author: EUGENE A. WRIGHT, Circuit Judge:

text:
    Jack BUZZARD et al., Plaintiffs-Appellees, v. LOCAL LODGE 1040 INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS et al., Defendants-Appellants. Margaret ALLEN et al., PlaintiffsAppellees, v. INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, LOCAL LODGE 1040 et al., Defendants-Appellants.
    Nos. 72-1400, 72-1401.
    United States Court of Appeals, Ninth Circuit.
    March 30, 1973.
    Rehearing Denied June 29, 1973.

      John E. Rinehart (argued), Hugh Hafer, M. Lee Price, Donaldson, Hafer, Cassidy & Price, Seattle, Wash., Plato E. Papp, Washington, D. C., for plaintiffsappellees.
    Frederick V. Betts (argued), Joan Smith Lawrence, W. R. McKelvy, Skeel, McKelvy, Henke, Evenson & Betts, Seattle, Wash., for defendants-appellants.
    Before BROWNING, WRIGHT, and WALLACE, Circuit Judges.
   EUGENE A. WRIGHT, Circuit Judge:

Local Lodge 1040, International Association of Machinists & Aerospace Workers [Local 1040, IAMAW] 'and two of its officers appeal from an order of the trial court permanently enjoining them from bringing or pursuing certain disciplinary action against members of IAMAW.

Plaintiffs below were members of Local 1040, IAMAW, employed by Northwest Airlines [NWA] at Seattle-Tacoma Airport and Spokane International Airport when, on July 8, 1970, employees of NWA represented by the Brotherhood of Railway, Airline and Steamship Clerks [BRAC] went on strike against NWA. BRAC personnel established picket lines at most of NWA’s facilities, including those at Seattle-Tacoma and Spokane International Airports.

The IAMAW instructed its members to not cross the BRAC picket lines. NWA, however, ordered plaintiffs to return to work and the plaintiffs complied with this order. Finally, the IAMAW agreed with NWA that its members would return to work based on guidelines dated December 8, 1970. The IAMAW members returned to work under this agreement, and the BRAC strike was subsequently settled.

In September of 1971 plaintiffs were individually notified by defendant Nasi, Chairman of the Trial Committee of Local 1040, that charges had been preferred against them b'y fellow members of Local 1040. Specifically, they were charged with failure to follow instructions from the IAMAW not to cross the BRAC picket line in violation of Article L Section 3 of the IAMAW Constitution.

The letters of notification included the following comments:

“[T]he President of Local Lodge 1040, Brother Leroy Hesner, has appointed a Trial Committee to consider the charges preferred against you by [a fellow member of the local].
“The Trial Committee has investigated these charges and decided that there is sufficient substance to these charges to warrant a trial to be held. “Therefore, you are hereby notified that a hearing will be held. . .

Prior to the date scheduled for that hearing, plaintiffs Buzzard et al. filed a “Petition for Injunction Against Local Lodge 1040 of I.A.M.A.W. to Hold Hearings Against Plaintiffs” in Superior Court for King County, Washington. Prior to a hearing in Superior Court the defendants filed a timely petition for removal and the cause was removed to the district court below.

On November 5, 1971, the district court entered a temporary restraining order prohibiting the local from conducting the disciplinary hearings pending a hearing on the merits of plaintiffs’ suit for an injunction. On November 8 plaintiffs Allen et al. filed a petition in the district court below for a similar injunction, and the court entered a temporary restraining order pending a hearing on the merits.

After a hearing on the merits, the court granted the permanent injunctions on December 17, 1971. The defendants filed a timely petition for appeal to this court, and this court, finding the two cases to involve common questions of fact and law, ordered them consolidated on appeal.

The context in which this suit has arisen involves a complex and extensive factual background. A chronological detailing of the events leading up to the proposed disciplinary hearings is necessary to a proper understanding of our disposition of this case.

When BRAC struck NWA on July 8, 1970, NWA notified 3,500 IAMAW-represented employees that they were laid off. On July 18, 1970 and thereafter, NWA notified certain IAMAW-represented employees to return to work. These were recalled in accordance with the seniority provisions of the collective bargaining agreement in effect between the IAMAW and NWA at that time. While some of those ordered to return to work did so [including the plaintiffs below], the majority did not, apparently in obedience to IAMAW orders not to cross the BRAC picket lines.

NWA then filed a submission with the NWA-IAMAW System Board of Adjustment pursuant to the Railway Labor Act, seeking to invoke its jurisdiction to determine if, under the terms of the NWA-IAMAW collective bargaining agreement, the recalled employees had an obligation to return to work and if their failure to do so resulted in automatic loss of their seniority.

The day after this submission was filed, NWA sued in a United States District Court to enjoin the IAMAW from alleged violations of the Railway Labor Act. The gravamen of its complaint was that the IAMAW was violating the IAMAW-NWA collective bargaining agreement by discouraging its employees from reporting to work. The court denied a preliminary injunction, and NWA appealed.

The United States Court of Appeals, Eighth Circuit, found the single underlying issue of the dispute between the parties to be

“whether IAM, in the light of the no-strike provision of the bargaining agreement, retains the right to instruct its members to honor the picket lines of a sister union.”

Accordingly, the court, on November 25, ordered that issue submitted to the NWA-IAMAW System Adjustment Board pursuant to § 204 of The Railway Labor Act, directing that Board to render a prompt decision.

Prior to the issuance of an award by the System Board of Adjustment, NWA and IAMAW verbally agreed under “Guidelines for Recall of Mechanics and Related Personnel Represented by IAM,” dated December 8,1970, that:

There will be no reprisals, recriminations, disciplinary actions, grievances or reprimands by either party against any employee represented by IAM because of any action or nonaction during or arising from the strike.

Pursuant to the guidelines and in consideration of the return to work of IAMAW-represented employees, IAMAW and NWA signed an agreement on December 9, 1970, which included the following condition:

Northwest Airlines and the IAM, their members and their officers, will not initiate any further actions or proceedings in any court or before any agency or in any other forum seeking damages or any other relief for any claim or cause arising out of the circumstances of the strike by the BRAC against Northwest Airlines which commenced on July 8, 1970.
IAM, in the light of the no-strike provision of the bargaining agreement does not retain the right to instruct its members to honor the picket lines of a sister union.

We note that the System Board of Adjustment expressly indicated that its award was a limited one:

. we deem it well to point out that we are not here concerned with matters of discipline or discharge of individuals for refusing to cross picket lines of sister unions. Our sole concern is with the “no-strike” clause as it affects Union conduct.

The Board filed its award with the panel of the United States Court of Appeals, Eighth Circuit, which had ordered the issue submitted. The panel had retained jurisdiction that it might decide the appeal from the denial of the temporary injunction. In its decision on January 18, 1971, the court took judicial notice of developments subsequent to their earlier order: namely, that NWA and BRAC had settled the strike and that BRAC had withdrawn its picket lines. In light of these facts, the court concluded that no temporary relief was required, noting that the complaint seeking a permanent injunction remained with the district court.

The district court, on remand, ordered the petition for a permanent injunction dismissed as moot. Subsequently, NWA moved the court to amend this order, in light of certain alleged IAMAW conduct. Specifically, NWA alleged that IAMAW members who had crossed BRAC picket lines were being disciplined at the local lodge level, and that at least in one instance appeals taken within the union hierarchy resulted in an affirmance by IAMAW President Smith and the IAMAW executive council, in violation of both the December 9 agreement and the award of the System Board of Adjustment.

The district court declined to amend its order holding, inter alia, that NWA did not have standing to assert the claim that it was making. Both of these decisions of the trial court were affirmed by the Court of Appeals, Eighth Circuit, in an unpublished per curiam opinion of November 27, 1972.

The disciplinary hearings referred to by the NWA have been the subject of other lawsuits. Adadczewski v. Local Lodge 1487, IAMAW (unreported decision of D.C.N.D.Ill., December 14, 1972) ; Verville et al. v. IAMAW (unreported decision of D.C.E.D.Mich., April 25, 1972). We come to the case before this panel.

Title I of the Labor-Management Reporting and Disclosure Act of 1959 establishes a “Bill of Rights of Members of Labor Organizations.” Section 411(a)(4) of that title provides for the protection of the right to sue:

“No labor organization shall limit the right of any member thereof to institute an action in any court, or in a proceeding before any administrative agency, irrespective of whether or not the labor organization or its officers are named as defendants or respondents in such action or proceeding, .: Provided, That any such member may be required to exhaust reasonable hearing procedures (but not to exceed a four-month lapse of time) within such organization, before instituting legal or administrative proceedings against such organizations or any officer thereof:

Defendants claim that the action brought by plaintiffs was premature for failure to exhaust intra-union remedies, and they ask this court to reverse the order of the district court granting the injunction. They would have us exercise our discretion to require plaintiffs first to submit their defenses at disciplinary hearings.

Plaintiffs contend that the exhaustion doctrine has no applicability to their cause of action. They would have us style their suit as one seeking enforcement of the December 14, 1970 award rendered by the System Board of Adjustment. It is well established that such an award is entitled to enforcement by the federal courts. Machinists v. Central Airlines, 372 U.S. 682, 83 S.Ct. 956, 10 L.Ed.2d 67 (1963).

The short answer to plaintiffs’ contention is that the System Board of Adjustment expressly stated that its award was not based on any consideration of “matters of discipline . of individuals for refusing to cross picket lines of sister unions.” Instead, the sole concern of the award was “with the ‘no-strike’ clause as it affects Union conduct.” Therefore we do not reach the issue whether the exhaustion doctrine applies to suits to enforce an award rendered by a System Board of Adjustment. By the terms of the award, it does not apply to the disciplinary hearings which plaintiffs face. Accordingly, the injunctive relief granted below could not be based on that award.

The district court did have jurisdiction, however, over plaintiffs’ suits. Under § 301 of the Labor Management Relations Act of 1947, an employee may sue his employer for breach of a promise embedded in the collective bargaining agreement that was intended to confer a benefit upon the individual. Smith v. Evening News Ass’n, 371 U.S. 195, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962). Section 301 also will support a suit by a union member against his union seeking redress from union interference with rights conferred on employees by employer promises in the collective bargaining agreement provided that such interference constituted a breach of the duty of fair representation. Humphrey v. Moore, 375 U.S. 335, 84 S.Ct. 363, 11 L.Ed.2d 370 (1964); see also Ford Motor Co. v. Huffman, 345 U.S. 330, 73 S. Ct. 681, 97 L.Ed. 1048 (1953); Falsetti v. Local 2026, U.M.W., 355 F.2d 658 (3rd Cir. 1966).

Fair representation is a statutory duty of the union to represent fairly all its members, both in the conduct of collective bargaining and in the enforcement of the resulting collective bargaining agreement. Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967); Humphrey v. Moore, supra. See also, Motor Coach Employees v. Lockridge, 403 U.S. 274, 91 S.Ct. 1909, 29 L.Ed.2d 473 (1971). As the Supreme Court stated in Vaca v. Sipes, supra-.

“Under this doctrine, the [union’s] statutory authority to represent all members of a designated unit includes a statutory obligation to serve the interests of all members Without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct.” Id., 386 U.S. at 177, 87 S.Ct. at 910.

While we have been unable to find any case for the proposition that § 301 will support a suit by a union member against his union for redress from union refusal to honor rights conferred on employees by Union promises in the collective bargaining agreement, we are convinced that § 301 does confer such jurisdiction. The union’s duty of fair representation is equally violated when it refuses arbitrarily and in bad faith to honor its obligations, under a collective bargaining agreement, which are designed to benefit its members.

Of course, for such a claim to succeed, there must be “substantial evidence of fraud, deceitful action, or dishonest conduct” on the part of the union. Motor Coach Employees v. Lock-ridge, supra, 403 U.S. at 299, 91 S.Ct. 1909; Humphrey v. Moore, supra, 375 U.S. at 348, 84 S.Ct. 363. It is clear that under this standard, plaintiffs’ complaints conferred jurisdiction on the district court.

We are left with the question whether the trial court properly exercised its discretion in not requiring plaintiffs to exhaust first their intra-union remedies before seeking relief from the courts. It is clear that the determination whether to require such exhaustion is left to the sound discretion of the court. NLRB v. Industrial Union of Marine & Shipbuilding Workers, 391 U. S. 418, 426, 88 S.Ct. 1717, 1723, 20 L.Ed. 2d 706 (1968):

“[29 U.S.C. § 411(a)(4) is] a statement of policy that the public tribunals whose aid is invoked may in their discretion stay their hands for four months, while the aggrieved person seeks relief within the union.”

We start with the proposition that generally a member aggrieved by an act of his union must exhaust his intra-union remedies “in the absence of a showing that it would be futile or that the remedies are inadequate.” Frederickson v. System Fed. No. 114 of Ry. Emp. Dept., 436 F.2d 764 (9th Cir. 1970).

The only allegation of futility presented by plaintiffs was contained in an affidavit submitted by Donald W. Nyrop, President of NWA:

“IAM represented employees who worked for NWA in Milwaukee, Wis-cousin during the BRAC strike were charged, tried and fined by the Milwaukee local of IAM earlier this year. Based on information and belief the disciplinary action and fines levied against the Milwaukee members were appealed by those members to the IAM international office. Contrary to the commitment made to me by Mr. Winpisinger the action of the local was affirmed on appeal. . . . This conduct by the IAM constitutes a breach of the understanding I had with Mr. Winpisinger as embodied in the Guidelines of December 8, 1970, the agreement which we signed on December 9, 1970 and our oral understanding reached on or about December 7, 1970.”

We do not find this a sufficient showing that the intra-union remedies available to plaintiffs would be futile or inadequate to resolve their claims.

A primary reason for the existence of the exhaustion doctrine is that prior union action interpreting union rules and perhaps also further refining and defining the problem may well assist the court when it is later called upon to resolve the controversy. Detroy v. American Guild of Variety Artists, 286 F.2d 75 (2d Cir. 1961). Another justification for the doctrine is, of course, conservation of judicial resources. The issue that will be before the union if we allow these hearings to be held will be the interrelationship of the IAMAW Constitution and the IAMAW-NWA collective bargaining agreement, as amended.

None of the parties to this suit has cited to us any authority which helps to resolve this difficult issue. Accordingly, this would appear to be an instance where both justifications for requiring exhaustion are present. The union may uphold plaintiffs’ defense, and the issue would become moot, requiring no judicial intervention. And even should plaintiffs ultimately be disciplined, the fact that the union will have had the opportunity to interpret its own constitution will be of significant help to any court subsequently considering this case.

New cases have dealt with a union member charged by his union with wrongdoing who sought pretrial relief in the courts. The case most directly in point is Baron v. North Jersey Newspaper Guild, American Newspaper Guild, 342 F.2d 423 (3rd Cir. 1965), reversing 224 F.Supp. 85 (D.C.), where employees had instituted de-authorization proceedings before the NLRB, and their union was attempting to discipline them for it. The district court, noting that any union prosecution would violate 29 U.S.C. § 529, held that no harm was done by enjoining the union from trying the employees. The court of appeals reversed, noting that

“in circumstances where relief from past union action is sought, courts have required the exhaustion of intra-union remedies except in those rare instances where a showing has been made that a union cannot do substantial justice because of the inadequacy of procedural mechanisms or the existence of clear substantive bias against the party seeking judicial relief. Analogizing from this developing concept, it would be anomalous indeed to refuse to apply such a standard where union action jeopardizing a member’s rights has yet to be taken, and exceptional circumstances have neither been demonstrated nor even alleged.” 342 F.2d at 424.

More recently, a district court held that when prospective candidates for union elections face union disciplinary hearings based on charges clearly void under the Labor-Management Reporting and Disclosure Act, “exceptional circumstances” have been shown and the court accordingly granted an injunction to halt the hearings. Sheridan v. Liquor Salesmen’s Union, Local 2, 303 F.Supp. 999 (S.D.N.Y.1969).

We do not find such exceptional circumstances here. In the absence of a showing that it would be futile for plaintiffs to present their defense at their intra-union disciplinary hearings, and because of the appropriateness of exhaustion in this case, we therefore reverse the action of the district court granting a permanent injunction.

      . IAMAW is occasionally referred to as IAM.

      . Allen, Thompson, Fortier, Hughes, Buzzard, Cramer, Johnson, White, and Wirth.

      . Batson, Bockheim, Jenks, McGinn, and Nunn.

      . Article XXV, Section K of the IAMAWNWA collective bargaining agreement dated January 1, 1969, provides as follows :
      “It is understood and agreed that the Company will not lock out any employee covered hereby and the Union will not authorize or take part in any strike or picketing of Company premises during the life of this agreement until the procedures for settling disputes as provided by the Railway Labor Act have been exhausted.”

      . Northwest Airlines, Inc. v. IAMAW, 323 F.Supp. 107 (D.Minn.1970).

      . Northwest Airlines, Inc. v. IAMAW, 442 F.2d 244, 246 (8th Oir. 1970).

      . 45 Ü.S.C. § 184.

      . Stipulated, fact No. Ill below.

      . Stipulated fact No. IV below.

      . Northwest Airlines, Inc. v. IAMAW, 442 F.2d 250 (8th Cir. 1971).

      . Northwest Airlines, Inc. v. IAMAW, 332 F.Supp. 1330 (D.Minn.1971).

      . Northwest Airlines, Inc. v. IAMAW, 336 F.Supp. 1117 (D.Minn.1972).

      . The court there dismissed a petition for an injunction that would have prohibited the local lodge from holding the disciplinary hearings on the grounds that the employees’ suit was being financed by NWA, in violation of the final proviso of 29 U.S.C. § 411(a) (4) :

        “And provided further, That no interested employer or employer association shall directly or indirectly finance, encourage, or participate in, except as a party, any such action, proceeding, appearance, or petition.”
      At oral argument counsel for defendants indicated that they made no contention that NWA was financing the suits presently before this panel.

      . 29 U.S.C. § 401 et seq.

      . Apparently contra, without any. discussion of the express limitation in the Board’s award, is Verville et al. v. IAMAW, supra.

      . 29 IBS.C. § 185.

      . We do not base this determination on plaintiffs’ allegation of a violation of the January 1, 1969, NWA-IAMAW collective bargaining agreement, but rather on tlieir contention that the disciplinary hearings are in violation of the December 1970 agreements. The latter agreements are “contracts” cognizable under § 301(a). Retail Clerks v. Dion Dry Goods, 369 U.S. 17, 82 S.Ct. 541, 7 D.Ed.2d 503 (1962).

      . William W. Winpisinger, General Vice President of IAMAW.

      . Plaintiffs petitioned the district court to enjoin the disciplinary hearings on the grounds that the holding of the hearings was in violation of the December 1970 agreements, and yet their affiant, Mr. Nyrop, concedes that local disciplinary hearings were not uncontemplated under the December agreements:
      During discussion on or about December 7, 1970, leading to the agreement which was signed by Mr. Winpisinger and myself on December 9, 1970, Mr. Winpisinger insisted that NWA give up its right to discipline any employee who refused to work during the BRAC strike. In turn, I insisted that IAM must give up its right to discipline its members who ' did work during the BRAG strike. We had a complete understanding that neither party could discipline such persons for conduct during the strike. However, Mr. Winpisinger advised me that he had a practical problem making such a commitment with respect to disciplinary action commenced at the local level. He stated that if any action were commenced at the local level which resulted in discipline or fines against any member who worked during the BRAC strike, such local action would be reversed when the matter was appealed to the international level and that he would personally handle the matter.

      . We express no opinion on the merits of plaintiffs’ defense to the charges brought against them. Of. NLRB v. Allis-Chalmers Manufacturing Co., 388 U.S. 175, 87 S.Ct. 2001, 18 L.Ed.2d 1123 (1967).


source: Caselaw Access Project

author: HOLLOWAY, Circuit Judge.

license: Public Domain

text:
    Janice HARRIS and June Parmenter, Plaintiffs-Appellants, v. Lenora POLLOCK, Individually and as Co-Executrix of the Estate of Lee Pollock, et al., Defendants-Appellees.
    No. 72-1364.
    United States Court of Appeals, Tenth Circuit.
    June 11, 1973.

      N. E. McNeill, Jr., Tulsa, Okl. (Pat Malloy, Tulsa, Okl., on the brief), for plaintiff s-appellants.
    J. Duke Logan, Vinita, Okl. (Thomas R. Brett, Tulsa, Okl., on the brief), for defendants-appellees.
    Before JONES SETH and HOLLOWAY, Circuit Judges.

       Of the Fifth Circuit, sitting by designation.

   HOLLOWAY, Circuit Judge.

The issue on this appeal is whether, in view of a pending Oklahoma probate proceeding, these plaintiffs as heirs can maintain a diversity suit against co-executors and a bank for equitable relief and a determination of ownership of personalty which one co-executrix claims as her separate property, and which the plaintiffs claim should be made a part of the decedent’s estate. The federal court dismissed on the ground that the state court had earlier acquired jurisdiction of the parties and subject matter and that the federal court should yield to the state court. The plaintiffs appeal, saying that federal diversity jurisdiction was properly invoked because the probate court may not determine title.

The federal district court had before it an amended complaint and a motion to dismiss, together with an affidavit, the petition for probate of the will, and the will itself. We- feel that the record shows in substance that the ruling of the district court was arrived at by procedure similar to a summary judgment upon consideration of the affidavit and exhibits as well as the pleading. See Rule 12(b) F.R.Civ.P. We therefore will outline the pleadings and the additional instruments.

The amended complaint alleged essentially these facts. Plaintiffs Harris and Parmenter are Texas citizens and daughters and heirs of Lee Pollock who died in 1970 at Vinita, Oklahoma. His widow, Lenora Pollock, is an Oklahoma citizen and is a co-executrix of his estate. She is sued individually and in her capacity as a fiduciary.

The First National Bank and Trust Company of Vinita (the Vinita bank) is also a co-executor named in Lee Pollock’s will. The National Bank of Mc-Alester (the McAlester bank) and the Vinita bank are alleged to have on deposit or under their possession and control money and other property valued at over $150,000, which plaintiffs claim belong to Pollock’s estate. Plaintiffs aver that Lenora Pollock has in her possession or control certificates of deposit, deposit slips and books and other evidence of purported ownership of such property on deposit with the banks. And they allege that she is claiming ownership to all such property when, in truth and fact, it belongs to the estate.

The plaintiffs aver further that they have a legal interest in the assets held by the banks and that unless enjoined, the banks will deliver these assets of the estate to Lenora Pollock. Also the plaintiffs allege that before letters of administration were issued, Lenora Pollock embezzled or alienated monies on certificates of deposit in the banks to the detriment of the estate. The plaintiffs ask that the banks be enjoined from any transfer of funds on certificates of deposit in the name of Lenora or Lee Pollock, pending outcome of the suit; that they cancel the transfer of the certificates of deposit from tenancy in common to joint tenancy; and that Lenora Pollock as co-executrix be directed to take the funds belonging to Lee Pollock and place them in the estate.

Defendants Lenora Pollock and the Vinita bank moved to dismiss. Among other things they alleged that the federal court lacked jurisdiction; that a previously commenced probate proceeding in the district court of Craig County involves the same issues and parties; and that the federal court action would interfere with the probate court’s jurisdiction.

The district court stated the reasons for its ruling briefly in an order of dismissal. The order says that the court reviewed the findings and recommendations of the magistrate and the court file and concluded that the magistrate’s recommendation should be approved. The order provides that the motion to dismiss is sustained “. . . because the District Court of Craig County, State of Oklahoma, previously acquired jurisdiction of the parties and the subject matter herein and this Court should yield to the State court having first acquired jurisdiction.”

We cannot agree with the views of the district court. The disputed property is not shown to be in the possession or control of the state probate court and instead is alleged to be held by Lenora Pollock individually under claim of separate ownership by her. Thus there is no possession or control by the state court and no in rem proceeding there requiring the federal court to yield. See Markham v. Allen, 326 U.S. 490, 494-495, 66 S.Ct. 296, 90 L.Ed. 256; Princess Lida v. Thompson, 305 U.S. 456, 466, 59 S.Ct. 275, 83 L.Ed. 285; Miller v. Miller, 423 F.2d 145, 147 (10th Cir.). The relief sought in the federal court would not interfere with jurisdiction of the probate court. Markham v. Allen, supra, 326 U.S. at 495, 66 S.Ct. 296; Batehelder v. Knecttle, 177 Okl. 327, 58 P.2d 873, 875. Moreover we do not have the narrowly limited special circumstances in which a federal court may abstain from exercising jurisdiction. See Zwickler v. Koota, 389 U.S. 241, 248, 88 S.Ct. 391, 19 L.Ed.2d 444; Meredith v. Winter Haven, 320 U.S. 228, 234, 67 S.Ct. 7, 88 L.Ed. 9. “When federal jurisdiction is properly invoked, it is ordinarily the duty of the federal court to determine the merits of the controversy. Allegheny County v. Frank Mashuda Co., 360 U.S. 185, 188-189, 79 S.Ct. 1060, 3 L.Ed.2d 1163 . . ..” Miller v. Miller, supra, 423 F.2d at 148.

We are satisfied that the complaint states a claim properly within the equity jurisdiction of the federal diversity court. In Taliaferro v. Reirdon, 186 Okl. 603, 99 P.2d 522, the Oklahoma Supreme Court upheld an exercise of equitable jurisdiction by a state district court in similar circumstances, despite the pendency of probate proceedings. There two beneficiaries under a will sued a bank and two executors, individually and in their fiduciary capacities, for cancellation of transfer of shares of stock and other equitable relief. The court said that: “[t]he sole question presented is one of jurisdiction, the point of conflict being the adequacy of plaintiffs’ remedy in the County Court.” Id. at 524.

The court referred to limitations on probate jurisdiction of the county court. It also pointed out that if the heirs proceeded in the probate court, in view of the unwillingness of the fiduciaries to return the property it would be necessary to have removal proceedings against the executors, appointment of successors, and then a suit by the new fiduciaries to recover the property. The remedies at law by probate and other proceedings were held inadequate and equity jurisdiction was sustained. The court stated, 99 P.2d at 524:

■x- -x- -x- “inadequacy exists where the case demands preventive relief, as for instance, the prevention of a multiplicity of suits or the prevention of serious or irreparable injury. [. . . ] In this case the exercise of equitable jurisdiction was essential to full relief, and the fact that the cause arose out of probate proceedings, or involved phases thereof, would not bar its interposition, [citations omitted].” Accord, Batehelder v. Knecttle, supra. The complaint before us alleges simi-

lar circumstances: the holding of certificates of deposit and other purported evidence of ownership of property; that the co-executrix is claiming and will continue to claim such property as her own; the possession and control of such property by the banks, the McAlester bank not being a co-executor; a claim that the banks will deliver the assets to Mrs. Pollock unless restrained; and an earlier alienation of monies on certificates of deposit by Mrs. Pollock. The complaint also prays for cancellation of transfer of certificates from tenancy in common to joint tenancy.

We are admonished that the complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80. Viewed in this light we are persuaded that the complaint should not have been dismissed. The plaintiffs were entitled to an opportunity to prove facts under the complaint calling for the exercise of equitable jurisdiction recognized in Oklahoma.

The federal district court in the diversity suit may not, of course, exercise probate jurisdiction such as by removing an administrator. See Markham v. Allen, supra, 326 U.S. at 494-495, 66 S.Ct. at 298; Porter v. Bennison, 180 F.2d 523, 527 (10th Cir.); and see Blue v. Murray, 260 P.2d 1069 (Okl.). However, the federal court may grant equitable relief that may be justified in accord with principles recognized by the state law. See Bancroft’s Probate Practice (2d ed.) § 18 at 42. Where the state district courts would have power to hear a suit under their general grant of equity jurisdiction, a federal court in the state has jurisdiction of a like suit, if diversity requisites are met. See Simler v. Wilson, 210 F.2d 99, 102 (10th Cir.), cert. denied, 347 U.S. 954, 74 S.Ct. 681, 98 L.Ed. 1099; Barnhart v. Hickman, 435 F.2d 913, 915 (10th Cir.).

We have considered the amendments in 1967 and 1968 to Article 7 of the Oklahoma Constitution and 20 O.S. A. § 91.1 et seq., respectively, and the recent case of In re Estate of Faulkner, 504 P.2d 875 (Okl.). The jurisdiction of the Oklahoma district court has been fundamentally expanded and does now include a probate docket. However we find no indication that the revisions would make it possible to avoid proceedings that may be necessary to remove an executor unwilling to include property in the estate assets. And we see in the revisions no bar to an equity suit for effective and complete relief in such a controversy involving the difficulties alleged here and a third party such as the McAlester bank. Thus notwithstanding the district court’s probate jurisdiction under the new provisions, if a plaintiff’s proof is sufficient he might establish inadequacy of the remedies at law and a proper basis for equitable. relief in a case like this.

In view of all the allegations made we are satisfied that the complaint should not have been dismissed. We feel instead that, the plaintiffs should be afforded an opportunity to make a case for equitable relief if they can. The federal court should proceed to hear the case which plaintiffs were given the right by Congress to bring in federal court where the diversity requirements are met. Meredith v. Winter Haven, supra; Miller v. Miller, supra, 423 F.2d at 148.

Accordingly the judgment is reversed and the cause is remanded for further proceedings.

      . The findings and recommendations of the magistrate rejected an objection of lack of an indispensable party. The reasons for the recommendation of dismissal were stated in the magistrate’s report as follows:
      “(1) The motion to dismiss because the District Court of Craig County of the State of Oklahoma before the filing of this action herein acquired jurisdiction over the subject matter and the parties is supported by the facts and pertinent documents so this Court should not assume jurisdiction of this case but should yield to the State court previously acquiring jurisdiction.”

      . See, e. g., In re Fullerton’s Estate, 375 P.2d 933, 943 (Okl.); Gentry v. Mitchell, 207 Okl. 488, 250 P.2d 856, 857.

      . See Taliaferro v. Reirdon, supra at 524; Gentry v. Mitchell, 207 Okl. 488, 250 P.2d 856, 857, and 58 O.S.A. §§ 541-546, which retain provisions for proceedings to remove a fiduciary.


author: PER CURIAM:

text:
    Mrs. Willie C. KIRKLAND, Plaintiff-Appellee, v. Caspar W. WEINBERGER, Secretary of Health, Education and Welfare, Defendant-Appellant.
    No. 73-1455
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    June 14, 1973.

      William Stafford, Jr., U. S. Atty., J. Worth Owen, Asst. U. S. Atty.,. Pensacola, Fla., Carl H. Harper, Robert B. Bell, Dept. of HEW, Atlanta, Ga., Kathryn H. Baldwin, Jean A. Staudt, Dept. of Justice, Washington, D. C., for defendant-appellant.
    Owen Ed Adams, Sr., Pensacola, Fla., for plaintiff-appellee.
    Before WISDOM, AINSWORTH and CLARK, Circuit Judges.

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

   PER CURIAM:

This action was initiated by Mrs. Kirkland, pursuant to § 205(g) of the Social Security Act, 42 U.S.C. § 405(g), to review the final decision of the Secretary of Health, Education and Welfare denying her disability insurance benefits. After remanding the case to the Appeals Council of H.E.W. for consideration of new evidence, the district court reversed the final decision of the Secretary. The Secretary appeals. We reverse.

In her claim for disability benefits, Mrs. Kirkland alleged that due to high blood pressure, arthritis, and kidney trouble, she had been disabled within the meaning of the Social Security Act, 42 U.S.C. § 423(d), on or before September 30, 1968, the last date on which she met the special earning requirements of 42 U.S.C. § 416(i). Mrs. Kirkland waived the right to appear at a hearing, and therefore the hearing examiner evaluated her disability claim on the basis of documentary evidence, which included medical records and the reports of personal interviews with the claimant. On the basis of this record, the hearing examiner concluded that Mrs. Kirkland did not suffer from any medically demonstrable disability within the meaning of § 423(d) prior to September 30, 1968. This determination was affirmed after review by the Appeals Council of H.E. W. and became the decision of the Secretary.

Subsequent to initiating the present judicial review under § 405(g), Mrs. Kirkland obtained the following statement from Dr. William H. Nass who had been her attending physician since April 1968:

June 5, 1972
This is to certify that Willie Kirkland is under my care for Hypertension, Arthritis, and Anxiety Reaction. Mrs. Kirkland was first examined by me on April 1, 1968. She was totally disabled at that time with no change in her condition at this date.

The filing of this statement resulted in remand by the district court to the Appeals Council, which twice affirmed its original determination. The district court then reversed the final decision of the Secretary on the sole authority of this court’s opinion in Williams v. Finch, 440 F.2d 613 (5th Cir. 1971).

The district court’s reliance on Williams is misplaced. There we held that where the claimant presented probative evidence demonstrating that he was disabled within the meaning of the Act, he was entitled to benefits unless the Secretary came forward with substantial contrary evidence. Cf. Richardson v. Perales, 402 U.S. 389, 91 S. Ct. 1420, 28 L.Ed.2d 842 (1971). Williams, however, does not modify the basic principle that the burden of establishing disability is on the claimant and not on the Secretary. Hart v. Finch, 440 F.2d 1340 (5th Cir. 1971); Aldridge v. Celebrezze, 339 F.2d 190 (5th Cir. 1964).

In the present case Mrs. Kirkland failed to present sufficient evidence to establish that prior to September 30, 1968, she was suffering from a medically demonstrable impairment of such severity as to disable her from engaging in gainful employment which existed within the national economy. The claimant’s medical history reveals that between 1961 and 1963 she had been admitted to hospitals on four occasions for the treatment of gynecological and renal problems. After each period of hospitalization, she was discharged as recovered. Her vocational record shows that despite these periods of hospital treatment she continued to work as a bookkeeper and typist until 1964. Although Mrs. Kirkland has not been regularly employed at any time after 1964, there is no evidence, aside from Dr. Nass’s statement discussed below, that she was under medical treatment for a disabling condition during the period between 1964 and September 30,1968.

After the expiration of her insured status, Mrs. Kirkland has been hospitalized for two periods totalling approximately two weeks. Upon her first hospital admission in October 1969, her attending physician, Dr. Nass, signed a medical history stating that Mrs. Kirkland had “in the last two or three weeks” complained of weakness and dizziness. The admission diagnosis was a duodenal ulcer. The only past medical problem Dr. Nass mentioned was a 1961 hysterectomy and he expressly stated “no other serious illnesses noted.” In January 1971 at the end of the second period of hospitalization, Dr. Nass.made a final diagnosis of osteoarthritis with spinal disc degeneration, accompanied by a chronic anxiety reaction. The discharge summary shows that Mrs. Kirkland had responded favorably to physiotherapy and was discharged with a prescription of muscle relaxants and tranquilizers.

Taken as a whole, Mrs. Kirkland’s medical records, her physicians’ diagnostic reports, her vocational history, and her personal statements concerning her condition, see DePaepe v. Richardson, 464 F.2d 92, 94 (5th Cir. 1972), fail to establish a disability within the requirements of the Social Security Act prior to September 30, 1968. The only other evidence which supports her claim of disability within the insured period is the certificate by Dr. Nass dated June 5, 1972, which asserts that she was “totally disabled” as early as April 1968. This statement, which is not only not supported by any clinical or laboratory findings but is directly contrary to the same doctor’s hospital admission history, does not represent substantial evidence establishing a statutory disability. See e.g., Valentine v. Richardson, 468 F.2d 588 (10th Cir. 1972); Sykes v. Finch, 443 F.2d 192, 194 (7th Cir. 1971); Steimer v. Gardner, 395 F.2d 197, 198 (9th Cir. 1968). While this court has not required that a disability must be proven exclusively by objective medical data, Hayes v. Celebrezze, 311 F.2d 648, 654 (5th Cir. 1963), the claimant must produce more than an unsubstantiated, .contradictory and totally conclusory statement to carry her burden of establishing a medically demonstrable disability on the relevant date. Cf. Daniel v. Gardner, 390 F.2d 32, 33 (5th Cir. 1968).

Unlike the claimant in Williams, Mrs. Kirkland has failed to meet her initial burden of proof of disability. The Secretary was therefore under no burden to come forward with substantial contradictory evidence. Disability benefits were properly denied and the decision of the district court .is therefore.

Reversed.

      . In Williams, the claimant and his wife testified in detail to the extent of his disability. He further produced the opinions of four different physicians stating that he was disabled. Each opinion was accompanied by diagnostic findings upon which the medical conclusion had been based. The record showed that Williams had been declared totally and permanently disabled by the Veterans Administration, and that the Social Security Administration itself had previously rejected him for vocational rehabilitation because his impairment was “too severe.”

      . The legislative history of recent amendments to the Social Security Act makes it clear that an unsupported medical conclusion as to impairment is not sufficient to establish disability under the Act:
      Statements of the applicant or conclusions of others with respect to the nature or extent of impairment or disability do not establish the existence of disability for purposes of Social Security benefits based on disability unless they are supported by clinical or laboratory findings or other medically acceptable evidence confirming such statements or conclusions.
      H.R.Rep.N0.544, 90th Cong., 1st Sess. 30 (1967).


author: ROBERT P. ANDERSON, Circuit Judge:

text:
    In the matter of TULLER’S, INC., Bankrupt. Jules TEITELBAUM, Trustee, Petitioner-Appellee, v. Jane T. VOSS, Individually, and as Executrix of the Estate of Herman T. Voss, Deceased, Respondent-Appellant.
    No. 681, Docket 72-2044.
    United States Court of Appeals, Second Circuit.
    Argued April 5, 1973.
    Decided May 10, 1973.

      Sheldon Lowe, New York City, for respondent-appellant.
    Richard Braverman, New York City, for petitioner-appellee.
    Before HAYS, ANDERSON and OAKES, Circuit Judges.
   ROBERT P. ANDERSON, Circuit Judge:

This is an appeal from a Referee’s order, affirmed by the district court, directing Jane Voss to turn over to the trustee of the bankrupt, Tuller’s, Inc., $17,000, and vacating the security interest she holds in its property. We affirm.

In February 1967, Mrs. Voss transferred all the capital stock of the bankrupt, a retail drugstore in Peekskill, New York, to Oscar Kelman, Stanley Lenchner and Herbert Salzman (the Purchasers). She also assigned to them a claim for $8430.78 which she held against the corporation, and assumed the payment of a $3,000 debt owed by the corporation to the National Bank of Westchester. In return, Mrs. Voss received $30,000 in cash from the Purchasers, and $60,000 in notes payable by the corporation and secured by a mortgage on all of its fixtures, equipment, supplies, sundries and inventory, then owned or thereafter acquired.

At the time the Purchasers took over the operation of the drugstore its assets consisted of inventory, fixtures and good will. All parties agree that the value of the inventory, at cost, was $70,000. Appellant would like to have some unspecified value assigned to the fixtures but, the Referee, on sufficient evidence found that they were valueless and that the new owners could not use them and had to replace them almost immediately, and pay for their removal. Appellant also asserts that the Referee erred by failing to place any value on the store’s good will. Because the proper valuation of this item is irrelevant to our decision, we do not consider the Referee’s ruling on this issue.

The corporation’s liabilities at that time included the notes held by Mrs. Voss ($60,000), accounts payable ($10,158.92), the claim which Mrs. Voss assigned to the Purchasers ($8430.78), the bank loan which she agreed to pay ($3,000), and miscellaneous obligations ($2329.24), in the total amount of $83,918.94.

On January 9, 1969 an involuntary petition in bankruptcy was filed against Tuller’s, and it was adjudicated a bankrupt on January 23. Prior to this, the corporation paid Mrs. Voss $17,000 on the notes. After the adjudication, the trustee commenced this action seeking an order vacating Mrs. Voss’ security interest in the property of the bankrupt and directing her to turn over the $17,-000 she had received. The trustee, relying upon his status under § 70(e) of the Bankruptcy Act, alleged that the original agreement and subsequent payments were fraudulent conveyances under § 270 et seq., of the New York Debtor and Creditor Law, McKinney’s Consol.Laws, c. 12.

The Referee, on the bases of the following three conclusions of law, granted the relief sought by the trustee: (1) the transaction between appellant and the Purchasers rendered Tuller’s insolvent and the notes and security interest were conveyed without a fair consideration, thereby violating § 273 of the New York Debtor and Creditor Law; (2) after the transaction, Tuller’s was left with unreasonably small capital and the conveyance occurred without fair consideration, thereby violating § 274 of the New York Debtor and Creditor Law; and (3) under general principles of corporate law, a person who sells a corporation’s stock under an agreement which provides for the corporation itself actually to pay for the stock is liable to creditors for any payments he receives from the corporation. The district court summarily affirmed on all three grounds. We find it unnecessary to rule upon the first or third points because the transaction was certainly violative of § 274. See In re College Chemists, Inc., 62 F.2d 1058 (2 Cir. 1933).

Contrary to appellant’s assertion, § 274 requires but two conditions for finding a conveyance to be fraudulent: (1) that it was made without fair consideration, and (2) that it left the corporation with unreasonably small capital. Mrs. Voss insists that she tendered fair consideration for the security interest and notes she received from the corporation, but the record shows that this was not so. All she gave the corporation was a promise to pay, when due, its $3,000 bank debt; in return, she received from the corporation its promise to pay her $60,000 and a security interest in all of its property. Clearly, the assumption of a $3,000 debt is not the “fair equivalent” of $60,000 in secured notes.

Appellant, properly, does not even challenge the Referee’s finding that her transaction with the Purchasers left the drugstore with unreasonably small capital. The corporation was left with all of its tangible assets mortgaged. It was effectively devoid of capital when the Purchasers assumed its operation. Compare, In re College Chemists, Inc., supra.

Mrs. Voss’s final argument, never advanced below, is that she is entitled to the protection of § 278 of the New York Debtor and Creditor Law. However, this statute protects only good faith purchasers; Mrs. Voss was a seller.

The judgment of the district court is affirmed.

      . Mrs. Voss also claims that as part of this deal her father, Harry Tuller, released the corporation from a $27,000 debt it owed to him. At the hearing before the Referee she attempted to prove this by introducing into evidence an unsigned, undated, unconformed copy of a document purporting to effect such a release. However, the Referee held, and we agree that, “There is no evidence that Harry Tuller ever liad any claim against the bankrupt, that said claim was bona fide and not in fact a capital contribution to an undercapitalized corporation, or that said claim had any value or was even outstanding at the time."

        . The Purchasers began operating the store two weeks before the actual transfer of the stock and notes. Thus, at the time they actually took over its ownership, the store’s inventory was worth $6,000 less, but its bank account held a like amount, which went to the new owners.

      . This statute provides, “Every conveyance made without fair consideration when the person making it is engaged or is about to engage in a business or transaction for which the property remaining in his hands after the conveyance is an unreasonably small capital, is fraudulent as to creditors and as to other persons who become creditors during the continuance of such business or transaction without regard to his actual intent.” N.Y.Debtor & Creditor Law § 274 (McKinney’s 1945). Fair consideration is defined as being given,
      “a. When in exchange for property, or obligation, as a fair equivalent therefor, anil in good faith, property is conveyed or an antecedent debt is satisfied, or b. When such property, or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared with the value of the property, or obligation obtained.” N.Y.Debtor & Creditor Law § 272 (McKinney’s 1945).

      . Even if Harry Tuller’s purported release is treated as consideration paid to the corporation, there was not a fair consideration, because the corporation would have obligated itself to pay $60,000 in return for having been released from $30,000 in existing obligations, which is hardly a “fair equivalent.”

      . This statute provides :
      “1. Where a conveyance or obligation is fraudulent as to a creditor, such ereditor, when his claim has matured, may, as against any person except a purchaser for fair consideration without knowledge of the fraud at the time of purchase, or one who has derived title immediately or mediately from such a purchaser.
      “a. Have the conveyance set aside or obligation annulled to the extent necessary to satisfy his claim, or “b. Disregard the conveyance and attach or levy execution upon the property conveyed.
      “2. A purchaser who without actual fraudulent intent has given less than a fair consideration for the conveyance or obligation, may retain the property or obligation as security for repayment.” N.Y.Debtor & Creditor Law § 278 (McKinney’s 1945).


author: SETH, Circuit Judge.

text:
    WICHITA EAGLE & BEACON PUBLISHING CO., INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
    No. 72-1673.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted March 29, 1973.
    Decided July 2, 1973.

      Gerrit H. Wormhoudt, Wichita, Kan. (Paul R. Kitch and J. Erie Engstrom, Wichita, Kan., with him on the Brief), for petitioner.
    Corinna Lothar Metcalf, Atty. N. L. R. B. (Peter G. Nash, Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, and Leonard M. Wagman, Atty., N. L. R. B., with her on the Brief), for respondent.
    Before PHILLIPS, SETH and HOLLOWAY, Circuit Judges.
   SETH, Circuit Judge.

Wichita Eagle & Beacon Publishing Co., Inc. petitions this court, pursuant to 29 U.S.C. § 160(f), to review and set aside an order of the National Labor Relations Board (199 NLRB No. 50). The Board cross-petitions for enforcement of its order.

The Board has found that the newspaper had engaged in unfair labor practices within the meaning of sections 8(a)(1) and (3) of the Act, by transferring employee Dorothy Wood, against her will, from the editorial page department to the Sunday magazine department because of the said Wood’s union activities, and by telling employee Wood that consequences of her union membership and activity might be severe.

The record shows that the newspaper is engaged in the publishing, sale, and distribution of daily newspapers in Wichita, Kansas. In August 1970, the Wichita Newspaper Guild, affiliated with The Newspaper Guild, AFL-CIO, filed a petition with the Board seeking certification as the collective bargaining agent of the newspaper’s employees. The Board conducted a hearing on the petition and issued a Decision and Direction of Election. -In connection therewith, the Board found that two “editorial writers,” Dorothy Wood and Theodore Blankenship, should be included in the bargaining unit as they did not “possess indicia of managerial employees.”

The newspaper filed a request for review of the Decision and Direction of Election with the Board, limited to the inclusion of the two editorial employees in the bargaining unit, but the Board denied the request for review.

An election was conducted by the Board among the unit that it had determined was appropriate and the Union was certified as the collective bargaining agent for the bargaining unit. Contract negotiations between the newspaper and the Union were begun, and at the time of the hearing of the unfair labor practice complaint the parties had not reached a contract.

As to Mrs. Wood, the Union filed charges and a hearing was held before a trial examiner. The trial examiner found that the newspaper had violated sections 8(a)(1) and (3) of the Act by transferring Mrs. Wood from the editorial page department to the Sunday magazine department because of her union activities. He recommended that she be reinstated in the editorial page department and that she be awarded any back pay that she would have been entitled to, including increases in salary, but for her transfer. The newspaper filed exceptions to the trial examiner’s Decision. The Board issued its Decision and Order, adopting the trial examiner’s Decision and adopting his recommended Order.

Mrs. Wood’s position prior to her transfer to the Sunday magazine department was that of an editorial writer. As the trial examiner’s Decision states, the editorial page department of the newspaper consisted of three people. Charles Pearson, editor of the editorial page, was the acknowledged supervisor of the two employees in the editorial page department, Mrs. Wood and Mr. Blankenship. He was excluded from the collective bargaining unit at the representation hearing by the Board. In the words of the trial examiner, John H. Colburn, editor and publisher of the newspaper, was also part of the editorial page department “in a real but perhaps ex officio sense.” The trial examiner’s Decision includes this description of the relationship of the positions:

“Normal day to day procedure, in the editorial page department, was the holding of a midmorning conference, with Colburn, Pearson, Wood and Blankenship participating. In turn, at the conference, Pearson, Wood, and Blankenship would be asked what he or she had in mind for an editorial. Wood, for instance, when thus asked, might say that she had in mind writing a piece on ecology. Colburn or Pearson might say that we had an editorial on air and water pollution last week so we will not go on ecology again at this time. That would dispose of Wood’s proposal. Or, for instance, Colburn might have responded to Wood’s proposal in the following vein: What particular aspect of ecology do you have in mind; Wood would respond, with some details and elaboration; the matter would then be discussed by those present; Colburn might then say to Wood, all right, give it a try. On some other subject thus raised, Colburn might make it clear that there were certain specific things that he wished to be stated in the particular proposed editorial, e. g., the theme of the editorial should be that, on balance, after weighing the arguments pro and eon, the Government should proceed with the development of the supersonic transport plane because of the need to maintain leadership in the field of air transportation and because of the need to maintain a viable aerospace industry and the tens of thousands of jobs involved in that and in satellite industries. The editorial writer would follow such a directive.
“Following the foregoing type of daily conference with Colburn, Pearson, Wood, and Blankenship would return to their offices. They would then get together in Pearson’s office and discuss at greater length topics that had received tentative approval at the conference with Colburn. Views and possibly conflicting contentions would be exchanged and argued. In most instances it would be at this tripartite conference that definite editorial topics would be assigned by Pearson, to Wood, Blankenship or himself.
“After a writer drafted or wrote an editorial, it was then submitted to Pearson. He might approve it, disapprove it, or prescribe changes or revision. If the editorial cleared Pearson, it would then go to Colburn. Again, the editorial might be approved, rejected, or rejected subject to some particular revision being made.” Trial Examiner’s Decision, Findings and Conclusions.

Whenever a particular member of the editorial department was assigned a topic which he or she felt unable to write upon, either for reasons of personal conviction or otherwise, upon request the writer would be excused from the assignment. However, as the trial examiner found, “. . . every witness in this case, including Wood, agrees that the editorials of the newspaper function as the voice of [the newspaper’s] ownership and management. What appears in an editorial is the subjective viewpoint of management.” Trial Examiner’s Decision, Findings and Conclusions.

Petitioner newspaper contends that editorial writers have the essential characteristics of managerial and confidential employees and therefore the two editorial writers in question, Mrs. Wood and Mr. Blankenship, were improperly included in the collective bargaining unit to begin with, and the newspaper’s action in transferring Mrs. Wood was not properly subject to the Act’s coverage. On the particular facts of this case, as brought out in the trial examiner’s Decision and from an extensive reading of the record, we agree.

We recognize that the task of determining the application of the term “employee” “. . . has been assigned primarily to the agency created by Congress to administer the Act.” NLRB v. Hearst Publications, Inc., 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170; Allied Chemical & Alkali Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157, 92 S.Ct. 383, 30 L.Ed.2d 341. The courts, however, “. . . have never immunized Board judgments from judicial review in this respect.” Allied Chemical & Alkali Workers v. Pittsburgh Plate Glass Co. The court said in NLRB v. North Arkansas Electric Cooperative, Inc., 412 F.2d 324 (8th Cir.):

“The term ‘managerial employee’ is not used in the National Labor Relations Act, nor is provision made in the Act for the inclusion or exclusion of such employees in bargaining units. The Act is silent as to whether this type of employee is entitled to the protection of the Act for union activities or membership. The Board, however, has long followed the practice o.f excluding employees, designated as ‘managerial,’ from bargaining units in representation elections. It does so on the premise that certain non-supervisory employees are so closely allied with management that they should be excluded from employee bargaining units.”

Although the Board considers editorial writers such as Mrs. Wood to be employees within the meaning of the Act, A. S. Abell Co., 81 NLRB 82, 83 (1949), and there does seem to be some language in the case of Associated Press v. NLRB, 301 U.S. 103, 57 S.Ct. 650, 81 L. Ed. 953, which could support this position, a closer reading of the latter case in view of its facts leads us to another conclusion.

Associated Press dealt not with a person who was actively engaged in the “formulating, determining and effectuating” of the employer’s policies. Illinois State Journal-Register, Inc. v. NLRB, 412 F.2d 37 (7th Cir.); Retail Clerks International Ass’n, AFL-CIO v. NLRB, 125 U.S.App.D.C. 63, 366 F.2d 642. Rather, that case dealt with a person who, although characterized as an “editor” or “editorial employee,” was employed “. . . to determine the news value of items received and speedily and accurately to rewrite the copy delivered to [him], so that the rewritten matter [should] be delivered to the various filing editors . . . responsible for its transmission, if appropriate, to the areas reached by their circuits.”

Regardless of which appellation is given to the employee in Associated Press, whether it be “editor,” “editorial employee,” or a member of the “news department,” his position was much more akin to that of the employees in the news department of the petitioning Wichita Eagle & Beacon Publishing Co., Inc., in the instant case than to that of Mrs. Wood. The hierarchy of personnel in Associated Press was such that the aggrieved employee was responsible, in turn, to a filing editor, various “editorial employees,” “supervising editors,” and an “executive news editor” in the “news department” of the Associated Press.

Although Mrs. Wood was responsible to the editorial page editor, Mr. Pearson, and in turn to the editor and publisher of the newspaper, Mr. Colburn, as concerns the content and direction of the newspaper’s editorials, she nevertheless was an active participant in “formulating, determining and effectuating” the newspaper’s journalistic policies. The daily conferences between Colburn, Pearson, Wood, and Blankenship attest to this relationship. While subject to supervision in her writing by the editorial page editor and the editor and publisher, Mrs. Wood could, and did, propose topics for editorials, propound her own viewpoint in an effort to influence editorial policy on various subjects, and was, in sum, an integral participant in the newspaper’s subjective voice, its editorials. Whether termed a managerial employee, a confidential employee, or whatever, Mrs. Wood’s relationship to the newspaper and its staff placed her in a position where she was intimately involved in “formulating, determining and effectuating” her employer’s policies. Illinois State Journal-Register, Inc. v. NLRB, 412 F.2d 37 (7th Cir.); Westinghouse Electric Corp. v. NLRB, 398 F.2d 669 (6th Cir.); Retail Clerks International Ass’n, AFL-CIO v. NLRB, 125 U.S.App.D.C. 63, 366 F.2d 642.

Mrs. Wood may not have been a “Chief” (in the words of the trial examiner), but she was certainly a member of the Chief’s council in the formulation of editorials. We recognize that she had no formal hand in determining wages, hours, and working conditions for employees on the newspaper, nor did she participate in such matters as basic ownership and management policies in the area of profit and loss and the like. Cf. North Arkansas Electric Cooperative, Inc., 185 NLRB No. 83 (1970), 75 LRRM 1068-69. There is, however, a distinction between the reporting of news and the creation and expression of subjective opinion on behalf of a newspaper. To hold that a person who was involved in the formulation of editorial content of a newspaper is not aligned with the newspaper’s management would come perilously close to infringing upon the newspaper’s First Amendment guarantee of freedom of the press.

The business of the newspaper is not immune from the Act’s coverage merely because it is an agency of the press. Associated Press v. NLRB. The newspaper is not contesting the Board’s determination that its news department employees are a proper collective bargaining unit and come within the Act’s protections. Although the Board’s ruling in this case does not have any relation to the impartial distribution of news, per se, nor to the newspaper’s ability and freedom to publish the news as it desires it published (Associated Press v. NLRB), it does infringe upon the newspaper’s freedom to determine the content of its editorial voice in an atmosphere of free discussion and exchange of ideas.

We therefore reject the Board’s determination that the two editorial writers, Mrs. Wood and Mr. Blankenship, were “employees” under the National Labor Relations Act. Rather, we hold that they were so closely aligned with the newspaper’s management in the formulation, determination, and effectuation, not to mention expression, of the newspaper management’s policies through its editorials as - to be properly excluded from the collective bargaining unit of news department employees.

As the Supreme Court has noted:
“. . . [I]n the normal course of events Board orders in certification proceedings under § 9(e) are not directly reviewable in the courts. This Court held as long ago as American Federation of Labor v. Labor Board, 308 U.S. 401, 60 S.Ct. 300, 84 L.Ed. 347, that the ‘final order [s]’ made reviewable by §§ 10(e) and (f) in the Courts of Appeals do not include Board decisions in certification proceedings. Such decisions, rather, are normally reviewable only where the dispute concerning the correctness of the certification eventuates in a finding by the Board that an unfair labor practice has been committed as, for example, where an employer refuses to bargain ... In such a case, § 9(d) of the Act makes full provision for judicial review of the underlying certification order by providing that ‘such certification and the record of such investigation shall be included in the transcript of the entire record required to be filed’ in the Court of Appeals.”

Boire v. Greyhound Corp., 376 U.S. 473, 84 S.Ct. 894, 11 L.Ed.2d 849. See also Magnesium Casting Co. v. NLRB, 401 U.S. 137, 91 S.Ct. 599, 27 L.Ed.2d 735. This is the situation in this case. The newspaper has duly filed objections to and requests for review of the collective bargaining unit determination at every step in this controversy. On the facts here present we find that the Board’s Decision and Order are not supported by “substantial evidence on the record considered as a whole.” National Labor Relations Act, § 10(e), 29 U.S.C. § 160(e). Accordingly, the petition for review is granted, and the Decision and Order of the National Labor Relations Board, filed September 29, 1972, is vacated.


author: GIBSON, Circuit Judge.

text:
    Pauline KEINATH, Transferee of Assets of Cargill MacMillan, Transferor, Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. Cargill MacMILLAN, Jr., Transferee of Assets of Cargill MacMillan, Transferor, Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. Whitney MacMILLAN, Transferee of Assets of Cargill MacMillan, Transferor, Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. Pauline W. MacMILLAN, Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. Cargill MacMILLAN 1967 TRUST et al., Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee.
    Nos. 72-1647 to 72-1651.
    United States Court of Appeals, Eighth Circuit.
    Submitted April 10, 1973.
    Decided May 8, 1973.
    Rehearing Denied June 1, 1973.

      John W. Windhorst, Minneapolis, Minn., for appellants.
    Donald H. Olson, Atty., Dept, of Justice, Washington, D. C., for appellee.
    Before GIBSON, LAY and BRIGHT, Circuit Judges.
   GIBSON, Circuit Judge.

These consolidated appeals question the validity of a gift tax of $147,572 plus interest assessed by the Commissioner and sustained by the Tax Court on a disclaimer made by a remainder-man within six months after the death of the life beneficiary. The Tax Court opinion, reported in 58 T.C. 352 (1972), held the disclaimer was not timely filed. We reverse for the reasons set forth in this opinion.

John H. MacMillan, Sr., the grandfather of appellants Pauline Keinath, Car-gill MacMillan, Jr., and Whitney MacMillan died testate in 1944, devising and bequeathing most of his estate to a trust, the income of which was to be paid to the testator’s widow Edna MacMillan for life and upon her death the principal was to be divided between the testator’s two sons, John, Jr. and Cargill MacMillan. In the event either son predeceased the widow, the deceased son’s share was to be distributed to his children per stirpes. John, Jr. and Car-gill were named in the will and subsequently served as co-trustees of the ti’ust. John, Jr. died in 1960 survived by three children. Cargill then served as sole trustee.

Cargill at no time accepted any income or principal from the trust and the parties agree that Cargill by virtue of his father’s will had a vested remainder in one-half of the trust subject to divestiture only if he should predecease the life beneficiary.

The life beneficiary Edna MacMillan died March 28, 1963. On May 20, 1963, Cargill signed a document titled “Disclaimer,” which was filed in the District Court of Hennepin County, Minnesota on September 6, 1963. That document reads in part:

“WHEREAS, under the terms of Article III of said trust instrument, the undersigned would, after his mother’s death, except for this Disclaimer, have succeeded to a one-half (Yz) beneficial interest in the remainder of said trust, but in the event of his death prior to that of his mother, said one-half (Yz) beneficial interest in the trust or trust property would have passed to the issue of the undersigned who survive said Edna C. MacMillan, per stirpes, free and clear of trust, and
* * * *
“NOW, THEREFORE, in consideration of the premises, the undersigned does hereby finally and irrevocably disclaim, renounce, remise and refuse to accept any beneficial interest in said trust or trust assets of any nature, real, personal or otherwise, including both principal and accrued or accruing income thereof, which now or hereafter would be effectively vested in him under the provisions of Article III of said last will and testament of John H. MacMillan, were it not for the execution of this Disclaimer, with the understanding that all right, title and interest in said one-half (½) interest in the trust or trust property will pass to his issue who survive said Edna C. MacMillan, per stirpes, this Disclaimer to become effective immediately upon, but not before, its filing with the District Court for the Fourth Judicial District, Hennepin County, Minnesota, in the proceeding entitled: ‘In the Matter of the Trusteeship under the Last Will and Testament of John H. MacMillan, Deceased,’ therein and maintained under District Court File No. T-2078.”

Prior to the filing of the executed Disclaimer, Cargill MacMillan, as Trustee, on August 16, 1963, petitioned the District Court of Hennepin County, Minnesota, for an order construing the provisions of the trust and the effect of such a Disclaimer upon the devolution of his share of the trust. The petition was heard on September 6, 1963, the same date the Disclaimer was filed with the court. The Minnesota District Court found that the Disclaimer was valid and timely, that Cargill had never accepted any beneficial interest in the trust estate or dominion over the property of the trust, and that the beneficial interest in the trust estate effective as of the date of Edna C. MacMillan’s death passed to the six grandchildren by virtue of the terms of the trust instrument.

On June 16, 1969, the Commissioner sent notices of deficiencies to the appellants because he claimed that Cargill’s attempted renunciation was in fact a gift by him to his children of one-half of the assets of the trust, which were valued at $669,797.63 on September 6, 1963. Each appellant, except Cargill’s wife, was assessed a gift tax of $147,572, plus interest, though it was stipulated the amount assessed was a duplicate of the liabilities set forth in all the four cases. Cargill’s wife as a spouse who had consented to her husband’s “gifts,” was assessed one-half of the above amount.

The Tax Court upheld the Commissioner’s assessments by relying on 26 U.S.C. § 2511(a), Treas.Reg. § 25.2511-1(c) (1958), and Kathryn S. Fuller, 37 T.C. 147 (1961). The Tax Courts reasoned that the regulation and Fuller establishes a two-pronged test to determine the validity of a disclaimer and said “that the disclaimer [must] be valid under local law and made within a reasonable time after the disclaimant learns of the transfer.”

“Reasonable time” is not defined in the Code or Regulations in this context, and the Tax Court held on the basis of Fuller that “reasonable time” should be defined according to a federally determined standard. The Tax Court then concluded that Cargill failed to disclaim his interest within a reasonable time, because he waited from October 20, 1944 —the time the testamentary trust was created — until September 6, 1963, the date of the filing of the disclaimer in the Minnesota courts.

The appellants contend that Brown v. Routzahn, 63 F.2d 914 (6th Cir. 1933), cert. denied, 290 U.S. 641, 54 S.Ct. 60, 78 L.Ed. 557 established the rule of law that a disclaimer valid and effective under local law is not a taxable transfer for federal tax purposes and that the Commissioner either by his regulation or his interpretation of that regulation is seeking to circumvent that principle of law. Routzahn was an estate tax case recognizing the common law principle on disclaimers. Treas.Reg. § 25.2511-1 (c), which implements 26 U.S.C. § 2511 that applies the gift tax imposed by 26 U.S. C. § 2501, also recognizes the common law principle or doctrine of disclaimers. It reiterates the basic common law re-' quirements that the disclaimer must be “made within a reasonable time after knowledge of the existence of the transfer” and that it be unequivocal and effective under local law. These conditions are but a codification of common law principles applicable to the doctrine of disclaimers, and the states, recognizing the doctrine, may well vary in what constitutes a reasonable time or even in imposing a reasonable time condition.

Central to- this case is the interpretation or denotation of the word “transfer” in the regulation. Is the transfer made at the time the trust is established or when the remainderman comes into possession and control? In other words is the reasonable time period calculated from the date the remainderman has the right of possession or control of the property or when the trust is established? The Commissioner contended and the Tax Court held that the reasonable time commenced to run at the time the trust was established.

The appellants would have us look to the local law to define “reasonable time” since this federal taxing act by its express language or necessary implication makes its operation dependent upon state law. Burnet v. Harmel, 287 U.S. 103, 110, 53 S.Ct. 74, 77 L.Ed. 199 (1932). Although the appellants argue for a complete state standard on the validity of a disclaimer, we think the Commissioner has the right in the Treasury Regulations to set forth the conditions under which disclaimers will be recognized. We are concerned here with the exercise of federal taxing power and state law participates only to the extent recognized in the federal statute or Treasury regulation. This is a federal tax act, and in the interest of uniformity implementing regulations should be applied evenly throughout the country. Furthermore as a federal tax act, the Commissioner pursuant to statutory authorization has the right to define the breadth and scope of its operation through regulations. 26 U.S.C. § 7805(a). However, notwithstanding the fact that the gift tax is a national act, there will be many variances in its application because of the' very nature of the following imposed conditions: (1) the disclaimer must be recognized and effective under local law; (2) the disclaimer must be made within a reasonable time after knowledge of the existence of the transfer; (3) there can be no disclaimer after there has been acceptance of the transfer of the property; and (4) the disclaimer must be unequivocal. In this case the Commissioner admits that the Disclaimer would have been timely made if the date from which the reasonable period is to be calculated commences at the death of the life beneficiary ; also, admittedly otherwise it would not.

In determining “reasonable time” and the related issue of when the reasonable time period commences, we perforce, absent a federal statute or regulation defining reasonable time, must look to the law of the states. We are not conclusively bound by the state law, but this is the only field to probe for legal decisions and discussions on the phrase “reasonable time” as used in the context of making valid disclaimers.

The reasonable time standard does not lend itself to a purely mathematical calculation and its parameters must depend on the varying factual situations and circumstances of each case. What is a reasonable time in which to disclaim a testamentary gift has been considered by state courts,, but there has emerged no exact and decisive pattern except the general concept that a factual question is presented.

A review of the state court cases is of limited assistance in defining “reasonable time.” Brown v. Routzahn, supra,, held there was no time limit under Ohio law. Obviously this ruling would conflict with the Treasury Regulation and is of no aid on this issue.

In Strom v. Wood, 100 Kan. 556, 164 P. 1100 (1917), the Kansas Supreme Court held, in a devise the court construed as giving a life estate to the widow with a vested remainder to the four children' subject to divestment of one-half thereof by the widow remarrying or becoming incapacitated, that the interest of a remainderman at least to his one-eighth interest not subject to divestment could not be renounced after a period of six years from the testator’s death. The court held that a judgment creditor who predated the will had a lien on the remainderman’s interest which by lapse of time and non-action he was presumed to have accepted and that the attempted renunciation after six years was not within a reasonable time. Coleman v. Burns, 103 N.H. 313, 171 A.2d 33 (1961), held an oral disclaimer by a succeeding life tenant before the demise of the current life tenant was within a reasonable time. There is no showing how long this was after the death of the testator. Perkins v. Isley, 225 N.C. 793, 32 S.E.2d 588 (1945) held a written disclaimer filed February 12, 1940, by a sole beneficiary to a will of a testator who died May 4, 1939, and offered for probate on December 18, 1939, was valid. Sanders v. Jones, 347 Mo. 255, 147 S.W.2d 424 (1941), held that a 15-month interval was not a reasonable time, but two years later Seifner v. Weller, 171 S.W.2d 617 (Mo.1943) held that 16 months was a reasonable time.

These cases demonstrate that what is a reasonable time is a phrase of art depending on the facts and circumstances of each case. Also of some relevancy and probative value is the current Minnesota statute, Minn.Stat.Ann. § 525.532 Subd. 3 (1969). While not enacted until 1965, it fixes a reasonable time period at six months after the event that indefeasibly fixes the estate.

Here we can confidently say that the 19-year period from the time of the creation of the testamentary trust is not a reasonable time and that the less than six months period after the death of the life beneficiary would in Minnesota and in most states constitute a reasonable time.

On the pivotal issue of when the reasonable time period commences for disclaiming a remainder interest, Seifner v. Weller, 171 S.W.2d 617 (Mo.1943) and In Re Estate of Page, 113 N.J.Super. 582, 274 A.2d 614 (1970) viewed the death of the life tenant or life beneficiary as the commencement date or event that triggered the commencement of the running of the reasonable time period. In Seifner, however, the remainder devise of land was accompanied by a potential monetary burden to equalize other testamentary distributions. The devise was made in 1928, the life beneficiary died in November 1940, and the remainderman renounced the devise of 151 acres of land in March 1942 (16 months after the termination of the life estate). Of interest is the reasoning of the Missouri Supreme Court in this adversary proceeding. It held:

“. . . we believe, the defendant [Leo] should not be held to have been put to his election to accept or reject the devise at the testator’s death, nor at any time prior to the termination of the life estate. From the death of the testator and until the death of . [the life tenant], the time of the contemplated final division was of uncertain remoteness — upon her death, the time of final division should have been anticipated to be near.” 171 S.W.2d at 623.

In Page, the testator died in 1937 setting up a life estate in trust for his wife with remainder distribution to two daughters with powers of appointment The life beneficiary died April 14, 1970, survived by both daughters. On April 19, 1970, and April 30, 1970, the daughters respectively executed identical “disclaimers and renunciation” of all their right, title, and interest as remainder-men in the trust. The New Jersey Superior Court in construing the effect of the two disclaimers stated that it had not discovered any ruling that a remainderman’s renunciation to be effective must occur within a reasonable time after learning about the bequest in the will. It, therefore, held the disclaimers effective.

Of some relevancy is the aforementioned Minnesota statute, Minn.Stat. Ann. § 525.532 Subd. 3, which sets the reasonable time period as commencing with the creation of the interest or at the point where the interest has been indefeasibly fixed both in quality and quantity. Thus a contingent remainder-man or a remainderman subject to divestiture can wait until what would ordinarily be the death of the life tenant or beneficiary, which indefeasibly fixes the quality and quantity of the estate, before he would be put to the decision to accept or reject.

Turning to the scholars for guidance on this issue, Page says:

“If the interest is one which will not take effect in immediate possession, even if accepted, it is said that the remainderman and the like has the entire period during which the particular estate lasts, to determine whether he accepts or renounces.” Page, Law of Wills § 49.8 (Bowe-Parker ed. 1962).

It thus appears from the adjudicated cases that remainder interests that are not subject to divestiture should be disclaimed within a reasonable time after the testator’s death, and where the remainder interest is subject to divestiture a disclaimer may be filed within a reasonable time after the termination of the life estate. This comports with the Minnesota act on disclaimers previously discussed and also the Model Act to Provide for Disclaimer of Succession to Real and Personal Property proposed by a special committee of the American Bar Association.

The appellants maintain, without any refutation by the Commissioner, that all of the authorities who have considered this question have concluded that the time in which a remainder interest subject to divestiture must be disclaimed commences upon the death of the life beneficiary, which in turn allows the remainder interest to be irrevocably fixed not subject to divestment. We have found no contrary authority and think that this is the prevailing common law rule, which also is sound in principle and reason. A remainder subject to divestment does not convey or transfer any actual control or current beneficial interest in property to the remainder-man. In Estate of Sanford v. Commissioner, 308 U.S. 39, 42-43, 60 S.Ct. 51, 55, 84 L.Ed. 20 (1939), the Supreme Court in construing an earlier gift tax statute where the Government was unable to determine which construction of the statute would be most advantageous to it from the point of revenue collected said: “When the gift tax was enacted Congress was aware that the essence of a transfer is the passage of control over the economic benefits of property rather than any technical changes in its title.” In discussing the taxable event of the relinquishment of the power of revocation as distinguished from the transfer of the corpus in trust, the Court said its dominant principle or rationale has been:

. . that ‘taxation is not so much concerned with the refinements of title as it is with the actual command over the property taxed’ See Corliss v. Bowers, 281 U.S. 376, 378 [50 S.Ct. 336, 74 L.Ed. 916]; Salton-stall v. Saltonstall, supra, 261 [276 U. S. 260, 48 S.Ct. 225, 72 L.Ed. 565 (1928)]; Burnet v. Guggenheim, supra 287 [288 U.S. 280, 53 S.Ct. 369, 77 L.Ed. 748 (1933)] and that a retention of control over the disposition of the trust property, whether for the benefit of the donor or others, renders the gift incomplete until the power is relinquished whether in life or at death.” 308 U.S. at 43, 60 S.Ct. at 56.

In the instant case the remainderman Cargill had really nothing to accept or renounce by way of beneficial ownership or control of the property until he succeeded in outliving the life beneficiary. When that event occurred he was in a position to accept or reject the gratuitous devise and would ordinarily be presumed to have accepted, absent an affirmative disclaimer executed in accordance with local law and in conformity with Treas.Reg. § 25.2511-1 (c) respecting disclaimers.

We hold, therefore, that under the prevailing common law and, in particular, the jurisdiction of the State of Minnesota the holder of a vested remainder interest subject to divestiture has a reasonable time within which to renounce or disclaim the remainder interest after the death of the life beneficiary and that an unequivocal disclaimer filed within six months thereof is made within a reasonable time.

We next proceed to the issue raised by the Commissioner that the disclaimer was not unequivocal in that Car-gill only intended to file the disclaimer if he was satisfied that his part of the remainder interest would then devolve to his children. The disclaimer once it was filed with the District Court of Hennepin County was clear and unequivocal. Since the trust did not specifically state what would happen in the event of a disclaimer, Cargill was understandably reluctant to disclaim until he knew the consequences of his renunciation. He should therefore not be faulted for desiring to make an intelligent and well considered disclaimer. Usually if a legatee or heir refuses to accept ownership, the results of such a disclaimer would be known for the disclaimed property would pass under other provisions of the will or according to intestate succession. Similarly, a beneficiary under a trust should be entitled to know who would receive the disclaimed assets.

It must be remembered that Cargill had not accepted any income or principal frqm the trust. He did not as a remainderman receive any benefit from nor did he use any of the trust assets. We do not agree with the Commissioner that the procedure employed constituted “an exercise of dominion and dictation [that] would be virtually an acceptance rather than a renunciation.” McCormick v. Engstrom, 119 Kan. 698, 241 P. 685, 687 (1925). Cargill did not in any document direct that the property must pass to his children; he only in effect was hinging his disclaimer on a possibly favorable decision by the District Court of Hennepin County. The court, not Cargill, directed that the property would pass to Cargill’s issue under the testamentary trust. The “Disclaimer” itself was unequivocal.

The Commissioner also argues that Cargill’s disclaimer constitutes a taxable event under Treas.Reg. § 25.-2511-1 (h)(6) which reads as follows:

“(6) If A is possessed of a vested remainder interest in property, subject to being divested only in the event he should fail to survive one or more individuals or the happening of some other event, an irrevocable assignment of all or any part of his interest would result in a transfer includible for Federal gift tax purposes. See especially paragraph (e) of § 25.-2512-5 or paragraph (e) of § 25.-2512-9, whichever is applicable, for the valuation of an interest of this type.”

The answer to this contention is that we are here involved with a disclaimer and not an irrevocable assignment and that Treas.Reg. § 25.2511-1 (c) recognizing the validity of disclaimers executed in accordance therewith cannot be obliterated by another subparagraph of the same regulation dealing with an irrevocable assignment of a remainder interest subject to divestiture. These regulations, the same as statutes, must be read in pari materia. Here there was no assignment of Cargill’s interest but an actual disclaimer of his interest with his children taking under the will of their grandfather and not as assignees of their father.

In summary, we agree with the Tax Court that Congress intended to tax gifts in the “broadest and most comprehensive sense . . . regardless of the means or the device used in its accomplishment.” H.R.Rep.No.708, 72d Cong., 1st Sess., 27-28 (1932), and with its analysis that a “donee can disclaim a gift without gift tax liability even though the effect of the disclaimer is to pass the property to another person,” which of course is a recognition of the law of disclaimer as set forth in Treas. Reg. § 25.2511-l(c). Further, neither the Tax Court, as it found, nor this court is bound by the decision of the Minnesota District Court. Commissioner v. Bosch, supra.

However, we do not think that Kathryn S. Fuller, 37 T.C. 147 (1961) relied on by the Tax Court, is controlling in this case. In Fuller, the life beneficiary of five-eighths of the income of the testamentary trust received that income for over 25 years before she renounced three-eighths of her five-eighths share. Even though the local Pennsylvania court approved that renunciation, it clearly appears that the life beneficiary in Fuller had completely accepted the testamentary bequest, having made use of the same and benefited therefrom for a period of 25 years, and hence was thus not in any position to make a valid disclaimer. We do not agree with the Tax Court that the above distinction is immaterial.

We believe that comment is in order on the following excerpt of the Tax Court’s opinion:

“The exception from taxation for disclaimers was designed to permit a do-nee to avoid receiving an unwanted gift or bequest within a reasonable time after learning of the gift or bequest; it should not be used as an estate planning and tax avoidance tool.”

We think in giving full and fair effect to the law of disclaimer that a person’s motives are immaterial, and if he has a right to disclaim he may do so for any reason. Persons have a right to and should consider the tax consequences of many of their acts, as taxes take an increasingly larger bite of the income or corpus of individual assets. There appears to be nothing morally reprehensible or legally wrong for a person who has never received the benefit or income from a bequest, to disclaim that bequest, provided of course the disclaimer is done in accordance with the applicable law and the Treasury Regulations implementing that law.

The Tax Court judgment is reversed.

      . Separate decisions were entered in each of the above cases and were identical as to Panline Keinath, Cargill MacMillan, Jr. and Whitney MacMillan, as transferees of assets of Cargill MacMillan, transferor. Pauline MacMillan, the wife of Cargill MacMillan, now deceased, is a party by reason of the consent she signed to treat gifts made by one spouse as made one-half by each spouse pursuant to 26 U.S.C. § 2513.
      The Cargill MacMillan 1967 Trust is included as a party since it holds assets of the disclaimant.

      . Article III of the Will read ns follows: “ARTICLE III. All the rest, residue, and remainder of my estate ... I give, devise, and bequeath to my sons John H. MacMillan, Jr. and Cargill MacMillan, as trustees, in trust for the following uses and purposes:
      “(a) To pay the net income therefrom in convenient installments to my said wife for the term of her natural life.
      “(b) Upon.the death of my said wife the trust hereby created shall thereupon tei’minate and the principal thereof together with any income therefrom subsequent to the death of my said wife, shall be distributed, share and share alike, between my said two sons; should either of my said sons die prior to the termination of this trust the share which such son would have received if then living shall be distributed per stirpes and not per capita among the children and among the lawful issue of a deceased child or children of his, if any. . . . ”

      . That section provides for the imposition of a gift tax upon the transfer of property by gift regardless of whether the transfer is in trust or otherwise and “whether the gift is direct or indirect.” Section 2511(a) reads:
      “(a) Scope. — Subject to the limitations contained in this chapter, the tax imposed by section 2501 shall apply whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible; but in the case of a nonresident not a citizen of the United States, shall apply to a transfer only if the property is situated within the United States.”

      . Treas.Reg. § 25.2511-1 (c) reads in part:
      “(c) The gift tax also applies to gifts indirectly made. Thus all transactions whereby property or property rights or interests are gratuitously passed or conferred upon another, regardless of the means or device employed, constitute gifts subject to tax. See further § 25.-2512-8. Where the law governing the administration of the decedent’s estate gives a beneficiary, heir, or next-of-kin a right to completely and unqualifiedly refuse to accept ownership of property transferred from a decedent (whether the transfer is effected by the decedent’s will or by the law of descent and distribution of intestate property), a refusal to accept ownership does not constitute the making of a gift if the refusal is made within a reasonable time after knowledge of the existence of the transfer. The refusal must be unequivocable and effective under the local law. There can be no refusal of ownership of property after its acceptance. Where the local law does not permit such a refusal, any disposition by the beneficiary, heir, or next-of-kin whereby ownership is transferred gratuitously to another constitutes the making of a gift by the beneficiary, heir, or next-of-kin.”

      . Since all the facts have been stipulated by both parties, our review is limited to determining whether the Tax Court’s decision was induced by an erroneous view of the law. Wilmington Co. v. Helvering, 316 U.S. 164, 168, 62 S.Ct. 984, 86 L.Ed. 1352 (1942) ; C. I. R. v. Riss, 374 F.2d 161, 166 (8th Cir. 1967) ; Lessmann v. C. I. R., 327 F.2d 990, 993-994 (8th Cir. 1964) ; Schoenberg v. C. I. R., 302 F.2d 416, 419 (8th Cir. 1942).

      . Treas.Reg. § 25.2511-1 (c) in part states where local law gives a beneficiary an unqualified right to “refuse to accept ownership of property transferred from a decedent,” the refusal to accept ownership does not constitute the making of a gift, (emphasis added).

      . Commissioner v. Bosch, 387 U.S. 456, 87 S.Ct. 1776, 18 L.Ed.2d 886 (1967) held the federal courts are not bound by a particular decision of a state court regardless of whether the adjudication was non-adversary, consensual, or collusive but instead must apply what they find the state law to be, giving proper consideration to the lower state court’s interpretation.

      . That subdivision reads :
      “Subd. 3. Such disclaimer shall be filed at any time after the creation of the interest, but in all events within six months after the death of the person by whom the interest was created or from whom it would have been received, or, if the disclaimant is not finally ascertained as a beneficiary or his interest has not become indefeasibly fixed both in quality and quantity as of the death of such person, then such disclaimer shall be filed not later than six months after the event which would cause him so to become finally ascertained and his interest to become indefeasibly fixed both in quality and quantity.”

      . That Model Act reads as follows:
      “Section 2. Time and Place of Piling. The disclaimer instrument shall be filed within [10] months after the death of the decedent or the donee of the power, as the case may be, or if the taker of the property or interest is not then finally ascertained or his interest has not become indefeasibly fixed both in quality and in quantity, then not later than [10] months after the event when the taker has become finally ascertained and his interest has become indefeasibl.v fixed botli in qunlity and quantity. 4 Real Property, Probate & Trust J. 658, 664 (1960).