author: FRIENDLY, Chief Judge:

text:
    James D. HODGSON, Secretary of Labor, United States Department of Labor, Appellee, v. CORNING GLASS WORKS, a corporation, Appellant.
    Nos. 252, 349, Dockets 72-1229, 72-1230.
    United States Court of Appeals, Second Circuit.
    Argued Jan. 4, 1973.
    Decided Feb. 2, 1973.

      Carin Ann Clauss, Associate Sol. (Richard F. Schubert, Sol. of Labor, Francis V. LaRuffa, Regional Sol., Donald S. Shire, Helen W. Judd, Isabelle R. Cap-pello, and Sylvia S. Ellison, Washington, D. C., of counsel), for appellee.
    Scott F. Zimmerman, Pittsburgh, Pa. (Reed, Smith, Shaw & McClay, John G. Wyman, and Walter P. DeForést, Pittsburgh, Pa., of counsel), for appellant.
    Before FRIENDLY, Chief Judge, KAUFMAN, Circuit Judge, and HOLDEN, District Judge.

       Chief Judge of the District Court for the District of Vermont, sitting by designation.

   FRIENDLY, Chief Judge:

This appeal marks this Court’s first encounter with the Equal Pay Act of 1963, 29 U.S.C. § 206(d), one of the many beneficent remedial statutes enacted during the last decade which create new tasks for the federal courts. The burden is increased, perhaps needlessly, because, as is the case with other provisions of the Fair Labor Standards Act of which it forms a part, the Equal Pay Act has no provision for administrative fact-finding.

The controlling statute, 29 U.S.C. § 206(d)(1), of seeming simplicity, reads as follows:

No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee.

I.

Since the parties broadly accept the factual findings of the district court, a brief summary will suffice.

The controversy concerns the wages paid by Corning Glass Works (“Corning”) to Class B, Class C, and General TV inspectors, in its A Factory, B & C Factory, and Pressware Plant at Corning, New York. Prior to 1925, Corning operated its plants only during the day, and found it unnecessary or undesirable to have a night shift. Between 1925 and 1930, however, the introduction of automatic production equipment made it necessary to institute a night inspection shift. Although, as the district judge found, Shultz v. Corning Glass Works, 319 F.Supp. 1161, 1170 (W.D.N.Y.1970), previously “women had filled most, if not all, of the inspection jobs on the day and afternoon shifts,” New York law then prohibited the employment of women between 10:00 P.M. and 6:00 A.M., and thus Corning had to recruit male employees for a steady night shift. They demanded and received wages comparable to what they were earning on other, often more demanding jobs in the plant, which were approximately twice those paid to the female inspectors. The base rate for the inspectors on the night shift was 53 cents per hour, as against 24 to 28 cents per hour for the female inspectors on the day shifts.

Thus a situation was created where the night inspection shift was all male, the day shift virtually all female, and the males received wages significantly higher than the females. This state of affairs persisted until the effective date of the Equal Pay Act — and beyond it— except for one brief period when, because of labor shortages during World War II, New York allowed women to work at night; women employed by Corning on the night shift during that period received the same wages as the men when they performed the same work. In 1944 the Corning, New York plants were organized by the American Flint Glass Workers Union and a collective bargaining agreement was negotiated which provided for the company’s first plant-wide night shift differential. But this change in Coming’s wage structure did not eliminate the higher base wage paid to male night inspectors since, in the case of the inspectors, the shift differential was superimposed upon the existing difference in wage scales. Similarly, although in 1953 New York changed its law to permit females over the age of 21 to work after midnight in factories operating multiple shifts where the Industrial Commissioner found transportation and safety conditions to be satisfactory and granted approval, the record does not reveal any application by Corning for such approval prior to 1966.

The Equal Pay Act became effective with respect to Coming’s Corning, New York plants on June. 11, 1964. Since Corning had previously maintained separate “male” and “female” rate schedules plant-wide, with the latter materially lower, the Act clearly called for action on its part. Corning therefore merged the separate schedules into one. However, so far as concerned the inspectors, this was a matter of theory only, since the day shift inspectors were assigned to lower wage groups, see 319 F.Supp. at 1165-1166. Thus, as the district court found, 319 F.Supp. at 1166, “the merger continued the historical difference in base hourly rates of the men and women inspectors working the three shifts.”

Coming’s first significant step toward eliminating the differential wage rates for male and female inspectors took place on June 1, 1966, when it opened the inspection jobs on the night shift to women, presumably with the approval of the State Industrial Commissioner. At this time Corning consolidated its theretofore separate male and female seniority lists, and women became eligible to bid for the higher paid night inspection jobs when vacancies occurred. It is undisputed that a considerable number of women took advantage of this opportunity; turnover in the night inspection jobs was substantial and over half the vacancies were taken by women. Still, the process required some time since women could not exercise their seniority to “bump” a less senior male night inspector.

The last significant event was Coming’s negotiation of a new collective bargaining agreement with the Flint Glass Workers Union, effective January 20, 1969. This abolished the separate base wage rates of day and night shift inspectors and increased the rate for all inspectors, so that the resulting base wage was the same for all three shifts and exceeded the wage rates on the steady night shift previously in effect. If the agreement had stopped at that point, there could be no substantial claim of further violation of the Equal Pay Act. However, the agreement provided for a higher “red circle” basic rate to every person employed before January 20, 1969, when working as an inspector on the night shift. At the time of the last hearing in the district court, over two years after the new agreement went into effect, all the night inspectors were being paid at the “red circle” rate; unless Corning changes its system, this is likely to continue for some time since at the date of the hearing over 500 laid-off inspectors had to be offered reemployment before any new inspectors could be hired.

The district court held that Corning had been in continuing violation of the Equal Pay Act; directed it to pay the night rate to all inspectors from November 1, 1964, see note 5 swpra, to January 20, 1969, and the “red circle” rate thereafter to all inspectors until true equalization was effected; awarded interest at the rate of 6% per annum on the amounts withheld; and issued an injunction against future violations of the Act of any kind with respect to all categories of employees at all plants except the branch plant at Wellsboro, Pennsylvania. Corning claims that it was never in violation of the Equal Pay Act; that if it was, any violation ended on June 1, 1966, when women became eligible to work on the night shift, or, at latest, on January 20, 1969, when the differences in basic wage rates were abolished; and that the broad injunction was unjustified. Although the issues are not free from doubt, we reject all contentions save the last.

II.

The parties are in agreement on the general approach we should follow. The initial question is whether the inspection jobs on the day and night shifts constituted “equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.” The Secretary has the burden on this, Shultz v. American Can Co., 424 F.2d 356, 360 (8 Cir. 1970); Hodgson v. Brookhaven Gen’l Hosp., 436 F.2d 719, 722 (5 Cir. 1970), and, if he has not sustained it, the complaint must be dismissed even if the wage differentials were unreasonably large in comparison with the actual differences in skill, effort, responsibility, or working conditions, and were based on discriminatory motivation; Congress did not intend to put either the Secretary or the courts in the business of evaluating jobs and determining what constituted a proper differential for unequal work. See 109 Cong.Reg. 9197-98, 9209 (1963); Hodgson v. Miller Brewing Co., 457 F.2d 221, 227 (7 Cir. 1972). The Secretary also has the burden of establishing a prima facie case that the wage differentials represent “discriminat[ion] ... on the basis of sex.” Shultz v. Wheaton Glass Co., 421 F.2d 259, 266 (3 Cir.), cert. denied, 398 U.S. 905, 90 S.Ct. 1696, 26 L.Ed.2d 64 (1970). Once the Secretary has sustained these burdens, the employer can escape liability only by bringing itself within one of the four exceptions, the one that is particularly relevant here being the general escape clause, “a differential based on any other factor other than sex.” On this the employer has the burden. Shultz v. Wheaton Glass Co., supra, 421 F.2d at 266; Shultz v. American Can Co., supra, 424 F.2d at 362.

Corning’s most basic contention — one-which, if sustained, would immediately end the case — is that work on a steady night shift is not performed under “working conditions” similar to work on day or afternoon shifts. To those uninitiated in the language of industrial relations, that would indeed seem to be true, and the District Court for the Middle District of Pennsylvania has so held, see note 7 supra. But, as said in one of Mr. Justice Frankfurter’s early opinions, “[t]he recognized practices of an industry give life to the dead words of a statute dealing with it.” United States v. Maher, 307 U.S. 148, 155, 59 S.Ct. 768, 771, 83 L.Ed. 1162 (1939). Statutory language addressed to experts must be read in the way the experts would understand it. See NLRB v. Highland Park Mfg. Co., 341 U.S. 322, 326-327, 71 S.Ct. 758, 95 L.Ed. 969 (1951) (Frankfurter, J., dissenting).

The legislative history of the Equal Pay Act supports the construction that the time at which work is performed was not regarded as a “working condition” but rather as a proper subject for “a differential based on any other factor other than sex.” The equal pay bills, H.R. 3861, 88th Cong., 1st Sess. (1963); S. 910, 88th Cong., 1st Sess. (1963), as originally introduced in Congress, would have required equal pay for “equal work on jobs the performance of which requires equal skills.” Ezra G. Hester, then Corning’s Director of Industrial Relations Research, testified before both House and Senate Committees in opposition to this formulation. He pointed out that most of industry was by then using formal job evaluation systems in order to establish equitable wage structures in their plants, and that most of these job classification systems considered three factors in addition to “skill,” to wit, effort, responsibility, and working conditions. As an example, he cited his own company’s plan, which was introduced into the record. Under “working conditions” the plan and the accompanying job evaluation sheets listed two factors: “surroundings” (requiring evaluation of exposure to elements, intensity, and frequency) and “hazards” (requiring evaluation of frequency of exposure to hazard, frequency of injury, and seriousness of injury); nothing was said about time of day worked or differences in shift. Mr. Hester testified that “Other companies use similar job evaluation sheets,” and urged the committees to amend the proposed legislation to conform to these industry practices. See Hearings on H.R. 3861 and Related Bills Before the Special Subcommittee on Labor of the House Committee on Education and Labor, 88th Cong., 1st Sess. 232-40 (1963); Hearings on S. 882 and S. 910 Before the Subcommittee on Labor of the Senate Committee on Labor and Public Welfare, 88th Cong., 1st Sess. 96-104 (1963).

In response to this, the bill was rewritten in committee and placed in its present form. Five House Committee members thus explained the change, H.R.Rep. No. 309, 88th Cong., 1st Sess. 8 (1963), U.S.Code Cong. & Admin.News, p. 690:

The concept of equal pay for jobs demanding equal skill has been expanded to require equal effort, responsibility, and similar working conditions as well. These factors are the core of all job classification systems and the basis for legitimate differentials in pay.

Earlier in the Report, at p. 3, U.S.Code Cong. & Admin.News, p. 689, the Committee had indicated where it thought shift differentials would fit into the statute:

Three specific exceptions and one broad general exception are also listed. . . As it is impossible to list each and every exception, the broad general exclusion [“differentials based on any other factor other than sex”] has also been included. Thus, among other things, shift differentials, restrictions on or differences based on time of day worked, hours of work, lifting or moving heavy objects, differences based on experience, training, or ability would also be excluded.

This persuasive explanation of how the bill took shape, and the evident understanding of the Committee, consistent with this explanation, of the structure of the amended bill, outweigh the point, strongly pressed by Corning, that Representative Goodell, who introduced the bill and had a hand in redrafting it, remarked during the course of an explanation of its provisions that “hours of work, difference in shift would logically fall within the working condition factor.” 109 Cong.Rec. 9209 (1963). Corning also relies upon a statement by Representative Thompson, chairman of the Subcommittee:

Thus, among other things, shift differentials, restrictions on or differences based on time of day worked, hours of work, lifting or moving heavy objects, differences based on experience, training, or ability would also be exempted under this act.

109 Cong.Rec. 9196. But this does not assist Corning; indeed, since it is apparent that Representative Thompson was only paraphrasing his Committee’s Report, this rather supports the construction that time of day differentials were covered under the catch-all exception rather than by the term “working conditions.”

Administrative interpretation by the Wage and Hour Administrator, which the Supreme Court has held entitled to deference, Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944), further indicates that shift differentials are to be considered a legitimate exception to the Act rather than to reflect a difference in working conditions which would make the statute inapplicable. 29 C.F.R. §§ 800.100 et seq. set out the Administrator’s interpretations of each of the provisions of the Equal Pay Act and each of the terms used in the Act. Under “similar working conditions,” § 800.132 says that “[generally, employees performing jobs requiring equal skill, effort, and responsibility are likely to be performing them under similar working conditions,” which in itself would seem to indicate that shift differences are not considered different working conditions since this is such a common situation. The only examples given of different working conditions are the salesman who works in a store as compared with the salesman who sells door to door, or one who does repair work in a shop as compared with one who does repair work in customers’ homes. In contrast, the Administrator recognizes the legitimacy of night shift differentials in § 800.145, under “Exceptions to Equal Pay Standard.”

Finally, while the case law is not conclusive, the decisions, other than the recent one between the same parties in the Middle District of Pennsylvania, see note 7 supra, are more favorable to the Secretary’s position on this issue than to Coming’s. See Shultz v. American Can Co., supra, 424 F.2d 356; Hodgson v. Miller Brewing Co., supra, 457 F.2d at 224-225 & n. 8; Wirtz v. Basic Inc., 256 F.Supp. 786 (D.Nev.1966).

Coming’s impressive evidence that night work not only is less attractive than day work but often causes physical and emotional problems thus does not carry the day. While the statute indeed permits all this to be taken into account, it is relevant under the catch-all exception, with its requirement that the employer establish that the differential was based on a factor other than sex, rather than making night work a different “working condition” and eliminating application of the statute altogether. Thus the question is whether the higher rate paid by Corning for night inspection work, until 1966 performed solely by males, was in fact intended as compensation for night work or constituted an added payment based in part upon sex.

A number of facts support the district court’s conclusion that the latter was the situation here. As the history set out above indicates, the higher night rate was in large part the product of the generally higher wage level of male workers and the need to compensate them for performing what were regarded as demeaning tasks. . The wage differential has never been regarded as compensation for night work. There was no evidence that any other night employees received higher pay than corresponding day workers until the plant-wide night differential was superimposed on the basic rates in 1944; since that time, it is apparent that the shift differential has been thought to compensate, fairly and adequately, employees other than inspectors for night work. Indeed, Corning had separate male and female salary schedules until June 11, 1964.

The plain fact is that the differentials here at issue arose because men would not work at the low rates paid the women day-time inspectors to perform what the men called “female work.” This is the very condition at which the Equal Pay Act was aimed. A higher rate paid to men for performing low-paid “female work” is not transformed into a permissible “differential based on any other factor other than sex” simply because the men work at night. We might, of course, have a different problem if New york had continued to prohibit the employment of women at night, but the prohibition had ended a decade before enactment of the Equal Pay Act, and there is nothing to indicate that Corning would have had any more difficulty in obtaining the Industrial Commissioner’s approval in 1964 than it did in 1966.

The only other basis advanced by Corning to challenge the district court’s finding that it initially violated the Act is its contention that the day and night shift inspection jobs were not “equal work . . . the performance of which requires equal skill, effort, and responsibility” because, some of the men on the night shift had to do their own “utility work,” involving a certain amount of packing and lifting the inspected articles and cleaning up around the inspection station, which, on the day shifts, was primarily performed by male helpers especially hired for such work. It is now well settled, however, that the jobs under analysis need not be identical in every respect before the Equal Pay Act is applicable; inconsequential differences can be disregarded as long as the jobs are “substantially equal.” Shultz v. Wheaton Glass Co., supra, 421 F.2d at 265; Shultz v. American Can Co., supra, 424 F.2d at 360; Hodgson v. Fairmont Supply Co., 454 F.2d 490, 493 (4 Cir. 1972). Applying this standard, the district court rejected Coming’s contention primarily on the ground that' Coming’s job evaluation plan “considered the utility work of so little consequence that these tasks were not included in the job descriptions of any of the inspectors.” 319 F.Supp. at 1169. As the court below noted, id., these job descriptions, prepared through observation of actual job performance in 1963 and 1964, are particularly significant here since they demonstrate Coming’s own view of the content of the jobs before its perspective was changed by the filing of this litigation. Other evidence also showed the inconsequentiality of this factor. Although some male inspectors on the night shift had at times been given the assistance of utility workers, Corning has always continued to pay all night inspectors at the same wage. Indeed, Coming’s Manager of Job Evaluation, Edward Noble, conceded that “there is very little difference from shift to shift” in the performance of these inspection jobs. There is ample support for the district court’s conclusion that the relevant jobs entail “substantially equal” work. Cf. Shultz v. American Can Co., supra, 424 F.2d at 360-361.

We thus approve the district court’s holding that when the Equal Pay Act took effect, Corning was violating it by paying higher base wages to the male night inspectors, and proceed to consider whether the violation has since been cured.

III.

Corning first contends that it cured its violation by opening the night shift to women in 1966 on what was clearly more than a token basis, but see note 6 supra. Although this argument seems persuasive at first blush, it must be rejected. Congress was quite specific how the injustice of unequal pay for equal work must be eradicated. Recognizing the weaker bargaining position of many women and believing that discrimination in wage rates represented unfair employer exploitation of this source of cheap labor, see, e. g., Hearings on H.R. 3861, supra, at 8 (statement of Secretary of Labor Wirtz), Congress declared that wage discrimination on the basis of sex “depresses wages and living standards” of the many families dependent on the income of women. Equal Pay Act § 2, 77 Stat. 56. Consequently it provided that an employer paying a wage differential violative of the Act should cure the'violation by raising the wage rates of the women. This intention, clearly enough expressed in the proviso of 29 U.S.C. § 206(d)(1), that “an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee,” received express emphasis from the legislators. “The only way a violation could be remedied under the bill ... is for the lower wages to be raised to the higher.” Hearings on H.R. 3861, supra, at 65 (statement of Representative Griffin); see also H.R. Rep. No. 309, supra, at 3 (“The lower wage rate must be increased to the level of the higher.”)

In light of this apparent congressional understanding, we cannot hold that Corning, by allowing some — or even many — women to move into the higher paid night jobs, achieved full compliance with the Act. Coming’s action still left the inspectors on the day shift — virtually all women — earning a lower base wage than the night shift inspectors because of a differential initially based on sex and still not justified by any other consideration; in effect, Corning was still taking advantage of the availability of female labor to fill its day shift at a differentially low wage rate not justified by any factor other than sex. We thus join with every other court of appeals which has considered the issue in holding that merely opening the higher paid jobs to women as vacancies arise is not sufficient to comply with the requirements of the Equal Pay Act. Shultz v. American Can Co., supra, 424 F.2d at 359; Hodgson v. Square D Co., 459 F.2d 805, 808-809 (6 Cir. 1972), cert. denied, 409 U.S. 967, 93 S.Ct. 293, 34 L.Ed.2d 232 (1972); see also Hodg-son v. Miller Brewing Co., supra, 457 F.2d at 226-227.

We come finally to Coming’s contention that any violation was cured by the new collective bargaining agreement which became effective January 20, 1969. As previously indicated, this would clearly have been so if Corning had simply established a uniform day and night shift rate at least as high as the previous night shift rate, either with or without a plant-wide night differential. The problem stems from the “red circle” rate whereby any employee hired before January 20, 1969, receives a basic rate for night shift work some four to twelve cents per hour higher than for the day and afternoon shifts. Coming’s contention that this is a differential based on seniority, another permitted exception, is belied by the fact that it is paid only for work on the night shift. We cannot disagree with the district judge, Hodgson v. Corning Glass Works, 330 F.Supp. 46, 50 (W.D.N.Y. 1971), that, on the facts of this case, “the ‘red circle’ rate paid to night shift inspectors perpetuates the discrimination of the ‘supplemental escalating shift differential’ ” — the euphemism Corning has coined for the excess base wage rates paid to inspectors on the night shift.

We do not minimize the problems faced by Corning in changing policies originally resulting from New York law so that it will comply with the Equal Pay Act. It may well be that the wages originally paid the male inspectors on the steady night shift were more than the jobs were worth and were paid only because Corning could not get the men to do this work for less than they were receiving for labor requiring more skill or effort. With the benefit of hindsight, Corning could have avoided this suit — and its back pay liability — by opening the night shift to women once the New York law was changed in 1953, when there was no legal obstacle to reducing the night rate, or, perhaps more realistically in light of union pressures, holding the night rate and gradually increasing the day rate until the two met, as was finally done, save for the “red circle” provision, in 1969. Even with the passage of the Act, however, Corning had ample time to restructure its wage rates to comply with the Act’s provisions, for Congress postponed its effectiveness for one year, see Equal Pay Act § 4, 77 Stat. 57, in order to avoid the “severe hardship” immediate compliance might impose on employers. See S.Rep. No. 176, 88th Cong., 1st Sess. 5 (1963). But it did not do so, and upon the effectiveness of the Act, many of Coming’s options were foreclosed by the proviso previously discussed. If the result here seems harsh in view of the efforts Corning has been making since 1966, the harshness is that which may be inevitable when a legislature demands a drastic change in discriminatory practices that had too long been accepted.

IV.

Not content with requiring the payment of back wages which, with interest, will exceed $600,000, the district court issued a sweeping injunction, broadly incorporating the words of the Act and applicable to all Corning plants (save that in Wellsboro, Pennsylvania), which we quote in the margin.

We see no justification for this. Corning had been found to have violated the Equal Pay Act only with respect to one class of employee at its three plants in Corning, New York. As indicated, the violations were largely a result of the New York law which until 1953 had prohibited the employment of women at night. The Secretary’s case was by no means impregnable, and Corning had been endeavoring since 1966 — sincerely, if ineffectively — to bring itself into compliance. There was no evidence of widespread violations of the Act, either at the Corning plants or its 26 branch plants nationwide. The evidence rather was that the only other cases where a similar violation might exist were the inspection jobs in the plant at Wells-boro, Pennsylvania, which was excepted from the injunction because of a pending suit by the Secretary, and in a plant at Central Falls, Rhode Island, as to which the Secretary had also already instituted suit. Yet so broad an injunction put Corning under threat of contempt for any alleged violation of the Equal Pay Act in respect of any category of employee in all but one of Coming’s many plants.

We agree with the point made by the Eighth Circuit, in another Equal Pay Act case, Hodgson v. American Can Co., 440 F.2d 916, 921 (1972), that absent a showing of a policy of discrimination which extends beyond the plants at issue here, there is no basis for a nationwide injunction. Moreover, the Supreme Court has held that

the mere fact that a court has found that a defendant has committed an act in violation of a statute does not justify an injunction broadly to obey the statute and thus subject the defendant to contempt proceedings if he should at any time in the future commit some new violation unlike and unrelated to that with which he was originally charged.

NLRB v. Express Publishing Co., 312 U.S. 426, 435-436, 61 S.Ct. 693, 699, 85 L.Ed. 930 (1941). Since there is no showing here of the “proclivity for unlawful conduct” or “record of continuing and persistent violations of the Act” found to justify such an injunction in McComb v. Jacksonville Paper Co., 336 U.S. 187, 192, 69 S.Ct. 497, 500, 93 L.Ed. 599 (1949), the injunction must be narrowed accordingly. While Hodgson v. First Fed. Savings & Loan Ass’n, 455 F.2d 818, 825-827 (5 Cir. 1972), relied on by the Secretary, may have been correctly decided on its own facts, we cannot subscribe, in the light of Express Publishing and our own views, to all that was there said.

The injunction is modified by eliminating paragraph (3) and limiting the remaining paragraphs to inspectors at the three Corning plants. As so modified, the judgment is affirmed. No costs.

      . Although the Secretary of Labor previously claimed that the wages paid to a fourth class of employees, TV Inspectors, also violated the Equal Pay Act, the district court seemingly held that the Secretary had not met his burden of proof that the work done by men and women on these jobs was equal and did not include these jobs in its back pay award. See Shultz v. Corning Glass Works, 319 F.Supp. 1161, 1168, 1171 (W.D.N.Y.1970). The Secretary has not appealed this aspect of the district court’s order.

      . 1927 N.Y.Laws, ch. 453; 1930 N.Y.Laws, ch. 868.

      . The record does not reveal whether, apart from the inspectors, Corning had paid more for night work before the institution of the plant-wide differential in the 1944 agreement. Corning suggested that there might have been other jobs performed by women during the day for which the company had to pay a higher wage to get men to perform at night. It seems relatively clear, however, that if a job had been performed on the day shift by men, men on the night shift would receive the same wage.

      . 1953 N.Y.Laws, ch. 708, amending N.Y. Labor Law § 172, now N.Y. Labor Law § 173(3) (a)(1) (McKinney’s Consol. Laws, c. 31, 1965).

      . It was stipulated that the statute of limitations barred all claims arising prior to November 1, 1964 and that any back pay awards in this action should run only from that date.

      . In 1966 only 4 of 15 women requesting transfer to the night shift received this. The situation later improved so that 39 out of 61 requests were honored in 1967, and 42 out of 52 through November 7 in 1968.

      . The reason for the exception was that an action with respect to the Wellsboro plant, on facts similar to those in the instant case, was then pending in the District Court for the Middle District of Pennsylvania. This has since been decided in favor of Corning, Hodgson v. Corning Glass Works, 341 F.Supp. 18 (1972), and is now on appeal to the Third Circuit.

      . Edward W. Noble, Coming’s Manager of Job Evaluation, testifying in this case, gave a similar description of Corning’s job evaluation plan and said specifically that the time of day was not considered to be a “working condition.” See also the Dictionary of Occupational Titles (3d ed. 1965), published by the Manpower Administration of the Department of Labor. Volume II: Occupational Classification, at 656, defines working conditions as “the physical surroundings of a worker in a specific job,” and gives the following examples: inside work v. outside work, exposure to heat, cold, wetness, humidity, noise, vibration, hazards (risk of bodily injury), fumes, odors, toxic conditions, dust and poor ventilation. It does not mention night work.

      . The first night, shift differential was only five cents per hour; the excess in the base rates paid the men working as inspectors on the night shift over that paid the women on the day shift was at that time on the order of fourteen cents per hour.

      . Corning objects to the use made by the district court of the descriptions of the inspection jobs prepared for the Coming-Glass Works Job Evaluation Plan (CGW Plan) and, to a lesser degree, of those contained in an earlier plan prepared for Corning by Stevenson, Jordan & I-Iarrison -(SJ&H Plan). Insofar as the objection rests on the hearsay rule, it is answered not only by the business records statute, 28 TJ.S.G. § 1732(a), but by the status of these plans as admissions (in the ease of the SJ&H plan, an adoptive admission). Insofar as the objection rests on the point that application of the Equal Pay Act hinges on actual job content rather than the emjdoyer’s evaluation, see Hodgson v. Brookhaven Gen’l Hosp., supra, 436 F.2d at 724, the evaluation is nonetheless evidence, and often exceedingly good evidence, of the actuality; if either party seeks to show the contrary, it is open to him to do so. The job descriptions, together with the supporting testimony of Edward Noble, were sufficient to sustain the Secretary’s burden of proof on job equality.

      . Corning also challenges' the district court’s calculation of the amount of back pay due. IV e see no merit in this contention.

      . (1) The defendant shall not, contrary to section 6(d) (1) of the Act, discriminate on the basis of sex between employees employed within an establishment by paying wages to employees in such establishment at a rate less than the rate at which it pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility and which are performed under similar working conditions:
      (2) The defendant shall not, contrary to section 6(d)(1) of the Act, reduce the wage rate of any employee in order to comply with the provisions of section 6(d) (1) of the Act:
      (3) The defendant shall not, contrary to section 15(a)(1) of the Act, transport, offer for transportation, ship, deliver, or sell with knowledge that shipment or delivery or sale thereof in commerce is intended, any goods in the production of which any of its employees has hereafter been employed in violation of section 6(d)(1) of the Act:
      (4) Defendants shall cease to withhold any amounts owing to any employee which have been withheld in violation of section 6(d) (1) of the Act.


source: Caselaw Access Project

author: HASTINGS, Senior Circuit Judge. PELL, Circuit Judge

license: Public Domain

text:
    NATIONAL FAMILY INSURANCE COMPANY, a Minnesota corporation, Plaintiff-Appellant, v. EXCHANGE NATIONAL BANK OF CHICAGO, a National Banking Association, Defendant-Appellee.
    No. 71-1617.
    United States Court of Appeals, Seventh Circuit.
    Argued Oct. 27, 1972.
    Decided Feb. 20, 1973.
    Rehearing Denied March 15, 1973.
    Pell, Circuit Judge, dissented and filed opinion.

      Dom J. Rizzi, Frank J. Pause, Chicago, Ill., for plaintiff-appellant.
    Edgar Bernhard, Selwyn Zun, Robert W. Gettleman, Chicago, Ill., for defendant-appellee.
    Before HASTINGS, Senior Circuit Judge, and FAIRCHILD and PELL, Circuit Judges.
   HASTINGS, Senior Circuit Judge.

National Family Insurance Company, a Minnesota corporation (National Family), filed this action in the district court against Exchange National Bank of Chicago, a national banking association (Exchange Bank). Plaintiff is an insurance company and at all times herein concerned was 100 per cent reinsured by American Allied Insurance Company (American Allied) at a cost to plaintiff of more than $1,000,000 in premiums. American Allied was one of a group of insurance companies in Minnesota and Illinois owned and controlled by the Phillip Kitzer family. American Allied was adjudged to be insolvent by a Minnesota state court, and a receiver was appointed.

In brief, National Family seeks to recover substantial damages because of heavy losses it sustained by reason of Exchange Bank’s alleged fraudulent misrepresentations of the true financial status of plaintiff’s 100 per cent reinsurer, American Allied.

The instant appeal is by National Family from an order of the district court dismissing this action against Exchange Bank on the ground that it was barred by the running of the five-year Illinois statute of limitations, Illinois Revised Statutes, chapter 83, § 16 (1969), which provides that an action such as plaintiff’s herein “shall be commenced within 5 years next after the cause of action accrued.” Plaintiff seeks to avoid this limitation by relying on the “fraudulent concealment” exception set out in Illinois Revised Statutes, chapter 83, § 23 (1969), which provides: “If a person liable to an action fraudulently conceals the cause of such action from the knowledge of the person entitled thereto, the action may be commenced at any time within five years after the person entitled to bring the same discovers that he has such cause of action, and not afterwards.” This action having arisen in Illinois and being based upon diversity of citizenship, the Illinois law governing limitations applies. Bernard Food Industries, Inc. v. Dietene Co., 7 Cir., 415 F.2d 1279, 1282 (1969), cert. denied, 397 U.S. 912, 90 S.Ct. 911, 25 L.Ed.2d 92 (1970).

Plaintiff filed its complaint on September 25, 1970, and its notice of demand for jury trial on September 30, 1970. On October 15, 1970, defendant raised the limitations issue by filing its motion to dismiss the complaint on the ground that it failed to state a claim against defendant upon which relief could be granted because of the five-year limitations bar raised by chapter 83, § 16, supra. Thereafter, each party filed numerous exhibits, affidavits, counter-affidavits, depositions and mem-oranda in support of and in opposition to the motion to dismiss. Subsequently, pursuant to Rule 12(b), Federal Rules of Civil Procedure, Title 28, U.S.C.A., defendant’s motion to dismiss was treated as one for summary judgment.

On May 3, 1971, the district court filed its written opinion and order and concluded:

“The conflict that arises from the facts outlined above creates an issue that is not ripe for resolution on motion for summary judgment and would ordinarily be cause for denial. However, in view of the obviously complicated and lengthy litigation that will ensue on the trial of this cause, the court has decided to order a factual hearing solely to determine whether, in accordance with the standard set out earlier in this opinion, the statute of limitations began to run prior to September 23, 1965.”

We have carefully reviewed the trial court’s memorandum opinion of May 3, 1971. In our judgment it correctly summarizes the nature of the cause of action and the relation of parties thereto, as well as the position of American Allied and the “Kitzer Family” and its activities. The court properly treated the motion to dismiss as one for summary judgment. Sticker Industrial Supply Corp. v. Blaw-Knox Co., 7 Cir., 367 F.2d 744, 745 n.1 (1966).

We have examined the Illinois law cited by the trial court in its written opinion. The court correctly determined that, although the “fraudulent concealment” exception set out in chapter 83, § 23, supra, literally reads that the right of action for concealment of fraud remains for a period of five years from the date plaintiff actually discovers the fraud, yet the Illinois courts have applied the ordinary fraud standards to determine when the cause of action accrues. The applicable statutory period here commences at the time the plaintiff, through ordinary diligence, should have discovered the fraudulent actions causing its injury. “Mere silence of the defendant and mere failure on the part of the complainant to learn of a cause of action do not amount to such fraudulent concealment.” Jackson v. Anderson, 355 Ill. 550, 557, 189 N.E. 924, 927 (1934).

The trial court further found that the statutory period of five years was uninterrupted. It noted the complaint charged that the Kitzers and American Allied were customers of defendant Exchange Bank for almost four years from August 1, 1961, through June 5, 1965, and from that logically assumed that all acts of fraudulent representations must have occurred within that period. Insolvency proceedings against American Allied commenced June 10, 1965. Beginning as early as April 12, 1965, and continuing on through September 21, 1965, a total of 27 newspaper articles appeared in the St. Paul-Minneapolis area (where plaintiff is located) questioning various financial dealings of American Allied and reporting a suit against defendant Exchange Bank by the receiver of American Allied. These were attached as exhibits to defendant’s motion for dismissal and/or summary judgment. The court specifically found that “[tjhis publicity and the insolvent condition of American Allied would alone appear to be sufficient notice.”

However, because of plaintiff’s counter-showing by affidavit that it was unaware of any fraud on the part of defendant Exchange Bank until 1967, the trial court wisely decided that this conflict was not ripe for summary judgment disposition.

Following the foregoing order of May 3, 1971, certain depositions were taken by plaintiff and additional documentary evidence was filed. The next hearing on the limitations issue was held before the court the afternoon of June 9, 1971. Plaintiff presented the testimony of one witness. Both parties relied on depositions previously taken. The matter was not concluded but was next resumed on the afternoon of June 23,1971.

The hearing was resumed on the limitations issue previously considered and under the guidelines set out in the earlier order. Certain documents in the Minnesota state court insolvency matter were admitted in evidence, and all counsel were heard at length on the issue before the court. At the conclusion of the hearing the trial court orally announced the following findings and ruling from the bench:

“The hour is late, you have argued, all of you, adequately and capably. I have read the pleadings. We have had occasion to consider the matter earlier in the context of a ruling on a motion for summary judgment.
“I take the argument today to be in support of an alternative motion to dismiss, which is based solely on the statute of limitations, and it is on that sole issue that I am prepared to rule.
“It is the finding of the Court, after the consideration of the evidence that is available to me in the form of pleadings, depositions, and other matters called to my attention, that the misrepresentations of the Exchange National Bank which are basically what is sued upon, whether directly or indirectly, relate to the financial condition of American Allied. The extent to which Exchange National Bank may be involved in any financial machinations, as they have been called here, to bring about the insolvency, or even to conceal the insolvency of American Allied, are not relevant, except as they operate to deceive National Family as to the financial condition of American Allied.
- “The operative facts which put National Family on notice of their cause of action here are the evidences of insolvency of American Allied and nothing else. National’s faith in the misrepresentations causing it to believe that American Allied was solvent, ripened into a cause of action when National learned, or should have learned that American Allied was insolvent. It seems clear from the evidence the beginning of that knowledge certainly should have occurred somewhere around June 10th, 1965, when National found American Allied no longer able, because of insolvency and the Court ruling, to live up to its obligations under the reinsurance contract.
“The cause of action which is asserted here, therefore, ripened into a cause of action some time in June or in any event, no later than mid-September of 1965. The complaint here was filed more than five years after that date. Therefore, the motion to dismiss filed by the defendant, based on the statute of limitations, is granted.”

We have examined the record before the district court and understand the district court’s interpretation thereof to mean that plaintiff’^available information should HaveTbeen sufficient to. have put plaintiff upon notice of .its cause of action at a time between June 10 and mid-September 1965. The chronology of events and publicity involving defendant Exchange Bank which, through the exercise of ordinary diligence, should have caused plaintiff National Family to have discovered the fraudulent actions causing its injury, follows :

The newspaper articles appearing on April 12, 1965, related accusations by two state legislators that the Minnesota Insurance Commissioner (later indicted with the Kitzers and three bank officers) had misused his office and that $1,000,000 of American Allied funds had been transferred to an unauthorized Chicago bank account.

In June 1965, American Allied was no longer able to pay claims on its reinsurance obligations, and National Family began to pay them itself. Insolvency proceedings against American Allied were commenced in the Minnesota state courts on June 10, 1965. On August 4, 1965, American Allied was found to be insolvent, and a receiver was appointed. In June, July and August 1965, the newspaper articles earlier mentioned informed the public in that area concerning the alleged illegal activities of defendant Exchange Bank, certain of its officers, the Kitzers, the Minnesota Insurance ■ Commissioner, together with other attendant litigation, and the resulting insolvency of American Allied. Further publicity concerning the same subject matter appeared on September 14, 17 and 18, 1965. Deposition testimony of Jensch, plaintiff’s executive director, and of Lewis, its counsel, was also revealing of National Family’s pre-Sep-tember 23, 1965, awareness or cause for awareness of defendant Exchange Bank’s alleged fraudulent activities.

Without further detailing the evidence, we are satisfied that the district court was amply justified in finding and holding that plaintiff knew or should have known of its cause of action against defendant more than five years prior to filing its complaint on September 23, 1970.

Finally, plaintiff makes the belated contention that this case presented an issue of fact which should have been determined by a jury since it had originally filed a notice of demand for a jury trial. This charge is without merit and is raised for the first time in the instant appeal. The district court did not act summarily and refused to determine the limitations issue by summary judgment. It handed down a memorandum opinion to that effect on May 3, 1971. At that time it ordered a factual hearing solely to determine the limitations issue. This second hearing was held on June 9, 1971, and was resumed to completion on June 23, 1971. Plaintiff not only made no objection to this procedure but approved and fully participated in it by presenting witnesses, documentary evidence and arguments on its own behalf.

Quite aside from any question of plaintiff’s right to a jury trial on the limitations issue on a motion to dismiss, it is now too late for plaintiff to raise this question for the first time on appeal. Brown v. Wisconsin State Department of Public Welfare, 7 Cir., 457 F.2d 257, 259 (1972); Desert Palace, Inc. v. Salisbury, 7 Cir., 401 F.2d 320, 324 (1968). Cf. Washington Gas Light Co. v. Virginia Electric & Power Co., 4 Cir., 438 F.2d 248, 250 (1971).

Further, this procedural question is a matter governed by federal law, and there is ample authority that if any such right existed, plaintiff waived it by proceeding to the trial of that issue before the court without objection. Kearney v. Case, 79 U.S. (12 Wall.) 275, 284, 20 L.Ed. 395 (1871); Smith v. Cushman Motor Works, Inc., 8 Cir., 178 F.2d 953, 954 (1950). See also Bradley v. Maryland Casualty Co., 8 Cir., 382 F.2d 415, 420 (1967) (written by then-Circuit Judge Blackmun). Cf. Maytag Co. v. Meadows Manufacturing Co., 7 Cir., 45 F.2d 299, 301-302 (1930), cert. denied, 283 U.S. 843, 51 S.Ct. 489, 75 L.Ed. 1452 (1931).

Finding as we do that the limitations issue was correctly determined on its merits and that the procedural issue is without substance, the judgment of dismissal is affirmed.

Affirmed.

PELL, Circuit Judge

(dissenting).

, The well expressed opinion of Judge Hastings in my view correctly and succinctly sets forth the factual picture and legal issues in this appeal and reaches the proper result on the claim of right to a jury trial. Respectfully, however, I am unable to agree with the determination reached as to the principal issue and therefore dissent from that portion of the opinion.

That issue, as to which there seems to be no disagreement as to what it is, is whether prior to September 23, 1965, the plaintiff insurance company discovered or with reasonable diligence should have discovered the alleged fraudulent misrepresentations made by the defendant bank to the Minnesota Department of Insurance as to the financial condition of American Allied.

The district court did not find actual knowledge as I read its opinion, and the question remains whether there was constructive notice. The district court finds a sufficient basis for constructive notice in the fact, which was obvious to all interested parties, that American Allied was insolvent. It appears to me, however, that there is an insurmountable'gap between knowledge of the insolvency of A and being put on notice that B had misrepresented that solvency.

The majority opinion basically relies on the fact that the defendant bank was sometimes mentioned in the abundant newspaper publicity concerning the defalcations of American Allied’s agents and representatives. This was not, however, the basis on which the district court, which had all of the evidence before it, determined the issue. The district court simply stated, “The operative facts which put National Family on notice of their cause of action here are the evidences of insolvency of American Allied and nothing else.” (Emphasis added.)

It is not uncommon for con artists, corporate or individual, to utilize innocent banking institutions in connection with their machinations. Funds are deposited, shifted, withdrawn, put into blind accounts and otherwise maneuvered, often with great expedition. Loans including mortgages are often made to those with impure hearts because of a lack of knowledge thereof by the lending bank. In short, because a customer of a bank has had his acts of fraud and insolvency exposed does not implicate the lending or depository bank with knowledge thereof. I cannot therefore agree with the district court’s apparent holding that just because the plaintiff knew American Allied was insolvent it should have been aware that the defendant bank might have been implicated.

Conceding, however, that if the record shows other facts, even though not relied upon by the district court, justifying constructive notice we must affirm, I turn to that upon which the majority opinion relies, i. e., the newspaper publicity in which the name of the defendant bank was mentioned and certain depositions.

In my opinion, and respectfully to the analysis of Judge Hastings, these did not serve as a flag of implication. I would venture the opinion that the district judge may have so thought when he did not base his decision on the fact that publicity had mentioned the defendant bank.

While there were numerous newspaper articles which clearly established that American Allied was on a collision course with financial disaster, the defendant bank was not named in many of these articles.

The transfer of funds to “an unauthorized Chicago bank account” can mean no more in my opinion than that a deposit was made without necessary American Allied corporate authority. This might indicate that the bank was not sufficiently insistent upon corporate resolutions but would scarcely implicate the bank in any fraudulent machinations.

I cannot find that the newspaper articles in June, July or August 1965 informed the public in the St. Paul-Minneapolis area of any illegal activities of the defendant bank or its officials. These articles at most indicated that the bank was a depository of funds of American Allied and had made loans to it. An article on July 12 states that Kitzer, Senior, took funds from one of the companies and pledged the securities to the Exchange National Bank of Chicago to cover personal loans. This indicates a defalcation on the part of Kitzer but does not reflect that any bank had any knowledge that he was using other than his own personal assets.

An article of July 20, 1965, stated that Kitzer, Senior, “pledged securities belonging to the insurance firms as collateral for personal loans at a bank. The bank sold the bonds when Kitzer defaulted on his notes, but policy holders of the Bell firms have brought suit against the bank claiming it had no right to sell the bonds.”

Here the bank involved is not identified and at most, even assuming that plaintiff’s representatives should have been aware that the bank was the defendant bank, there is no showing that the bank was not properly taking steps to collect a loan which it had made on a bona fide basis.

An article of July 24, without identifying any bank specifically, stated that funds were being shifted between the Twin Cities and the Chicago, Illinois banks. There is no showing that whatever bank it may have been was aware of the shifting.

In an article of August 8, there is a vague reference to “the unexplained shift of $1.1 million in company money from St. Paul to Chicago, where the Kitzers headquartered.” The same article, again without identifying the bank stated: “He alleged that $200,000 in securities listed as company assets had been transferred to a Chicago bank and placed in Kitzer’s personal account or the account of someone named by him.”

On August IS, an article reflected that a grand jury had subpoenaed records from two named banks in Minneapolis and had also subpoenaed “two officials of a Chicago, Illinois, bank and a New York, N.Y., investment firm.”

On August 21, 1965, a suit was brought to foreclose a mortgage on the American Allied Building and the defendant bank is mentioned as the original mortgagee. Again, there is no showing other than a bona fide transaction. The article indicated that there would be a claim as to the legality of the mortgage but it is not an uncommon occurrence for dissident creditors to attempt to set aside liens which would otherwise make their claims less collectible.

In an article of September 10, 1965, an Illinois Insurance Department examiner was quoted as stating that certain money could not be properly considered as an asset of the American Allied firm “since it was prepledged - to the bank which granted Kitzer’s loan.” Thus, as late as September there was some authoritative indication that the bank which had granted Kitzer’s loan was doing so within the limits of proper banking practice.

It was not until an article of September 17, 1965 (five years and six days before the filing of the complaint here involved) that there was any specificity with regard to possible involvement of the defendant bank. An article of September 17 related that several suits had been filed against American Allied and its officers. One of these named the defendant bank as a party. With regard to the suit, the article stated the following: “It is alleged that the bank paid over the money to the Kitzers knowing that they were borrowing it for ‘their own personal use.’ It also is claimed that the Chicago bank assigned the mortgage to Mrs. Brown while proceedings were pending before Pearson to have the company declared insolvent.”

An article the next day also referred to the same suit and mentioned the further claim that the bank had assigned the mortgage to a Mrs. Brown while insolvency proceedings were pending.

The bank was charged, in still another article of September 18, with knowing that the Kitzers were borrowing for their own personal use. Finally, on September 21, an article stated that a vice-president of the defendant bank was expected to appear that day before the federal grand jury investigating the collapse of American Allied. This, of course, on the surface presents nothing more than the usual situation of calling in, where fraudulent financial schemes are involved, those who were acquainted with the financial affairs of the defrauding party. It has often been utilized as an initial source of inquiry.

While regretting the necessity of lengthening this dissent by the foregoing analysis, I have found it to be necessary to show that there was not, in my opinion, sufficient to establish a duty of diligent inquiry but at most there were suspicious but highly ambiguous circumstances of merely possible involvement of the defendant bank. Even the status of being suspicious did not really occur until about September 14. An analogous situation was reported in Grant v. National Bank, 97 U.S. 80, 24 L.Ed. 971 (1877), where the Court held that to invalidate a fraudulent preference the creditor must have had such knowledge of facts as to induce a reasonable belief of the debtor’s insolvency and it was not sufficient that he had some cause to suspect such insolvency.

The ease is of double significance here because it also involved a bank dealing with one who was found out to be insolvent. The Court summarized the situation at page 82:

“The circumstances calculated to excite their suspicions are very ably and ingeniously summed up in the brief of the appellant’s counsel; but we see nothing adduced therein which is sufficient to establish any thing more than cause for suspicion. That Miller borrowed money; that he had to renew his note; that he overdrew his account; that he was addicted to some incorrect habits; that he was somewhat reckless in his manner of doing business; that he seemed to be pressed for money, — were all facts well enough calculated to make the officers of the bank cautious and distrustful ; but it is not shown that any facts had come to their knowledge which were sufficient to lay any other ground than that of mere suspicion.”

With regard to the matter of the general test here applicable for imputing notice, the Tenth Circuit in Southwestern Petroleum Corporation v. Udall, 361 F.2d 650, 657 (10th Cir. 1966), stated:

“We agree that the test for imputing notice of a superior right is generally whether facts are sufficient to put an ordinarily prudent man on inquiry, an inquiry which, if followed with reasonable diligence, would lead to the discovery of defects in the title or of equitable rights of others affecting the property. The test is not what an extremely cautious person might do, but what a prudent one should do. Charles v. Roxana Petroleum Corp., 282 F. 983 (8th Cir.), cert. den. 261 U.S. 614, 43 S.Ct. 361, 67 L.Ed. 827.
“The existence of other later offers is not such a fact as to put Lowe on notice that a conflicting claim exists. This is a common situation which in itself should cause no suspicion.” (Emphasis added.)

Further, it is to be noted that a respectable-body of authority recognizes as “a broad, general proposition that no one is chargeable with constructive notice of a statement, advertisement, or other matter printed in a newspaper, in the absence of a statute expressly authorizing such publication and declaring the effect of a compliance with its terms, or unless it is seen by the person to be charged.” 58 Am.Jur.2d Notice § 17 (1971). Here there was no contention that any statute was applicable and there was a substantial doubt in the record as to the awareness of plaintiff’s representatives of the newspaper references to the defendant bank although it was clear they were aware of the insolvency of American Allied on which the district court rested its decision.

In my opinion there was not a sufficient basis in the newspaper articles to cause even suspicions that the bank was improperly involved with American Allied. In other words, an ordinarily prudent man would not have been put on inquiry as to the bank.

I would reach the same result as to the deposition testimony of Jensch and Lewis. Jensch testified that he may have been aware of the fact that the defendant had been mentioned in the newspaper articles but he assumed that the bank lent money to the Kitzers or were their financial backers or something like that. The deposition itself indicated that Jensch had attended a number of sessions of the insolvency trial and did make inquiries of a number of people but did not get very far asking questions. Apparently none of these questions were directed toward the bank because the name was not familiar to him. As far as Jensch’s testimony is concerned, I find no indication of any fact which would have caused him to think that the hearing or newspaper references to the defendant bank were other than that American Allied had an account at the bank and that the bank was attempting to protect collateral it had on a loan.

It appears to me that the indicia of fraudulent concealment on the part of the defendant bank were so minimal as to fall within the orbit of the principle stated in 54 C.J.S. Limitations of Actions § 189 at 193 (1948):

“The courts will not lightly seize on some small circumstance to deny relief to a party plainly shown to have been actually defrauded against those who defrauded him, on the ground that he did not discover the fact that he had been cheated as soon as he might have done; it is only where the party defrauded should plainly have discovered the fraud except for his inexcusable inattention that he will be charged with a discovery in advance of actual knowledge on the subject.”

Here, of course, the plaintiff has been denied by the limitations bar the opportunity of showing that it had been defrauded.

A person is only charged with the knowledge which proper inquiry would disclose where he has reasonable grounds for suspecting or inquiring, but here, there being a wide difference between suspicion and knowledge, evidence that there existed a suspicion in a person’s mind is not equivalent to evidence of notice. 58 Am.Jur.2d Notice § 13 (1971).

Even if it were to be assumed that there was such a reference to the defendant bank in the newspaper article of September 17, in which knowledge of improprieties on the part of American Allied by the bank was first specifically stated, in my opinion, the statute did not start running from the raising of the first flag of suspicion. This brings into play a rule of law which appears to me to be a matter of first impression.in the State of Illinois. However, this is merely an extension of the general rule which there is no reason for thinking Illinois would not follow. This rule, which might be termed “a reasonable period for inquiry” rule in the context of a statute of limitations situation, is stated in United States v. Booth-Kelly Lumber Co., 246 F. 970, 972 (D.Or.1917), as follows :

“Notice and knowledge of the fraud will set the statute in operation. No one questions the principle. But a party claiming fraud and lack of knowledge concerning it may be guilty of laches in ascertaining its existence, which will preclude him from asserting want of knowledge, where he has been let into facts and circumstances which are calculated to put a reasonably intelligent man upon inquiry as to the main fact, which inquiry, if seasonably pursued with reasonable diligence, would lead to a discovery of such main fact. Stated generally, the rule is that whatever puts a party upon inquiry amounts, in judgment of law, to notice, provided the inquiry becomes a duty and would lead to a knowledge of the real facts by the exercise of ordinary intelligence. The circumstances known to him must be such as ought reasonably to have excited his suspicion and led him to inquiry, and he must be allowed a reasonable time within which to make such inquiry before being affected with notice.” (Emphasis added.)

The principle is recognized in 66 C.J. S. Notice § llb(3) as follows:

“A person put on inquiry by facts is to be allowed a reasonable time in which to make such inquiry before being affected with notice. Neither law nor equity will impute to a person a knowledge of facts which he has not had a reasonable opportunity to ascertain. What constitutes a sufficient lapse of time for notice depends on the circumstances of the case.” (Footnotes omitted.)

The general rule has been stated in Nettles v. Childs, 100 F.2d 952, 957 (4th Cir. 1939), “if a person has actual knowledge of facts which would lead an ordinarily prudent man to make further investigation, the duty to make inquiry arises and the person is charged with knowledge of the facts which inquiry would have disclosed.” The logical extension of the rule would appear to be that he should not be charged with knowledge prior to inquiry or prior to a reasonable period of time which would be necessary for inquiry. To hold otherwise would be to place the person without actual knowledge in a less advantageous position than the person with actual knowledge.

I recognize that the “reasonable period for inquiry” rule has not been, as far as I have been able to discover, the subject of particularized application but only of general enunciation. The cases examined, however, have not evolved from close timewise situations such as the present case and there had not been a necessity for application of the rule. I also recognize in respect to the rule it could be argued that, once the waving flag is up, the prospective litigant has five years in which to inquire and to institute his suit, an arguably reasonable time. However, the litigant who has actual notice has a full five year statutory period following actual knowledge. I can conceive no valid reason in logic or justice for the prospective litigant in the uncertain and sometimes ambivalent area of fictitious constructive notice having less time, which would be true if he were denied a reasonable time to inquire diligently so as to verify what is at best only a clue.

The general rules of law pertaining to the imputing of knowledge following information or knowledge of certain extraneous facts which of themselves do not amount to, nor tend to show, actual notice, but which are sufficient to put a reasonably prudent man upon inquiry are summarized in 58 Am.Jur.2d Notice §§ 8 and 9 (1971). The text points out, however, that there must also be such circumstances that the inquiry, if made and followed up with reasonable care and diligence, would lead to the discovery of the truth, a questionable inference on the record before us. Finally, the Am.Jur. text recognizes the necessity of reasonable time for inquiry: “A reasonable cause to know is not equivalent to knowledge. Neither law nor equity will impute to a person knowledge of facts which he has not had a reasonable opportunity to ascertain.” 58 Am. Jur., supra, § 9.

It is obvious from the record in this case that the machinations of the top officials of American Allied had produced a complicated and murky picture involving dealings with several banks. Certainly the picture had not been brought into focus by September 23, 1965, in Minneapolis where a grand jury had been in session along with various suits and proceedings over the summertime. The state Insurance Commissioner was involved, and answers continued to be elusive.

I cannot see from the examination of the record that diligent inquiry would have produced knowledge of the defendant bank’s involvement even if inquiry had commenced a month or two before that date. Accordingly, I would hold that the statute of limitations did not commence until some time after September 23, 1965, and therefore that the suit was timely filed.

I have little patience with or sympathy for litigants who wait until the eve of the date when arguably the time of limitations might be considered as having expired, although it is not clear from the record when the first date became reasonably knowable that the defendant bank was involved. In any event, the statute of limitations allows five years in the case of fraudulent concealment and I do not conceive that the plaintiff here received its legal allowance.

The majority opinion determines as a matter of law that the action was filed beyond the statutory period of limitations. I would have determined as a matter of law that upon either of two bases the statutory period had not expired. Neither of the court’s opinions relies on the basis of the district court’s determination. Therefore, at the very least it would appear to me that there should be a reversal and a remand to determine factually, and not as a matter of law, whether there was a basis for a reasonably prudent person to have been alerted that the defendant bank might be improperly involved with American Allied, and, if so, specifically when the duty to exercise diligent inquiry arose and what would be a reasonable time thereafter in which to make the inquiry. Inasmuch as the district court’s decision rested on an incorrect ground, the record is questionably complete to supply the answers to the above essential questions.

I have herein addressed myself only to the limitations question and, of course, express no opinion as to whether there was an otherwise valid cause of action for fraudulent concealment stated in the plaintiff’s complaint.

      . For convenience of reference, I have categorized by the term “constructive notice” factual situations in which there is a lack of actual notice but there is that which in the law is equated with actual notice. This is variously termed “implied notice,” “constructive notice,” “presumptive or imputed notice.” See 66 C.J.S. Notice §§ 5, 6 and 10 at 638, 639 and 642 (1950).
      The Ninth Circuit expressed the thought that constructive notice includes “implied notice” and “inquiry notice,” the latter apparently being similar to or identical with “implied notice.” F. P. Baugh, Inc. v. Little Lake Lumber Company, 297 F.2d 692, 696 (9th Cir. 1961), cert. denied, 370 U.S. 909, 82 S.Ct. 1256, 8 L.Ed.2d 404 (1962).


author: HASTIE, Circuit Judge.

text:
    UNITED STATES of America v. James D. HOCKENBERRY, Appellant.
    No. 72-1425.
    United States Court of Appeals, Third Circuit.
    Argued Oct. 3, 1972.
    Decided Feb. 21, 1973.

      Louis Lipschitz, Philadelphia, Pa., and Stanton D. Levenson, Watzman, Leven-son & Snyder, Pittsburgh, Pa., for appellant.
    Richard L. Thornburgh, U. S. Atty., James A. Villanova and Kathleen K. Cur-tin, Asst. U. S. Attys., Pittsburgh, Pa., for appellee.
    Before SEITZ, Chief Judge, and HASTIE and HUNTER, Circuit Judges.
   OPINION OF THE COURT

HASTIE, Circuit Judge.

James Hockenberry, a former county detective, has taken this appeal from his conviction of making a false material declaration under oath before a grand jury in violation of the recently enacted section 1623 of Title 18, United States Code. 84 Stat. 932. Hockenberry had testified before the grand jury only under judicial compulsion after he had been granted immunity under section 2514 of Title 18, United States Code. We must decide whether the trial judge committed reversible error in admitting into evidence against the accused at his perjury trial a truthful statement he had made to the grand jury on the same occasion as the alleged false statement but unrelated to it.

The indictment charged Hockenberry with falsely swearing to the grand jury that he had no knowledge of or connection with bribes or payoffs to county detectives by persons engaged in unlawful gambling and prostitution. At his trial he took the stand in his own defense and denied any such knowledge or connection. In an effort to discredit him as a wit-

ness, the prosecution cross-examined him, over objection, about other unrelated parts of his testimony before the grand jury. Part of the cross-examination was as follows:

“Q. Well, do you recall appearing before the Grand Jury on the 16th of March, 1971, and my questioning you about certain returns on search warrants that you have executed under oath?
“A. I recall that, yes.
“Q. You do recall?
“A. Yes.
“Q. Do you recall testifying that there were at least two instances that you had executed a sworn return on those search warrants, and the information in it was false?”

Then, after an objection had been overruled, the prosecution read two excerpts from Hockenberry’s grand jury testimony in which he admitted that on occasion, in the course of his work as a detective, he had signed affidavits wherein he falsely asserted personal knowledge of facts upon which search warrants were being sought.

It was the contention of the prosecution that appellant’s admission before the grand jury — stating that on occasion he signed false affidavits to obtain search warrants — could be introduced to impeach him as a witness. The prosecution reasoned that this evidence was relevant and competent to show a “pattern of deceit” and thus discredit Hock-enberry’s denial at trial that he had lied to the grand jury about the unrelated matter of accepting bribes from criminals.

Assuming that the law of evidence would permit such impeachment, there is a separate question whether this use of admissions made before the grand jury violated the immunity under which the admissions had been compelled. Hock-enberry originally had refused to testify before the grand jury, claiming Fifth Amendment privilege. He then was granted immunity under 18 U.S.C. § 2514 and ordered to testify. The admissions here in question were part of that testimony.

After prescribing a procedure for compelling testimony, section 2514 continues as follows:

“ . ' . . No such witness shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing concerning which he is compelled, after having claimed his privilege against self-incrimination, to testify or produce evidence, nor shall testimony so compelled be used as evidence in any criminal proceeding (except in a proceeding described in the next sentence) against him in any court. No witness shall be exempt under this section from prosecution for perjury or contempt committed while giving testimony or producing evidence under compulsion as provided in this section.”

In this case appellant’s statements before the grand jury, truthful admissions of prior wrongdoing compelled under grant of immunity, certainly were used against him, since they were used to impeach his credibility as an accused person testifying in his own defense. Attempting to justify this disallowance of immunity, the government has found it necessary to argue that the use made of Hockenberry’s otherwise immunized testimony comes within the exception stated in the above quoted concluding provision of section 2514. The government reads that exception as meaning that, in a prosecution for perjury allegedly committed in the course of testimony required pursuant to section 2514, the statutory immunity does not cover either the allegedly false statement itself or anything else the accused may have said on the protected occasion. However, we think the exception is not that broad.

Under the narrowest arguable reading of the Fifth Amendment, Hockenberry was compelled to incriminate himself when he was required to admit before the grand jury that he had executed false affidavits to obtain search warrants. However, Congress had authorized and the courts have sanctioned judicial compulsion of otherwise self-incriminating testimony so long as full protection is given the witness against injury through future incriminating use of the compelled statement. Kastigar v. United States, 1972, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212. “Answers may be compelled regardless of the privilege if there is immunity from federal and state use of the compelled testimony or its fruits in connection with a criminal prosecution against the person testifying.”. Gardner v. Broderick, 1968, 392 U.S. 273, 276, 88 S.Ct. 1913, 1915, 20 L.Ed.2d 1082.

But quite apart from any question of self incrimination, a witness who testifies before a grand jury is required and sworn to tell the truth. The grant of immunity is superimposed upon that requirement. Protection is granted against future injurious use of the incriminating truth that the witness is required to speak, not against prosecution for or the use of any exculpatory falsehood that he may utter to avoid the required admission of wrongdoing. Hence, the immunity statute properly permits prosecution for perjury committed in an otherwise immunized statement and also the introduction in evidence of so much of the statement as is essential to establishing the corpus delicti.

To go beyond that and to argue, as the government does, that the immunity statute allows the use of any truthful admission of wrongdoing made in an immunized statement to discredit the individual as a witness in a subsequent prosecution, so narrows the statutory grant of immunity as to jeopardize its adequacy as a constitutional means of requiring self incrimination. But for the grant of immunity Hockenberry would have been privileged to refuse to admit to the grand jury his wrongdoing in the execution of affidavits to obtain search warrants. And if immunity that deprived him of that privilege is to be, as constitutionally it must, co-extensive with the privilege itself, his compelled admission of wrongdoing cannot later be used to discredit his effort to defend himself against a charge of some other wrongdoing. “Immunity from the use of compelled testimony . . . prohibits the prosecutorial authorities from using the compelled testimony in any respect . . . ” Powell, J., in Kasti-gar v. United States, supra, 406 U.S. at 453, 92 S.Ct. at 1661.

Finally, we have not overlooked the government’s reliance upon Harris v. New York, 1971, 401 U.S. 222, 91 S.Ct. 643, 28 L.Ed.2d 1, as supportive of what was done in this case. The Harris case holds that an arrested person’s voluntary incriminating statements, though inadmissible later as part of the prosecution’s ease in chief because the prisoner had not been advised of his right to counsel, may be used to impeach his credibility when he testifies as a witness in his own defense. In that case the Court was deciding how broad a sanction is necessary to vindicate the Miranda procedural requirement that an arrested suspect must be advised of his right to counsel before he shall be interrogated.

In contrast, the question here is the scope of the use immunity thát government must afford and the Congress has undertaken to grant a witness in order to justify compelling him to make an incriminating statement. In this situation, as we already have pointed out, the mandated quid pro quo is immunity coextensive with the privilege; to-wit, immunity from any damaging use of the compelled truthful statement in a future prosecution. The Harris rule does not compel a person to incriminate himself. The abridgement of immunity in this case does, and that is its invalidating vice.

Hockenberry’s conviction must be set aside and the cause remanded for a new trial.

      . In its brief the government argues that “[t]he better rule . . . is to permit the use of testimony obtained under an immunity grant, where otherwise relevant and admissible, for the purpose of impeaching the immunized witness or an immunized defendant when (as here) he chooses to testify on his own behalf”.


author: RONEY, Circuit Judge:

text:
    PLAINS GROWERS, INC., By and Through FLORISTS’ MUTUAL INSURANCE COMPANY, the real party in interest in this cause, Plaintiff-Appellant, v. ICKES-BRAUN GLASSHOUSES, INC. and Modine Manufacturing Company, Defendants-Appellees.
    Summary Calendar.

    No. 72-1578
    United States Court of Appeals, Fifth Circuit.
    Feb. 9, 1973.

      Mickey C. Shyrock, Larry L. Gollaher, Dallas, Tex., for plaintiff-appellant.
    L. A. White, R. A. Wilson, Amarillo, Tex., for defendants-appellees.
    Before WISDOM, GODBOLD and RO-NEY, Circuit Judges.

       Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5th Cir. 1970, 431 F.2d 409, Part I.

   RONEY, Circuit Judge:

Plaintiff’s greenhouses were damaged by fire caused by allegedly defective gas-fired heaters. Plains Growers, a Texas corporation, sued the seller, Iekes-Braun Glasshouses, Inc., and the manufacturer, Modine Manufacturing Company, both foreign corporations, in a Texas state court.

Defendants removed the case to federal District Court on diversity grounds. Plaintiff sought remand to the state court on the ground that the cause of action for the fire loss had been assigned by plaintiff to its insurance company, an Illinois corporation, and that since defendant Iekes-Braun was also an Illinois corporation, there was no diversity of citizenship. The District Court denied the motion for remand and thereafter ordered plaintiff to answer defendants’ interrogatories and to produce for inspection the allegedly defective heaters.

Plaintiff refused to permit discovery and sought dismissal of the case without prejudice. Voluntary dismissal without prejudice was denied, and the District Court dismissed the action against both defendants, with prejudice to plaintiff’s right to refile the cause in any court, because of its refusal to comply with orders for discovery. Plaintiff appeals. The appeal raises two issues: first, whether the Court had diversity jurisdiction, and second, whether the plaintiff had an absolute right under the Rules to a voluntary dismissal without prejudice. We affirm the Court’s jurisdiction but hold that the plaintiff was entitled to a voluntary dismissal without prejudice as to the defendant Modine.

JURISDICTION

On the motion for remand to the state court, Plains Growers submitted affidavits to prove that, at the time its fire loss was paid, the cause of action was assigned to Florists’ Mutual Insurance Company, an Illinois corporation, which was alleged to be the only real party in interest. Although Plains Growers maintained that it had no interest in the lawsuit, it remained the party plaintiff, and the insurance company has never been made a party. The present style of this case, “Plains Growers, Inc., by and through Florists’ Mutual Insurance Company, the real party in interest in this cause,” appears in this form for the first time in the appellate proceedings. Plains Growers, Inc. has never sought to amend its complaint to include Florists’ Mutual as an additional plaintiff. Florists’ Mutual has never sought to intervene in the suit.

The District Court held that:

“The insurance company has never been made a party to this cause of action. It is settled in the Fifth Circuit that a right of removal depends upon the case disclosed by the pleadings when the petition for removal is filed. Nunn v. Feltinton, 294 F.2d 450 (5th Cir. 1961).
“The pleadings on file at the time that this case was removed, as well as the parties to the suit at this time, show a complete diversity of citizenship, and as the amount in controversy is over $10,000, jurisdiction is conferred upon the United States District Court.”

Although the Court may look beyond the complaint to the record as a whole when the factual'basis of a party’s jurisdictional claim is challenged, no case has been cited which sustains the contention of plaintiff-appellant that, having voluntarily chosen to sue in the name of Plains Growers, Inc., as sole plaintiff, and not sue in the name of Florists’ Mutual, it can now defeat removal jurisdiction on the basis of the citizenship of Florists’ Mutual.

The citizenship of one who has an interest in the lawsuit but who has not been made a party to the lawsuit by plaintiff cannot be used by plaintiff on a motion to remand to defeat diversity jurisdiction.

The contention is made that Florists’ Mutual was an indispensable party from the beginning and that for this reason its citizenship must be taken into account in determining whether the federal court acquired jurisdiction. The short answer to this contention is that Florists’ Mutual never saw itself as an indispensable party, is not a party to the lawsuit, has not sought to become one, and plaintiff has failed to take any steps to make it a party of record in the proceedings. There is no basis for the plaintiff to complain when federal jurisdiction is determined by the citizenship of only those parties which plaintiff has chosen to include in the lawsuit. See Provident Tradesmens Bank & Trust Co., Adm’r v. Patterson, Adm’r, 390 U.S. 102, 88 S.Ct. 733, 19 L.Ed.2d 936 (1968) and Saint Paul Mercury Indemn. Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938).

VOLUNTARY DISMISSAL

In an apparent last-minute effort to avoid litigation in federal court, plaintiff filed against Modine, the manufacturer, notice of voluntary dismissal without prejudice pursuant to Rule 41(a)(1), Federal Rules of Civil Procedure, and moved the court for an order of dismissal without prejudice as to Ickes-Braun, the seller, following Rule 41(a)(2).

Plaintiff had to proceed by motion rather than notice against Ickes-Braun because that defendant had filed an answer and cross-claim. The court denied the motion and refused to dismiss the case against Ickes-Braun. Only on a showing of abuse of discretion can the denial of such a motion under Rule 41(a)(2) be reversed, and plaintiff does not here assert error as to the refusal to dismiss the case against Ickes-Braun.

As to Modine, however, plaintiff contends that it had an absolute right to dismissal on notice. By the time such notice was served by plaintiff, the District Court had denied the motion to remand the ease to the state court, overruled plaintiff’s objections to interrogatories, and ordered discovery. Modine had neither filed an answer nor moved for summary judgment, but by that time it had filed (1) a motion to dismiss for lack of personal jurisdiction, (2) a motion to challenge service of- process, and (3) written interrogatories.

The District Court, refusing to dismiss the action against Modine, decided first, that Modine’s response sought affirmative relief and constituted an answer within the contemplation of Rule 41(a)(1), so that voluntary dismissal by notice was impermissible, and second, that, treating plaintiff’s notice as a motion under Rule 41(a)(2), dismissal should be denied under the circumstances.

We would have no difficulty in affirming the refusal to dismiss the case against Modine if the attempt to obtain a dismissal were considered as a motion under Rule 41(a)(2), which places the matter within the court’s discretion. Where notice of dismissal under Rule 41(a) (1) fails, the notice may be considered a motion under Rule 41(a)(2) and the court may order the dismissal. The grounds for such a motion to dismiss Modine, however, would be no better than that asserted in plaintiff’s abortive attempt to dismiss the ease against Ickes-Braun, and plaintiff does not contend on this appeal that the court erred in finding that there were insufficient grounds to require a dismissal of Ickes-Braun. Under the circumstances of this case, we could not hold the denial of the motion for dismissal of Modine under Rule 41(a)(2) to be an abuse of discretion.

We hold, however, that under Rule 41(a)(1), plaintiff was entitled as a matter of right to dismissal without prejudice against Modine. This result is premised on two conclusions of law. First, we hold that the pleadings filed by Modine prior to the notice constituted neither an answer nor a motion for summary judgment, either of which would prohibit dismissal by notice; and second, we hold that plaintiff is entitled to a dismissal against one defendant under Rule 41(a), even though the action against another defendant would remain pending.

I.

Although some cases have held that certain pleadings which are neither an answer nor a motion for summary judgment will bar the right to a voluntary dismissal by notice under Rule 41(a)(1), they almost invariably have involved proceedings which joined issue on the controversy or brought the court into consideration of the merits of the controversy. Harvey Aluminum, Inc. v. American Cyanamid Co., 203 F.2d 105 (2d Cir. 1953), cert. denied, 345 U.S. 964, 73 S.Ct. 949, 97 L.Ed. 1383 [Extensive hearing on request for preliminary injunction]; Butler v. Denton, 150 F.2d 687 (10th Cir. 1945) [Petition for intervention tendered justiciable issues]; Robertson v. Limestone Mfg. Co., 20 F.R.D. 365 (W.D.S.C.1957) [Argument of motion for temporary restraining order]. See 9 C. Wright and A. Miller, Federal Practice & Procedure; Civil § 2363 (1971); 5 Moore’s Federal Practice 41.02(3) (2d ed. 1971).

In this case, Modine had not only failed to file an answer or a motion for summary judgment or any other pleading which joined issue on the merits of the controversy, but, at the time of the notice, was actually challenging the jurisdiction of the court to hear the merits of the cause by its motion to dismiss for lack of personal jurisdiction and its motion to challenge service of process. The trial court had not yet considered Modine’s motions. A notice of voluntary dismissal filed after motions challenging the jurisdiction of the person of the defendant is not untimely under Rule 41(a)(1). Kilpatrick v. Texas & P. Ry. Co., 166 F.2d 788 (2d Cir. 1948), cert. denied, 335 U.S. 814, 69 S.Ct. 32, 93 L.Ed. 369 (1948) and 337 U.S. 75, 69 S.Ct. 953, 93 L.Ed. 1223 (1949). The defendant’s filing of interrogatories which remained unanswered at the time of the notice could not prevent a dismissal by notice. See Sheldon v. Amperex Electronic Corp., 52 F.R.D. 1 (E.D.N.Y.1971), in which the trial court held that the fact that, in a patent infringement case, voluminous depositions had been taken before plaintiff had filed its notice did not bar dismissal.

The District Court erred in denying a voluntary dismissal on the ground that Modine’s response constituted the equivalent of the answer required by Rule 41(a)(1), F.R.Civ.P.

II.

Defendant Modine urges us to follow Harvey Aluminum, Inc. v. American Cyanamid Co., supra, by holding that a notice of voluntary dismissal under Rule 41(a)(1) cannot effect a dismissal against less than all of the defendants. Harvey reasoned that the word “action” in the rule that “an action may be dismissed by the plaintiff without order of court ... by filing a notice of dismissal” denotes the entire controversy, and that, for dismissal as to less than all of the defendants, the plaintiff should proceed under Rule 21, F.R.Civ. P., which provides for the dropping and adding of parties. Although some courts have appeared to follow Harvey, Philip Carey Mfg. Co. v. Taylor, 286 F.2d 782 (6th Cir. 1961); Neiman-Marcus Co. v. Lait, 14 F.R.D. 159 (S.D.N.Y.1953); cf. Robertson v. Limestone Mfg. Co., supra; see 2B W. Barron & A. Holtzoff, Federal Practice and Procedure § 911 (1961), other courts have followed what has been termed the “better view” by holding that a Rule 41(a) notice or motion can be effected against less than all of the defendants. Johnston v. Cartwright, 355 F.2d 32 (8th Cir. 1966); Young v. Wilky Carrier Corp., 150 F.2d 764 (3d Cir. 1945), cert. denied, 326 U.S. 786, 66 S.Ct. 470, 90 L.Ed. 477 (1946); Terry v. Pearlman, 42 F.R.D. 335 (D.Mass.1967); Southern Electric Generating Co. v. Allen Bradley Co., 30 F.R.D. 135 (S.D.N.Y.1962); United States v. E. I. DuPont de Nemours & Co., 13 F.R.D. 490 (N.D.Ill.1953); 9 Wright & Miller, Federal Practice & Procedure, § 2362; 5 Moore’s Federal Practice ¶ 41.06-1.

If only Rule 41(a)(1) would logically be affected by our ruling, Modine’s argument might be persuasive. The purpose of the Rule is to permit the plaintiff voluntarily to take the case out of court if no other party will be prejudiced. Piedmont Interstate Fair Ass’n v. Bean, 209 F.2d 942 (4th Cir. 1954); Ockert v. Union Barge Line Corp., 190 F.2d 303 (3d Cir. 1951). It can be reasonably argued that the court should determine whether the remaining parties will be prejudiced by the dismissal when the plaintiff seeks the dismissal of less than “all.” The difficulty comes from the use of the identical word “action” in Rule 41(a)(2), which requires a court order. There is little merit in an argument that the court could not dismiss the action as to less than all defendants upon motion, and yet there is nothing in the Rule to indicate an intent to make the word “action” mean “all” in 41(a)(1) and mean less than “all” in 41(a)(2).

It has been pointed out that the distinction is not critical in consideration of a motion under Rule 41(a)(2) because the court’s determination of such a motion would presumably turn on the same factors as would control a Rule 21 motion to drop a party or a Rule 15(a) motion to amend the pleadings. Johnston v. Cartwright, supra; Broadway & Ninety-Sixth St. Realty Corp. v. Loew’s, Inc., 23 F.R.D. 9 (S.D.N.Y.1958); Southern Electric Generating Co. v. Allen Bradley Co., supra. Nevertheless, reading the rules governing dismissal by notice and dismissal by motion together, we conclude that it was intended by the rule-makers to permit dismissal against such of the defendants as have not served an answer or motion for summary judgment, despite the fact that the case might remain pending against other defendants. The third-party claim of Iekes-Braun against Modine, as yet unanswered, would not bar a voluntary dismissal of plaintiff’s action.

The District Court’s order dismissing the cause against Modine Manufacturing Company with prejudice is vacated, and the cause is remanded for the entry of an order granting plaintiff a voluntary dismissal without prejudice as to such defendant.

Affirmed in part and vacated and remanded in part, with directions.

      . The intervention of Florists’ Mutual after removal would probably not divest the federal court of diversity jurisdiction. See Wichita R. R. & Light Co. v. Public Util. Comm’n of Kansas, 260 U.S. 48, 43 S.Ct. 51, 67 L.Ed.2d 124 (1922); Ford v. United Gas Corp., 254 F.2d 817 (5th Cir. 1958); Virginia Electric & Power Co. v. Carolina Peanut Co., 186 F.2d 816 (4th Cir. 1951).