author: PERRY, Senior District Judge.

text:
    The OHIO CASUALTY INSURANCE COMPANY, Plaintiff-Appellee, v. Max D. RYNEARSON, etc., Defendant and Third-Party Plaintiff-Appellant, v. PORTER AND BOSTON, INC., Third-Party Defendant-Appellee.
    No. 73-1736.
    United States Court of Appeals, Seventh Circuit.
    Argued Sept. 19, 1974.
    Decided Dec. 2, 1974.

      Stanley D. Lytal, Fort Wayne, Ind., for appellant.
    John T. Hume, III, William M. Osborn and Grace M. Curry, Indianapolis, Ind., for appellee.
    Before SPRECHER and TONE, Circuit Judges, and PERRY, Senior District Judge.

       Senior District Judge Joseph Sam Perry of the Northern District of Illinois is sitting by designation.

   PERRY, Senior District Judge.

This is an appeal by defendant-appellant, Max D. Rynearson, etc. (“Rynear-son”), from a judgment of the District Court which granted a motion for summary judgment in favor of plaintiff-ap-pellee, the Ohio Casualty Insurance Company (“Ohio Casualty”), upon its complaint for declaratory judgment, denied Rynearson’s cross-motion for summary judgment, and dismissed Rynearson’s third-party complaint against defendant-appellee, Porter and Boston, Inc. (“Porter and Boston”).

There are two issues: (1) Did the District Court err in granting summary judgment for Ohio Casualty? (2) Did the District Court err in dismissing Ryn-earson’s third-party complaint against Porter and Boston?

The District Court made findings of fact summarized as follows:

On or about June 28, 1968, Ohio Casualty issued a liability insurance policy to Max D. Rynearson, d/b/a Hamilton Shores. Under the terms of the insurance contract, Ohio Casualty agreed to pay on behalf of Rynearson all sums which he may become legally obligated to pay as damages because of bodily injury or death to others arising out of premises located % mile southeast of the city limits of Goshen, Indiana on the west side of U.S. Highway 33, Elk-hart Township, Elkhart County, State of Indiana, which premises were used as a drive-in restaurant. On or about May 4, 1969, Chris W. Yoder, a tenant of the restaurant, was fatally electrocuted while working in the restaurant. On either May 4th or 5th, 1969, Ryn-earson became aware of Yoder’s electrocution and death, but failed to notify Ohio Casualty or its agents of the occurrence until March 19, 1971. Ohio Casualty had no knowledge of said occurrence until March 19, 1971. On March 17, 1971, Sadie W. Yoder, Ad-ministratrix of the Estate of Chris W. Yoder, deceased, filed a lawsuit against Rynearson in which she alleged that Yoder’s death was the proximate result of careless and negligent conduct on the part of Rynearson. The aforementioned liability policy defined an “occurrence” as follows: “An occurrence means an accident including injuries, exposure to conditions which results during the policy period in bodily injury or property damage, neither expected nor intended from the standpoint of the insured.” The policy also contained the following clause relating to the duty of the insured in the event of occurrence, claim or suit:
In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable. The named insured shall promptly take at his expense all reasonable steps to prevent other bodily injury or property damages from arising out of the same or similar conditions, but such expense shall not be recoverable under this policy.

The policy was in effect during the period June 28, 1968 to June 28, 1969. The policy specifically described the aforementioned restaurant in the description of hazards section as follows: “% Mile S/E of the City Limits of Goshen on W/S of U.S. 33 S/E, Elkhart, Twp., Elkhart Co., Ind.” Rynearson had prior experience in liability insurance matters by virtue of the following:

(a) From 1956 until 1958 he was a Claims Adjuster for State Farm Mutual Insurance Company.
(b) From 1959 until 1964 or 1965 he was a Claims Adjuster for State Farm Mutual Insurance Company and during this period of time he was promoted to Claims' Superintendent in charge of other Claims Adjusters.
(c) For approximately one year to one- and-a-half years during 1965 and 1966, Rynearson was Claims Manager for National Union Insurance Company.
(d) Rynearson has been a practicing lawyer since 1965 or 1966.
(e) Since 1956, Rynearson has had extensive experience in handling liability claims under the terms and conditions of liability insurance policies.

In an affidavit in support of his motion for summary judgment, Rynearson stated that he did not report the occurrence in question to any representative of Ohio Casualty until a lawsuit had been filed, for the following reasons:

A. Rynearson leased the premises in question to Chris W. Yoder, deceased.
B. Yoder asked for and received permission to make miscellaneous changes, including electrical changes, in the restaurant.
C. When Rynearson received notice of the death of Yoder, it was his understanding that Yoder had electrocuted himself by grabbing hold of a “hot” 220 volt line.
D. At first blush, Rynearson did not think he had any insurance to cover the occurrence because of the existing relationship between himself and Yoder.
E. Only after a search borne of desperation did Rynearson finally discover the endorsement, and then only after a lawsuit had been filed.

On February 5, 1973, Rynearson filed a third-party complaint against Porter and Boston, alleging that he did not notify Ohio Casualty or any of its authorized agents of Yoder’s electrocution and death until March 19, 1971 because he thought, due to the following wrongful omissions of Porter and Boston, that he had no insurance coverage:

(a) Porter and Boston negligently-failed to advise Rynearson verbally that he had coverage for the drive-in restaurant when the policy was delivered.
(b) Porter and Boston negligently failed to advise Rynearson in writing that he had coverage.
(c) By the design of its policy, Ohio Casualty negligently and carelessly, by and through its agent Porter and Boston, failed to apprise and failed to give Rynearson notice of the coverage afforded him.

Rynearson further alleged that because of the trust placed by him in Porter and Boston, there was created a fiduciary relationship flowing from Porter and Boston to Rynearson, and that Porter' and Boston breached that relationship by failing specifically to advise Rynearson of the coverage available to him. Ryn-earson also alleged that he contracted with Porter and Boston for the purpose of obtaining liability insurance on the drive-in restaurant, and that Porter and Boston breached this contract by failing specifically to advise Rynearson of his specific rights and of the specific fact that such insurance was available to him.

The Declaratory Judgment Action

Rynearson strongly contends that the design of the policy misled him into the belief that there was no coverage for Yoder’s death. We must reject this contention for several reasons. First, the extension schedule of the policy describes the premises of its coverage in much the same manner as was used to identify the premises of the drive-in restaurant in the lease agreement by which Rynearson leased the restaurant to Yoder. The extension schedule describes the premises as % of a mile southeast of the city limits of Goshen, on the west side of U.S. 33, Elkhart Township, Elk-hart County, Indiana. The schedule also indicates that the coverage is “a lessor’s risk only.” The lease agreement describes the premises as being located on U.S. Highway 33, one-half mile southeast of Goshen, Elkhart County, Indiana. Second, and most important, Rynearson is a practicing lawyer with several years of experience as a claim adjuster, claim supervisor, and claim manager of insurance companies. With his background, Rynearson possessed special knowledge of insurance contracts, a circumstance which causes him to be held to a higher standard of care in giving notice of a loss. See Stuveysant Insurance Co. v. United Public Ins. Co., 139 Ind.App. 533, 543, 218 N.E.2d 379, 221 N.E.2d 358, 360 (1966), where the court held that insurance corporations, due to the superior knowledge available to them, should be held to a higher standard of reasonable time to give notice of a loss. To like effect, in McPherson v. St. Paul Fire & Marine Ins. Co., 350 F.2d 563, 567 (5th Cir. 1965), the court said:

The record fails to disclose the existence of any extenuating circumstances which would require a relaxation of the notice requirements, [citation omitted.] Lack of knowledge of coverage in the circumstances here present does not constitute a valid excuse for failure to give notice [citation omitted.] J. B. McPherson [the insured] previously had been a licensed general insurance agent for 15 years and was experienced in the insurance business.

Third, although late notice has been excused where the insured was unaware of the existence of a policy, Metropolitan Life Ins. Co. v. Peoples Trust Co., 177 Ind. 578, 584, 98 N.E. 513, 515 (1912), it is not excused where the insured alleges that he was unaware of coverage simply because he failed to read his policy. See General Accident Fire & Life Assurance Corp. v. Prosser, 239 F.Supp. 735, 738 (D.Alaska 1965), where the court said:

Prosser knew about the liability policy that he had but he didn’t know it covered the accident. The only reason Prosser did not have this knowledge is the simple fact that for approximately 23 months he did nothing to determine this and apparently didn’t even bother to read the policy.

Rynearson contends that “It does not stretch the' imagination to believe that the defendant [Rynearson] after viewing the ‘coroner’s certificate of death’ might well have decided as a reasonable and prudent man to believe that no claim for damages would arise.” Brief of Appellant at 21. We do not agree. First, Rynearson’s policy clearly required the insured to give notice of any accident resulting in bodily injury, irrespective of liability. Thus Ohio Casualty was entitled to prompt notice, irrespective of whether or not Rynearson believed that a claim for damages would arise. See Hartford Accident and Indemnity Co. v. Loyd, 173 F.Supp. 7, 11 (W.D.Ark.1959).

Second, although the general rule is that an insured will be excused where, acting as a reasonably prudent person, he believed that he was not liable for the accident, Hartford Accident & Indem. Co. v. Lochmandy Buick Sales, 302 F.2d 565, 566 (7th Cir. 1962), differing fact situations produce different results under the general rule. In Lochmandy, defendant’s president, Lochmandy, was asked to provide automobiles for a parade. He declined, stating that he would furnish his own car but could not agree to furnish other cars because his salesmen owned their own cars and could not be directed by him to use them outside of their business as salesmen. Several of his salesmen, however, including one Miller — a part-time and non-salaried salesman — volunteered to enter their cars. Miller drove his car with a sign on the side, furnished by another salesman, reading: “Welcome Legionnaires — Ernest Miller — Lochmandy Buick Sales, Inc.” During the parade, held on June 23, 1956, Miller’s car ran into one Ruklic and broke his leg. Three days later, Lochmandy learned of the occurrence from Miller, and was advised that the matter had been turned over to Miller’s insurer. Lochmandy’s next notice of the matter was by a letter of April 30, 1958 from Ruklic’s attorney, of intention to sue. Lochmandy sent this letter to his insurer’s agent. Ruklic sued the defendant as Miller’s principal. The insurance company rejected defendant’s request to defend the suit, stating that the defendant had violated its policy by failing to give timely notice of the occurrence. It was stipulated that Lochmandy “was of the opinion that there was no need to notify his insurance company because he was in no way involved, Mr. Miller was not acting as agent for . . . Buick [defendant] and furthermore, Mr. Miller carried his own liability insurance . ” Lochmandy knew of the occurrence a few days after it happened, but gave no notice to his insurer, whose first notice was when Lochmandy forwarded the summons nearly two years later. On these facts the District Court concluded as a matter of law that the defendant did not notify the plaintiff “as soon as practicable after the accident,” as required by the policy; that there was no valid excuse for his failure to do so; and that the plaintiff was not bound to defend defendant. We agreed, saying:

Here Lochmandy made the decisions for Buick [defendant] that it was not liable because Miller was not its agent, and that the notice requirement of Buick’s policy was unnecessary. We think the trial court could decide as a matter of law, on the undisputed facts, that Lochmandy, had there been no insurance, would not have made the decisions for Buick, in the same way, and surely not without a much more thorough investigation; that in making the decisions he did not act as a reasonably prudent person; and that plaintiff was under no duty to defend Buick or pay any judgment obtained by Ruklic against it. We find no error in the court’s decision. [Emphasis added.] 302 F.2d at 567.

Because of his training and experience as a lawyer and former insurance company claim adjuster and claim supervisor, Rynearson possessed knowledge of insurance contracts far superior to that of the average insured. He became aware of Yoder’s death within a day after it occurred, but made no inquiry into the facts surrounding the death. He had an opportunity to inspect his premises and to initiate an immediate investigation. He did neither. Under these circumstances, he can hardly expect this court to decide that he acted as a reasonably prudent person in determining that no claim for damages would arise. Thus, under the authority of Lochmandy too, we must reject Rynearson’s contention.

Rynearson relies heavily on Renuart-Bailey-Cheely Lumber & Supply Co. v. Phoenix of Hartford Ins. Co., 474 F.2d 555 (5th Cir. 1972), in support of his contention that his delay in notice was reasonable in view of the circumstances. We agree that whether a delay in notice is reasonable depends upon the circumstances in each case, but the circumstances in Renuart differ from those in the case at bar. In Renuart, the accident did not occur on the insured’s premises; in the instant case, it did. In the case at bar, the term “occurrence” is clearly defined in the policy as an accident resulting in bodily injury which is neither expected nor intended, and there is no question that the “occurrence” resulted in bodily injury.

Rynearson strongly contends that Ohio Casualty, in order to prevail, must prove that it was substantially prejudiced by the late notice. We hold otherwise on the controlling authority of Hartford Accident & Indemnity Co. v. Lochmandy Buick Sales, supra, where we held that where the notice is unreasonably late, there is a presumption of prejudice as a matter of law. Prompt notice of an accident is of great importance in preparing a defense while the facts may be more readily and accurately ascertainable. The fact that Ohio Casualty was precluded from making a prompt investigation into the electrocution and death of Yoder at a time when the facts were readily and accurately available, and fresh in the minds of witnesses, demonstrably raises the presumption that Ohio Casualty was prejudiced. Rynearson offered no evidence to rebut this presumption. To the contrary, his own testimony established that many physical changes were made in the drive-in restaurant after Yoder’s death and prior to Rynearson’s giving notice. We agree with Ohio Casualty that it was not necessary for the District Court to include a finding of prejudice, for the reason that its finding of unreasonably late notice gave rise to a presumption of prejudice which Ryn-earson did not refute. Our conclusion in this respect is controlled by Hartford Accident & Indemnity Co. v. Lochmandy Buick Sales, supra. Our language in Lochmandy is particularly appropriate to the case at bar and bears repeating:

We think that the District Court in the case at bar could justifiably conclude that the delay was “unreasonable in itself,” gave rise to a presumption of prejudice, and that the presumption was not rebutted. The refusal to include the no prejudice finding was not error. [Emphasis added.] 302 F.2d at 567-568.

Rynearson contends that he should have been excused for his delay in giving notice of Yoder’s death for the reason that Ohio Casualty’s reservation of rights letter of March 29, 1971 indicated that there was a question as to whether coverage for the occurrence was afforded. We must reject this contention. The policy in question covers Rynearson as a “lessor”. As shown in his sworn statement attached to his motion for summary judgment, Rynearson initially leased the restaurant to Chris W.' Yoder and Sadie Yoder in October, 1964. Thereafter, Chris and Sadie Yoder relinquished possession of the premises. Some time prior to May 4, 1969, Rynearson and Chris Yoder agreed to resume their relationship of landlord and tenant, respectively; however, when Sadie Yoder, Administratrix, filed suit against Rynearson, it was not clear to Ohio Casualty whether the relationship between Rynearson and Chris Yoder was that of landlord and tenant, employer and employee, or otherwise.

In an affidavit filed Feb. 13, 1973, Donald Nutter, an adjuster for Ohio Casualty, stated that he called upon Rynear-son during the week of March 22, 1971 in order to commence an investigation into the electrocution and death of Yo-der; that he requested Rynearson to give a complete account of the contractual relationship between Yoder and Rynearson so that Ohio Casualty could determine whether the relationship was that of landlord-tenant or employer-employee, or otherwise; that Rynearson promised to gather all of his leases and records and to dictate a full memorandum of the relationship; that, despite repeated requests by Nutter, Rynearson never fully submitted the requested information until his sworn statement was taken by Ohio Casualty on January 20, 1972; that, because of Rynearson’s failure to provide the information, it was questionable at the time Ohio Casualty served its reservation of rights letter of March 29, 1971 upon Rynearson, whether or not Rynearson had coverage for Yo-der’s death under the liability policy in question, or whether he would have to rely upon the coverage afforded by a workmen’s compensation policy. Therefore Ohio Casualty properly stated in its reservation of rights letter that there was a question of coverage. Neither do we agree that the reservation of rights letter is ambiguous and therefore unenforceable. A reading of the letter indicates that the letter was drafted in language abundantly clear to advise Ryn-earson of Ohio Casualty’s intention to reserve its rights to disclaim coverage due to delayed notice.

Rynearson contends that Ohio Casualty was guilty of waiver and estoppel by continuing to defend him until the District Court’s decision was rendered. We must reject this contention for several reasons. First, Ohio Casualty served a reservation of rights letter upon Rynearson 10 days after its agent was notified of Yoder’s death. Simultaneously, Ohio Casualty retained counsel to defend Rynearson against the Yoder lawsuit. By this procedure, Ohio Casualty not only reserved its right to deny coverage due to the 22-month delay in notice, but it also protected Rynearson from a default judgment. Ohio Casualty continued Rynearson’s defense until the District Court ruled that the policy afforded no coverage to defend Rynearson for Yo-der’s death.

Second, it is recognized in Indiana that an insurer can protect itself from waiver and estoppel by defending an insured under a non-waiver agreement. London Guarantee & Accident Co. v. Siwy, 35 Ind.App. 340, 347-348, 66 N.E. 481, 483 (1903). This court, too, has upheld the creation of a reservation of rights letter from the insurer to the insured. Canadian Universal Ins. Co. v. Northwest Hospital, Inc., 389 F.2d 559, 561 (7th Cir. 1968). By letter of March 29, 1971, Ohio Casualty advised Rynearson that it would undertake his defense against the Yoder lawsuit, but that it specifically reserved its right to disclaim coverage because of Rynearson’s late notice. Rynearson makes no showing that he protested this reservation of rights; thus by his silence he is deemed to have accepted the terms of the letter. Zauderer v. Continental Cas. Co., 140 F.2d 211, 214 (2d Cir. 1944). Furthermore, Ohio Casualty reiterated its reservation of rights in the preamble to Rynearson’s sworn statement taken on January 20, 1972 and filed as Exhibit C to Ohio Casualty’s motion for summary judgment.

Finally, Rynearson had the burden of proving waiver or estoppel, Home Indemnity Co. of New York v. Allen, 190 F.2d 490, 491 (7th Cir. 1951), but failed to offer any evidence thereof. Thus the District Court was required as a matter of law to reject this defense.

The Third-Party Complaint

Ohio Casualty’s action for declaratory judgment proceeded against Rynearson on the sole ground that Rynearson failed to give notice of Yoder’s electrocution until March 19, 1971. Ohio Casualty did not contend that coverage for Yoder’s death was not otherwise afforded, and a reading of the policy indicates that such coverage was indeed otherwise afforded. Rynearson’s third-party complaint against Porter and Boston is in four counts, each count charging— either on a negligence theory or on a breach-of-contract theory — that Porter and Boston breached its duty to advise him that he had coverage for the Yoder claim. The law does not impose such duty upon an insurance agent.

It is fundamental that an insured has a duty to learn the contents of the policy himself, even though it becomes necessary to have some third person read the contents to him. 1 Appleman, Insurance Law and Practice § 1, pp. 9 — 10 (1965 ed.); United Pac. Ins. Co. v. Northwestern Nat. Ins. Co., 185 F.2d 443, 447 (10th Cir. 1950); New York Life Ins. Co. v. McMaster, 87 F. 63, 67 (8th Cir. 1898), cert. denied, 171 U.S. 687, 18 S.Ct. 944; Warren v. Confederation Life Ass’n, 401 F.2d 487, 490 (1st Cir. 1968). Indiana law is in accord. Union Assurance Society, Ltd. v. Reneer, 86 Ind.App. 240, 244, 156 N.E. 833, 834 (1927); Metropolitan Life Ins. Co. v. Alterovitz, 214 Ind. 186, 198, 203, 14 N.E.2d 570 (1938).

Rynearson does not dispute the foregoing rule of law but seeks to avoid its application on two grounds: first, the design of the policy failed to apprise him that coverage was afforded; second, Porter and Boston failed to disclose that it was acting as Ohio Casualty’s agent.

The design argument is founded on the fact that as of June 16, 1969, Ryn-earson had four policies of insurance with Ohio Casualty which had been procured through Porter and Boston. Ryn-earson states that the policy in question covered the drive-in restaurant “by a mere endorsement inserted in the middle of a policy ostensibly issued to cover the defendant’s [Rynearson’s] business ‘Hamilton Shores.’.” Brief of Appellant at 12. Rynearson asserts:

it should be noted that the Ohio Casualty Insurance Company had issued the defendant three (3) different policies of insurance and nowhere in any of these policies was the name “California Drive In” mentioned. A fourth policy of insurance was issued by plaintiff [Ohio Casualty] to the defendant on June 16, 1969, a matter of about forty-four (44) days subsequent to the electrocution of Chris Yoder. This policy did specifically mention the “California Drive In” but was for material damage coverage only.
Brief of Appellant at 16.

Rynearson further asserts:

It is submitted that it was difficult for the defendant and any attorney to understand this oblique procedure. It is further submitted that this procedure ... is inherently deceptive and amounts to negligence in giving the defendant fair and adequate notice of the entire extent of his insurance coverages.
Brief of Appellant at 12.

Rynearson contends that it is a question for the jury to decide whether under the foregoing circumstances Porter and Boston had a duty to advise Rynearson of its “oblique procedure”; if so, whether this duty was breached; and whether any damages were proximately caused by the conduct of Porter and Boston.

There are several answers to the design argument. First, there are five Ohio Casualty policies in the record. The first policy is the liability policy for the period June 28, 1968 to June 28, 1969. The second policy is a fire insurance policy for the period Feb. 13, 1970 to Feb. 13, 1973. The third policy is a fire insurance policy for the period Feb. 13, 1967 to Feb. 13, 1970. The fourth policy is a scheduled property floater policy for the period Feb. 13, 1967 to Feb. 13, 1970. The fifth policy is a scheduled property floater policy for the period Feb. 13, 1970 to Feb. 13, 1973. Rynear-son’s brief refers to two additional policies, neither of which is in the record; the first is described as policy No. OCF 309 52 62 issued to Max D. Rynearson d/b/a California Drive In (Brief of Appellant at 8), and the second is described as a material damage policy issued June 16, 1969 on the California Drive In (Brief of Appellant at 12). Of these seven policies, the only policies in effect on May 4, 1969, the date of Yoder’s electrocution, were the first (the liability policy in question), the third (fire insurance), and fourth (scheduled property floater). Neither the third nor the fourth policy afforded any wrongful death liability coverage. The result is that only the first policy could possibly have afforded Rynearson coverage for the Yoder claim. Therefore it was the only policy which he needed to read.

Second, Rynearson states that at the time of the electrocution, he owned not only the drive-in restaurant just outside Goshen, where Yoder was electrocuted, but also a mobile home park in Hamilton, Indiana. Brief of Appellant at 8. He further states that the policy in question “listed only the geographical location of the ‘California Drive In’ on an endorsement and then not in a very clear manner.” Brief of Appellant at 10. The policy as a whole affords coverage not only for the restaurant outside Goshen, but also for hired and non-owned automobiles located at Indianapolis, Indiana, and for premises located at Hamilton, Indiana. Thus three geographical locations — not just one — are covered in the policy.

Third, the fact that the drive-in restaurant premises are afforded coverage in the middle of the policy in question is of no help to Rynearson. The premises are described near the top of the page in typewritten words larger than the words in the printed parts of the policy. Moreover, as indicated above, this was the only Ohio Casualty policy which afforded Rynearson any wrongful death liability coverage at the time of Yoder’s electrocution.

As for Rynearson’s argument that Porter and Boston failed to disclose that it was acting as Ohio Casualty’s agent, we need only point out that Rynearson’s amended third-party complaint does not contain any contention that Porter and Boston failed to disclose that it was acting as agent for Ohio Casualty. The principle that new issues or new bases for liability may not be raised for the first time on appeal is too well known to require citation.

For all of the foregoing reasons, the decision of the District Court is affirmed.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    RIVER VALLEY, INC., a corporation, Appellee, v. DUBUQUE COUNTY et al., United States of America and Rowland F. Kirks, Director, Administrative Office of the U. S. Courts, Appellants. UNITED STATES of America and Rowland F. Kirks, Director, Administrative Office of the U. S. Courts, Petitioners, v. Hon. Edward J. McMANUS, Chief Judge, United States District Court for the Northern District of Iowa, Respondent.
    Nos. 74-1500, 74-1588.
    United States Court of Appeals, Eighth Circuit.
    Submitted Oct. 16, 1974.
    Decided Dec. 10, 1974.

      Appeal dismissed and mandamus denied.
    Neil H. Koslowe, Atty., Appellate Section, Civ. Div., U. S. Dept, of Justice, Washington, D. C., for appellants.
    James H. Reynolds, Dubuque, Iowa, for appellee.

      Before GIBSON, Chief Judge, and LAY and STEPHENSON, Circuit Judges.
   PER CURIAM.

Rowland F. Kirks, the Director of the Administrative Office of the United States Courts (hereinafter called the Director), has filed a petition for a writ of mandamus and, alternatively, a notice of appeal from an order to show cause why he should not be held in contempt under 18 U.S.C. § 401(3) for refusing to authorize payment of certain fees in a civil proceeding as ordered by the district court pursuant to 28 U.S.C. §§ 1915 and 753(f).

River Valley, Inc., is a private nonprofit corporation created pursuant to 42 U.S.C. § 2790 for the purpose of coordinating various welfare programs under the Economic Opportunity Act of 1964, 42 U.S.C. §§ 2781 et seq. When various state and federal agencies sought to change River Valley into a public agency under that act, River Valley brought suit in the district court to block the change and to get financial and technical assistance from those state and federal agencies. Among the parties were the national, state and regional directors of the federal Office of Economic Opportunity. Injunctive relief was sought against the federal agencies as well. The United States Attorney for the State of Iowa appeared on behalf of the federal agencies and officers. When the district court denied relief, River Valley sought leave to appeal to this court in forma pauperis. The United States appeared by and through the Assistant United States Attorney, Robert Sikma, and filed a resistance to this motion, based, inter alia, on the ground that River Valley was a corporation and, as such, not entitled to appeal in forma pauperis under 28 U.S.C. § 1915. The district court, the Hon. Edward J. McManus presiding, ruled to the contrary. He found that River Valley’s appeal was not frivolous and granted leave to appeal in forma pauperis. When the United States appeared on appeal before this court, it filed an appellee’s brief on the merits of the case but did not resist the in forma pauperis order. River Valley was allowed, pursuant to the district court’s order, to docket the case without filing fee and proceed under our Rule 11 in forma pauperis. After certification under §§ 1915 and 753(f) the court reporter prepared a full transcript for the appellant corporation and on April 2, 1974, submitted his claim to the Administrative Office for payment in the sum of $197.00. On April 26, 1974, the Administrative Office refused on the ground that §§ 1915 and 753(f) did not authorize free transcripts for corporations. On June 3, 1974, the district court entered the order to show cause why the Director should not be held in contempt. This appeal and alternative petition for a writ of mandamus followed.

The Director urges that the district court erred in finding River Valley eligible to proceed in forma pauperis since § 1915 was intended to apply only to natural persons. See S.O.U.P., Inc. v. Federal Trade Commission, 146 U.S.App.D.C. 66, 449 F.2d 1142 (1971); Atlantic S.S. Corp. v. Kelley, 79 F.2d 339 (5th Cir. 1935); Quittner v. Motion Picture Producers & Distributors, 70 F.2d 331 (2d Cir. 1934); Honolulu Lumber Co., Ltd. v. American Factors, Ltd., 265 F.Supp. 578 (D.Hawaii 1966), aff’d on other grounds, 403 F.2d 49 (9th Cir. 1968).

The Director’s separate appeal from the show cause order must be dismissed as premature. The appeal is from an interlocutory order, not a final order appealable to this court. See United States v. Ryan, 402 U.S. 530, 91 S.Ct. 1580, 29 L.Ed.2d 85 (1971); Cobbledick v. United States, 309 U.S. 323, 60 S.Ct. 540, 84 L.Ed. 783 (1940); Duffy v. Dier, 465 F.2d 416 (8th Cir. 1972). It is urged that the Supreme Court’s recent decision on the merits of the Watergate tapes question in United States v. Nixon, 418 U.S. 683, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974), provides support for an appeal at this stage of the contempt proceedings. However, the Court explained that in the “unique setting” of that case, a confrontation between two branches of government, traditional limitations on the right of appeal were not applicable. Those considerations do not obtain here, and the appeal is premature.

Alternatively the Director urges that mandamus should lie since the district court was without authority to certify a corporation eligible under § 1915. The extraordinary writ of mandamus may lie where a district judge usurps power and acts beyond his jurisdiction. But even if the district court may have erred in its construction of § 1915 (which we do not decide), manda- ■ mus is not appropriate here. A district court has initial authority under §§ 1915 and 735(f) to authorize in forma pauperis appeals. Steffler v. United States, 319 U.S. 38, 63 S.Ct. 948, 87 L.Ed. 488 (1943). The mere fact that a court acts erroneously is not usurpation of power. “Jurisdiction to decide is jurisdiction to make a wrong as well as the right decision.” Hoffman v. Celebrezze, 405 F.2d 833, 835 (8th Cir. 1969). As the Supreme Court observed in Bankers Life & Cas. Co. v. Holland, 346 U.S. 379, 74 S.Ct. 145, 98 L.Ed. 106 (1953):

[Jurisdiction need not run the gauntlet of reversible errors. The ruling on a question of law . . . was made in the course of the exercise of the court’s jurisdiction to decide issues properly brought before it. Ex parte American Steel Barrel Co., 230 U.S. 35, 45-46, [33 S.Ct. 1007, 57 L.Ed. 1379] (1913); Ex parte Roe, 234 U.S. 70, 73, [34 S.Ct. 722, 58 L.Ed. 1217] (1914). Its decision against petitioner, even if erroneous — which we do not pass upon — involved no abuse of judicial power.

Id. at 382, 74 S.Ct. at 148. See also Will v. United States, 389 U.S. 90, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967).

The Director urges that as a third party, however, he has no other recourse to obtain a ruling and that mandamus should lie in such an exceptional case as this. We disagree. Although the Director and the Administrative Office were not named parties to the earlier litigation, they are nevertheless bound by the earlier judgment against the United States. The question of whether River Valley was entitled to proceed in forma pauper-is on appeal was decided adversely to the United States in the district court and under the doctrine of res judicata, that judgment is not now open to collateral attack. The district court’s memorandum and order of February 11, 1974, certifying that the appeal was not frivolous and allowing River Valley to proceed in forma pauperis invokes 28 U.S.C. §§ 753(f) and 1915(a) which require the United States to pay the court reporter’s expenses in preparing the transcript. The district court expressly ordered the United States to pay the expenses. In the original action the United States directly contested, through the United States Attorney, the order allowing the appeal in forma pauperis. On the appeal of the merits, the government did not renew its resistance by motion or appeal as to the in forma pauperis order.

The Supreme Court observed in Drum-mond v. United States, 324 U.S. 316, 65 S.Ct. 659, 89 L.Ed. 969 (1945):

If the United States in fact employs counsel to represent its interest in a litigation or otherwise actively aids in its conduct, it is properly enough deemed to be a party and not a stranger to the litigation and bound by its results. Compare United States v. Candelaria, 271 U.S. 432, [46 S.Ct. 561, 70 L.Ed. 1023; 10 Cir.,] 16 F.2d 559, with Logan v. United States, [10 Cir.,] 58 F.2d 697. But to bind the United States when it is not formally a party, it must have a laboring oar in a controversy.

Id. at 318, 65 S.Ct. at 660; see also Restatement of Judgments § 84 (1942). Clearly, the United States had a laboring oar in the opposition to the in forma pauperis appeal in the district court proceedings.

The Director’s lack of personal knowledge is not sufficient to bar the application of res judicata between officers of the same government. As the Supreme Court stated in Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 60 S.Ct. 907, 84 L.Ed. 263 (1940):

Where the issues in separate suits are the same, the fact that the parties are not precisely identical is not necessarily fatal. ... A judgment is res judicata in a second action upon the same claim between the same parties or those in privity with them. Cromwell v. County of Sac, 94 U.S. 351, [24 L.Ed. 195]. There is privity between officers of the same government so that a judgment in a suit between a party and a representative of the United States is res judicata in reliti-gation of the same issue between that party and another officer of the government. See Tait v. Western Maryland Ry. Co., 289 U.S. 620, [53 S.Ct. 706, 77 L.Ed. 1405]. The crucial point is whether or not in the earlier litigation the representative of the United States had authority to represent its interests in a final adjudication of the issue in controversy. Where a suit binds the United States, it binds its subordinate officials.

Id. at 402-403, 60 S.Ct. at 916-917.

As a subordinate official, the Director is bound by the judgment below. See also George H. Lee Co. v. Federal Trade Commission, 113 F.2d 583, 585—586 (8th Cir. 1940).

We view the controversy between the Administrative Office and the district court as unfortunate to say the least. We express grave doubts as to the propriety of the district court’s order requiring the Director to show cause why he should not be held in contempt. The proper course for the Director, however, would have been to resist, on behalf of the United States, the grant of the in forma pauperis appeal in this court after the district court ruled. The Director, like any other agent of government or private citizen, was not at liberty to disobey the court’s order because he felt it was in error.

We find that the writ of mandamus should be denied. The appeal is ordered dismissed for lack of jurisdiction. We assume that the court reporter’s fees will be paid pursuant to the district court’s order of February 11, 1974. Even though that order may have been in error it is a final judgment from which no appeal was taken. Upon payment of the fees under the terms of the district court’s order, the order to show cause will be dissolved.

It is so ordered.

      . The appellees’ brief is entitled “Brief of Ap-pellees, United States of America and Du-buque Co., Iowa.”

      . River Valley’s appeal was submitted to a panel of this court on May 17, 1974, and the order of the district court was affirmed on June 19, 1974. River Valley, Inc. v. Dubuque County, No. 74-1141 (8th Cir. June 19, 1974). The mandate of this court issued July 15, 1974.

      . Although § 1915 was amended in 1959 to substitute the word “person” for “citizen,” it is urged that the amendment was intended only to extend the statute’s benefits to aliens and not to corporations. See S.R.Rep.No.747, 86th Cong., 1st Sess. (1959).

      . Rule 2(c) of this court allows our court to entertain motions and hear objections as to the granting or denial of in forma pauperis appeals.

      . The Director’s argument that he had no knowledge of the controversy in district court cannot be similarly asserted as to the penden-cy of the in forma pauperis appeal. The Administrative Office did have notice of the request by the court reporter for reimbursement of his fee on or before April 16, 1974. The Chief Procurement Officer authorized payment of it on April 16, 1974. Final payment was ultimately withheld and during April and May the Administrative Office corresponded with the district court as to its objection that River Valley was a corporation and not eligible to proceed in forma pauperis. At no time did the Director, as suggested by the district court, raise his objections to the in forma pauperis order in this court during the pend-ency of the appeal. The case was not argued in this court until May 17, 1974.


author: HEANEY, Circuit Judge.

text:
    Fred Douglas PARKER, Appellant, v. UNITED STATES of America, Appellee.
    No. 74-1636.
    United States Court of Appeals, Eighth Circuit.
    Submitted Nov. 15, 1974.
    Decided Dec. 13, 1974.
    Certiorari Denied April 14, 1975.
    See 95 S.Ct. 1576.
    Fred D. Parker, pro se.
    Donald J. Stohr, U. S. Atty., and J. Kenneth Lowrie, Sp. Atty., Crim. Div., U. S. Dept, of Justice, St. Louis, Mo., filed printed brief for appellee.
    Before LAY and HEANEY, Circuit Judges, and SMITH, Senior District Judge.

       TALBOT SMITH, Senior District Judge, Eastern District of Michigan, sitting by designation.

   HEANEY, Circuit Judge.

Petitioner Fred Parker was convicted, along with two codefendants, of two counts of distributing heroin in violation of 21 U.S.C. § 841(a)(1) and of one count of conspiracy to do the same. The subject of this appeal is the District Court’s dismissal of his subsequent motion under 28 U.S.C. § 2255 for vacation of sentence and judgment. His sole ground of attack against the conviction is that he was unconstitutionally subjected to double jeopardy because he was convicted after an earlier trial had ended in a mistrial. We affirm.

A brief recitation of the facts concerning the first trial is necessary. On the second day of that trial, after some evidence had already been taken, a juror indicated to the court that she had heard on a radio broadcast that the trial had previously been postponed because a prosecution witness had been threatened. All three defendants immediately moved for a mistrial. The court suggested that it would proceed with a jury of eleven if all of the defendants agreed, and asked the defense counsel to discuss this option with the defendants. After a brief recess, two of the defendants, including the petitioner, declared a willingness to proceed with eleven jurors. The third defendant insisted on a jury of twelve. The court then declared a mistrial as to all defendants. At his second trial, the petitioner made no objection on double jeopardy grounds.

The government contends that the petitioner is barred from asserting the double jeopardy defense, because he did not raise it at his retrial. It points to the following language of this Court:

Constitutional immunity from double jeopardy is a personal right which if not affirmatively pleaded by the defendant at the time of trial will be regarded as waived.

Ferina v. United States, 340 F.2d 837, 838 (8th Cir.), cert. denied, 381 U.S. 902, 85 S.Ct. 1446, 14 L.Ed.2d 284 (1965).

We repeated this language in United States of America v. John Conley, 503 F.2d 520 at 521 (8th Cir. 1974). The petitioner, however, urges that Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938), requires a “knowing and intelligent waiver” of a constitutional right, and that such a waiver is impossible where the defendant is not personally aware of that right. He contends that such a waiver cannot be found where counsel has failed to object without advising his client of the existence of the constitutional defense.

The question of whether counsel is empowered to effectively waive the double jeopardy defense without his client’s knowledge is a difficult one which we leave to a future decision, because we conclude that the petitioner was not twice placed in jeopardy.

It is settled that a defendant is not placed twice in jeopardy within the meaning of the Fifth Amendment where a mistrial is declared, even over his objection, on the ground of “manifest necessity.” United States v. Perez, 22 U.S. (9 Wheat) 579, 580, 6 L.Ed. 165 (1824). It is equally settled that, where prejudicial publicity has reached the jurors, there is “manifest necessity” which will justify aborting the trial. See Simmons v. United States, 142 U.S. 148, 154, 12 S.Ct. 171, 35 L.Ed. 968 (1891). Here, a juror had heard information which could have been highly prejudicial to the defendants. The petitioner’s argument that the information was not in fact prejudicial is specious, in light of his motion for a mistrial when the juror first informed the court of what she had heard. The decision of whether or not to grant a defendant’s motion and declare a mistrial is within the sound discretion of the trial judge. See Logan v. United States, 144 U.S. 263, 298, 12 S.Ct. 617, 36 L.Ed. 429 (1891); United States v. Perez, supra, 22 U.S. at 580, 6 L.Ed. 165. Neither the prosecutor nor the court was to blame for the radio broadcast, and the dismissal of the juror was for the benefit of the petitioner, not the state. Thus, this case is unlike United States v. Glover, 506 F.2d 291 (2d Cir. 1974).

It is also within the court’s discretion to reject a defendant’s motion to proceed with a jury of eleven. Federal Rule of Criminal Procedure 23(b) provides that

* * * at any time before verdict the parties may stipulate in writing with the approval of the court that the jury shall consist of any number less than 12. (Emphasis supplied.)

The notes of the Advisory Committee indicate that the rule was intended to codify the Supreme Court’s decision in Patton v. United States, 281 U.S. 276, 50 S.Ct. 253, 74 L.Ed. 854 (1930). That case was the first instance in which that Court held that a criminal defendant had the power to consent to a trial by less than twelve jurors. At the same time, the Court spelled out the necessity of obtaining the trial court’s consent:

In affirming the power of the defendant in any criminal case to waive a trial by a constitutional jury and submit to trial by a jury of less than twelve persons * * * we do not mean to hold that the waiver must be put into effect at all events. * * * Not only must the right of the accused to a trial by a constitutional jury be jealously preserved, but the maintenance of the jury as a fact-finding body in criminal cases is of such importance and has such a place in our traditions, that, before any waiver can become effective, the consent of government counsel and the sanction of the court must be had, in addition to the express and intelligent consent of the defendant. And the duty of the trial court in that regard is not to be discharged as a mere matter of rote, but with sound and advised discretion, with an eye to avoid unreasonable or undue departures from the mode of trial or from any of the essential elements thereof, and with a caution increasing in degree as the offenses dealt with increase in gravity.

Id. at 312-313, 50 S.Ct. at 263 (Emphasis supplied.)

It is, therefore, clear that a defendant has no absolute right to proceed with a jury of less than twelve.

Two circuits have ruled explicitly that there is no double jeopardy where the trial court refuses to proceed with eleven jurors, even when the defendant desires to do so. See United States v. Potash, 118 F.2d 54, 56 (2d Cir.), cert. denied, 313 U.S. 584, 61 S.Ct. 1103, 85 L.Ed. 1540 (1941); Gardes v. United States, 87 F. 172 (5th Cir.), cert. denied, 171 U.S. 689, 19 S.Ct. 884, 43 L.Ed. 1179 (1898). Here, the matter was further complicated by the fact that different defendants made conflicting demands.

The petitioner stresses the implicit command of United States v. Jorn, 400 U.S. 470, 487, 91 S.Ct. 547, 27 L.Ed.2d 543 (1971), that a trial judge faced with a mistrial motion which is opposed by a criminal defendant should consider all other alternatives which would not involve reprosecution.’ See United States v. Walden, 448 F.2d 925, 929 (4th Cir. 1971), rev’d on reconsideration en banc, 458 F.2d 36, modified, 464 F.2d 1015, cert. denied, Ard v. United States, 409 U.S. 867, 93 S.Ct. 165, 34 L.Ed.2d 116 (1972). We agree that it would be an abuse of the trial court’s discretion not to do so. However, the trial judge did consider the alternatives here. After all three defendants demanded a mistrial, it was the trial court which suggested the possibility of proceeding with eleven jurors, if all would consent. When one refused, the judge had to choose the solution which he thought would be fairest to all defendants. On the facts of this case, the decision to retry all three defendants was within his discretion. See Whitfield v. Warden of Md. House of Correction, 486 F.2d 1118, 1124 (4th Cir. 1973). The petitioner was certainly not willing to continue the trial without removing the juror. He demanded a remedy for the interjection of prejudice, and the remedy which he initially demanded was granted. A claim of double jeopardy does not arise from the retrial of a defendant following a mistrial declared upon that defendant’s own motion. See Roberts v. United States, 477 F.2d 544, 545 (8th Cir. 1973). In effect, despite the petitioner’s later wish to proceed with eleven jurors, that was what took place here. We find no double jeopardy in the petitioner’s retrial and conviction.

Affirmed.

      . The waiver “rule” may not be as absolute as we have stated it. Where we have purported to apply it, we have alternatively held that there was no double jeopardy, see Ferina v. United States, 340 F.2d 837, 839 (8th Cir.), cert. denied, 381 U.S. 902, 85 S.Ct. 1446, 14 L.Ed.2d 284 (1965); Kistner v. United States, 332 F.2d 978, 980 (8th Cir. 1964), reversed the conviction on other grounds, see United States of America v. John Conley, 503 F.2d 520 (8th Cir. 1974), or noted that the issue was still open to the petitioner in state court. See Pope v. United States, 434 F.2d 325, 329 (8th Cir. 1970), cert. denied, 401 U.S. 949, 91 S.Ct. 953, 28 L.Ed.2d 232 (1971). Moreover, we have not explicitly held that counsel may bind a defendant by his failure to raise the double jeopardy issue. On the power of counsel to waive constitutional rights, see Henry v. Mississippi, 379 U.S. 443, 451-452, 85 S.Ct. 564, 13 L.Ed.2d 408 (1965); Winters v. Cook, 489 F.2d 174 (5th Cir. 1973) (en banc); Pope v. Swenson, 395 F.2d 321, 326 (8th Cir. 1968); and Developments in the Law — Federal Habeas Corpus, 83 Harv.L.Rev. 1038, 1109-1112 (1970).

      . For the same reason, we reject the petitioner’s assertion that an evidentiary hearing on the § 2255 motion was necessary to determine if the waiver of the defense was knowing and intelligent. Nor was an evidentiary hearing needed on the issue of double jeopardy, since all of the facts concerning the mistrial are on the record.


text:
    Marnick C. NARAINE, Appellant, v. WESTERN ELECTRIC COMPANY, INC., Appellee.
    No. 74-1498.
    United States Court of Appeals, Eighth Circuit.
    Submitted Nov. 14, 1974.
    Decided Dec. 18, 1974.

      Benjamin M. Wall, Omaha, Neb., for appellant.
    Hird Stryker, Omaha, Neb., for appel-lee.
    Before CLARK, Associate Justice, STEPHENSON, Circuit Judge, and MEREDITH, District Judge.

       Associate Justice Tom C. Clark, United States Supreme Court, Retired, sitting by designation.

       Chief Judge James H. Meredith, United States District Court for the Eastern District of Missouri, sitting by designation.

   PER CURIAM.

This is an appeal from a bench decision dismissing appellant’s claims of racial discrimination in his promotion, granting of home sick leave, and discharge under 42 U.S.C. §§ 1981 and 2000e-5. From the record, the background of the dispute between appellant and his employer follows.

Training.

Naraine, a dark-skinned East Indian Hindu, was born in Guyana, South America, emigrated to the United States, and in June, 1959 was granted a B.S. degree in Natural Sciences from Midland College, where his grades were slightly below a straight “B” average. He also studied for one year in graduate courses at the University of Nebraska.

Naraine’s Work Record.

His work record included six months at Aaron Ferer and Sons as a part-time laboratory assistant, conducting routine lead analysis; full-time attendant at the Douglas County Hospital for some five months; six weeks at Warren Douglas Chemical Company as supervisory trainee; and, finally, some seven years with Western Electric beginning in August, 1961, as a floor cleaner in its Omaha works. Fearing that Western Electric would not hire him in this position if he revealed his college degree, he represented to the Company that he had 2V2 years of college training. This prompted an inquiry by the Company as to whether he understood that the job of cleaner primarily involved the cleaning of floors. He indicated that he understood what the task involved but said he was in need of work so badly that he was ready to accept any position and it was the only job available. He remained in the cleaner position until December 17, 1962, when he became a forklift operator with Western Electric for six months. He was unhappy in both positions; his attendance record was poor in the cleaner position as was his attitude and initiative. In the spring of 1962, Naraine advised Western Electric of his true educational background, and his name was submitted in September for a position as a Chemical Laboratory Assistant, Grade 206, but his prior poor attendance record prevented his selection. He improved his attendance record and in May, 1963, another opening occurred in the Western Electric Laboratory, and Naraine was selected to fill the position after the Company had sent two of its Supervisors to interview the Dean of Midland College and its Vice President. He began work in the Laboratory at a 206 grade, was promoted to Grade 208 in less than nine months and to the salaried position of Engineering Associate (Grade 210) on July 1, 1965. He remained in this nonprofessional engineering level position until discharged on June 21, 1968.

There were some 75 to 100 Engineering Associates at the Omaha Works of Western Electric during the period Na-raine was in that category. The Western Electric Guide for Promoting Engineering Associates to the Professional Engineering Level sets out two requirements: (1) outstanding performance as an Engineering Associate; and (2) demonstrated ability to perform a wide range of professional engineering assignments.

The Discharge.

The discharge came about soon after Naraine had an automobile accident (May 30, 1968) and a subsequent flareup of an ulcer which had been bothering him since 1965. On June 17, 1968, he went to see the company physician to relate to him the recommendation of his private physician that Naraine take two weeks off to return to his former home in Guyana. But the Company physician could not agree. He advised against the trip, believing that Naraine should stay where his doctor was located so the latter could keep him under observation and treatment. Moreover, he advised that he did not think going to Guyana would relieve Naraine’s stress.

During the meeting, the Company physician called in Mr. Mulligan, Manager of Western Electric’s Benefit Service program, and told him, in Naraine’s presence, that the latter had “reached a point of recovery where his return to 'work was almost eminent [sic].” The Company medical records on Naraine recites that Naraine’s doctor understood and felt that Naraine was “fit for work today.” Mr. Mulligan then refused Na-raine’s request. In view, however, of Naraine’s insistence that he was not feeling well and wished to stay home for the rest of the week, the Company doctor classified him as “not fit” and scheduled a re-examination four days later.

After this interview, Naraine went to see his supervisor, R. B. Burton, and asked if he could be granted leave without pay. Burton stated that he could not act while Naraine was on sick leave, but only when he was found fit to work and released by the Company doctor. Further, Burton stated that the Company had a heavy backlog at the moment and needed him badly. Without further discussion, Naraine left the plant and took a two-week trip to Guyana, later testifying that he thought he was getting “the run around.”

On his return, July 8, Naraine reported to the Company doctor, complaining of headaches and other ulcer symptoms and stated he did not feel able to go to work. However, the Company doctor classified him as “fit” and Naraine reported to Burton, his supervisor, who told him that he was under suspension. Subsequently, he was discharged by the Manager of the Engineering Division at Omaha for taking the unauthorized absence, an act which was thought to reflect appellant’s irresponsibility and, in light of his generally low job performance record, his unfitness for professional duties.

Naraine’s Claims.

Three issues are raised by Naraine. He contends, first, that Western Electric did not articulate a legitimate non-discriminatory reason for failing to promote him by citing (a) his absentee record while employed as a cleaner of floors and toilet bowls; (b) his poor performance evaluations that carried over the results of both Naraine’s initial employment as a cleaner and Western Electric’s previous discrimination against him; and (c) its alleged inability to physically examine and care for him during his two-week sick leave at home when a majority of its white employees are recruited from an area that permits them to take leave at home and still be available for physical examination.

Second, he argues that while Western Electric’s ground for discharging him was his failure to report for physical examination and for taking off two weeks without permission, the normal penalty for such conduct is not discharge but is only loss of sick benefits. Further, he argues that the court’s finding of nondiscrimination by race or color ignored evidence that Western Electric’s percentage of minority employees was less than that of its community (6 percent vs. 10 percent); its percentage of minority technicians and professionals was at best a token (2.3 percent and 2 percent respectively vs. 10 percent); and Naraine was repeatedly passed over or ignored for promotion to which he was qualified, was refused sick leave when white employees were granted the same on like grounds, was denied sick leave recommended by his physician, and was discharged for irresponsible conduct when such a forfeiture had never been suffered by any employee before.

Third, Naraine complains of the refusal of the Court to admit into evidence a letter dated September 10, 1968, from Western Electric to the Defense Supply Agency in which the former dealt with some of its equal opportunity employment problems. Naraine now claims the letter to be an admission against interest.

Western Electric’s Position.

Western Electric asserted that Na-raine met none of the requirements for promotion and that it did not discriminate in the hiring, promotion, or discharge of him. Its proof consisted of the following: (a) low performance ratings attained by Naraine, all of which were known to him and none of which qualified him for promotion to the professional Engineering level, and (b) statistics showing that no more than 2 percent of the Engineering Associates at its Omaha plant attained the rank of Professional Engineer within a three-year period and that it was not unusual for an Engineering Associate to remain so during the rest of his employment with Western Electric. Moreover, the Company asserted that Naraine was irresponsible and had deliberately and consciously defied company orders, thereby exhibiting conduct which was deleterious to the proper conduct of its engineering staff and required the exercise of the ultimate sanction of discharge.

The Judgment of the District Court.

We have carefully examined the record, the exhibits, the rulings and judgment of the trial judge. We conclude that there are no grounds on which we could say that any of his findings are clearly erroneous. The fallacy in Naraine’s reasoning is that he assumes that the burden is on Western Electric to prove non-discrimination. However, the burden is on him to affirmatively prove racial discrimination and this he has failed to do. All of the direct evidence in this regard is against him. From the very inception of his employment as a cleaner he indulged in absenteeism; later he concluded that he had reached a plateau in the “Chem Lab,” and became impatient and restless because he felt, incorrectly we think, that as a college graduate his talents were not being fully utilized and his pay was not equal to that of employees having similar education and experience. His parade of some 14 “passovers” is not sustained by the record. Of the 13 specific “passovers” listed by Naraine in his brief, three were occasioned by his “bad attitude,” a problem which the evidence clearly indicates he suffered greatly from; the remainder of the positions open were filled by persons who outranked Naraine in service or seniority or were obviously better educated and had wider experience, such as James Travnacek, who had a B.S. degree from Wisconsin with broad experience as a Laboratory Technician and Chemist. He joined Western Electric in 1966 as an Engineering Associate and was made a Planning Engineer eleven months later. Travnacek was chosen subsequently as one of thirty engineers from a national group of 7000 to attend a two-year program at the Engineering Research Center at Princeton, graduation from which carried a Master’s Degree from Lehigh University.

In support of his case, Naraine offered statistical data contrasting the racial makeup of Western Electric’s employees with that of the Omaha community. The comparison might suggest that equal employment opportunity was not the prevailing policy of Western Electric. Since such statistics alone have been held sufficient to constitute a prima facie case and to shift the burden of proof to the employer, see Reed v. Arlington Hotel Co., 476 F.2d 721, 723 (8th Cir. 1973); Parham v. Southwestern Bell Tel. Co., 433 F.2d 421, 426 (8th Cir. 1970); accord, Spurlock v. United Airlines, Inc., 475 F.2d 216 (10th Cir. 1972), we must look to the evidence presented by the company to justify the alleged discriminatory practices. Even assuming that appellant had made out a prima facie case, we conclude here that Western Electric has provided satisfactory explanation for the discharge of Naraine and has therefore rebutted the charges brought by appellant. Cf. Heard v. Mueller Company, 464 F.2d 190 (6th Cir. 1972).

Nor do we find the court’s refusal to admit a letter, marked as Exhibit 4 and dated September 10, 1968, from Western Electric to the Defense Supply Agency reversible error. At trial the letter was offered in evidence without any witness to authenticate it or to lay any foundation or relevancy for its admission. On objection the court refused to admit it. Naraine now claims that it was offered as an admission against interest. Whatever was its purpose, we fail to see its probative value in the light of the entire record and, the trial being without a jury, we find the error, if any, harmless.

Finally, Naraine objects to his discharge as being too harsh. On first blush it might appear harsh but a close study of the record supports the discharge. Furthermore, the trial court heard all of the evidence, saw the witnesses and is, we believe, the best judge of the relief that is appropriate. The judgment is, therefore, affirmed.

      . His student visa status prohibited full-time employment, but in January, 1961, he married a United States citizen which changed his immigration status permitting full-time employment.

      . He resigned because he had not been made supervisor within six weeks which he testified he felt was “long enough” to learn the business.

      . Subsequent to his discharge, Naraine went into the restaurant business for himself and has been very successful. At oral argument, counsel indicated that if successful in this case, Naraine would turn the restaurant over to his wife.


author: PALMIERI, District Judge:

text:
    GOLCONDA MINING CORPORATION, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. GOLCONDA MINING CORPORATION, Petitioner-Appellee, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellant.
    Nos. 72-3202, 73-1162 and 73-1161.
    United States Court of Appeals, Ninth Circuit.
    Nov. 19, 1974.

      F. A. LeSourd (argued), LeSourd, Patten, Fleming & Hartung, Seattle, Wash., for petitioner-appellant (72-3202) and cross-appellee.
    William S. Estabrook, III, Asst. Atty. Gen. (argued), Tax Div., U. S. Dept, of Justice, Washington, D. C., for respondent-appellee and cross-appellant.
    Before CHOY and WALLACE, Circuit Judges, and PALMIERI, District Judge.

       United States District Judge for the Southern District of New York, sitting by designation.

   PALMIERI, District Judge:

Golconda Mining Corporation (Golconda), a publicly held Idaho corporation, has operated in the Coeur d’Alene mining district of that state for many years. An area approximately 30 miles long by 20 miles wide, the Coeur d’Alene has been recognized as one of the principal mining areas of the world for the production principally of lead, zinc, silver and by-products of copper and gold. In recent years it has produced almost half of the nation’s silver.

During the period involved in this case Golconda stock was listed on three stock exchanges in this country and one in Canada.

Golconda appeals from a decision of the United States Tax Court, 58 T.C. 139 and 58 T.C. 736 (Supplemental Opinion on motion for reconsideration), entered on September 27, 1972, insofar as it held that Golconda was liable for a deficiency in income tax due to the Commissioner for the year 1966. The Commissioner of Internal Revenue appeals from the decision of the Tax Court insofar as it held that Golconda was not subject to the tax imposed under the Internal Revenue Code of 1954, 26 U.S.C. §§ 531-537, and particularly § 533, the “accumulated earnings” tax, for the years 1962 through 1965. The notices of appeal were timely filed and this Court has jurisdiction. 26 U.S.C. §§ 7482, 7483.

The detailed facts as found by the Tax Court appear in the reported decisions, supra, and need not be reiterated here.

The Application of the Accumulated Earnings Tax to Publicly Held Corporations

The Tax Court recognized that the threshold question presented for its decision was whether the accumulated earnings tax may be imposed upon a publicly held corporation. That Court expressed its awareness of the underlying legislative history of § 533 which demonstrated Congress’ recognition that the tax had not been applied to publicly held corporations. It held, nevertheless, that under the section’s language the tax was “theoretically” applicable to any corporation irrespective of the nature of its ownership, thereby deciding the threshold question adversely to Golconda. While its ultimate finding was that for the years 1962 through 1965 petitioner did not accumulate its earnings and profits beyond the reasonable needs of its business, the appeal of the Commissioner of Internal Revenue (Commissioner) from this finding, as well as Golconda’s appeal as to the year 1966, place this issue squarely before us.

Since the enactment of the Revenue Act of 1913, 38 Stat. 166, and the advent of the accumulated earnings tax established therein, there has been only one instance in which the tax was applied to a publicly held corporation — Trico Products Corp. v. Commissioner, 137 F.2d 424 (2d Cir. 1943); Trico Products Corp. v. McGowan, 169 F.2d 343 (2d Cir. 1948). Relying upon these cases the Tax Court stated (58 T.C. 139, at 158-159) that,

“. . . the mere fact that petitioner had from 1,500 to 2,900 shareholders during the years in issue and petitioner’s management group owned or controlled no more than approximately 12 to 17 percent of its issued and outstanding stock cannot preclude per se further inquiry into whether the facts disclosed in this proceeding dictate that the accumulated earnings tax be imposed upon petitioner for any of the years involved herein.”

We believe the reliance of the Tax Court upon the Trico cases was misplaced. The Trico cases involved a corporation that for the tax years in question was owned and controlled by a group of twenty-one shareholders who held between 62 and 68 per cent of the company’s total shares, either directly or indirectly through their ownership of a type of holding company which owned 55 per cent of the taxpayer corporation. The holding company itself was controlled by six stockholders who held 85 per cent of its stock and of these six it is clear that at least two were the guiding officers and it appears that all six were officially involved in the management of the company in one capacity or another.

“In practice, the accumulated-earnings provisions are applied only to closely held corporations, controlled by relatively few shareholders.” United States v. Donruss Co., 393 U.S. 297, 310, 89 S.Ct. 501, 508, 21 L.Ed.2d 495 (1969) (concurring opinion of Harlan, J.), citing the legislative history of the reenactment of the tax in the Internal Revenue Code of 1954, S.Rep.No.1622, 83d Cong., 2d Sess. 69 (1954), and B. Bittker & J. Eustice, Federal Income Taxation of Corporations and Shareholders 213 — 14 (2d ed. 1966). See also 7 Mertens, Law of Federal Income Taxation § 39.54 at 110 (1967 Rev’n) and id. § 39.54, at 18 (1974 Supp.).

The House version of the reenactment contained a provision which would have specifically excepted corporations which had more than 1,500 shareholders and no more than ten per cent of the stock of which was held, either directly or constructively, by any individual from the accumulated tax provisions. H.R.8300, 83d Cong., 2d Sess. § 532 (1954). The Report specifically noted that “as a practical matter, the provision has been applied only in cases where 50 percent or more of the stock of a corporation is held by a limited group” and “the area of tax avoidance through retention of corporate earnings is confined to closely held companies.” H.R.Rep.No.1337, 83d Cong., 2d Sess. 54, U.S.Code Cong. & Admin.News, p. 4080 (1954). Section 532 of the House bill was deleted by the Senate, which also recognized that “as a practical matter, the provision has been applied only in cases where 50 percent or more of the stock of a corporation is held by a limited group.” S.Rep.No. 1622, 83d Cong., 2d Sess. 69, U.S.Code Cong. & Admin.News, p. 4700 (1954). The Senate’s reason for not providing a specific exemption for publicly held corporations, however, was not to include them expressly as being subject to the accumulated earnings tax, but rather because,

“Testimony before your committee has indicated that it would be very difficult for many corporations which are generally recognized to be publicly held to establish from its records that no more than 10 percent of its stock is held by an individual and members of his family. Yet if publicly held corporations are to be exempted from this tax it is recognized that a requirement of this type is needed. In view of this and the fact that this tax is not now in practice applied to publicly held corporations, your committee believed it was desirable to remove the exemption provided for such corporations by the House bill.” Id.

There is, of course, no distinction in the statutory language between publicly and closely held corporations. See also Treas.Reg. § 1.532 — 1 (1959). Yet, as the Supreme Court stated in Helvering v. Winmill, 305 U.S. 79, 83, 59 S.Ct. 45, 46, 83 L.Ed. 52 (1938), “Treasury regulations and interpretations long continued without substantial change, applying to unamended or substantially reenacted statutes, are deemed to have received congressional approval and have the effect of law.”

While the Tax Court could justifiably conclude that H. F. Magnuson and Wray Featherstone, Golconda’s president, were important and influential stockholders, it is simply not the case that, as a matter of law, these persons, in concert with others, who owned at most approximately seventeen per cent of the outstanding stock of Golconda, could exercise such “control” over the corporation as to bring it within the congressionally-ap-proved accumulated earnings tax provisions.

Golconda had cumulative voting for directors throughout the years in question. The seventeen per cent ownership by Magnuson and the officers and directors of the company would only entitle them to seventeen per cent representation on the board of directors. That Feather-stone and Magnuson solicited proxies on behalf of the incumbent management naming them as “attorney and proxy” is nothing more than the perquisite of their positions as members of management as well as stockholders.

As the Tax Court recognized, David A. Noyes & Co., a Chicago securities brokerage house, owned about as much stock in Golconda as Magnuson, and at one point claimed control of some 440,000 shares of its stock or approximately twenty-two per cent.

Thus, even if a person or group of persons could be said to effectively control a company with less than fifty per cent ownership of its stock for the purposes of the accumulated earnings tax, there is nothing to show that the group of people associated with Magnuson did so in this instance as stockholders. With the reenactment of the accumulated earnings tax in the Internal Revenue Code of 1954, 26 U.S.C. §§ 531— 537, Congress did not intend to change the longstanding practice and application of the tax to closely held corporations and these corporations alone. Golconda was, and apparently still is, a widely held, publicly owned corporation whose stock is similarly and actively traded. It is, therefore, not subject to the accumulated earnings tax provisions.

What we have already said leads us to conclude that the accumulated earnings tax should not have been applied in this case and that Golconda is entitled to prevail with respect to all the years in question, namely 1962 through 1966. We hold the Tax Court was in error in holding the accumulated earnings tax to be applicable to publicly held corporations, and we remand with directions to enter its decision in each case consonant with this opinion.

APPENDIX

Internal Revenue Code of 1954 (26 U.S.C.):

§ 531. Imposition of accumulated earnings tax

In addition to other taxes imposed by this chapter, there is hereby imposed for each taxable year on the accumulated taxable income (as defined in section 535) of every corporation described in section 532, an accumulated earnings tax equal to the sum of—

(1) 27V2 percent of the accumulated taxable income not in excess of $100,000, plus
(2) 38x/2 percent of the accumulated taxable income in excess of $100,-000.

§ 532. Corporations subject to accumulated earnings tax

(a) General rule. — The accumulated earnings tax imposed by section 531 shall apply to every corporation (other than those described in subsection (b)) formed or availed of for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of any other corporation, by permitting earnings and profits to accumulate instead of being divided or distributed.

(b) Exceptions. — The accumulated earnings tax imposed by section 531 shall not apply to—

(1) a personal holding company (as defined in section 542).
(2) a foreign personal holding company (as defined in section 552), or
(3) a corporation exempt from tax under subchapter F (section 501 and following).

§ 533. Evidence of purpose to avoid income tax

(a) Unreasonable accumulation determinative of purpose. — For purposes of section 532, the fact that the earnings and profits of a corporation are permitted to accumulate beyond the reasonable needs of the business shall be determinative of the purpose to avoid the income tax with respect to shareholders, unless the corporation by the preponderance of the evidence shall prove to the contrary.

* * * * * *

§ 535. Accumulated taxable income (a) Definition. — For purposes of this subtitle, the term “accumulated taxable income” means the taxable income, adjusted in the manner provided in subsection (b), minus the sum of the dividends paid deduction (as defined in section 561) and the accumulated earnings credit (as defined in subsection (c))-

(b) Adjustments to taxable income. —For purposes of subsection (a), taxable income shall be adjusted as follows:

(1) Taxes. — There shall be allowed as a deduction Federal income and excess profits taxes (other than the excess profits tax imposed by sub-chapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940) and income, war profits, and excess profits taxes of foreign countries and possessions of the United States (to the extent not allowable as a deduction under section 275(a)(4)), accrued during the taxable year or deemed to be paid by a domestic corporation under section 902(a)(1) or 960(a)(1)(C) for the taxable year, but not including the accumulated earnings tax imposed by section 531, the personal holding company tax imposed by section 541, or the taxes imposed by corresponding sections of a prior income tax law.
* $ * * * *

§ 537. Reasonable needs of the business

(a) General rule. — For purposes of this part, the term “reasonable needs of the business” includes—

(1) the reasonably anticipated needs of the business.
******

       See Appendix appended hereto.


author: GODBOLD, Circuit Judge:

text:
    CHURCH OF GOD IN CHRIST, INC., Plaintiff-Appellee, v. Reverend A. L. CAWTHON et al., Defendants-Appellants.
    No. 74-1213.
    United States Court of Appeals, Fifth Circuit.
    Feb. 3, 1975.
    George Sladczyk, Jr., Robert P. Walker, Port Arthur, Tex., for defendants-appellants.
    Gerald J. Goodwin, Houston, Tex., for plaintiff-appellee.
    Before RIVES, GODBOLD and GEE, Circuit Judges.
   GODBOLD, Circuit Judge:

This is a factional dispute over the possession, use and control of a small church building and lot in Port Arthur, Texas.

The property in question was acquired in 1921 by conveyance to named persons as trustees for the First Church of God in Christ of Port Arthur, Texas (the “local church”).

In 1922 the plaintiff Church of God in Christ, Inc., (the “national church”) was incorporated in the State of Tennessee pursuant to a resolution adopted by the General Assembly of that church conducted in Memphis, Tennessee. The incorporation papers reveal that the Church of God in Christ was already carrying on worship in several states and that the persons designated as incorpora-tors were a number of “overseers” from these several states. The headquarters of the church at all times has remained at Memphis.

For many years after 1922 the national church was under the general supervision of its founder, Bishop Mason. The organizational structure was somewhat loosely maintained. A local church could be “brought in” to the national church by its pastor or a bishop. A bishop could “set in order” a local church by examining it and if he found it accepted the doctrines and rules and regulations of the national church, then it could become a member of the national church. No certificates were issued to local churches evidencing their membership in the national church.

The 1922 charter was amended several times. By around 1970 there were approximately 10,000 member churches in the United States.

In the 1950’s or 1960’s the local church adopted the new name White Rose Church of God in Christ of Port Arthur, Texas. Following the death of Bishop Mason in the 1950’s factional differences arose. In litigation in the State of Tennessee the national church was required to tighten its structure and procedures and to formalize the previously somewhat unstructured ties with its member churches. As a part of this overhauling of the church structure a new (amended) charter was filed in Tennessee in 1972.

In 1972 the national church appointed a new presiding bishop over the Southeast Texas District, in which Port Arthur is located. The former bishop challenged the authority of the national church to remove him and the power of the new bishop as well. Litigation ensued in the state courts of Texas over this dispute, which ultimately was decided adversely to the former bishop. While this controversy was going on, the defendant Rev. A. L. Cawthon was serving as pastor of the local church. He refused to recognize the authority of the new bishop and on August 8, 1972 was removed. A new pastor was appointed and for several weeks conducted services in the church without incident.

While his removal was pending Rev. Cawthon formed the opinion that if the local church were incorporated the new bishop could not remove him. In late October, after his removal, he moved forward with the incorporation. He met with what he described as the largest group of members, composed of persons “following him,” and they voted to incorporate. A nonprofit Texas corporation was formed called “The White Rose Church of God In Christ of Port Arthur, Texas.” Rev. Cawthon and two other persons favorable to him “became” trustees in a business session conducted by Rev. Cawthon. On November 27, 1972 these new trustees executed a deed purporting to convey the local church property to the new corporation. Subsequently, on December 4, by letter from his attorney to the attorney for the new bishop, Rev. Cawthon renounced all allegiance to the national church. These events led to several confrontations at the local church between the factions led, respectively, by the new minister and by Rev. Cawthon as to which was entitled to use and enjoyment of the property. This litigation ensued, and during its pendency the two factions have used the church on alternate Sundays.

The District Court, following a nonju-ry trial, found:

It is undisputed that since 1922, up until 1972, no one had questioned the fact that the White Rose Church of God in Christ was in fact a member of and subservient to the National Church. All objective and subjective criteria support this conclusion.

Also the court found that the purported deed of November 27 to the new Texas corporation was void because executed by persons without authority or capacity to convey the property. Underlying this conclusion, the court noted that the deed was executed nearly four months after Rev. Cawthon’s removal, following which he had no voice or control over the property of the local church. Further, the court noted that under the charter of the national church a conveyance of real estate of a local church was required to be approved by the bishop of Southeast Texas, which approval had not been received. Also, we note that a member church may withdraw from the national church only with approval of the General Assembly.

The District Court held that Rev. Caw-thon and his followers could withdraw from the national church and form an independent group, but that when they did they relinquished their rights in and to the local church property. It concluded that the national church has a “property interest” in the local church which is subject to protection by the court, and it enjoined the defendants from interfering with the local church, its present pastor and officers and their use of the church property for services, and from purporting to act on behalf of the local church, and enjoined them from holding meetings in the church property without the consent of the pastor, from disposing of church property, and from attempting to exercise possessory control over the church premises. On appeal the defendants have directed their contentions to the matter of use and control of the church premises rather than to those parts of the judgment relating to holding offices in the local church and acting on its behalf. We affirm the decision of the District Court.

The evidence adequately supports the finding that the local church was a member of and subservient to the national church. Rev. Cawthon repeatedly acknowledged that the White Rose Church was “a part of the national church.” He acknowledged that the local church was part of the Southeast Texas District of the national church. He acknowledged that the local church made reports to the national church and that as pastor he operated under the national church’s constitution as amended in 1952, and specifically the section thereof requiring that deeds conveying church property contain a clause providing that the premises be maintained and disposed of as a place of worship for the ministry and membership of the national church subject to the doctrine, laws and usages of the [national] church as from time to time declared by its General Assembly. That clause, or a similar one, had appeared in the constitution of the national church as early as 1926 or 1927. Rev. Cawthon acknowledged that the Port Arthur property was “supposed to be” subject to this provision but asserted that “nobody has ever gone by it.” Rev. Cawthon, in his capacity as pastor of the local church, was a credentials-holding delegate to the 1971 General Assembly of the national church and to the 1972 General Assembly that adopted the amended constitution and by-laws.

The plaintiff relies, as did the District Court, upon Browning v. Burton, 273 S.W.2d 131 (Tex.Civ.App.1954), which involved a suit between two disputing local factions. A local church for many years had been affiliated with and conducted its affairs under the discipline of a national church. The members of the local church considered themselves members of the national church, ministers were ordained by the national church and appointed by it to serve in the local church. The alignment with the national church was never questioned until a faction of the local church, led by the incumbent pastor, sought to withdraw from the national church and affiliate with another national church, and trustees executed a deed of the church property to the local church under its new affiliation. The faction loyal to the national church filed suit. The Texas Court of Civil Appeals held that the withdrawing members could not destroy the identity of the local church and could not take the property of that church with them into a new and independent organization. It held that right to possession of the church property remained with the local church, which it identified as the body of the congregation desiring to continue affiliation with the national church, and held also that the rights and obligations of its members were to be determined by the discipline and laws of the national church, including provisions for withdrawal from membership.

The defendants rely upon African M. E. Church v. Independent African M. E. Church, 281 S.W.2d 758 (Tex.Civ.App. 1955, err. reg. N.R.E.). But in that case the pastor and entire membership of the local church withdrew from the national church pursuant to a discipline which permitted each individual member to withdraw at will and provided that title to church property is in the local church. The entire congregation, withdrawn and reorganized, was the same body of persons for whom the trustees were holding title. The court recognized and distinguished Browning.

In the instant case, there were two disputing factions in the local congregation but the plaintiff is the national church, which seeks to protect the interests in the property which it enjoys as part of a hierarchical church organization, and seeks also to exclude possession, use and interference by the local faction that has renounced adherence to the plaintiff national church.

Having concluded on what we have held to be adequate evidence that the local church was a member of and subservient to the national church, the District Court was correct in enjoining the dissident faction from attempting to exercise acts of possessory control over the local church property and from interfering with the local church property and with the conduct of services therein by the local faction loyal to the national church, and in holding that the deed to the newly created corporation was void. Browning does not bar that result but supports it. In Browning, with the national church not a party to the suit, the court held thq local group loyal to the national church to have the right to possession and control. Here the national church is a party and, as a church of hierarchical polity, has established its right to possession and control.

The 1972 amended constitution of the national church provided for the first time for issuance of certificates of membership to local churches conferring or exemplifying membership in the national church. The Port Arthur local church had not received a certificate. The General Secretary of the national church explained that it was intended that every local church receive a certificate and that his office was engaged in issuing them but had not been able to complete the mechanical task. We do not view the provision for a certificate as abrogating the prior relationship between the national church and a local church acquired by long years of less formalized affiliative participation.

The contention that jurisdictional amount was not properly proved is without merit and requires no discussion.

The decision of the District Court is affirmed.

      . While the exact date is unclear we infer that this was after Rev. Cawthon’s removal.

      . Qualifying this on one occasion by the phrase “under the leadership of Bishop Ranger [the ousted bishop of Southeast Texas].”

      . Another article of the 1952 constitution provides: “No Board of Trustees may divert property from the use of the Church of God in Christ.”

      . See Watson v. Jones, 13 Wall. 679, 80 U.S. 679, 722, 726, 20 L.Ed. 666, et seq. (1871); Kedroff v. St. Nicholas Cathedral, 344 U.S. 94, 118, 73 S.Ct. 143, 97 L.Ed. 120 (1952); Presbyterian Church v. Hull Church, 393 U.S. 440, 448, 89 S.Ct. 601, 21 L.Ed.2d 658 (1969); Maryland and Virginia Churches v. Sharps-burg Church, 396 U.S. 367, 90 S.Ct. 499, 24 L.Ed.2d 582 (1970); Northside Bible Church v. Goodson, 387 F.2d 534, 547 (CA5, 1967).

      . His office was, as he succinctly put it, “short handed and short monied.”