author: HAMLEY, Circuit Judge:

text:
    SAFE FLIGHT INSTRUMENT CORPORATION, a New York corporation, Plaintiff-Appellant, v. McDONNELL-DOUGLAS CORPORATION, a Maryland corporation, and Sperry Rand Corporation, a Delaware corporation, Defendants-Appellees.
    No. 71-1751.
    United States Court of Appeals, Ninth Circuit.
    April 27, 1973.
    Rehearing Denied Sept. 13, 1973.

      Thomas M. Marshall (argued), William R. Woodward, New York City, Robert Yale Libott, Richard H. Keatinge, Keatinge, Libott, Bates & Loo, Los An-geles, Cal., for plaintiff-appellant.
    W. Robert Spensley (argued), Stuart Lubitz, Edwin H. Taylor, Spensley, Horn, Jubas & Lubitz, Los Angeles, Cal., Richard B. Hoegh (argued), Dennis B. Haase, Hahn, Cazier, Thornton, Hoegh & Leff, Los Angeles, Cal., for defendants-appellees.
    Before CHAMBERS, HAMLEY, and WALLACE, Circuit Judges.
   HAMLEY, Circuit Judge:

Safe Flight Instrument Corporation (Safe Flight) brought this patent infringement action in the United States District Court for the Central District of California on December 31, 1968. In a six-count amended complaint Safe Flight charged defendants, McDonnell-Douglas Corporation (MDC) and Sperry Rand Corporation (Sperry), with infringement of Safe Flight’s U.S. Letters Patent No. 3,043,540 (’540 patent), and with the improper use of trade secrets.

The ’540 patent is entitled “Aircraft Instruments” and describes a closed-loop aircraft instrument system intended to assist the pilot of a jet aircraft in takeoff and other flight maneuvers such as landing approach and go-round. The subject matter of the ’540 patent claims in suit is in commercial practice by Safe Flight in a Speed Command and Automatic Throttle System (SCAT), manufactured and sold by Safe Flight. The patent was issued to Safe Flight on July 10, 1962, as assignee of Leonard M. Greene.

The infringement claims are set forth in counts one, two and three of Safe Flight’s amended complaint. In count one, Safe Flight alleged that MDC and Sperry have infringed, and will continue to infringe, the ’540 patent in connection with the manufacture and sale of an Automatic Throttle/Speed Control System (AT/SC) for installation on MDC’s model DC-10 aircraft. In count two, Safe Flight alleged that MDC and Sperry have infringed, and will continue to infringe, that patent in connection with the manufacture and sale of devices comparable to AT/SC for use on aircraft manufactured by MDC other than model DC-10. In count three, Safe Flight alleged that MDC (but not Sperry) has infringed, and will continue to infringe, the '540 patent by making, using and selling products embodying the patented invention on MDC model DC-9 aircraft and other aircraft.

Defendants asserted various defenses, including that of patent invalidity. MDC moved for a partial summary judgment dismissing count three of the amended complaint. Safe Flight countered with cross-motions for partial summary judgment against MDC on the third count. Both motions were denied.

After a lengthy trial limited to the validity of the ’540 patent and infringement of that patent by the Sperry AT/SC system, the district court entered a judgment declaring invalid all of the ’540 patent claims in issue. In addition, the district court adjudged that Sperry’s AT/SC system did not infringe the ’540 patent even if that patent were valid. Safe Flight appeals.

We will first consider issues pertaining specifically to counts one and two. The first such issue is whether MDC and Sperry are collaterally estopped from contesting the validity of the ’540 patent.

In July, 1967, Safe Flight instituted a patent infringement suit, involving the ’540 patent, and other patents, in the United States District Court for the Western District of Washington (Seattle ease). The defendants were United Control Corporation and its successor U. C. Liquidating Corporation, collectively referred to herein as UCC.

That suit was the outgrowth of UCC’s action in contracting to manufacture its so-called Speed Command Computers of the angle of attack type, for installation in MDC’s model DC-9 aircraft. In connection with the manufacture and sale of these devices, UCC agreed to indemnify MDC for any damages MDC might be required to pay for patent infringement. Safe Flight alleged, in the Seattle case, that the UCC devices infringed the ’540 patent.

After a lengthy trial in the Seattle case, the district court in that case entered findings of fact and conclusions of law to the effect that the ’540 patent is valid and claims 1 through 8, 17, 19, 20, 22 and 26 of that patent had been infringed by the defendants in that case. A judgment for Safe Flight, consistent with these determinations, was entered on December 11, 1968, and UCC and U. C. Liquidating Corporation appealed. The appeals were docketed in this court as Nos. 23,746 and 23,867.

Safe Flight thereafter requested that the appeals in the Seattle ease be remanded to the district court to enable that court to entertain Safe Flight’s motion for a new trial and for other relief. On May 27, 1969, in an unreported order, this court granted the requested remand. On July 31, 1969, Safe Flight entered into an agreement with UCC settling all issues in the Seattle case. Under the terms of this agreement UCC paid Safe Flight the sum of $2,509,922.-19, and, by consent,' a final judgment was entered, one provision of which determined that the ’540 patent is valid. The appeals in Nos. 23,746 and 23,867 were thereafter dismissed.

During the trial, Safe Flight did not contend that MDC and Sperry, in defending against counts one and two of the amended complaint, were collaterally estopped to challenge the validity of the ’540 patent because of the adjudication of the validity of that patent in the Seattle case. At the outset of this case Safe Flight contended, at most, that the adjudication of validity in the Seattle case was entitled to “great weight” in the absence of convincing new evidence of invalidity. Accordingly, the pre-trial order of March 30, 1970, does not refer to any collateral estoppel issue.

As a matter of fact, during the pretrial argument bearing on the cross-motions for summary judgment on count three, counsel for Safe Flight stated that had MDC not, by its motion for partial summary judgment, elected to accept benefits under the settlement agreement and judgment entered in the Seattle case, “they [MDC] could have remained solid and taken the position that nothing in Seattle affects them in any way . . . and they are entitled to their full day in court.” Likewise, at the same hearing, counsel for Safe Flight conceded that “Sperry Rand has not had its day in court.”

As recited in the judgment herein, the only issues tried were with regard to the validity of the ’540 patent and whether that patent had been infringed by Sperry’s AT/SC device. It is true that, in its cross-motion for partial summary judgment, Safe Flight contended that MDC was collaterally estopped by the judgment in the Seattle case. But that motion pertains only to count three of the amended complaint, to be dealt with below. The pre-trial order clearly provides for the separation of those matters pertaining peculiarly to counts three, four, five and six. Safe Flight did not raise collateral estoppel as to counts one and two during the proceedings in the district court. The court’s findings of fact and conclusions of law made no reference to a collateral estoppel issue.

Even on this appeal, Safe Flight, in its opening brief, after referring to Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971), decided after the entry of judgment in this case, contended only that because of the judgment in the Seattle case, the ’540 patent was entitled not only to the usual presumption of validity, “but also to the further strengthened presumption of validity after a considered decision” in the Seattle case.

In its reply brief on this appeal, Safe Flight began to harden its position concerning the asserted binding effect of the Seattle judgment insofar as counts one and two are concerned, until it finally asserted that MDC “and its privy, Sperry” should be bound by the outcome of the Seattle case. It was not until the oral argument before us that Safe Flight began to talk about “collateral es-toppel.”

In the context described above, we hold that the issue concerning the collateral estoppel of MDC and Sperry to assert their defense of patent invalidity as against counts one and two of the amended complaint was not raised and preserved by Safe Flight in the district court and therefore may not be presented on this appeal. Grantham v. McGraw-Edison Co., 444 F.2d 210, 216-217 (7th Cir. 1971); Strouhal v. Allied Development Co., 220 F.2d 541, 544 (10th Cir. 1955); City of Erlanger v. Berkemeyer, 207 F.2d 832, 839 (6th Cir. 1953).

The findings of fact of the district court contained fifty paragraphs. Under five different headings Safe Flight argues that twenty-two of these findings, pertaining to the validity of the ’540 patent are clearly erroneous.

At the outset of its argument concerning these findings of fact, Safe Flight observes that the questioned findings are “completely inconsistent and directly contrary” to the findings entered in the Seattle case, and postures the problem as one of determining which of the two sets of findings are clearly erroneous under Rule 52(a), F.R.Civ.P.

We decline to approach the problem in this way. It is true, as defendants concede, that prior adjudications as to the validity of a patent “are entitled to respectful consideration and in doubtful cases they are strongly persuasive.” Ritchie v. Lewis-Browning Mfg. Co., 196 F.2d 434, 436-437 (5th Cir. 1952). It was on this theory that the district court, in the case before us, admitted in evidence the judgment, findings of fact and conclusions of law entered in the Seattle case. We have no reason to believe that the district court in our action failed to accord these records of the Seattle case the weight to which they are entitled. i i s 1 '

But the respect which should be accorded prior adjudications as to the validity of a patent does not, absent estoppel running against the parties to the prior litigation, supplant the primary duty of a court to dispose of cases according to the law and the facts of the particular case before it. See Ritchie, supra,, at 437. , . ,

Our function on appeal is consonant with this view. Moreover, it would not be practicable for us to enter into an appraisal of the relative soundness of the two sets of findings. The record of the Seattle case is not before us. The parties have argued pro and con as to the differences between the evidence in the two records, but we have no basis for evaluating their differing appraisals. We have accordingly determined the soundness of the findings of fact in the instant case, as measured by Rule 52(a), by a consideration of the evidence received in this trial.

We do not propose to deal individually with each of the twenty-two questioned findings of fact and the evidence relevant to each. Instead, we will consider them as a whole. Taken together, and with some of the unchallenged findings, these questioned findings represent the trial court’s determination that, on this record, the device described in the patent claims at issue constitutes a combination of old elements, which combination would have been obvious at the time the invention was made to a person having ordinary skill in the relevant art. Findings having this import, if sustainable on the record, warrant a conclusion that the patent is invalid under 35 U.S. C. § 103.

Safe Flight characterizes the device described in the ’540 patent as a “direetor” instrument, as distinguished from a “displacement” instrument. Displacement instruments provide a pilot with information as to the flight situation then existing or which has just previously existed. Utilizing this information the pilot is expected to determine what corrective action, if any, should be taken, and proceed to take such action. Director instruments, on the other hand, convey no specific information to the pilot concerning the then existing flight situation. Instead, they direct him as to which way and how much he should move his controls to perform some predetermined task.

According to Safe Flight, the particular director instrument described in the ’540 patent was primarily designed to meet the jet take-off problem encountered because of some aerodynamic peculiarities of jet aircraft. It had been determined that, in order to meet this problem a new criterion should be selected, namely, that the speed at the lift-off had to be a certain percentage above a speed called the minimum “unstick” speed.

A concern then arose whether pilots could repeatedly and consistently perform the take-off maneuver demanded by this new criterion with the precision required. The necessary lift-off speed, which varies according to the weight of the aircraft, the runway altitude and the outside air temperature, is determined by the aircraft manufacturer and the FAA. However, instruments measuring speed were subject to lags and other problems.

Speed is controlled by rotation of the pitch attitude (raising or lowering the wheel nose of the aircraft). If the pilot knows the pitch attitude necessary to attain the proper lift-off speed and the existing pitch attitude, he can make adjustments to achieve the necessary pitch attitude. An instrument displaying pitch attitude on an artificial horizon was available, but it was subject to gyro precision errors.

Pitch attitude equals the angle of attack (the incidence angle with which the wings attack the air mass) plus the flight path angle. Therefore, another way of attaining the pitch attitude necessary to reach the appropriate lift-off speed is to determine the current angle of attack and adjust the flight path angle accordingly. Safe Flight’s own prior U.S. Letters Patent No. 2,945,375 (’375 patent) is a displacement type instrument which provides a lift signal. Lift is a function of forward speed and the angle of attack, thus the ’375 device provides a measure of the angle of attack. However, reliance on the ’375 measuring device in making adjustments produced a phugoid or “roller coaster” type flight path. Errors in acceleration measurement (and, therefore, the ’375 lift signal and the angle of attack) were caused by the pitch of the aircraft.

As Safe Flight concedes, the ’540 patent is a modification of the ’375 device accomplished by biasing the ’375 lift signal with a ground acceleration signal. The principal parts added to the ’375 device are a gyroscope and a pendulous accelerometer. The gyroscope removes the effects of aircraft pitch from the pendulous accelerometer, thus removing the error in acceleration measurement noted above. The forward acceleration signal was added to the lift signal from the ’375’s lift transducer and the combined signal was displayed on a Fast/Slow meter.

The trial court found that a person of ordinary skill in the art prior to 1958 would have no difficulty in realizing that the determination of the forward acceleration would necessitate the removal of the effect of pitch from an accelerometer. The court also found that, to a person of ordinary skill in the art, having the ’375 patent before him, this would immediately suggest the use of a gyroscope to remove the pitch from the accelerometer therein described. The prior art U.S. Letters Patent No. 2,942,864 to Sikora taught that a gyroscope could be combined with the pendulous accelerometer to remove the effect of pitch and thus get a signal representative of actual acceleration notwithstanding the pitch of the aircraft.

While there is room for debate as to the evidentiary support for these and other questioned findings, we conclude that they are not clearly erroneous. The trial court based its findings primarily upon the device described in claim one of the patent, on the theory that it was probably the broadest claim. We find nothing in the record which convinces us that this procedure was improper.

Safe Flight takes issue with several of the trial court’s conclusions of law pertaining to counts one and two. We do not find it necessary to place our imprimatur upon all of the questioned conclusions. Perhaps some go too far and perhaps certain of the decisions cited are not in point. What is important, however, is that the district court rigidly adhered to the rules and criteria of the Supreme Court in determining that the questioned patent claims are invalid under 35 U.S.C. § 103.

All of the factual inquiries required under the Graham decision, and in Reeves Instrument Corporation v. Beckman Instruments, Inc., 444 F.2d 263 (9th Cir. 1971), in order to resolve the obviousness-non-obviousness dichotozny, were made. Consistent with Reeves, the trial court determination that the ’540 patent is obvious took into account the subject matter as a whole and did not rest alone on a consideration of the individual elements of the claimed combination and their individual novelty or lack of novelty.

The foregoing discussion renders it unnecessary for us to consider the trial court’s determination that some of the questioned claims of the ’540 patent are also invalid under 35 U.S.C. § 102(a), and that court’s determination that, in any event, the ’540 patent was not infringed by the Sperry AT/SC system.

This brings us to the issues on appeal peculiar to count three of the amended complaint. Actually there is only one such issue.

As noted above, the trial was had only with regard to the validity of the ’540 patent (at issue in counts one, two and three), and infringement of that patent by the Sperry AT/SC system (at issue only in counts one and two). These issues were decided adversely to Safe Flight.

Thus, apart from the question as to the validity of the ’540 patent, the trial involved no issue concerning count three of the amended complaint, and the judgment entered at the close of the trial did not dispose of count three (or counts four, five and six) of the amended complaint. But Safe Flight nevertheless argues that the trial court erred in denying Safe Flight’s cross-motion for partial summary judgment on count three.

Discussion of this contention requires us to consider the context in which Safe Flight made this cross-motion. MDC first moved for a partial summary judgment dismissing the third count of the amended complaint. In support of this motion, MDC argued that, in view of an indemnity agreement entered into between UCC and MDC, concerning the manufacture of Speed Command Computers by UCC for installation in MDC aircraft, of which agreement Safe Flight had notice, and in view of the terms of the settlement agreement between Safe Flight and UCC in the Seattle case, and by reason of the fact that count three pertains to the installation of UCC’s Speed Command Computers in MDC aircraft, MDC has been released and discharged by Safe Flight from any and all claims for such infringement.

Safe Flight countered with its cross-motion for a partial summary judgment in Safe Flight’s favor on count three. As we construe this motion, Safe Flight sought a ruling that MDC is estopped to question the determination in the Seattle case on patent validity and infringement. The establishment of this estop-pel would lay the groundwork for Safe Flight’s prayer for damages and injunc-tive relief on its count three.

In support of this motion Safe Flight argued that, by moving for a partial summary judgment in reliance upon the settlement agreement and judgment in the Seattle case, MDC had bound itself to accept the adjudication, in the Seattle case, that the '540 patent is valid and infringed. In addition, Safe Flight argued that, by reason of the privity between MDC and UCC, MDC was es-topped by the Seattle judgment, insofar as count three of the amended complaint is concerned, from contesting the validity and infringement determination made in that case.

Ordinarily the denial of a motion for summary judgment is not appealable, even where there has been an express direction and determination of the kind called for by Rule 54(b), F.R. Civ.P. This is because an order denying a motion for a summary judgment does not finally dispose of any claim. See 6 Moore’s Federal Practice 2790 (2d Ed. 1972). But such an order would be appealable if the effect of the order was to deny a petition for a preliminary injunction. See 28 U.S.C. § 1292(a). Since Safe Flight did seek injunctive relief in its motion for partial summary judgment, we hold that the order denying the motion is appealable.

The factual premises of Safe Flight's motion, and of MDC’s opposition thereto, are highly complex. The district court did not deny the motion because it was convinced that the motion was without merit, but because the issue presented was so complicated the court did not wish to dispose of it on a motion for partial summary judgment. In effect, the denial was without prejudice. Under the circumstances we believe this was a judicious way to deal with the matter. Safe Flight did not regard the count three request for injunctive relief as urgent. This is indicated by the fact that Safe Flight did not seek an immediate appeal from the order of denial, pursuant to 28 U.S.C. § 1292(a), but was content to raise the question on the main appeal after the trial.

We conclude that the district court did not err in denying Safe Flight’s motion for partial summary judgment, and that count three remains to be disposed of in further district court proceedings.

Safe Flight complains of asserted irregularities in trial procedure, including piecemeal progress of the trial. We have reviewed the circumstances complained of and find nothing indicating an abuse of discretion by the trial court or substantial prejudice to Safe Flight.

The judgment and order under review are affirmed and the cause is remanded to the district court for further proceedings on counts three, four, five and six of the amended complaint.

      . The claims of the ’540 patent which Safe Flight alleged were being infringed are claims 1-8, 17,19, 20, 22 and 26.

      . The judgment contains the express determination and direction which, under Rule 54(b), F.R.Civ.P., in the absence of abuse of discretion, confers jurisdiction upon this court to entertain an interlocutory appeal. See Zangardi v. Tobriner, 116 U.S.App.D.C. 850, 330 F.2d 224 (1964). Appellees do not assert that there has been an abuse of discretion in entering the Rule 54(b) recital, nor do we find such an abuse.

      . That suit is entitled Safe Flight Instrument Corporation v. United Control Corporation, et al., Civil Action No. 7268.

      . In its statement of issues presented for review, Safe Flight said nothing about collateral estoppel. Instead, it queried: “With respect to the same evidence, which of the Findings of Fact . . . [entered in the Seattle case or in the case now before us] . . . are clearly erroneous and which Conclusions of Law concerning the validity of the ’540 patent are in error?”

      . At the outset of the present trial, the district court announced that if it had a strong view concerning the validity of the patent, it would not be influenced by the finding as to validity in the Seattle case, but that if the court found the issue to be in doubt, tlie Seattle findings “would constitute make-weight.”

      , The minimum “unstick” speed is the lowest speed at which one can demonstrate a jet take-off without displaying hazardous characteristics.

      . We recognize that the foregoing discussion of the findings and evidence is summary in form and omits much that the respective parties rely upon. Since wé are affirming, however, it seems to us a more extensive discussion would have little utility. Our conclusion, stated above, is based upon our understanding of the record considered as a whole. In reaching that conclusion we have given due recognition to the opportunity the trial court had, over a period of weeks, to evaluate live testimony, and to query the witnesses on doubtful points.
      It should also be added that, in sustaining the questioned findings of fact in this case, we are not holding that the contrary findings in the Seattle case are necessarily clearly erroneous. Each set of findings must be judged by the record in the case in which the findings were entered. As previously noted, the record in the Seattle case is not before us.

      . See Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966); United States v. Adams, 383 U.S. 39, 86 S.Ct. 708, 15 L.Ed.2d 572 (1966); Anderson’s-Black Rock, Inc. v. Pavement Salvage Co., Inc., 396 U.S. 57, 90 S.Ct. 305, 24 L.Ed.2d 258 (1969).


source: Caselaw Access Project

author: AINSWORTH, Circuit Judge:

license: Public Domain

text:
    NOR-TEX AGENCIES, INC., and W. E. Riley, Plaintiffs-Appellees, v. Richard M. JONES, Defendant-Appellant, Charles Owen and Continental National Bank of Fort Worth, Defendants-Appellees.
    No. 72-2707.
    United States Court of Appeals, Fifth Circuit.
    July 26, 1973.
    Rehearing Denied Oct. 11, 1973.

      Clyde M. Marshall, Jr., Fort Worth, Tex., for defendant-appellant.
    Henry W. Simon, John W. Hughes, Fort Worth, Tex., for Nor-tex & Riley.
    Terry W. Gardner, Thomas H. Law, Fort Worth, Tex., for Owen.
    Ogden K. Shannon, Jr., Fort Worth, Tex., for Continental National Bank.
    Before AINSWORTH, GODBOLD and CLARK, Circuit Judges.
   AINSWORTH, Circuit Judge:

The district court found the transactions here to involve securities sold through material misrepresentations, in violation of the anti-fraud provisions of federal securities laws, and ultimately awarded relief on various claims by plaintiff Nor-Tex Agencies, Inc. against defendant Richard M. Jones, by plaintiff W. E. Riley against defendants Jones and Charles Owen, and by cross-claimant Owen against defendant Jones, subject to rights of the Continental National Bank of Fort Worth as holder of notes issued by the claimants.

The facts, stated chronologically, begin in April 1967 when Jones approached Owen with the idea of purchasing a 420-acre tract of land in Bexar County, Texas, from Robert Maddox at a price of $260,000. Of interest to Owen were Jones’s representations concerning oil and gravel deposits on the property. Owen and Jones together with another poténtial buyer, James Williford, looked at the property on April 23, 1967, and on this occasion Jones reaffirmed that the purchase price from Maddox was $260,000. On April 28, 1967, Jones told Owen that Maddox would hold the offer open another thirty days if they put up a total of $21,000 for an option. On May 1, 1967, Owen wrote a check to Jones for $14,000, representing his and Williford’s share of the price for the option, and on the same day Jones wrote and mailed to Owen a letter confirming the terms of their verbal agreement. When Williford was unable to arrange financing for his share of the purchase price, Jones suggested that Owen and Jones go ahead on a “fifty-fifty”, basis. On May 31, 1967, Owen gave Jones a check for $36,333.33 and a promissory note for $79,666.67, which with Owen’s earlier check for $14,000 amounted to a total investment for Owen of $130,000. Jones and his wife took title to the property and then conveyed to Owen an undivided one-half interest in the surface, an undivided one-half interest in the mineral estate subject to an existing oil and gas lease covering the south 200 acres, and an undivided one-half interest in the existing lease entitling the owners to share a one-sixth royalty.

During the negotiations Jones warned Owen not to contact Maddox directly, because Jones had a special deal which could be ruined if Owen intervened. Furthermore, Jones said he made a sacrifice to enter the deal himself, because his wife had to sell her fur coat and Cadillac in order for Jones to raise his half of the money. However, when a deposition was taken in connection with this case on January 5, 1970, Owen learned that Jones actually purchased the property from Maddox for $125,000 instead of the $260,000 represented to Owen.

In July of 1968 Jones met Riley and interested him in the Bexar County property. Jones subsequently telephoned Riley and arranged another meeting. At this next meeting Jones told Riley of plans to develop the oil resources with his “partner” Owen, and that Riley could have one third of their interest in the 420-acre tract for $100,000. A few days later Jones, Owen and Riley traveled in a private airplane to inspect the property. In addition to giving Riley a brochure outlining tax and financial prospects, Jones further assured Riley that his investment could be recovered within ^two years. Jones said he would purchase the outstanding production lease within six months and that there was a contract offer pending which would pay them $25,000 per year for gravel. Riley, during the return flight, gave his verbal commitment to invest, and Riley eventually paid Jones and Owen $56,222.22 cash and gave a promissory note for $43,777.78. Later, the outstanding lease was not acquired and the return for all three parties on the Bexar County property was negligible.

During the same airplane flight above referred to, Jones also discussed with Riley the possibility of embarking on a program of acquiring working interests in oil leases on other property. As worked out later, the basic plan was for a corporation, Nor-Tex, controlled by Riley to put up the money for drilling the wells. Jones itemized the cost of each well at about $32,000 for a complete well and $10,000 for a dry well. In return Nor-Tex would get 75 per cent of the working interest in the mineral lease, Jones would retain 25 per cent of the working interest, and Nor-Tex would reassign 25 per cent of the working interest to Jones after Nor-Tex received all of its money back for the drilling expenses. Jones assured Riley that the wells would not be “wildcats,” but rather holes in a “proven area,” so that they could count on production of the maximum allowable twenty barrels per day for each well and sell the oil at $2 per barrel.

In September of 1968 Riley in his capacity as president of Nor-Tex signed the first agreements with Jones relating to wells to be drilled on what were called the Turner and Harris leases. To enable Jones to get started with the drilling, Nor-Tex borrowed money with Riley’s personal guarantee and made several $50,000 advances to Jones.

Instead of $32,000, the cost to Jones of drilling a complete well was substantially less than that amount. Furthermore, several of the holes drilled were dry, and Jones’s cost was substantially less than the $10,000 Nor-Tex agreed to pay.

Based on Jones’s glowing reports, Riley decided sometime in December that Nor-Tex should go ahead with more commitments. Jones suggested they purchase two producing wells on the so-called Styles lease and drill three more wells. Riley closed the transaction on January 9, 1969 for Nor-Tex by agreeing to pay $20,000 for 75 per cent of the working interest in the two producing wells and to pay the usual price for Jones to drill additional wells. What Jones did not tell Riley was that Jones had acquired the Styles lease in early December for only $5,500.

Riley made a final commitment in February of 1969 for Nor-Tex to purchase 75 per cent of the working interest in ten producing wells on the Glen-wood lease at a price of $110,000 and for Nor-Tex to pay Jones the usual price for additional wells. Jones failed to advise Riley that Jones acquired the lease for $46,000.

When it became evident that the wells were not producing according to Jones’s representations, Nor-Tex brought this suit against Jones for rescission and compensatory damages on September 9, 1969, alleging that Jones induced Nor-Tex to buy securities through various misrepresentations in contravention inter alia of section 12(2) of the Securities Act of 1933, 15 U.S.C. § 77l(2) (1970), and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5 (1972), promulgated under section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) (1970). During the taking of a deposition on .January 5, 1970, it became evident that Jones also defrauded Riley and Owen in the transactions relating to the Bexar County property, and the complaint was amended on June 30, 1970 to add Riley as a plaintiff and Owen and the Bank as defendants. Owen then filed a cross-complaint against Jones asking for $67,500 damages, representing the difference between the $130,000 Owen paid to Jones and the $62,000 (one half the price Jones paid Maddox) Owen should have paid Jones for a half interest.

Each claim herein presents a question cognizable under federal statutes and meets the $10,000 jurisdictional amount of 28 U.S.C. § 1331 (1970). See also Securities Act of 1933 § 22(a), 15 U.S.C. § 77v(a) (1970); Securities Exchange Act of 1934 § 27, 15 U.S.C. § 78aa (1970); Kasner v. H. Hentz & Co., 5 Cir., 1973, 475 F.2d 119, 120. We hold that Jones sold “securities,” thus fulfilling a condition precedent to application of the anti-fraud provisions of the federal securities laws. See Securities Act of 1933 § 12(2); SEC Rule 10b-5. There is no doubt that Jones used the mails to perpetrate his scheme, thus satisfying another requirement of the anti-fraud provisions. See Securities Act of 1933 § 12(2); SEC Rule 10b-5.

At the close of the evidence, the district judge submitted to the jury under Rule 49(a) of the Federal Rules of. Civil Procedure, numerous written special issues to determine whether Jones actually perpetrated fraud on each claimant. The jury found that Jones, for the purpose of inducing Owen to buy an interest in the Bexar County property, made materially untrue statements of fact relied upon by Owen which Jones knew to be untrue, and which fraud Owen could not have discovered through the exercise of ordinary care until January 5, 1970, thereby causing Owen damages of $67,500. Rule 10b-5 forbids such making of “any untrue statement of a material fact” in connection with the sale of a security, and has been held to grant a private remedy for the amount of damages based on the difference between the price paid and fair market value of the security at the time of the transaction. See generally 2 A. Bromberg, Securities Law § 9.1, pp. 227-28 (1971); J. R. Lewis, Inc. v. Newman, 5 Cir., 1971, 446 F.2d 800, 805. The district judge granted judgment in favor of Owen and against Jones for $67,500. To assure Owen’s recovery, the district judge granted a lien and impressed a trust on Jones’s interest in the Bexar County property, subject to the superseding claims of the Bank and Riley. The jury found that Jones made his offers to Riley and Nor-Tex (through Riley) by means of a prospectus or oral communication which included untrue statements of material facts which Jones knew to be false, and that Riley relied upon the statement and could not have known by the exercise of reasonable care about such untruths until July 3, 1969, thus entitling plaintiffs to the standard remedy of rescission on all their transactions with Jones for his violation of section 12(2). The jury additionally found that Jones’s false statements to Riley in connection with the Bexar County property were not made with the authorization or knowledge of Owen but were made within the purposes of the joint venture of Jones and Owen. In the judgment Owen was vicariously held liable with Jones to grant Riley rescission.

Jones raises eighteen points of error on this appeal. All of these points of error have been considered by us following a thorough study of the record and with the benefit of extensive briefs and oral argument. None of these points warrants modification of the judgment. Only the following main points are discussed below.

I.

At issue initially is the question whether Jones sold a “security” in each of the transactions. See generally L. Loss, Securities Regulation 469-96 (1961), Supplement 2495-2509 (1969). According to his brief, “Appellant still insists that the Bexar County sales did not involve securities .... Irrespective of the answer to this issue, however, he respectfully submits that the evidence conclusively shows that all of the transactions, both Bexar County and the Nor-Tex leases, were isolated intrastate contracts, made by private negotiations, without advertisement or public offer, between Texas residents only, with each purchaser being equal or superior to Jones as to business experience, knowledge or access thereto, and ability to fend for self without need for protection of the securities acts, so that such transactions would be exempt, as a matter of law . . . . ”

Section 2(1) of the Securities Act of 1933, as amended, 15 U.S.C. § 77b (1) (1970) defines a “security” as “any note, stock . . . certificate of interest or participation in any profit-sharing agreement, . . . investment contract, . . . fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a ‘security’.” See also Securities Exchange Act of 1934 § 3(a) (10), 15 U.S.C. § 78e(a)(10) (1970). The term “security” must be given a broad and flexible construction so that the remedial purpose of the anti-fraud provisions will be effectuated. See Tcherepnin v. Knight, 389 U.S. 332, 336, 88 S.Ct. 548, 553, 19 L.Ed.2d 564 (1967); Herpich v. Wallace, 5 Cir., 1970, 430 F.2d 792, 802; Rekant v. Desser, 5 Cir., 1970, 425 F.2d 872, 878.

Owen, Riley, and Nor-Tex were induced by Jones to speculate in fractional undivided oil and gas interests, and were led to expect profit from Jones’s efforts. At the time of his purchase Owen obtained the right to receive an undivided one-half interest of a one-sixth royalty interest existing on the Bexar County property. By his later purchase. Riley obtained an undivided one-third interest in the same one-sixth royalty. Each of Nor-Tex’s contracts provided for the acquisition of part of a working interest in the oil lease, and the wells were already producing or to be drilled by Jones. Accordingly, the contracts were securities within the contemplation of the federal securities laws. See generally Securities and Exchange Commission v. C. M. Joiner Leasing Corp., 320 U.S. 344, 64 S.Ct. 120, 88 L.Ed. 88 (1943); Graham v. Clark, 6 Cir., 1964, 332 F.2d 155; Moses v. Michael, 5 Cir., 1961, 292 F.2d 614, 618-619.

Furthermore, we find that Owen, Riley and Nor-Tex made “investment contracts” with Jones which were securities within the contemplation of the federal securities laws. See generally Securities and Exchange Commission v. MacElvain, 5 Cir., 1969, 417 F.2d 1134, 1136-1137, cert. denied, 397 U.S. 972, 90 S.Ct. 1087, 25 L.Ed.2d 265 (1970); Lynn v. Caraway, 5 Cir., 1967, 379 F.2d 943, cert. denied, 393 U.S. 951, 89 S.Ct. 373, 21 L.Ed.2d 362 (1968); Roe v. United States, 5 Cir., 1961, 287 F.2d 435, cert. denied, 368 U.S. 824, 82 S.Ct. 43, 7 L.Ed.2d 29 (1961), on appeal after remand, 5 Cir., 1963, 316 F.2d 617, 620. Thus, the district judge posed a special issue to the jury whether or not plaintiff Riley’s transaction with defendants Jones and Owen was an investment contract. An investment contract was defined by the trial judge in instructions to the jury on the basis of the Supreme Court decision in Securities and Exchange Commission v. W. J. Howey Co., 328 U.S. 293, 298-299, 66 S.Ct. 1100, 1103, 90 L.Ed. 1244 (1946), as follows:

You are instructed that an investment contract is a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party. In an investment contract the investor provides capital and shares in the earaings and profits; others manage, control and operate the enterprise.

The jury answered affirmatively that the transaction was an investment contract. This conclusion was fully supported by the evidence. Riley contributed the investment capital and depended on Jones to manage the enterprise and develop a profit through his expertise in the oil and gas field. The terms and purpose of Owen’s contract with Jones were essentially the same as Riley’s contract with Jones and Owen. Nor-Tex’s contracts with Jones expressly depended upon Jones to drill the oil wells with Nor-Tex’s capital investment.

The jury finding that Owen and Jones were joint venturers was not inconsistent with the fact that this was an investment contract in which Jones was expected to take the initiative in any development of the enterprise. It was anticipated that Owen would remain comparatively passive. See generally R. Jennings & H. Marsh, Securities Regulation 308-09 (1972) (for a discussion of joint venture and partnership interests as securities).

We do not understand the relevance of appellant’s contentions that all the transactions were isolated intrastate contracts engaged in without a public offer by purchasers with equal or superior business experience to Jones. As this Court said in Stier v. Smith, 5 Cir., 1973, 473 F.2d 1205, 1207, “sophisticated investors, like all others, are entitled to the truth.” See also Lehigh Valley Trust Co. v. Central National Bank of Jacksonville, 5 Cir., 1969, 409 F.2d 989, 992. Moreover, here neither Owen nor Riley had extensive oil and gas experience prior to their transactions with Jones, who had superior knowledge of the particular transactions involved in this case. The jury found that public offers were made by Jones. However, even if the transactions were isolated intrastate contracts made pursuant to private offers, the sales of securities were still subject to the anti-fraud provisions of the federal securities acts. See generally Hill York Corp. v. American International Franchises, Inc., 5 Cir., 1971, 448 F.2d 680, 695; 1 Bromberg, supra, § 4.6, p. 82.

Thus, section 3(a) (11) of the Securities Act of 1933, 15 U.S.C. § 77c(a) (11) (1970) states the so-called intrastate exemption as follows: “Except as hereinafter expressly provided, the provisions of this subchapter shall not apply to any of the following classes of securities: [a]ny security which is part of an issue offered and sold only to persons resident within a single State or Territory, where the issuer of such security is a person resident and doing business within or, if a corporation, incorporated by and doing business within, such State or Territory.” But the anti-fraud provision of section 12(2) is expressly applicable without regard to whether the security falls within the exemption of section 3(a) (11). Likewise, Rule 10b-5 of the ’34 act is not subject to the intrastate exemption stated in the ’33 act. See Securities Exchange Act of 1934 § 3(a) (12), 15 U.S.C. § 78c(a)(12) (1970) ; 2 Bromberg, supra, § 4.6, p. 82 (1971) .

The so-called private offer exemption of section 4(2) of the Securities Act of 1933, 15 U.S.C. § 77d(2) states: “The provisions of section 5 shall not apply to . transactions by an issuer not involving any public offering.” By its express terms, the private offer exemption only exempts a transaction from the registration requirements of sections 5, 15 U.S.C. § 77(e) (1970), and 12(1), 15 U.S.C. § 77K1) (1970), and does not exempt a transaction from the anti-fraud provisions of sections 12(2) of the ’33 act or Rule 10b-5 under the ’34 act.

II.

The second major issue in this case concerns the district judge’s approval of Nor-Tex’s amended complaint which added Riley as a plaintiff and Owen and the Bank as defendants, followed by Owen’s filing a cross-complaint against Jones. In the trial below, Jones moved to sever the Nor-Tex action for a separate trial, but the district judge denied the motion. On appeal Jones objects to Riley being in this case, because Riley was allegedly an “intervening stranger” who sought recovery on an “unrelated cause of action in which Nor-Tex had no interest.”

The addition of Riley was permissible under Rule 20(a), Federal Rules of Civil Procedure, because his claim arose from the same series of occurrences as Nor-Tex’s claim, and the claims presented common questions of law and fact. Both Nor-Tex’s and Riley’s claims were based on a series of false statements made by Jones, such as were made on the day Jones flew with Riley and Owen to inspect the Bexar County property. Both claims present common questions of law concerning the definition of a security and common questions of fact whether Jones’s statements were false.

The district judge acted within his discretion in allowing the joinder under Rule 20(a), as well as denying the motion for severance under Rule 20(b). See also Rules 13, 42, Fed.R.Civ.P. As noted above, Jones’s scheme to defraud Nor-Tex was only one chapter in a larger plot to also defraud Riley and Owen. The defendant was not prejudiced by the addition of Riley and Owen, because testimony about them was unavoidable in the Nor-Tex action. In dealing with Nor-Tex, Jones negotiated with Riley. Nor-Tex’s transactions stemmed from Riley’s flight with Owen and Jones to the Bexar County property, so the facts concerning Nor-Tex were inextricably woven together with the facts concerning Owen and Riley.

Appellant relies upon Dupont v. Southern Pacific Company, 5 Cir., 1966, 366 F.2d 193, cert. denied, 386 U.S. 958, 87 S.Ct. 1027, 18 L.Ed.2d 106 (1967), where the district judge consolidated the cases of four plaintiffs who had differing theories of recovery and ordered the designation of a lead counsel for all four plaintiffs. Because of the resulting confusion and because the consolidation created a conflict of interest for the lead counsel, we reversed and remanded for severance and new trials. Unlike Du-pont, here the consolidation did not deprive Riley of effective assistance of counsel or require him to present inconsistent theories. His defensive stance would have been the same even if the claims were tried separately. The fairest and most expeditious way to dispose of these claims was to try them together.

III.

In his answers to the amended complaint and to the cross-claim, Jones filed counterclaims against Riley and Owen to collect on overdue notes given in connection with the Bexar County property. Because the notes were in default, Jones sought to accelerate the maturity and foreclose on the security, which was the interest Riley and Owen had each purchased in the property. Named as voluntary or involuntary plaintiff, “whichever it shall elect,” was the Bank to which the notes had subsequently been pledged.

The Bank moved to dismiss the counterclaims, and the district judge correctly granted the motion. According to the express terms of the pledge agreement the Bank was granted “possession and custody of the Collateral [the notes] until the Obligations are fully paid” thereby precluding Jones from foreclosing.

Under the circumstances, the contentions of Jones are without merit and the judgment appealed from is affirmed.

      . Section 12(2) reads as follows: Any person who—
      (2) offers or sells a security (whether or not exempted by the provisions of section 3, other than paragraph (2) of subsection (a) thereof), by the use of any means or instruments of transportation or communication in interstate commerce, or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission,
      shall be liable to the person purchasing such security from him, who may sue either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such security with interest thereon, less the amount of any. income received thereon, upon the tender of such security, or for damages if he no longer owns the security.

      . Rule 10b-5 reads as follows:
      It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
      (1) To employ any device, scheme, or artifice to defraud,
      (2) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
      (3) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,
      in connection with the purchase or sale of any security.

      . Section 10(b) reads as follows:
      Section 10. It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange — ■
      (b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

      . Jones nevertheless contends on appeal that a “pledgee has a duty of reasonable diligence to collect on the pledged note, and certainly has a duty to seek recovery when the maker of the note institutes suit to cancel same, joining both pledgor and pledgee.” Appellant cites the following Texas authorities in support of his contention: 46 Tex.Jur.2d § 8, p. 202 et seq.; Liner v. J. B. Watkins Land Mtge. Co., 68 S.W. 311 (Tex.Civ.App.1902); and Wise v. Cecil, 135 S.W.2d 235 (Tex.Civ.App.1939).
      The Texas Jurisprudence text at pages 207 and 208 establishes the proposition that the pledgee is bound to take certain measures for the collection of the sum due from the maker. Liner is cited at 46 Tex.Jur.2d at 203 n. 7 for the proposition that the pledgor may also sue but that the pledgee should be joined as a party. Neither of these authorities is apposite here in that the parties varied the general rules on the pledgee’s duty by stipulating that the “Bank will not have any duty to take steps to preserve rights against prior parties or enforce collection of collateral by legal proceedings or otherwise, Bank’s sole duty being to use only reasonable care in the custody and physical preservation of the collateral in the Bank’s possession.” Wise is cited at 46 Tex.Jur.2d at 206 n. 6 for the proposition that it is the duty of the pledgee to protect pledgor to the extent that security shall not be sacrificed, such as in the event of some bankruptcy proceeding. The Bank’s action here could not have helped Jones, since the claims of rescission by Riley and damages by Owen depended upon Jones’s fraud at the inception of the original transactions. The claims against Jones could not be affected by later inaction of the Bank.


text:
    David McCHESNEY, Petitioner-Appellee, v. C. Murray HENDERSON, Warden, Louisiana State Penitentiary, Respondent-Appellant.
    No. 72-3743.
    United States Court of Appeals, Fifth Circuit.
    July 26, 1973.

      John M. Mamoulides, Dist. Atty., Parish of Jefferson, Ernest E. Barrow, II, Gretna, La., for respondent-appellant.
    James O. Manning, New Orleans, La., (court appointed) for petitioner-appel-lee.
    Before AINSWORTH, GODBOLD and INGRAHAM, Circuit Judges.
   AINSWORTH, Circuit Judge:

David McChesney seeks a writ of habeas corpus from a conviction on his plea of guilty in a Louisiana state court to a charge of armed robbery. He contends that the writ should be granted because he was not fully advised at the time of his guilty plea by counsel or the court that he was effectively waiving his constitutional rights under Boykin v. Alabama, 395 U.S. 238, 89 S.Ct. 1709, 23 L.Ed.2d 274 (1969), and also because he was not advised that the effect of his plea would be confinement for the entire period of his sentence without parole.

He has exhausted state remedies, having been accorded a full evidentiary hearing by the Louisiana state district court which denied his petition for habeas corpus. Certiorari was also denied by the Louisiana Supreme Court (260 La. 1196, 258 So.2d 550 (1972)).

The federal district judge below found, on the basis of the record made when McChesney’s guilty plea was accepted in state court, that “ [h] e was not advised of his right not to incriminate himself, his right to confront his accusers, his right to trial by jury, the maximum sentence that could be imposed, or any other of his constitutional rights,” and thus the record did not satisfy Boy-kin standards. The district judge further held that under Boykin only the record of the proceeding at the time the plea is accepted may be considered in determining whether the defendant understands the significance of the plea and is entering it knowingly and voluntarily. The district court accordingly declined to give consideration to the evidence taken at the state post-conviction hearing on the issue of whether McChesney was fully informed of his constitutional rights and entered a guilty plea as a voluntary and intelligent choice. The court ordered that the writ be granted unless the state, within thirty days, granted defendant the right to replead to the charge.

McChesney’s plea of guilty to the offense of armed robbery was entered in open court on September 10, 1970, by his appointed counsel, Mr. George Stringer, Jr. The defendant, McChesney, was asked at that time by the court whether he understood the plea made in his behalf by his attorney to the effect that he was pleading guilty to armed robbery. His answer was in the affirmative as also was his answer to the court’s subsequent question did he appreciate that as a result of the consequences of this plea he would be subject to be sentenced to the state penitentiary at hard labor. The court asked if he still wished a plea of guilty to be entered in his behalf and again the answer was in the affirmative. He was then sentenced to a term of six years at hard labor in the Louisiana state penitentiary.

In the state habeas proceeding defense attorney Stringer testified that he had advised McChesney what sentence he would receive with a plea and what sentence he could expect if he were convicted. He told the defendant that he had reviewed the matter with the district attorney and discussed the type of plea that would be acceptable to the state and the length of sentence that would be imposed. He explained to him that he would have to be tried by a jury, that it would be necessary that the jury find him guilty, and that he would be allowed to present what evidence he had to the jury. The statute under which he was charged was reviewed by counsel with the defendant. Mr. Stringer explained to the defendant what evidence the district attorney had or intended to produce, which included an eyewitness as well as the arresting officers. He went over the time sequence of the commission of the crime and the evidence found when McChesney (along with another defendant not involved here) was apprehended. He also reviewed the possible defense of the case with the defendant and made a recommendation though he did not tell him to plead guilty, leaving that choice to the defendant. The accused was told that he would have to decide whether he wanted to be tried by a jury or whether he wanted to enter a plea. The defendant therefore indicated to his attorney that he wanted to enter a plea of guilty. Mr. Stringer lacked specific recollection whether he had informed McChesney that he would not be eligible for parole, but he felt certain that he had so informed him because counsel had bargained unsuccessfully with the district attorney to get a plea to a lesser offense so that McChesney might be eligible for parole.

In his testimony at the state habeas proceeding, McChesney conceded that he had pled guilty to armed robbery, accompanied by his counsel, but he said that if Mr. Stringer had advised him of his constitutional rights he did not fully understand the advice. He said he did not realize until he was incarcerated- in the Louisiana state penitentiary that he could not be paroled and that no one had told him that before. When asked about the judge’s interrogation at the time of the guilty plea, he admitted that he understood that he was pleading guilty to the crime of armed robbery. but he thought that upon good behavior he could serve less than the full sentence and be paroled. It appears from his testimony that his principal complaint was and is that he cannot be paroled from his conviction for armed robbery and that he was not told this before entering his plea. He did not maintain that he was innocent or that he was coerced in any way to enter his plea.

In Boykin, supra, the Supreme Court invalidated a plea of guilty made under unusual circumstances. There the accused appeared with appointed counsel and pled guilty to five charges of armed robbery. “So far as the record shows, the judge asked no questions of petitioner concerning his plea, and petitioner did not address the court.” Id., 395 U.S. at 239, 89 S.Ct. at 1710. Pursuant to the requirements of Alabama law, a jury was empaneled to fix the punishment and sentenced Boykin to die. The Court held that when a plea of guilty is entered in a state criminal trial a waiver of several federal constitutional rights takes place, that these are the privilege against compulsory self-incrimination, the right to trial by jury, and the right to confront one’s accusers. Accordingly, the Court said, “We cannot presume a waiver of these three important federal rights from a silent record.” Id., 395 U.S. at 243, 89 S.Ct. at 1712. “[T]he utmost solicitude of which courts are capable in canvassing the matter with the accused to make sure he has a full understanding of what the plea connotes and of its consequence,” is required, said the Court. Id., 395 U.S. at 243-244, 89 S.Ct. at 1712.

However, no rule of criminal procedure was mandated by Boykin, and there is no express requirement that specific articulation of the three constitutional rights above mentioned be given to the accused at the time of the acceptance of a plea of guilty, but it is necessary that the record show that the guilty plea was intelligently and voluntarily made. Supreme Court decisions after Boykin make this clear. For example, in Brady v. United States, 397 U.S. 742, 90 S.Ct. 1463, 25 L.Ed.2d 747 (1970), decided shortly after Boykin, the Supreme Court upheld Brady’s plea of guilty as having been voluntarily and intelligently made. The record at the time of entry of the plea showed that the trial judge twice questioned the defendant as to the voluntariness of his plea, and the colloquy between the court and the accused was directed to the issue of the voluntariness of his plea of guilty. The court asked the defendant the following (397 U.S. at 743 n. 2, 90 S.Ct. at 1466):

“You understand that in doing that you are admitting and confessing the truth of the charge contained in the indictment and that you enter a plea of guilty voluntarily, without persuasion, coercion of any kind? Is that right?”

The defendant responded, “Yes, your Honor.” The court twice again inquired if the accused persisted in the plea of guilty and received affirmative replies. In the post-conviction hearing the district court found that there was no impermissible pressure by petitioner’s counsel on the defendant, and that the plea was voluntarily and knowingly made by the accused. The Supreme Court affirmed on the basis that the guilty pleas were both “voluntary” and “intelligent,” citing Boykin. Nowhere in Brady was anything said by the Court to indicate that specific articulation of the three constitutional rights set forth in Boykin was required when the plea was entered, the Court stating in footnote 4 (397 U.S. at 747, 90 S.Ct. at 1468) that “[t]he new element added in Boykin was the requirement that the record must affirmatively disclose that a defendant who pleaded guilty entered his plea understanding^ and voluntarily.” To the same effect as the holding in Brady, see Parker v. North Carolina, 397 U.S. 790, 90 S.Ct. 1458, 25 L.Ed.2d 785 (1970), decided the same day.

In North Carolina v. Alford, 400 U.S. 25, 91 S.Ct. 160, 27 L.Ed.2d 162 (1970), decided the year after Boykin, the Supreme Court said in determining the validity of guilty pleas that “[t]he standard was and remains whether the plea represents a voluntary and intelligent choice among the alternative courses of action open to the defendant. See Boykin v. Alabama, 395 U.S. 238, 242, 89 S.Ct. 1709, 1711, 23 L.Ed.2d 274 (1969); . . .” Id., 400 U.S. at 31, 91 S.Ct. at 164. The Supreme Court declined to vacate Alford’s guilty plea because the record in the post-conviction state court hearing “confirmed that Alford had been fully informed by his attorney as to his rights on a plea of not guilty and as to the consequences of a plea of guilty. Since the record in this ease affirmatively indicates that Alford was aware of the consequences of his plea of guilty and of the rights waived by the plea, no issues of substance under Boykin v. Alabama (citation omitted), would be presented even if that case was held applicable to the events here in question.” Id., 400 U.S. at 29 n. 3, 91 S.Ct. at 163. We note that the Court’s decision was predicated on evidence received at the post-conviction hearing. As in Brady and Parker, there is no indication that any express enumeration of the three constitutional rights referred to in Boy-kin was required to be made at the time of the acceptance of Alford’s plea.

We have held in several cases since Boykin that evidence in post-conviction habeas proceedings may be considered which shows that a guilty plea was intelligently and voluntarily made at the time with awareness of its consequences. Our most recent decision in LeBlanc v. Henderson, 5 Cir., 1973, 478 F.2d 481 (Brown, C. J.), involved the habeas corpus petition of a defendant who, like Mc-Chesney, was accused of armed robbery in Louisiana and, pursuant to a plea bargain, entered a plea of guilty and was sentenced to a term of six years in the state penitentiary. LeBlanc contended that his plea of guilty was not voluntarily and knowingly made. The minute entry of the state court proceedings showed only that the accused, LeBlanc, had appeared before the court with his attorney, had withdrawn his former plea of not guilty, and entered a plea of guilty as charged whereupon he was sentenced to imprisonment in the Louisiana state penitentiary for a period of six years. We held that “ . under the circumstances of this case, we agree with its [i. e., the lower court’s] acceptance of evidence obtained in a post-conviction hearing as curative of the■ otherwise defective trial transcript . ” (Emphasis supplied.) Id. at 483. We also considered LeBlanc’s contention that he was unaware of his ineligibility for parole for this offense, and held that the trial judge was not required to inform a defendant of his ineligibility for parole, citing Onick v. United States, 5 Cir., 1970, 425 F.2d 1292, cert. denied, 400 U.S. 846, 91 S.Ct. 92, 27 L.Ed.2d 83 (1970); Sanchez v. United States, 5 Cir., 1969, 417 F.2d 494; Trujillo v. United States, 5 Cir., 1967, 377 F.2d 266, cert. denied, 389 U.S. 899, 88 S.Ct. 224, 19 L.Ed.2d 221 (1967). Finally, we said that under Boykin, “ Li] t is error, plain on the face of the record, for a trial judge to accept a guilty plea without an affirmative showing that it is intelligently and voluntarily made,” and affirmed the district court’s denial of the writ “because of the overwhelming showing in the state habeas hearing that the plea was in fact knowingly made with awareness of its consequences in respect of those requirements having constitutional statute . . . .’’Id. at 484.

Earlier in Oaks v. Wainwright, 5 Cir., 1971, 445 F.2d 1062 (Brown, C. J.), a habeas case from a Florida state conviction, we took cognizance of the holding in Boykin and on the basis of the record made in the state habeas post-conviction hearing concluded:

“Under these circumstances, after being advised of his right to a jury trial and of the maximum sentence which could be imposed, Oaks pleaded guilty to a reduced charge of second degree murder. All the facts point to a knowing and voluntary plea induced by the defendant’s knowledge of strong evidence corroborating his guilt and by his desire to trade the certainty of prison for the possibility of a death sentence. Such a plea is not constitutionally infirm. North Carolina v. Alford, supra; Parker v. North Carolina, 1970, 397 U.S. 790, 90 S.Ct. 1458, 25 L.Ed.2d 785; Brady v. United States, 1970, 397 U.S. 742, 90 S.Ct. 1463, 25 L.Ed.2d 747.”

Id. at 1064.

Nobles v. Beto, 5 Cir., 1971, 439 F.2d 1001. (P.C., Gewin, Goldberg and Dyer, Circuit Judges), involved a Texas state prisoner applying for habeas corpus growing out of his plea of guilty to robbery by assault. In that case a state trial court conducted a full evidentiary hearing on the merits of the allegations in the prisoner’s habeas petition. We held that the record of the state court habeas proceedings fully supported that court’s findings and conclusions and that our independent review of the state ha-beas transcript clearly disclosed no error in the district court’s ruling. Finally, we said:

“The appellant’s second contention is that the trial judge’s failure to determine the voluntariness of his plea in a recorded proceeding renders the conviction invalid under Boykin v. Alabama, 395 U.S. 238, 89 S.Ct. 1709, 23 L.Ed.2d 274 (1968). We do not agree with this argument. Even if Boykin were to be held to have retroactive effect, it is inapplicable in this case because the state post-conviction hearing resulted in a valid conclusion that the guilty plea was in fact voluntarily and intelligently made. Dennis v. Henderson, 435 F.2d 1288 (5th Cir. 1970).”

(Emphasis supplied.) Id. at 1002.

In Dulin v. Henderson, 5 Cir., 1971, 448 F.2d 1238 (P.C., Gewin, Goldberg and Dyer, Circuit Judges), we held, pursuant to Boykin v. Alabama, supra, that the record lacked “sufficient indication that the appellant was either advised or aware of his rights” and that the state trial court had not taken steps “to insure a record which would undisputably show that Dulin’s guilty plea was intelligently and voluntarily entered.” We remanded the case “for an additional hearing at which appellant should be assisted by counsel, and at which the state should be given the opportunity to come forth with any positive evidence it may have to controvert appellant’s allegations.” Id. at 1240.

It is abundantly clear, therefore, from numerous prior holdings of this Court that in a state habeas corpus ease when determination is being made whether an accused’s guilty plea was intelligently and voluntarily entered, consideration should be given not only to the record of proceedings at the time of acceptance of the plea, but also to evidence obtained in a post-conviction hearing. The contrary ruling of the district court is erroneous.

In none of the Fifth Circuit cases referred to, LeBlanc, Oaks, Nobles or Du-lin, was there mention of a Boykin requirement that there be express waiver of certain specified constitutional rights. Were we to impose a rule of criminal procedure requiring express articulation and waiver of certain constitutional rights at the time of acceptance of guilty pleas, we would require more of the state courts than is required in the federal courts. The federal courts are, of course, governed by Rule 11 of the Federal Rules of Criminal Procedure which requires that the plea may not be accepted by the court without “determining that the plea is made voluntarily with understanding of the nature of the charge and the consequences of the plea.” In McCarthy v. United States, 394 U.S. 459, 467 n. 20, 89 S.Ct. 1166, 1171, 22 L.Ed.2d 418 (1969), the Supreme Court said, “The nature of the inquiry required by Rule 11 must necessarily vary from case to case, and, therefore, we do not establish any general guidelines other than those expressed in the Rule itself.” Thus there is no requirement that the court “conform to any litany.” United States v. Tabory, 4 Cir., 1972, 462 F.2d 352, 353.

In United States v. Frontero, 5 Cir., 1971, 452 F.2d 406, 415, this Court was confronted with the contention by the defendant that express waiver of specific constitutional rights by a defendant was necessary on acceptance of his guilty plea. Judge Wisdom writing for the Court ruled adversely to this contention and said:

“This Court is, however, aware of no precedent, from the Supreme Court or elsewhere, for the proposition that due process requires that a defendant be informed of each and every right which is waived by a guilty plea or that the waiver of these rights is a ‘consequence’, within the meaning of Rule 11, of which a defendant must be personally informed before a guilty plea may be accepted. Carrying Kelly’s argument to its logical conclusion, the court, before accepting a guilty plea, would be required to inform a defendant of his right to a speedy and public trial, his right to an impartial jury, his right to compulsory process for obtaining witnesses, his right to be free from cruel and unusual punishment, his right to be free from unreasonable searches and seizures, his right to have excluded from the trial any evidence illegally seized, and many more. We do not read Rule 11 as requiring this; nor do we feel that due process requires this. Kelly relies heavily, in fact solely, on Boykin v. Alabama, 1969, 395 U.S. 238, 89 S.Ct. 1709, 23 L.Ed.2d 274, as authority for this contention. This reliance is misplaced. Boykin involved a silent record, where there was absolutely no showing that the guilty plea was intelligently and voluntarily entered. The record in the case at bar reveals affirmative awareness of the ‘consequences’ of a guilty plea.”

The Fourth Circuit was presented with a similar contention in Wade v. Coiner, 1972, 468 F.2d 1059, 1060, a state habeas corpus case, and Judge Craven writing for the court held, “ . . .we reject the contention that under either the Constitution or Rule 11, if applicable to the states, and we think it is not, Wade was entitled to specific monition as to the several constitutional rights waived by entry of the plea.” Judge Craven then went on to say the following:

“Despite the dissenting statement of Mr. Justice Harlan, joined in by Mr. Justice Black, we do not find in Boykin v. Alabama, 395 U.S. 238, 89 S.Ct. 1709, 23 L.Ed.2d 274 (1969), a rule fastening the ‘rigid prophylactic requirements of Rule 11’ of the Federal Rules of Criminal Procedure upon the states. As a matter of expediency and circumspection, state judges may choose to engage in the colloquy mandated for their federal colleagues by Rule 11, but there is nothing in Boy-kin that requires them to do so. The exhortation to state judges to exercise the utmost solicitude ‘in canvassing the matter with the accused to make sure he has a full understanding of what the plea connotes and of its consequence’ is silent as to the method of discharging that function. If the record affirmatively shows that the plea was intelligently and voluntarily entered, that is enough. The substance of the inquiry will, of course, be analogous to a Rule 11 colloquy. Smith v. Cox, 435 F.2d 453, 457 (4th Cir. 1970).”

We hold, therefore, that there is no requirement that there be express articulation and waiver of the three constitutional rights referred to in Boykin, by the defendant at the time of acceptance of his guilty plea, if it appears from the record that the accused’s plea was intelligently and voluntarily made, with knowledge of its consequences. The contrary ruling of the district court is erroneous.

McChesney, of course, did not have to plead guilty, and was advised by counsel that he had the alternative of pleading not guilty and being tried before a jury, that the district attorney would have to produce witnesses against him (here an eyewitness and arresting officers who apprehended him in possession of property) . He made a choice between the alternative of a sure six-year sentence (one year more than the minimum term for this offense) which his counsel had bargained for with the prosecutor, as against a possible sentence of up to ninety-nine years. When he freely elected to plead guilty, he thereby confessed his guilt and incriminated himself. Obviously there would be, no trial or confrontation of witnesses for the plea bargain dispensed with a trial. His counsel, Mr. Stringer, gave a satisfactory account of his services and advice to the defendant. It is difficult to see how he could have done more. It must not be forgotten in considering all of the circumstances of this case that what transpired was in pursuance of a plea bargain, freely made, with obvious advantage to McChesney.

We hold, therefore, that in deciding the voluntariness of McChesney’s guilty plea consideration must be given to the record of proceedings not only which transpired when the plea was accepted, but also in the post-conviction state evidentiary hearing; that a reasonable reading of the record supports a finding that the defendant was advised of his ineligibility for parole for the offense of armed robbery prior to acceptance of his plea; and that in any event the defendant was not entitled as a matter of law to be informed of ineligibility for parole. Finally, we hold that express articulation and waiver of the three constitutional rights referred to in Boykin by the defendant at the time of acceptance of his plea is not required, since it appears from the record that McChesney entered the plea intelligently and voluntarily with knowledge of its consequences.

Reversed.

      . The applicable Louisiana criminal statute, LSA-R.S. 14:64(B), reads in part as follows :
      “Whoever commits the crime of armed robbery shall be imprisoned at hard labor for not less than five years and for not more than ninety-nine years, without benefit of parole, probation or suspension of sentence.”

      . The Louisiana Supreme Court’s present position on the requirements of Boykin is set forth in detail in this decision, sub nom. State ex rel. LeBlanc v. Henderson, 261 La. 315, 259 So.2d 557.

      . The entire colloquy between the court, the assistant district attorney, defense counsel and the defendant at the time of the entry of the plea on September 10, 1970, follows:
      MR. NEYREY [The Assistant District Attorney] :
      Charles Wooten and David Charles McChesney.
      THE COURT:
      Mr. Stringer, identify yourself for the Record.
      MR. STRINGER:
      George Stringer, 6222 Jefferson Highway, Attorney representing Wooten and McChesney.
      At this time, we’d like to withdraw our former plea of not guilty and enter a plea of guilty as charged.
      THE COURT:
      Which one is McChesney?
      MR. MeCHESNEY:
      I am, Your Honor.
      THE COURT:
      You understand the plea entered on your behalf by your Attorney, Mr. Stringer, to the effect that you plead guilty to armed robbery; do you understand that fully?
      MR. MeCHESNEY:
      Yes, Your Honor.
      THE COURT:
      Do you appreciate that as a result of the consequences of this plea you’re subject to be sentenced to the State Penitentiary at hard labor; do you understand that fully?
      MR. MeCHESNEY:
      Yes, Your Honor.
      THE COURT:
      Being advised of this, do you still wish the plea of guilty to be entered on your behalf?
      MR. MeCHESNEY:
      Yes, sir.
      THE COURT:
      What is the date of your birth?
      MR. MeCHESNEY:
      8/6/’44.
      THE COURT:
      You are entitled to delays under the Daw between the time of your plea today and sentence. Do you wish to avail yourself of these delays, are you willing to waive the delays and be sentenced immediately?
      MR. MeCHESNEY:
      I’d like to waive the delays, sir.
      THE COURT:
      Court is going to sentence you to serve a term of six years at hard labor in the State Penitentiary.
      MR. STRINGER:
      Your Honor—
      THE COURT:
      —And, you will receive credit for the time that you’ve been in the Parish Prison.

      . Reproduced herewith are several excerpts from Mr. Stringer’s testimony relative to his conversations with defendant Mc-Chesney prior to entry of the plea of guilty.
      Q. What preliminary steps did you take in his defense, Mr. Stringer?

        A. I visited him at Parish Prison on a number of occasions, spoke to him about the case, obtained the facts from him on the case, and went out and checked some of the . . . spoke to some . attempted to speak to some of the witnesses that he said were involved in the case. After I had conducted this, I spoke to the District Attorney’s Office on a few occasions. And then came back and visited with him, explained to him how I felt about the case and what I . the talks with the District Attorney. And also, before the time we went to trial I also explained to him what the what sentence he would receive with a plea and what sentence, of course, he could expect if he were convicted.
      Q. After you reviewed the matter, what was your opinion ... I mean, was your opinion that he should go to trial or take a plea?
      A. My recommendation to him was that he go ahead and take a plea. But, as I had told him at the time, that the decision was up to him as to what he wanted to do.
      Q. While you were telling him about this, did you at anytime advise him of his rights that he might have of a right to a trial by jury or any other type of right?
      A. Oh, of course. I told him a jury would be the one that would decide from the facts as well as the law.
      Q. What else did you advise him of? You said you advised him of the amount of time, the amount of time he might get by trial and the amount of time he might get by a plea?
      A. The amount of time if he were convicted by a jury. The amount of time that he would probably get then, as against the amount of time that he would get if he entered a plea, because I had already discussed this with the District Attorney.
      Q. And you explained this to him completely?
      A. I did, on more than one occasion.

        Q. And what was his response to your suggestion ?
      A. Preliminary, I think, he said he wanted time to think about it. And I came back, after speaking to him about it initially, I came back to him and finally got his response that he wanted to go ahead and enter a plea of guilty and accept the sentence as I recall, just offhand, of six years.
      Q. And he decided this after you had told him all the facts about what could happen and what he had a right to?
      A. Yes.
      # * * * ❖
      Q. Now if I understood your testimony correctly, Mr. Stringer, you said that after you talked to MeCliesney after you had made your investigation, after you had attempted to speak to witnesses, and, I believe, you said after you consulted with the prosecuting official, then you explained to him what might happen if he went to trial and what would happen if he pled guilty. Is that correct?
      A. Yes.
      * * :!•. #
      Q. Could you tell the Court, as near as you ean remember, exactly what you told him?
      A. As near as I can remember, I told him that I had attempted to locate the witnesses that they told me existed that could testify in their behalf at the trial, that I had been unable to locate them, they were unknown at the addresses they had given me. I have no other address for them. I explained to them what evidence the District Attorney had or what they intended to produce in line of witnesses, as I recall, including an eye-witness as well as the arresting officers. We went over the time sequence of the commission of the crime and the time when they were apprehended, the evidence that was found when they were apprehended. We discussed all these things. And they had explained previously to me what their defense was and we reviewed that in line with what the jury might take into consideration, listening to both evidence and the defense that they wanted to present. And as I say, based on all of this, I made a recommendation. They asked me what I thought about the case and I told them.
      * * * * *
      Q. At the time you talked to these people, had you talked with the prosecuting attorneys or with anyone to get an inclining of how much time they would get if they pled?
      A. Now, you mean at the time that I told them that if they pled guilty, what they would get?
      Q. Yes?
      A. Well, at that time, of course, I had reviewed with the District Attorney and we had also discussed it with the judge as to what type of plea would be acceptable to the State and what type of time we were talking about.
      Q. Now this first time when you talked to them about the type of case that the State had and whether you told them or not, they at least understood that they might come out better if they tendered a plea of guilty. At that time did you, in your recommendation, indicate to them that if they went to trial they may get more time than that?

        A. Oh, yes. I told them that, of course, if they went to trial and were found guilty, that they ... At the time, I think, I probably had the Statutes with me and I told them exactly what the offense called for, what the maximum that could be .
      4 $ $ $ *
      A. I explained to him at that time, of course, that the case was one that would have to be tried by a jury. It would be necessary for a jury to find him guilty. And that we would be allowed to go ahead and present our . . . present what evidence we had to the jury. And that regardless of what the District Attorney had, we would still have the right to present any evidence that we could come up with to the jury and it would be up to them to make the final decision. And it would also be up to him to go ahead and decide whether he wanted to go ahead and be tried by a jury or whether he wanted to enter a plea — exactly what he wanted to do. All I could do was advise him of his rights, make investigation from what facts he gave me, and then either go ahead and try the case or attempt to enter a plea and find out what sentence would be imposed by the Court.
      sfc *
      A. . . .1 had spoken to the District Attorney and with the Court and received the amount of the sentence and told him the amount of sentence he would receive if he entered a plea.
      * :!: * * %

      Q. You heard him say that you didn’t advise him of no possibility of parole. Is that correct?
      A. Yes. I did hear that.
      Q. Did you advise him of that fact?
      A. Yes. I feel certain I did because we attempted to get a lesser sentence ah, a lesser plea for Mr. Mc-Chesney. The Court was unable . The Court was unwilling to go along with that.
      Q. Earlier, when you were up here, you said, I believe you said, you read him the Statutes with the amount of time he could get?
      A. Yes.
      * :¡: * #

      . McChesney related his prior criminal record on cross-examination at the post-conviction evidentiary hearing in the state court. He said that he had appeared in a court of law in California for possession of stolen goods; also for forgery or uttering worthless checks which he said were misdemeanors and that in those matters he was either allowed to plead to a lesser charge, a misdemeanor, or make restitution. He did not elaborate further.

      . In Brady, Mr. Justice White elaborated on the mutuality of advantage to the state and the accused of pleas of guilty. He said in his opinion (397 U.S. at 751-753, 90 S.Ct. at 1471):
      “The issue we deal with is inherent 'in the criminal law and its administration because guilty pleas are not constitutionally forbidden, because the criminal law characteristically extends to judge or jury a range of choice in setting the sentence in individual cases, and because both the State and the defendant often find it advantageous to preclude the possibility of the maximum penalty authorized by law. For a defendant who sees slight possibility of acquittal, the advantages of pleading guilty and limiting the probable penalty are obvious — his exposure is reduced, the correctional processes can begin immediately, and the practical burdens of a trial are eliminated. For the State there are also advantages — the more promptly imposed punishment after an admission of guilt may more effectively attain the objectives of punishment; and with the avoidance of trial, scarce judicial and prosecutorial resources are conserved for those cases in which there is a substantial issue of the defendant’s guilt or in which there is substantial doubt that the State can sustain its burden of proof. It is this mutuality of advantage that perhaps explains the fact that at present well over three-fourths of the criminal convictions in this country rest on pleas of guilty, a great many of them no doubt motivated at least in part by the hope or assurance of a lesser penalty than might be imposed if there were a guilty verdict after a trial to judge or jury.

        “Of course, that the prevalence of guilty pleas is explainable does not necessarily validate those pleas or the system which produces them. But we cannot hold that it is unconstitutional for the State to extend a benefit to a defendant who in turn extends a substantial benefit to the State and who demonstrates by his plea that he is ready and willing to admit his crime and to enter the correctional system in a frame of mind that affords hope for success in rehabilitation over a shorter period of time than might otherwise be necessary.”

      . The most recent decision by the Supreme Court concerning the voluntariness of guilty pleas is Fontaine v. United States, 411 U.S. 213, 93 S.Ct. 1461, 36 L.Ed.2d 169 (1973). In Fontaine petitioner was arraigned on November 13, 1969, more than five months after the Supreme Court’s decision in Boykin. Fontaine pled guilty after executing a written waiver of his right to counsel and to a grand jury indictment. The trial judge, before accepting the plea, addressed him personally. Petitioner acknowledged that his plea was given voluntarily and knowingly, that he understood the nature of the charge and consequences of the plea, and that he was in fact guilty. The judge then accepted the guilty plea. Petitioner later filed a motion under 28 U.S.C. § 2255 to vacate his sentence on the grounds that his plea of guilty had been induced by a combination of fear, coercive police tactics, and illness, including mental illness. The district judge denied the motion without an evidentiary hearing and was affirmed by the Sixth Circuit Court of Appeals. The Supreme Court vacated and remanded by noting: “On this record, we cannot conclude with the assurance required by the statutory standard ‘conclusively show’ that under no circumstances could the petitioner establish facts warranting relief under § 2255; accordingly, we vacate the judgment of the Court of Appeals and remand to that court to the end that the petitioner be afforded a hearing on his petition in the District Court.”
      Although the Court did not expressly state that Boykin requires the trial judge to enunciate all three rights relating to jury trial, confrontation, and self-incrimination in order for the guilty plea to be valid, the facts and result in Fontaine certainly have that effect. After all, if Boykin meant what the district court said in the present case, the Supreme Court would have allowed Fontaine to re-plead without the need for an evidentiary hearing. The plea in Fontaine would have been per se invalid.

      . Chief Judge Brown, writing for the panel, said in Oaks that "Boykin imparts a unique twist to this rule by requiring affirmative evidence in the record to establish an intelligent and voluntary plea, thereby rejecting as insufficient the mere lack of evidence that the plea was involuntary or coerced. ‘It was error, plain on the face of the record, for the trial judge to accept petitioner’s guilty plea without an affirmative showing that it was intelligent and voluntary.’ 395 U.S. at 242, 89 S.Ct. at 1711, 23 L.Ed.2d at 279.” Id., 445 F.2d at 1063.

      . Rule 11, Fed.R.Crim.P., reads as follows:
      “A defendant may plead not guilty, guilty or, with the consent of the court, nolo contendere. The court may refuse to accept a plea of guilty, and shall not accept such plea or a plea of nolo con-tendere without first addressing the defendant personally and determining that the plea is made voluntarily with understanding of the nature of the charge and the consequences of the plea. If a defendant refuses to plead or if the court refuses to accept a plea of guilty or if a defendant corporation fails to appear, the court shall enter a plea of not guilty. The court shall not enter a judgment upon a plea of guilty unless it is satisfied that there is a factual basis for the plea.”

      . The district court said its view was held in other circuits as well, citing United States ex rel. Sadler v. Pennsylvania, 3 Cir., 1970, 434 F.2d 997; Korenfeld v. United States, 2 Cir., 1971, 451 F.2d 770; Smith v. Cox, 4 Cir., 1970, 435 F.2d 453. Sadler involved a pre-Boykin plea. Referring to Boykin in dicta, however, the
      Third Circuit said only that a plea should be invalidated if the record is silent on the issue of voluntariness.
      In Korenfeld, Judge Lumbard of the Second Circuit noted that “[Boykin] in no way intimated the precise terms of the inquiry that the trial judge should make of a defendant before accepting his plea,” 451 F.2d at 773, and the case did not establish that the defendant must be specifically advised of his constitutional rights relating to jury trial, confrontation, and self-incrimination.

        Smith, a Fourth Circuit case, involved another pre-Boykin plea which the court considered properly accepted by the district judge. Whatever the court said about Boykin was obvious dicta since that circuit subsequently held prior to the district court’s decision here, that Boykin does not require the trial judge’s discussion with the defendant to conform to any litany of constitutional rights. United States v. Tabory, 4 Cir., 1972, 462 F.2d 352, 353. See also Wade v. Coiner, 4 Cir., 1972, 468 F.2d 1059.


author: PER CURIAM:

text:
    Anita B. BRODY, Plaintiff-Appellant, v. CHEMICAL BANK et al., Defendants-Appellees, and Pennsylvania Company, Defendant.
    No. 812, Docket 72-2047.
    United States Court of Appeals, Second Circuit.
    Argued June 4, 1973.
    Decided July 3, 1973.

      Benedict Wolf, New York City (Wolf, Popper, Ross, Wolf & Jones, and Lester L. Levy, New York City, on the brief), for plaintiff-appellant.
    Ralph L. McAfee, New York City (Cravath, Swaine & Moore, New York City, and Richard S. Simmons, Andrew P. Tashman and Lawrence R. Samuels, New York City, of counsel; Pepper, Hamilton & Seheetz, Philadelphia, Pa., of counsel for The Fidelity Bank), for defendants-appellees Chemical Bank and The Fidelity Bank.
    Simpson, Thacher & Bartlett, New York City (Horace J. McAfee, Roy L. Reardon and Edward C. Mendrzycki, New York City, of counsel), for defendant-appellee Manufacturers Hanover Trust Co.
    Winthrop, Stimson, Putnam & Roberts, New York City (Stephen A. Wei-ner, New York City, of counsel), for defendant-appellee Irving Trust Co.
    Milbank, Tweed, Hadley & McCloy, New York City (Andrew J. Connick, Briscoe R. Smith and Norman R. Nelson, New York City, of counsel; Drinker, Biddle & Reath, Philadelphia, Pa., of counsel for Girard Trust Bank), for defendants-appellees Chase Manhattan Bank, N.A. and Girard Trust Bank.
    Tobin, Decof, LeRoy & Silverstein, New York City (John V. Downey, New York City, of counsel), for defendant-appellee Bank of Montreal.
    Before HAYS, MANSFIELD and MULLIGAN, Circuit Judges.
   PER CURIAM:

This is an appeal from a judgment of the United States District Court for the Southern District of New York, Hon. Lee P. Gagliardi, entered on August 3, 1972, dismissing finally an amended complaint. The complaint by a preferred stockholder of the Pennsylvania Company (Penneo) was brought derivatively on behalf of Penneo and repre-sentatively on behalf of all other Penn-eo stockholders similarly situated. Plaintiff alleges that the defendants Chemical Bank, Manufacturers Hanover Trust Company, Irving Trust Company, Chase Manhattan Bank, N.A., Bank of Montreal, Girard Trust Bank, and the Fidelity Bank (Banks) were unwilling to lend money to the Penn Central Transportation Company (Railroad) because of its weak financial condition. It is further alleged that the Banks conspired with the Railroad which held all of Penneo’s outstanding common stock, to cause Penneo to enter into an arrangement whereby Penneo borrowed $50,000,000 from the Banks in return for the note of the solvent Penneo. The funds were then turned over to the Railroad in return for the Railroad’s notes to Penneo which were or soon would be, to the knowledge of the Banks, practically worthless. The complaint states that the Penneo loan was made in May 1970 when the Banks had already refused to make a loan to the Railroad in view of its staggering losses in 1969 and the first quarter of 1970. On June 20, 1970 the Railroad filed a petition under § 77 of the Federal Bankruptcy Act. The plaintiff urges that the transfer of the $50,000,000 in this fashion constituted common law fraud as well as a violation of § 17(a) of the Securities Act of 1933 (15 U.S.C. § 77q(a)).

The defendants moved to dismiss the representative counts for failure to state a cause of action. The dismissal of the representative action by the court below was based on a finding that the injury here was not uniquely to the preferred stockholders of Penneo but to the corporation which has the remedy of either a direct action or a derivative suit brought on its behalf. We affirm the dismissal of these counts on the opinion below (Brody v. Chemical Bank, Docket No. 71 Civ. 2639, at 10-14 (S.D. N.Y. July 26, 1972)).

The motion for dismissal of the derivative counts was bottomed upon the argument that the complaint violated Fed.R.Civ.P. 23.1 which requires in pertinent part:

The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action he desires from the directors or comparable authority and, if necessary, from the shareholders or members, and the reasons for his failure to obtain the action or for not making the effort.

The plaintiff admittedly did not make a demand on the board of directors of Pennco nor its common stockholder before commencing the action. The plaintiff instead simply pleaded:

Plaintiff has made no demand on the Board of Directors of Pennco to take action with regard to the wrongs herein described because all of said directors are designees of Railroad which, through its ownership of all of Penn-co’s common stock, has been able to designate and select said directors. Railroad, by said stock ownership, controls Pennco and said directors. Thus, to make demand upon said directors would be to request that they sue the company that has chosen them and that controls them. By reason of the foregoing, any demand upon said Board of Directors to redress or prevent the wrongs herein described would have been futile.

Inasmuch as four trustees have been appointed for the bankrupt Railroad and since they in turn have selected a new board of four directors for Pennco, we cannot disagree with the court below that the allegations of the complaint are insufficient to excuse plaintiff’s failure to make a demand on the Pennco board. Plaintiff then sought discovery to establish that there was an interrelationship between the new Penn-co board and the pre-bankruptcy management of the Railroad. The court below held that even arguendo such link did exist, a demand upon the common stockholder was necessary in any event, and there was no showing that such a demand would be futile since the Railroad trustees were court appointed and not implicated in the transaction which is the basis for the complaint herein. However, it is settled that the federal courts will look to the state law in such cases to determine whether a demand on stockholders is necessary. Gottesman v. General Motors Corp., 268 F.2d 194, 197 (2d Cir. 1959); Dopp v. American Elec. Labs, Inc., 55 F.R.D. 151, 155 n. 10 (S.D.N.Y.1972). Pennco is a Delaware corporation and the leading Delaware case in point, Mayer v. Adams, 37 Del.Ch. 298, 141 A.2d 458 (Sup.Ct.Del.1958), holds that a shareholder demand is unnecessary where the wrongs complained of (fraud) are beyond the power of ratification by a majority of the stockholders. While the Delaware point of law was not raised below, there is no reason why this court should not consider it here. American Sur. Co. v. Coblentz, 381 F.2d 185, 189 n. 5 (5th Cir. 1967); Bartlett-Collins Co. v. Surinam Navigation Co., 381 F.2d 546, 550 (10th Cir. 1967). In view of the gravity of the alleged wrongdoing we cannot agree with the final dismissal and therefore remand. The plaintiff then may either make a demand on the directors or not, as she chooses. In any event, the repleading must comply with Rule 23.1. See In re Kauffman Mutual Fund, 479 F.2d 257 (1st Cir. 1973); 7A Wright & Miller, Federal Practice and Procedure: Civil § 1832, at 392 (1972). After pleading in compliance with Rule 23.1 the question of whether or not discovery should be permitted rests in the discretion of the trial court (see Fifth Ave. Peace Parade Comm. v. Gray, 480 F.2d 326 (2d Cir. 1973)), which did not reach this issue since it proceeded on the erroneous theory that in any event stockholder demand was necessary.

Affirmed in part and remanded.