas Corporation (hereinafter “Maritime”).

On October 29, 1969 plaintiff instituted a suit against Maritime claiming damages under the Jones Act (46 U.S.C. § 688), as a result of an accident sustained by him while a member of the crew of defendant’s vessel “Overseas Traveller”. The accident had occurred on August 15, 1969 when without warning, a boom fell toward, but did not reach, the deck on which Lipari was working. Had the boom fallen all the way, the plaintiff and several other crew members on deck at that time might easily have been killed or severely injured. Thereafter, as a result of this incident, Lipari complained of nervousness and anxiety.

On June 9, 1972 plaintiff instituted this action to recover maintenance and cure stemming from the August 1969 accident. The damage and maintenance actions were consolidated for trial, which commenced with a jury on June 21, 1972. At the conclusion of trial, the District Court submitted 11 interrogatories to the jury. These interrogatories were answered on June 27, 1972, and resulted in the entry of a judgment in favor of the plaintiff.

Thereafter, the court, sitting without a jury, received evidence and heard argument with respect to the issue of maintenance and cure and found that: (1) psychotherapy of the type that would benefit the plaintiff was not available to him; (2) no such psycho-' therapy treatment was ever offered to the plaintiff (by the defendant); (3) the plaintiff was unaware that he (the plaintiff) could get the type of psychotherapy necessary to benefit him; and (4) there was no evidence that plaintiff ever rejected such treatment.

Accordingly, on March 21, 1973, judgment in the amount of $4,456 was entered against the defendant, representing payment of maintenance and cure for the period November 24, 1970 to June 27, 1972, excluding a period of hospitalization from December 28, 1971 to January 22, 1972. This appeal from the order of March 21, 1973, concerned only with the judgment as it pertained to maintenance and cure, followed.

I.

Lipari, a merchant seaman, while in the service of Maritime’s vessel “Overseas Traveller” was almost struck by a falling boom on August 15, 1969. As a result of this accident, Lipari developed a nervous condition which caused him to leave the vessel when it reached its next port (Amsterdam). At his own expense, he thereafter returned to the United States, reporting on September 2, 1969 to the United States Public Health Service facility in New York, where he commenced out-patient treatment for his emotional condition. He remained under out-patient care, marked “not fit for duty”, until December 4, 1969, at which time he was declared “fit for duty”. He re-shipped aboard the first available vessel and served from January 29, 1970 until May 2, 1970, at which time he left the ship (“Newark”) to make arrangements for his brother’s funeral. Thereafter he re-registered, but his next assignment was not until October 16, 1970 when he joined the “Trans Idaho”.

His nervous condition again resulted in his leaving his ship (now the “Trans Idaho”). He returned to the Public Health Service in New York on November 24, 1970. The record of that psychiatric examination includes among other things: “. . . post-traumatic, chronic excessive phobic reaction. . This man is not fit for duty. He is permanently 100% disabled for sea duty by virtue of his chronic insistent reaction to an accident fifteen months before. He should be given a medical retirement.”

Lipari was told by the Public Health Service that he was to return in 2y2 months. He did not, but rather went home to Montreal, Canada, where he commenced work as a part-time taxicab driver.

The evidence discloses that Lipari did not seek any medical treatment of any sort whatsoever from November 24, 1970 until June 4, 1971. On June 4, 1971 and again on June 11 and July 2, 1971 he visited an orthopedic physician (Dr. Le-maire at Sacre-Coeur Hospital, Montreal) for a back problem, unrelated to either his service aboard the defendant’s vessel or his psychiatric disability.

On July 15, 1971 at the request of Li-pari’s attorney, Lipari was examined by Dr. Alexander Silverstein, a Philadelphia psychiatrist, who recommended psychotherapy for approximately one to four years, three to four times a week, in order to “. . . help him [Lipari] gain insight into the mechanism of his condition and, hopefully, bring him back to his former level of adaptability and eventually return to the work he is best suited to do.”

After this examination, Lipari returned to Montreal and his cab driving. Again he sought no treatment of a psy-chotherapeutic nature.

On December 28, 1971, Lipari was hospitalized at Sacre-Coeur Hospital in Montreal. The hospital record reveals that a number of tests and laboratory analyses were performed, none of which appear to have direct relevance to any psychiatric involvement.

Thereafter, (June 2, 1972) on the eve of instituting this action for maintenance and cure, Dr. Silverstein again saw the plaintiff.

Two other facts are relevant to our discussion. On June 9, 1972 Lipari’s counsel wrote to-Maritime’s counsel setting forth the information that Dr. Sil-verstein would be used as plaintiff’s medical expert witness. Demand was made in that letter for defendant to respond in maintenance and cure from November 24, 1970.

After the jury verdict, but prior to the entry of judgment for maintenance and cure, Maritime entered into evidence the deposition of Dr. Evan McCallum, Medical Director of the Montreal General Hospital in Canada. That testimony revealed that free medical care, including psychiatric care (psychotherapy), was available in Montreal at the relevant times in question, and information to that effect had been generally made public.

II.

It is the duty of a vessel and her owner to provide maintenance and cure for seamen injured or falling ill while in the service of the vessel. Maintenance and cure is not compensatory; it is supportive and curative. Calmar Steamship Corp. v. Taylor, 303 U.S. 525, 58 S.Ct. 651, 82 L.Ed. 993 (1938); Sobosle v. United States Steel Corporation, 359 F. 2d 7 (3d Cir. 1966).

The seaman’s right to maintenance and cure is not without its obligations. He, the seaman, must act with reasonable diligence to ascertain the nature of his illness and his need for treatment, and he must seek the necessary treatment to correct the illness or injury. Repsholdt v. United States, 205 F. 2d 852 (7th Cir. 1953); Bowers v. Seas Shipping Co. Inc., 185 F.2d 352 (4th Cir. 1950).

Seamen have been precluded from their right to maintenance and cure when they have failed to fulfill these obligations Repsholdt v. United States, supra, or (absent mitigating circumstances) when they have voluntarily rejected hospital care. Luth v. Palmer Shipping Corp., 210 F.2d 224, 228 (3d Cir. 1954); Murphy v. American Barge Line Co., 169 F.2d 61, 64 (3d Cir.) cert. den. 335 U.S. 859, 69 S.Ct. 133, 93 L.Ed. 406 (1948). Seamen must also keep the cost of maintenance and cure to a minimum. Wiseman v. Sinclair Refining Company, 290 F.2d 818 (2d Cir. 1961).

Further, while it may not terminate the duty of maintenance and cure, the failure to resume treatment by reason of mental or emotional illness, may suspend that right for the period during which the seaman fails to submit to the prescribed treatment. Sobosle v. United States Steel Corporation, supra,.

With these principles in mind, we turn to the findings made by the District Court to determine whether they are supported by competent evidence, or whether they are clearly erroneous and are to be set aside. See Luth v. Palmer Shipping Corp., supra.

III.

Availability of Treatment

The District Court found that “after a study of all the evidence, including the deposition presented of Dr. McCallum, there is no showing that psychotherapy of the type that would benefit Mr. Lipari was available to Mr. Lipari.”

Conceding that psychiatric treatment was indicated, was there evidence before the District Court to show that such treatment was not available to Lipari?

Lipari himself testified that when he had been declared permanently 100% disabled for sea duty by the United States Public Health Service on November 24, 1970, no psychotherapy treatment was offered to him by the Public Health authorities. He admits, however, that he was told that he would have to return to that facility at least every 90 days in order to “retain my seniority like free medical attention.” (Tr. 121a). He further testified that he did not go back “due to the fact that it cost money, and also I had free medical attention in Canada, . . .” [emphasis supplied] (Tr. 122a). On cross examination, he explained the instruction given to him by the United States Public Health Service to return in 2% months by stating: “they didn’t tell me to return in 2y2 months. They told me that if I wanted to keep my eligibility for free medical care I would have to return at least every 90 days. And he told me he would put a date about 2% months. And I was to call up before going in, if I wanted to keep my eligibility. . . . Due to the fact I was living in Montreal and it cost money to go to New York, and I have free medical care in Montreal, I didn’t go back to the Public Health in New York.” (Tr. 191a-7).

Dr. McCallum, a Medical Director of the Montreal General Hospital in Canada, testified as to both a hospitalization and a Medicare program available to residents and citizens of the Province of Quebec, Canada, and hence available to plaintiff at the relevant times disclosed by this action. These programs afford hospital care and medical out-patient or in-patient care free of charge to Montreal residents. The hospitalization program had its inception in or about 1962 and the Medicare program was activated in 1969. Specifically, the doctor testified that the type of psychotherapy recommended by Dr. Silverstein for the plaintiff was available free of charge in Montreal, and if not at the Sacre-Coeur Hospital in Montreal, at a specialized psychiatric institution (Albert Prevost Hospital) no further than three miles away from Sacre-Coeur.

Dr. McCallum testified that in 1969, when the Medicare system was initiated, information as to the program was disseminated in the public media, press and radio by the governmental agency responsible for the administration of the medical and hospital program.

The record is barren of any evidence indicating the unavailability of free medical service to the plaintiff. Accordingly, the finding of the District Court in this respect cannot be sustained.

Awareness of Available Treatment

The District Court found that Lipari was not aware of the availability to him of psychiatric treatment. In making that finding, the District Court’s attention was focused upon and restricted to the plaintiff’s knowledge of the availability of a specific type of treatment (psychotherapy). We think this view of the issue and proofs is too narrow.

The appropriate inquiry here is the awareness of available free general medical services. All other inquiries having to do with the kind, of medical treatment or procedure available, are immaterial.

Lipari’s testimony is direct and unequivocal that he knew of the availability of free medical service in New York, but chose not to avail himself of treatment there. He asserted time and again that he knew of free medical service in Montreal through the Medicare program, and in fact he sought and obtained its benefits when he consulted Dr. Lemaire for his back problems and when he was hospitalized at Sacre-Coeur Hospital in December 1971. Lipari having knowledge that general medical services were available to him in Montreal, and without charge, it is immaterial whether Li-pari also knew the specific availability of a particular treatment, therapy, diagnostic aid or procedure, which might be prescribed by the medical authority responsible for his care.

Hence, we hold that under the facts of this case, all that is required for the resolution of this issue is proof by the defendant that the plaintiff had knowledge of free general medical services. That proof is undisputed by the plaintiff’s own testimony.

Failure to Offer Treatment

We agree with the District Court that the evidence shows defendant failed to “offer” treatment to Lipari after November 24, 1970. That finding, however, even if supported by evidence, does not dispose of the issue before us.

The crucial inquiry is whether there is evidence in the record which would reveal the defendant’s knowledge of the need to make an “offer” of treatment, for that evidence is a prerequisite to the ultimate finding concerning Maritime’s obligation. If Maritime did not know or could not have known of the plaintiff’s need for treatment, the finding of the District Court with respect to defendant’s failure to “offer” is irrelevant.

On November 24, 1970 Lipari had been declared not fit for duty and permanently disabled, thereby terminating the defendant’s obligation to provide maintenance and cure. Farrell v. United States, 336 U.S. 511, 69 S.Ct. 707, 93 L.Ed. 850 (1949); Brown v. Dravo Corp., 258 F.2d 704 (3d Cir. 1958); Desmond v. United States, 217 F.2d 948 (2d Cir. 1954). The defendant’s obligation to this date had been met; it had no further obligation with respect to maintenance and cure absent extenuating circumstances and requisite knowledge. See Murphy v. American Barge Line Co., supra.

The defendant argues that after November 1970, Lipari had never given it such notice of his condition as would require the defendant to respond with an offer of maintenance and cure, and, in addition, it had lost touch with Lipari, who had returned to his home in Montreal, Canada. Accordingly, the defendant argues that it could not have offered treatment to Lipari during the period November 24, 1970 through June 1972 as it had no knowledge of the need for such treatment.

While in Montreal, Lipari consulted an orthopedic physician for a back sprain and was hospitalized at the Sa-cre-Coeur Hospital. Neither the physician’s nor the hospital’s record indicates that information as to these visits had been conveyed or made known to Maritime. Even had the out-patient file of Dr. Lemaire been disclosed to defendant, it would have shown nothing pertaining to any psychiatric disturbance. The four visits to Dr. Lemaire on June 4, 11, 25, and July 2, 1971 deal solely with the diagnosis and treatment of a lumbar sprain. Similarly, the hospital record for the period December 28, 1971 to January 22, 1972 indicates nothing regarding mental or emotional disturbances, but rather reveals only a diagnosis and treatment of physiological ailments. Hence, the defendant, even if it had been privy to these records, would not have known of any psychiatric involvement of Lipari and could not have known that there had. been a change in his condition from the “permanent disability” status recorded by the United States Public Health Service. In fact, even though the plaintiff claims that he told both Dr. Lemaire and the physicians at the hospital of his nervousness and anxiety, this could not have supplied the underlying obligation necessary to compel an “offer” of treatment by Maritime for plaintiff’s emotional distress, for this was the very ailment for which he, the plaintiff, had been certified not fit for duty.

On July 15, 1971, apparently for the first time plaintiff was informed (by Dr. Silverstein) that he could benefit from psychotherapy and that with treatment there was hope that he could return to his former vocation. This information, however, was not imparted to the defendant until some time after June 9, 1972. Accordingly, during the period from November 24, 1970, the date on which Lipari was declared not fit for duty, and, at the earliest, June 9, 1972, the defendant: (a) knew that its obligation to pay maintenance and cure had been terminated; (b) had no communication or contact with Lipari; and (c) did not know' of any benefit that treatment could afford. Under these circumstances, it is difficult to comprehend how or why psychiatric treatment could or should have been made available to Lipari by the defendant.

We decline to hold the defendant has the duty of providing or offering treatment when it had no knowledge of Lipari’s need for treatment and when Lipari had failed to notify it of his need. See Repsholdt v. United States, supra. The evidence is clear that Maritime received notice of Lipari’s change in status no earlier than June 9, 1972. It is also clear that no treatment had been sought for this ailment by Lipari, at least through June 27, 1972, the date on which the jury returned with its answers to the Court’s interrogatories. Accordingly, the District Court’s finding cannot be sustained.

Evidence of Rejection of Treatment

The District Court found that there was no evidence that Lipari had rejected psychiatric treatment. Under the facts of this ease, that finding is not relevant, as we are concerned here, not with a rejection of treatment, but rather with a failure by Lipari to seek treatment.

Lipari testified that after being declared permanently unfit for duty by the United States Public Health Service in November 1970, he knew that he could never work on a ship again (Tr. 121a) and returned to Montreal where he commenced work as a cab driver.

He sought no treatment directed to his “nervousness” although he testified to telling an orthopedic physician about his nervous condition and relating the history of his August 1969 accident to the hospital authorities when he was -admitted to the Sacre-Coeur Hospital in December 1971. Neither medical record, however, (both of which are in evidence) reflects this medical history. Of even more importance, the hospital record makes no reference to Dr. Silver-stein’s prognosis nor to the fact that the plaintiff had ever consulted with a psychiatrist. Lipari did not testify that he had informed the hospital authorities of Dr. Silverstein’s examination, an examination which occurred but five months prior to the plaintiff’s hospitalization. Strikingly, even after Dr. Silverstein’s prognosis and his recommendation for treatment, Lipari sought no treatment.

The record also reveals that Lipari never returned to any Public Health Service facility as he was directed. Nor did he return to the Sacre-Coeur Hospital after his discharge. Aside from the equivocal statements made by plaintiff that he told Dr. Lemaire and the hospital physicians of his nervousness, there is no evidence whatsoever of Lipari’s seeking treatment for this ailment during the entire period in question— and this despite his knowledge of the availability of free medical services, both in the United States and in Montreal.

We are satisfied that the evidence clearly demonstrates the plaintiff’s failure to seek treatment, and that therefore, on this record a suspension of maintenance and cure for the period in question should be ordered. Sobosle v. United States Steel Corporation, supra.

Having held that the findings of the District Court, on which judgment for the plaintiff was predicated, were made in error, the judgment as to maintenance and cure for the period November 24, 1970 to June 27, 1972 will be reversed and the District Court directed to enter judgment for the defendant.

JAMES HUNTER, III, Circuit Judge

(concurring in part and dissenting in part):

Maintenance and cure continues until the seaman obtains maximum cure or becomes permanently disabled. E. g., Farrell v. United States, 336 U.S. 511, 69 S.Ct. 707, 93 L.Ed. 850 (1949). On November 24, 1970, the Public Health Service in New York declared plaintiff not fit for duty and permanently disabled. Although I do not believe that this diagnosis by the Public Health Service is necessarily conclusive, plaintiff did not submit any evidence to contradict the Public Health Service’s diagnosis at least for the period between November 24, 1970 and July 15, 1971, when plaintiff first saw Dr. Silverstein. I would therefore deny plaintiff maintenance and cure during this period on the basis that there is no evidence to support a finding that plaintiff was not permanently disabled. Furthermore, I believe that during this “gap” plaintiff’s right to maintenance and cure was merely suspended. See Farrell v. United States, 336 U.S. 511, 519, 69 S.Ct. 707, 93 L.Ed. 850 (1949); Sobosle v. United States Steel Corp., 359 F.2d 7, 11 & n. 9, 12 (3d Cir. 1966).

Once plaintiff became aware on July 15, 1971 that his disability was not permanent and that “frequent” psychotherapy treatments would be useful as a “curative” measure, I believe the central issue became whether plaintiff acted with “reasonable diligence” to “secure proper treatment.” Repsholdt v. United States, 205 F.2d 852, 856 (7th Cir. 1953).

To the extent that Maritime has an affirmative duty to provide treatment (as opposed to reimbursement for maintenance or treatment), I agree with the majority that notice is required. But I am aware of no decision which has held that reimbursement liability for maintenance and cure cannot attach until the shipowner is given notice of the seaman’s disability. To fashion such an inflexible rule would disregard, m my view, the possible lack of prejudice to the shipowner from lack of noticé and the admonition in Sobosle, supra, that, “admiralty recognizes the human rights that are involved, judging the seaman as he is, — subjectively, rather than as he might have been, — objectively, if he were someone else.”

Thus, while I agree that Maritime could not have been obligated to provide treatment to plaintiff prior to June 9, 1972 at the earliest, I do believe that Maritime would be liable for the stipulated eight dollars per diem maintenance charge from July 15, 1971, provided plaintiff made reasonable efforts to seek treatment following Dr. Silverstein’s diagnosis on July 15, 1971. However, the record clearly discloses that plaintiff made no reasonable effort from that date forward to obtain the treatment suggested by Dr. Silverstein. And even if plaintiff was unaware of free medical treatment, all he had to do was notify Maritime who would then have had an affirmative obligation to provide treatment. Consequently, plaintiff should not be allowed to recover for maintenance and cure for the period between July 15, 1971 and June 9, 1972 because he did not make reasonable efforts to seek treatment during this time.

As for the period between June 9, 1972 and June 27, 1972, I would remand to the district court for two findings: 1) the date on which Maritime received notice that plaintiff was seeking maintenance and cure and 2) whether plaintiff’s failure to seek treatment prior to such date was willful. The majority appears to foreclose the latter finding by holding that “on this record a suspension of maintenance and cure for the period in question should be ordered.” As I read Sobosle, supra, on which the majority relies for this statement, suspension, rather than complete termination, of maintenance and cure depends on whether or not the seaman willfully refused treatment or, as in our case, willfully failed to seek treatment. Thus, by holding that maintenance and cure are suspended, the majority impliedly holds that plaintiff’s failure to make reasonable efforts to seek treatment, during the period prior to which Maritime was notified, was not willful. In my view, the district court should decide this issue in the first instance and then apply the Sobosle rule.

      . The District Court directed the entry of judgment on the damage action in favor of the plaintiff and against the defendant in the amount of $33,333.33 plus costs. The jury found that the defendant was negligent; that the negligence caused the plaintiff’s injury ; that the plaintiff was contributorily negligent to the extent of 33%% and that the total amount of plaintiff’s damage exclusive of contributory negligence was $50,000.
      Interrogatories Nos. 9, 10 and 11 which have relevance to the maintenance and cure proceeding were answered by the jury as follows: the plaintiff sustained his injury while in the sea service of the defendant; he is still suffering from the injury (illness) ; and he will benefit from treatment or psychotherapy in the future. The defendant does not contend that the evidence was insufficient to support these answers.

      . The parties stipulated that if a judgment was entered for maintenance and cure, it would be at the rate of $8 per day; that there were 557 days within the calculated period and that the total therefore would be $4,456. The judgment when entered further provided that it was without prejudice to Li-pari’s rights to recover such maintenance to which he might be entitled subsequent to June 27, 1972.

      . Lipari, a resident of Montreal, Province of Quebec, Canada, first went to sea in 1941 at the age of 17.

      . The defendant Maritime neither owned or operated the vessels “Newark” or “Trans Idaho”.

      . On this appeal plaintiff’s claim is for maintenance and cure only for the period November 24, 1970 to June 27, 1972, excluding December 28, 1971 to January 22, 1972 when he was hospitalized in Montreal.

      . Although the plaintiff claims to have told both the orthopedic physician in June of 1971 and the physicians at Sacre-Coeur Hospital of his nervousness and emotional problem, nothing appears in any of the medical records which would reflect that information. To the contrary, the various tests and laboratory analyses appear centered upon pathological or organic abnormalities. The final hospital diagnosis was listed as “Normochrome, normocytary anaemia, of uncertain aetiology (mild)” and the secondary diagnosis as “Emaciation, probably through malnutrition. Sedimentation very high without known aetiology. Possibility of slight urinary infection.”

      . We note that the plaintiff availed himself of these various free services when he visited Dr. Lemaire for his back ailment in June and July, 1971 and again when he was hospitalized from December 28, 1971 to January 22, 1972.

      . We do not believe that even the plaintiff would contend that the defendant in an appropriate case would be obliged to prove the plaintiff’s knowledge of available free procedures such as rectosigmoidoscopy, urethro-cystoscopy, hepatosplenic cartograph, etc. Yet these are just a few of the many tests provided without charge to Lipari during his hospitalization at Sacre-Coeur Hospital.

      . The plaintiff contends that had Maritime pursued certain avenues of discovery in the damage action which had been commenced in 1969, facts might have surfaced giving the defendant earlier notice of the 1971 findings of Dr. Silverstein. In effect plaintiff argues that the defendant had an obligation to propound interrogatories to plaintiff which would have elicited such information.
      We note that the plaintiff’s deposition was taken by Maritime on June 4, 1970 approximately one year before Dr. Silverstein’s prognosis. Despite that circumstance, and even without reference to the rules prescribing the time of completion of discovery by parties, we are not persuaded that there is an obligation on a defendant to continue utilizing all discovery mechanisms up to the time of trial.

      . Maritime contends that its last direct contact with Lipari was when he left its vessel in August 1969. The later vessels on which Lipari shipped out (“Newark” and “Trans Idaho”) have no connection with Maritime.

      . The letter was dated June 9, 1972, and it was stipulated by counsel that it was forwarded on that date. It was claimed to have been received by defendant’s counsel on June 12, 1972. This latter date was not stipulated but appears in the transcript of hearing of March 21, 1973 as a representation by counsel. The letter itself was marked in evidence.

      . The hospital record in evidence bears the following notation:
      “Condition on leaving — slightly improved— under periodical checkups.” [emphasis supplied]

      . Inasmuch as we are concerned here with only the period November 24, 1970 to June 27, 1972, we obviously do not preclude the plaintiff from asserting a claim for maintenance and cure, if appropriate, from or after June 27, 1972.

      . See Gore v. Maritime Overseas Corp., 256 F.Supp. 104, 122 (E.D.Pa.1966), rev’d on other grounds, 378 F.2d 584 (3d Cir. 1967).

      . Even if plaintiff had submitted evidence that he was never permanently disabled, I do not think Maritime should be held liable for maintenance and cure during a period in which both parties presumably accepted the conclusion of the Public Health Service.

      . I believe, however, that the right to maintenance and cure is completely terminated if a seaman willfully delays contesting a diagnosis of permanent disability or if the equitable defense of laches applies. Cf. Sobosle v. United States Steel Corp., 359 F.2d 7 (1966). These exceptions have not been raised by Maritime and thus they do not confront us in this case.

      . Compare, Brown v. Dravo Corp., 258 F.2d 704 (3d Cir. 1958).

      . A shipowner is prejudiced from lack of notice chiefly when the seaman has failed to seek treatment on his own, thus prolonging the period for which the shipowner will be liable for maintenance and cure.

      . 359 F.2d at 12. See Luth v. Palmer Shipping Corp., 210 F.2d 224 (3d Cir. 1954) ; Murphy v. American Barge Line Co., 169 F. 2d 61 (3d Cir.), cert. denied, 335 U.S. 859, 69 S.Ct. 133, 93 L.Ed. 406 (1948).

      . Maritime would also be liable for any reasonable expenses incurred for treatment, but none were sought by plaintiff.

      . In this sense, notice to Maritime can be considered one factor in determining whether plaintiff made reasonable efforts to seek treatment.


author: McENTEE, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Richard H. GENS, Defendant, Appellant, UNITED STATES of America, Appellee, v. Anthony W. CARLETON, Defendant, Appellant. UNITED STATES of America, Appellee, v. Richard T. PORTER, Defendant, Appellant.
    Nos. 73-1220 to 73-1222.
    United States Court of Appeals, First Circuit.
    Argued Jan. 10, 1974.
    Decided March 13, 1974.

      Harold Hestnes, Boston, Mass., with whom James D. St. Clair, Robert F. McLaughlin, and Hale & Dorr, Boston, Mass., were on brief, for Richard H. Gens, defendant, appellant.
    William P. Homans, Jr. and Edward J. Lonergan, Boston, Mass., with whom Julian T. Houston, Featherston, Ho-mans, Klubock & Griffin, Paul G. Couni-han, Robert E. McLaughlin, and The McLaughlin Brothers, Boston, Mass., were on brief, for Anthony W. Carleton and Richard T. Porter, defendants, appellants.
    George V. Higgins, Sp. Asst. U. S. Atty., with whom James N. Gabriel, U. S. Atty., was on brief, for appellant.
    Before COFFIN, Chief Judge, ALD-RICH and McENTEE, Circuit Judges.
   McENTEE, Circuit Judge.

Appellants were convicted on eight counts of willfully misapplying funds of the Massachusetts Bank and Trust Company of Brockton, Massachusetts, a federally-insured bank, in violation of 18 U.S.C. § 656 (1970) . Several issues are raised in this consolidated appeal, including adequacy of the indictment, sufficiency of the evidence and the correctness of the trial court’s charge to the jury. We reverse.

I.

The grand jury indicted appellants on eleven counts charging willful misapplication of bank funds! Upon the government’s motion, Counts 3, 5, and 8 were dismissed prior to trial. The remaining counts, on which appellants were convicted, charged that appellants committed willful misapplication “in that they granted and caused to be granted” eight unsecured loans to parties “who [were], then and there, as the defendants well knew, not the actual beneficiar [ies] of said loan[s] The indictment further charged “[t]hat by means of the granting of the said loan[s], the defendants converted the proceeds thereof to the use of [appellant] Gens.” The foregoing is the complete extent of the physical acts alleged in the indictment. It was further alleged that appellants Porter and Carleton were officers and directors of the bank at all times material to the eight counts, and that appellant Gens was a director at all times material to the final six counts.

The evidence adduced at trial was as follows. In the fall of 1969, Porter and Carleton gained control of the Massachusetts bank. They did so with financial assistance from Gens, whose principal business was the operation of several nursing homes in the New England area. At that time Gens’ nursing homes were experiencing cash shortages, mainly due to delays in Commonwealth of Massachusetts welfare payments. To add needed cash to his business, Gens borrowed $80,000 from the Massachusetts bank. That amount represented the bank’s self-imposed loan limit. The record is not clear, but apparently Gens’ business also borrowed funds from the bank at this time.

Besides these loans directly to Gens and his business, during the next twelve months the bank also granted the eight loans totaling $235,000 which are in issue in this case. It was undisputed at trial that the named debtors turned over the proceeds of all eight loans to Gens, and that he in turn invested these sums in the nursing homes. The eight loans are best described in three categories: four loans to Hyman H. Silver; one loan to Charles Roazen; and three to J. Peter Felopoulos, Dennis Ditelberg and their law firm.

Hyman H. Silver was for many years Gens’ partner in the nursing home business. At trial Silver acknowledged signing for the four loans from the Massachusetts bank alleged in Counts 1, 2, 4 and 6, in the total amount of $80,000. He testified that he had neither sought these loans nor received the proceeds. All he did was sign papers for them at the behest of his partner Gens. He also said he presumed Gens would employ the loan proceeds in their nursing home business, which is what Gens did. Silver further testified that these sort of cursory financial transactions on his part were not unusual. Over the years he had been in charge of the day-to-day operations in their business, while Gens was in charge of finances. Silver said he routinely signed whatever financial papers Gens placed before him, apparently even when such papers were blank notes representing his personal obligation rather than that of their business. *8 On cross-examination, Silver said that he recognized in signing for such loans that he could be held personally responsible for their repayment should the business fail to do so, even though he personally did not receive the proceeds. Silver also testified that at the time he signed for the four loans in issue in this case he had a net worth of between $500,000 and $700,000. It may be, however, that these figures represented the assets of the nursing home business as well as Silver’s personal assets. The general impression derived from Silver’s testimony is that he rarely, if ever, distinguished his personal finances from those of the nursing home business.

Charles Roazen was a neighbor and close friend of Silver and through him became acquainted with Gens. At trial, Roazen acknowledged signing for the $80,000 loan alleged in Count 9 and further testified that upon deposit of that sum in his account he immediately made out a check to Gens for the same amount. According to Roazen, the loan came about in the following manner. Sometime around January 1970 Gens said that he, Silver, Porter and Carleton wanted to purchase stock in yet another bank, the Garden City Bank and Trust Company of Newton, Massachusetts. Gens told Roazen that they needed a fifth person “to come in with them because they were going to use money borrowed from the Massachusetts Bank and Trust Company.” Gens said that he and Silver had borrowed up to their limits at the Massachusetts bank and that Porter and Carleton did not want their names publicly associated with the stock purchase. Despite vigorous cross-examination suggesting otherwise, Roazen maintained that it was his understanding that although he was to sign for a loan to help out the other four, he personally would not have to repay the loan, barring some “catastrophe.” Roazen said he agreed to this proposal because he and Silver had been friends for a long time. In addition, Gens had pointed out to Roazen that the stock purchase would be beneficial to Roazen’s automotive-parts business because the Garden City bank thereafter would be amenable toward making loans to Roazen’s customers. Roazen’s position was also supported by the fact that when the Garden City bank stock purchase was called off, Gens felt free to invest the $80,000 proceeds of the Roazen loan into his cash-hungry nursing home business. He did not consult Roazen on this. On the other hand, appellants’ position that Roazen had agreed to purchase stock in the bank along with the four others, and that the loan was clearly a personal obligation of Roazen’s, is supported by a letter which Gens gave Roazen at the time of the loan, evidencing a beneficial interest on Roazen’s part in the stock to be acquired. Also, there is no question that Roazen was a man of wealth who could afford to repay the $80,000 loan. On this record the jury could reasonably have reached either conclusion as to Roazen’s agreed-upon role with respect to the loan that he signed for.

Finally, J. Peter Felopoulos and Dennis Ditelberg were partners in a law firm which did a substantial amount of work for Gens and Silver’s nursing home business around the time of the loans in question. These two attorneys testified that in early 1970 Gens and Silver came to them and asked to borrow money for their business. They replied that they had no cash available. Gens and Silver then told the attorneys that if they could present a financial statement, “they could perhaps arrange a loan for us; and, that’s how we got to know the Massachusetts Bank and Trust Company.” Subsequently, the loans cited in Counts 7, 10 and 11, in the total amount of $75,000, were arranged. The two attorneys never personally went to the bank or spoke with Porter or Carle-ton about these loans. Instead, after financial statements were prepared, Gens brought them the notes and they signed them. Immediately after each loan, the proceeds were forwarded to Gens by check. In exchange, they received notes from Gens and Silver. Like Silver, Felopoulos and Ditelberg said that they “fully recognized” that the three loans from the Massachusetts bank were personal obligations of theirs. The apparent motive was the attorneys’ desire to keep the favor of a substantial client. There appears to be no question that they possessed sufficient resources at the time to repay the three loans. At the close of the government’s case, appellants moved for judgment of acquittal for lack of evidence. These motions were denied.

In its charge to the jury, the trial court first stated that the government’s theory of willful misapplication was as follows:

“. . . that Defendant Gens dominated and controlled Defendants Porter and Carleton or at least worked in concert with them to arrange loans to the persons named in each count in the indictment, knowing that such person was not the true borrower and that Defendant Gens was to be the true beneficiary thereof, and that each of such persons was used as the borrower either with or without the knowledge and consent of the common borrower in order to disguise the concentration of the bank’s funds to Defendant Gens.”

The court then instructed the jury that it had to find that appellants “misapplied or caused to be misapplied money, funds, or credits of the bank by granting a loan for the amount and to the person named in the particular count so that these funds could be converted to the use of Defendant Richard H. Gens.” These two excerpts from the charge were the only descriptions instructing the jury as to the acts which it could find constituted willful misapplication. On this basis, the jury found each appellant guilty on all eight counts.

II.

We think that the indictment and the charge to the jury, at best, did not give the jury adequate guidance as to precisely what acts constitute .willful misapplication of bank funds in violation of § 656. The most likely interpretation of the indictment and the court’s charge was that appellants should be found guilty if it was found that they granted loans to the named debtors knowing that the proceeds would be turned over to Gens. For the reasons that follow, such a finding by itself is not sufficient to constitute willful misapplication under § 656. Therefore, the convictions cannot stand.

As employed in § 656, the term “willfully misapplied” has generally been held to have no settled meaning. See, e. g., United States v. Britton, 107 U.S. 655, 669, 2 S.Ct. 512, 27 L.Ed. 520 (1883); Mulloney v. United States, 79 F.2d 566, 581 (1st Cir. 1935), cert. denied, 296 U.S. 658, 56 S.Ct. 383, 80 L. Ed. 468 (1936). Instead, during the past hundred years it has been left to the courts to define the acts which constitute willful misapplication of bank funds within the meaning of the statute. During this period several cases have involved situations roughly analogous to the instant case, i. e., instances of bank loans made to named individuals who, with the knowledge of bank officials, passed on the proceeds to third parties. But willful misapplication of bank funds has not been found in all such situations.

The cases of this type in which willful misapplication has been found fall into three general categories. First, those in which bank officials knew the named debtor was either fictitious or wholly unaware that his name was being used. See, e. g., United States v. Stokes, 471 F.2d 1318 (5th Cir. 1973) (fictitious debtor); United States v. Schmidt, 471 F.2d 385 (3d Cir. 1972) (per curiam) (named debtor never authorized use of his name for any purpose). Second, cases in which bank officials knew the named debtor was financially incapable of repaying the loan whose proceeds he passed on to the third party. See Mulloney v. United States, supra 79 F.2d at 581. Third, cases in which bank officials assured the named debtor, regardless of his financial capabilities, that they would look for repayment only to the third party who actually received the loan proceeds: in other words where the debtor allowed only his name to be used, enabling the bank officials to grant a de facto loan to a third party to whom the bank was unwilling to grant a formal loan. See, e. g., United States v. King, 484 F.2d 924 (10th Cir. 1973) cert. denied, 42 U.S.L.W. 3555 (U.S. April 1, 1974); United States v. Moraites, 456 F.2d 435 (3d Cir.), cert. denied, 409 U.S. 891, 93 S.Ct. 109, 34 L. Ed.2d 148 (1972). In the three situations described above, the loans formally being made could be characterized as “sham” or “dummy” loans, because there was little likelihood or expectation that the named debtor would repay. The knowing participation of bank officials in such loans could consequently be found to have a “natural tendency” to injure or defraud their banks and thus constitute willful misapplication within the meaning of § 656. Mulloney v. United States, supra 79 F.2d at 584; Galbreath v. United States, 257 F. 648, 656 (6th Cir. 1918).

On the other hand, ■ where the named debtor is both financially capable and fully understands that it is his responsibility to repay, a loan to him cannot — absent other circumstances — properly be characterized as sham or dummy, even if bank officials know he will turn over the proceeds to a third party. Instead, what we really have in such a situation are two loans: one from the bank to the named debtor, the other from the named debtor to the third party. The bank looks to the named debtor for repayment of its loan, while the named debtor looks to the third party for repayment of his loan. If for some reason the third party fails to make repayment to the named debtor, the latter nonetheless recognizes that this failure does not end his own obligation to repay the bank. In this situation, the bank official has simply granted a loan to a financially capable party, which is precisely what a bank official should do. There is no natural tendency to injure or defraud the bank, and the official can not be said to have willfully misapplied funds in violation of § 656. See United States v. Docherty, 468 F.2d 989 (2d Cir. 1972); cf. Giragosian v. United States, 349 F.2d 166 (1st Cir. 1965); Johnson v. United States, 95 F.2d 813 (4th Cir. 1938). For example, in Doch-erty, involving a factual situation quite similar to the instant case, the court held that where a named debtor knew he was putting his own credit “on the line” and possessed the financial means to repay, there was insufficient evidence of willful misapplication of bank funds even though he turned over the loan proceeds to a third party. 468 F.2d at 995.

Throughout the trial the government has argued to the contrary. It contends that willful misapplication occurs whenever bank officials grant loans to parties with the knowledge that the proceeds will go to a third party. In support of this proposition, the government relies on two cases, United States v. Cooper, 464 F.2d 648 (10th Cir. 1972), cert. denied, 409 U.S. 1107, 93 S.Ct. 902, 34 L.Ed.2d 688 (1973), and Hargreaves v. United States, 75 F.2d 68 (9th Cir.), cert. denied, 295 U.S. 759, 55 S.Ct. 920, 79 L.Ed. 1701 (1935). However, both cases more readily fall within the three categories of willful misapplication outlined above. The loans in Cooper appear to have been to parties who were not held responsible for repayment. They never made any payments of their own on the loans. Instead, the third-party recipient made the payments. 464 F.2d at 650-651. Similarly, the loan in Hargreaves appears to have been to a financially irresponsible party. He testified that it was a question “whether he was worth it unsecured” and that he never expected to pay it. 75 F.2d at 70; see United States v. Docherty, supra 468 F. 2d at 992, 994. The government’s theory of willful misapplication goes much too far and is without case or policy support.

III.

In addition to holding that the jury was incorrectly instructed on the standard for willful misapplication, we also hold that, with respect to seven of the eight counts, there was insufficient evidence adduced at trial to find appellants guilty under the correct standard. Silver, Felopoulos and Ditelberg were real persons who were financially capable of repaying the loans they signed for. Moreover, there ttfas no evidence presented which might rebut their assertions that they fully recognized their personal obligations to repay these loans. Thus, absent special circumstances, see n. 14, supra, there was no basis for the jury to find that the seven loans cited in Counts 1, 2, 4, 6, 7, 10, and 11 were shams. They simply were loans to financially-capable parties who reloaned the proceeds to Gens. We note that Silver subsequently signed a personal guarantee on the loans to him, and that Felopoulos and Ditelberg have made payments on the loans to them.

On the other hand, although Roazen was a real person and a wealthy one to boot, there was evidence from which the jury could conclude that neither he nor appellants expected him to pay back the loan cited in Count 9, and that instead the bank looked only to Gens for repayment. However, in view of the indictment and jury instructions, the jury may alternatively have found only that the loan was properly made to Roazen and that he reloaned the proceeds to Gens. Therefore, we reverse the convictions of Gens, Porter and Carleton on Counts 1, 2, 4, 6, 7, 10 and 11, vacate their convictions on Count 9, and remand for a new trial on said count. In view of this disposition, we do not reach the several other issues appellants have raised.

      . The statute reads in pertinent part:
      “§ 656. Theft, embezzlement, or misapplication by bank officer or employee.

      Whoever, being an officer, director, agent or employee of, or connected in any capacity with any Federal Reserve Bank, member bank, national bank or insured bank, or a receiver of a national bank, embezzles, abstracts, jiurloins or willfully misapplies any of the moneys, funds or credits of such bank or any moneys, funds, assets or securities intrusted to the custody or care of such bank, or to the custody or care of any sucli agent, officer, director, employee or receiver, shall be fined not more than $5,000 or imprisoned not more than five years, or both; but if the amount embezzled, abstracted, purloined or misapplied does not exceed $100, lie shall be fined not more than $1,000 or imprisoned not more than one year, or both.
      * * * »
      There is no question in the instant case that the bank was federally-insured within the meaning of the statute.

      . The eight loans alleged in the counts were as follows:
      Count 1. — On or about November 18, 1969, $15,000 to Hyman H. Silver.
      Count 2. — On or about January 15, 1970, $25,000 to Hyman H. Silver.
      Count 4. — On or about February 16, 1970, $6,000 to Iiyman H. Silver.

        Count 6. — On or about March 16, 1970, $34,000 to Hyman H. Silver.
      Count 7. — On or about March 21, 1970, $55,000 to Felopoulos & Ditelberg, a law firm.
      Count 9. — On or about June 5, 1970, $80,000 to Charles Roazen.
      Count 10. — On or about September 17, 1970, $10,000 to J. Peter Felopoulos.
      Count 11. — On or about September 17, 1970, $10,000 to Dennis Ditelberg.

      . For example, Count 4 of the indictment, in its entirety, provided as follows : '
      “A. That at all times material to this count, Massachusetts Bank and Trust Company at Brockton in the District of Massachusetts was a bank the deposits of which were insured by the Federal Deposit Insurance Corporation of the United States.
      B. That at all times material to this count, Richard T. Porter was an officer, director, agent and employee of the said bank.
      C. That at all times material to this count, Anthony W. Carleton was an officer, director, agent and employee of the said bank.
      D. That at all times material to this count, Richard H. Gens was a director of the said bank.
      E. That on or about February 16, 1970, Richard T. Porter, Anthony W. Carleton and Richard H. Gens, with intent to injure and defraud the said bank, knowingly, wil-fully misapplied, and caused to be misapplied, moneys, funds and credits of said bank, and moneys, funds, assets and securities intrusted to the custody and care of the said bank, and to the custody and care of them as officers and directors of the said bank, in that they- granted and caused to be granted, by the said bank, a loan in the amount of $6,000, more or less, without security therefor being given to the said bank, to Hyman H. Silver, who was, then and there, as the defendants well knew, not the actual beneficiary of the said loan.
      F. That by means of the granting of the said loan, the defendants converted the proceeds thereof to the use of the said Richard I-I. Gens.”
      The other seven counts were essentially identical, simply substituting references to the other loans listed in n. 2, except that Counts 1 and 2 also omitted the allegations contained above that Gens was a director of the bank at the time of the pertinent loans.

      . Because Gens did not hold a position with the bank at the time of the loans alleged in Counts 1 and 2, it is clear that he could not have been convicted as a principal under § 656. The court, in its charge to the jury, said that Gens could nevertheless be convicted as an aider and abettor. But see United States v. Tornabene, 222 F.2d 875 (3d Cir. 1955).

      . Prior to the takeover, the bank had been experiencing difficult times and needed fresh financial investment. An arrangement was made by which Porter and Carleton would receive effective control of the bank in exchange for their purchase of $400,000 in the bank’s convertible debentures. Lacking that much money on their own, Porter and Carle-ton enlisted the financial support of others in acquiring the needed debentures. Gens was among those who came in with them, purchasing $40,000 worth. His business partner, Hyman H. Silver, also purchased $40,000 worth.

      . Silver specifically testified as follows:
      “[Silver] : If I could explain how it went, I would come in in the morning and go out and come back in late in the afternoon. Mr. Gens usually would say to me, ‘Are you, going to be in tomorrow morning?’ I would say, ‘No, I’m going, wherever I’m going.’ ‘I’m going to need some money. Do you want to sign these?’ I would sign some blank notes. We have done that. I know it’s wrong. We have done it over a period of years.”
      Indeed, Silver could not actually recall signing for the fourth loan alleged in the indictment, presumably because he did so in the same casual manner described above. Silver did acknowledge his signature on the loan when it was shown to him, and testified on the assumption that he signed it. There was no suggestion of forgery.

      . We note the following exchange in the record:
      “ [Q ] Mr. Silver, there is no question but when you signed these notes, at least those that you remember you did sign, it is your personal obligation to pay back that money to the Massachusetts Bank and ■ Trust Company?
      A. If the company didn’t pay.
      Q. You understand that?
      A. Yes, if the company didn’t pay.
      The Court: Were those personal borrowings on your part and were you the beneficiary of those loans?
      The Witness: I was not. The money went into the company.”

      . As noted earlier, this bank had a self-imposed loan limit of $80,000 per party. We also note that the loans to Silver and Roa-zen were each in that total amount, and that the loans to Felopoulos and Ditelberg were in the total amount of $75,000.

      . We note the following excerpts from the cross-examination of Roazen:
      “Q. You were not, in your mind, acting as a straw for Mr. Gens or Mr. Silver, were you?
      A. What do you mean by a ‘straw’ ?
      Q. Lending your name to them, were you?
      A. In a sense, I would say yes.
      $ $ $ $ *
      The Court: When you borrowed that money, did you understand you would pay the $80,000 back?
      The Witness: No sir, I was not supposed to pay one cent of it back.
      The Court: Go ahead.
      Q. (By Mr. St. Clair) When did you say that?
      A. It’s the answer to what the Judge asked me.
      Q. You understood you would never have to pay the bank back anything?
      A. I shouldn’t say ‘never’. I would think that if the Massachusetts Bank folded or some catastrophe happened, I would have to stand my share, one-fiftli.”

      . The letter read in pertinent part:
      “Dear Chuck:
      This will acknowledge receipt of the sum of $80,000 for your participation in the stock acquisition of Garden City Trust.
      As you are aware, I will acquire the stock in my name and will be holding the same for your benefit along with the other participants.
      When the stock is received, a duly-executed trust document will be forwarded to you.
      In the meantime, this letter will serve as evidence of your interest.”

      . But cf. United States v. Moraites, 456 F. 2d 435, 441 & n. 9 (3d Cir.) (dictum), cert. denied, 409 U.S. 891, 93 S.Ct. 109, 34 L.Ed. 2d 148 (1972) (suggesting that since the Britton decision the term “willfully misapplied” has acquired a technical meaning of its own). See also United States v. Ar-chambault, 441 F.2d 281, 283 (10th Cir.), cert. denied, 404 U.S. 843, 92 S.Ct. 140, 30 L.Ed.2d 78 (1971) ; United States v. Fortunato, 402 F.2d 79, 81 (2d Cir. 1968), cert. denied, 394 U.S. 933, 89 S.Ct. 1205, 22 L.Ed.2d 463 (1969).

      . Of course, where bank officials knowingly grant loans to financially incapable parties, such conduct in and of itself constitutes willful misapplication, whether or not the debtor passes on the loan proceeds to a third party. See, e. g., United States v. Joiner, 429 F.2d 489 (5th Cir. 1970) ; Robinson v. United States, 30 F.2d 25 (6th Cir. 1929).

      . We also note the case of Gordon v. United States, 438 F.2d 858 (5th Cir.), cert, denied, 404 U.S. 828, 92 S.Ct. 63, 30 L.Ed.2d 56, rehearing denied, 404 U.S. 960, 92 S.Ct. 312, 30 L.Ed.2d 279 (1971), in which the many defendants appear to have engaged in loan transactions falling within all three of these categories.

      . We do not go so far as to say that the obligation of a financially responsible party to a bank will in all cases mean that post-loan transfer to a third party will not result in liability for willful misapplication. Por example, there may well be situations where the funneling of funds from marginally responsible borrowers to a third party engaged in a high risk venture would tend to injure the bank. But we need not explore this matter further at this time. The government made no allegation and offered no proof beyond the bare contention that funds were concentrated in Gens’ hands. In the absence of a showing of special circumstances demonstrating injury or risk of injury to the bank despite the obligation of a financially responsible party to the bank, liability cannot be found.

      . Government counsel sought to distinguish Docherty at oral argument by noting, accurately, that the defendant in that case was the named debtor rather than, as here, the bank officials or the actual recipient of the proceeds. However, this distinction between Docherty and the instant case in no way blunts the key point made by tiie Second Circuit: that there can be no harm to the bank, and thus no misapplication, where the named debtor is both financially capable and fully intends to repay the loan.

      . Indeed, since the nursing home business was as much Silver’s as Gens’, the proceeds of the loans to him were not truly reloaned to Gens. They simply were invested in their business at a time when cash was vitally needed. The prospective benefits of this investment would flow equally to Silver and Gens.