author: JOHN W. PECK, Circuit Judge.

text:
    Sue Ellen Baker JAMES, Plaintiff-Appellant, v. GERBER PRODUCTS COMPANY, The Old State Bank of Fremont, et al., Defendants-Appellees.
    No. 73-1022.
    United States Court of Appeals, Sixth Circuit.
    Argued April 13, 1973.
    Decided Sept. 5, 1973.

      John H. Schomer, Jackson, Mich., for plaintiff-appellant; Domke, Marcoux, Allen & Beaman, Jackson, Mich., of counsel.
    Roger M. Clark and Joel E. Krissoff, Grand Rapids, Mich., for defendants-ap-pellees; Warner, Norcross & Judd, Grand Rapids, Mich., on brief for Gerber Products Company, and others; Hill-man, Baxter & Hammond by Douglas W. Hillman, Grand Rapids, Mich., on brief for Old State Bank of Fremont, and others.
    Before PECK, MILLER and LIVELY, Circuit Judges.
   JOHN W. PECK, Circuit Judge.

This appeal presents the difficult question as to whether a beneficiary of a testamentary trust from which securities are sold has proper standing to sue under Rule 10b-5 of the Securities and Exchange Commission, 17 C.F.R. § 240.-10b-5. The District Court dismissed the action for lack of standing. We conclude that appellant possessed the requisite standing.

Plaintiff-appellant is the beneficiary of two trusts from which 15,000 shares of Gerber Products Co. stock were sold. Two transactions are involved and each included a sale of Gerber stock by the trustee to the defendant-appellee, Gerber Products Co. The first transaction involved a 1966 sale of 10,000 shares; the second was of 5,000 shares, sold in 1968. Both Gerber and the defendant-appellee, Old State Bank, which operates as trustee, are located in Fremont, Michigan, a community of less than 4,000. The trustee sold the shares directly to Gerber, rather than through a broker, at prices equal to the New York Exchange closing price for the stock on the dates of the sales. The transactions were reflected in the trustee’s annual accountings filed in the local probate court, but the buyer’s identity was not disclosed. Corporate officers and directors from Gerber were members of the Bank’s Trust Committee and of the Bank’s Board of Directors. In addition, Gerber maintained substantial deposits in the Bank during the period in question.

Appellant complains as to the interlocking relationship between the Board of Directors of Gerber and the Board and Trust Committee of the Bank. She charges that inside information furthered the stock purchase scheme, that material facts were withheld from the proxy statements and that she did not become aware of them until February, 1970. The Gerber stock was sold in 1966 at an “unusually low fair market value,” appellant alleges, to fund an executive stock option plan with an inexpensive stock reserve. At least some of the dual capacity executives participated in the stock plan. The stock sold in 1968 at a higher price.

According to the appellant, these activities create two causes of action. The first alleges violation of the Securities Act of 1934, § 10(b), 15 U.S.C. § 78j(b); and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5. The second cause of action is based on alleged violations of state (Michigan) fiduciary laws, M.C.L. A. § 704.37, a claim based on pendent jurisdiction.

In the District Court, the defendants-appellees denied any fraud or deception in connection with the transactions in issue and claimed that the sales were completely fair, were prudent from a trust investment standpoint, were fully reported in the trustee’s annual accounting and were made in compliance with the SEC rules governing an issuer’s purchase of its own listed shares. In addition, the appellees raised separate defenses based on the appellant’s lack of standing to maintain an action under Rule 10b-5 since it is apparent from the face of the complaint that the appellant was not a party to the transactions which she claims violated § 10(b). The standing defenses were treated as motions to dismiss the complaint for failure to state a claim upon which relief can be granted under Rule 12(b) of the Federal Rules of Civil Procedure. A hearing was held in the District Court, briefs were filed and the Court ruled that the appellant lacked standing to maintain an action under Rule 10b-5. Both the 10b-5 claim and the pendent state law claims were dismissed, the latter without prejudice. This appeal was perfected from the District Court’s order granting the dismissal.

The Securities Act of 1933, 15 U.S.C. § 77a et seq., and the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., were enacted in part to restore the public’s confidence in the stock market following the public investment frauds of the 1920’s and the market crash of 1929. See, A. Bromberg, Securities Laws:, Fraud — SEC Rule 10B-5, § 2.2 at 21-22.9 (1969). Section 10(b) of the 1934 Act prohibited fraudulent securities transactions and pursuant to that section, the Securities Exchange Commission in 1942 enacted Rule 10b-5. Promulgated as a broad anti-fraud provision, the Rule was designed to reach a wide scope of deceptive activities in securities transactions without regard to the limitations of a common law action for fraud. See SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 193-195, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963); also, Hooper v. Mountain States Securities Corp., 282 F.2d 195, 201 (5th Cir. 1960), cert. denied, 365 U.S. 814, 81 S.Ct. 695, 5 L.Ed.2d 693 (1961).

The Rule does not expressly call for civil liability but in the first reported civil action based on 10b-5, Kardon v. National Gypsum Co., 69 F.Supp. 512 (E.D.Pa.1946), it was impliedly recognized that civil liability existed. The result spawned a vast body of federal common law under the statute and rule. Concomitantly, limitations as to plaintiffs eligible to sue also developed. One such formidable restriction is referred to as the “purchaser-seller” requirement which was established in the celebrated case of Birnbaum v. Newport Steel Corp., 193 F.2d 461 (2d Cir. 1952), cert. denied, 343 U.S. 956, 72 S.Ct. 1051, 96 L.Ed. 1356. That case involved a derivative action by minority shareholders of Newport Steel complaining that the majority shareholder sold his 40% interest for approximately twice its market value after misrepresenting and rejecting an alleged attractive merger offer that would have been highly profitable for all shareholders. The plaintiffs had not purchased or sold in reliance on the alleged misrepresentation and were complaining of the abuse of the fiduciary obligations by the defendant, a corporate director and insider. The Court of Appeals found that the plaintiffs did not have standing to sue and upheld the dismissal of the complaint on the dual ground that § 10(b) “. . . was directed solely at that type of misrepresentation or fraudulent practice usually associated with the sale of or purchase of securities rather than at fraudulent mismanagement of corporate affairs and that Rule [10b-5] extended protection only to the defrauded purchaser or seller.” 193 F.2d at 464.

Birnbaum’s standing requirement has been the subject of considerable criticism, but subsequent decisions have tempered its effect by rejecting a strict view of the purchaser-seller concept without repudiating Birnbaum. See, e. g., Vine v. Beneficial Finance Co., 374 F.2d 627 (2d Cir. 1967), cert. denied, 389 U.S. 970, 88 S.Ct. 463, 19 L.Ed.2d 460 (standing granted since shareholder was forced to sell his shares at a later time); A. T. Brod & Co. v. Perlow, 375 F.2d 393 (2d Cir. 1967) (defrauded stockbroker granted standing when client refused to pay for ordered securities) ; Hooper v. Mountain States Securities Corp., supra (trustee in bankruptcy granted standing to sue for injured corporation); Schoenbaum v. Firstbrook, 405 F.2d 200, reviewed en banc, 405 F.2d 215 (2d Cir. 1968), cert. denied, sub. nom., Manley v. Schoenbaum, 395 U.S. 906, 89 S.Ct. 1747, 23 L.Ed.2d 219 (1969) (shareholder can bring derivative action).

It appears, moreover, that the purchaser-seller restriction has been abandoned in suits seeking prospective injunctive relief. In Mutual Shares Corp. v. Genesco, Inc., 384 F.2d 540 (2d Cir. 1967), minority shareholders sought to enjoin a controlling shareholder from depressing the price of the corporation’s stock by manipulation. Since the shareholders had not capitulated to the manipulation and sold their stock, they were neither purchasers nor sellers of the securities in the strict sense. However, the Court granted injunctive relief, reasoning that the minority shareholders were the “logical plaintiffs” to enforce the Act. See also, Britt v. Cyril Bath Co., 417 F.2d 433 (6th Cir. 1969); Kahan v. Rosenstiel, 424 F.2d 161 (3d Cir. 1970), cert. denied, sub. nom., Glen Alden Corp. v. Kahan, 398 U.S. 950, 90 S. Ct. 1870, 26 L.Ed.2d 290. In subsequent cases, however, the Second Circuit has emphasized that despite the Mutual Shares decision regarding injunction suits, the Birnbaum rule remains applicable to damage suits. Greenstein v. Paul, 400 F.2d 580 (2d Cir. 1968); Iroquois Industries, Inc. v. Syracuse China Corp., 417 F.2d 963 (2d Cir. 1969), cert. denied, 399 U.S. 909, 90 S.Ct. 2199, 26 L.Ed.2d 561 (1970).

From a review of these cases, we are unable to devise a precise common standard for application to the case before us, but it would appear though that where the alleged deceptive practices have led or would lead the shareholder into a completed transaction giving rise to a § 10(b) suit, the courts have generally inclined to a logical and flexible construction of the term “purchaser-seller” in order to accommodate the avowed purpose of § 10(b) of protecting the investing public and of ensuring honest dealings in securities transactions.

Appellant argues that the recent Supreme Court decision in Superintendent of Insurance v. Bankers Life & Casualty Co., 404 U.S. 6, 92 S.Ct. 165, 30 L.Ed.2d 128 (1971), has altered the Birnbaum standing rule. The case involved a state liquidator representing the rights of the creditors and suing in the name of Manhattan Casualty Co. Rule 10b-5 violations by Manhattan’s sole shareholder were alleged. The shareholder had purchased the stock in Manhattan from Bankers Life for $5 million by inducing a bank to issue a check without collateral as payment. The new owner then caused Manhattan to sell its U. S. Treasury bonds, the proceeds of which were turned over to the bank as payment for the advance of the $5 million earlier that day. A worthless $5 million certificate of deposit was then obtained to make it appear both to Manhattan’s directors and on the corporation’s books that the proceeds of the bond sale had been used to purchase the certificate. The Court’s opinion is explicitly based on the only one of the three transactions, i. e., the bond sale, in which the defrauded plaintiff was not directly involved as the purchaser or seller of the securities. In fact, the Court specifically declined to consider the purchaser-seller standing requirement. 404 U.S. at 13 n.10, 92 S.Ct. 165. Therefore we conclude that Bankers Life has not repudiated the Birnbaum standing requirement. Accord : Haberman v. Murchison, 468 F.2d 1305, 1311 n.5 (2d Cir. 1972); Mount Clemens Industries, Inc. v. Bell, 464 F.2d 339, 344 (9th Cir. 1972). Contra: Tully v. Mott Supermarkets, Inc., 337 F.Supp. 834 (D.N.J.1972). See also, Entel v. Allen, 270 F.Supp. 60 (S.D.N. Y.1967).

We conclude that the interests intended to be served by Rule 10b-5 and the Birnbaum decision are best promoted by providing standing to the appellant. Because of the nature of our holding, we do not find it necessary to reach the question of Birnbaum’s continued viability in this Circuit. A principal purpose of § 10(b) and Rule 10b-5 is to protect purchasers and sellers of securities from those who deal unfairly with them. SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 847 (2d Cir. 1968) (en banc), cert. denied, sub. nom., Coates v. SEC, 394 U.S. 976, 89 S.Ct. 1454, 22 L.Ed.2d 756 (1969). This broad purpose of investor protection is of course consistent with the broad language of both the statute and the rule. As described earlier, the climate to which the statute was a response gives weight to the conclusion that the intent of the enactment was to repair the market’s integrity by proscribing manipulation and inducement designed to encourage investors to engage in transactions in which they would not ordinarily engage. See, Whitaker, The Birnbaum Doctrine: An Assessment, supra at 591.

Appellant does not claim that she took any action with respect to the subject transactions nor that she had the power to do so. But she does imply that had she the power or even foreknowledge of the transaction, she would have sought to prevent the transactions. As beneficiary, she was the person who was to be benefitted by the sale and thus she had the interests of a de facto seller. In this respect she is much closer to the transaction than the plaintiffs in the Birnbaum case. In Birnbaum, the plaintiffs were not involved to any extent in the sale of securities which were the subject of the complaint. This point was described in Heyman v. Heyman, 356 F.Supp. 958, 965 (S.D.N.Y.1973), as the “. . . nexus missing in the line of cases which follow Birnbaum.” We agree. In that case, the beneficiary of a trust which was funded by the proceeds of a sale of corporate stock claimed that the defendant corporation purchased the shares at less than their fair market value. The sale was pursuant to a stockholders’ agreement requiring the corporation to purchase, upon the death of any stockholder, all of the stock owned by the decedent stockholder at its fair market value. Plaintiff complained that the sale was based on book value and the true value of the shares was concealed from her. The District Court found that the beneficiary did have proper standing to sue for the alleged violation of Rule 10b-5. It held that conferring standing was consistent with the purpose of Birnbaum and emphasized the beneficiary’s close connection with the sale.

On the other hand, Gerber makes the argument that “[the] distinction between investor [meaning trustee] interests and beneficial interests with respect to trust property may properly serve as the basis for an exclusive definition of the scope of Rule 10b-5.” We have difficulty with that argument for the reason that the trustee’s interest in consummating the transactions at issue was to benefit the beneficiary. The very niceties of Gerber’s legal distinctions may be misleading. The trustee’s promotion of any interest other than the beneficiary’s, such as its own, would be fraudulent. Therefore, as applies to these circumstances, separating the legal and beneficial incidents of ownership in the property is a mere technical argument since there is only one interest at stake and that is the beneficiary’s. No one here argues that if the trustee had been defrauded into selling the shares, it could not initiate an action for relief under 10b-5. But of course, if the trustee was a party to any fraud, it could scarcely be expected to institute such an action. Consequently, were we to accept the appellee’s argument, we would be faced with an unacceptable situation where alleged fraudulent securities transactions occurred which, if true, are prohibited by federal statute and regulation but the party in interest who actually suffered the fraud would be without an avenue of redress in the federal courts.

Rule 10b-5 was intended to prohibit all fraudulent schemes in connection with the purchase or sale of securities and it has been often stated that novel or atypical transactions are not to be excluded from its ambit. See, e. g., A. T. Brod v. Perlow, supra; Vine v. Beneficial Finance Co., supra. We view Birnbaum’s import as denying shareholders a federal courtroom to litigate all matters of alleged corporate fraud under the auspices of Rule 10b-5. We agree that the seemingly infinite varieties and complexities of fraud which are possible in today’s securities markets militate strongly against a federal inquiry into each allegation of fraud in securities transactions, but our decision is not inconsistent with those considerations.

Since neither the statute nor the Rule require a purchaser-seller restriction, the decision in Birnbaupn can be viewed not only as reflecting a fear of overabundant litigation but also as avoiding a field traditionally reserved to the states. As to the latter, under Birnbaum federal courts have denied jurisdiction to suits under § 10(b) where the fraud alleged is simply corporate mismanagement or a breach of fiduciary duty for which there is an adequate state remedy. See, Herpich v. Wallace, 430 F.2d 792, 808 (5th Cir. 1970); Simmons v. Wolfson, supra. However, in the Bankers Life case, cited supra, the Supreme Court, speaking through Mr. Justice Douglas, clearly implied that federal securities law was appropriate in a fraud situation notwithstanding the existence of an available state remedy. 404 U.S. at 12, 92 S.Ct. 165, 30 L.Ed.2d 128. Adding support to that implication is the fact that the inexorable growth of law with respect to § 10(b) demonstrates that for policy reasons private enforcement should be encouraged to reduce the incidence of fraud and to effectuate the purpose of the statute. Too, we are unable to ignore the caution of Bankers Life, 404 U.S. at 12, 92 S.Ct. 165, 30 L.Ed.2d 128, to view § 10(b) “flexibly” rather than “technically or restrietively.” In viewing § 10(b) flexibly, we are satisfied that the proscription of § 10(b) against fraud “in connection with the purchase or sale of any security” is furthered and that we remain within the purpose of Birnbaum to exclude corporate mismanagement suits unrelated to securities transactions in the federal courts.

In addition to Heyman v. Heyman, supra, which supports our conclusion, two other reported cases discuss a trust beneficiary’s standing under Rule 10b-5. In Rippey v. Denver United States National Bank, 260 F.Supp. 704 (D.Colo. 1966), the action was dismissed against the plaintiff trust beneficiaries for lack of standing. As contingent beneficiaries of two testamentary trusts, plaintiffs charged that the trust asset was sold for $3,500,000 below its actual value. In bringing their derivative action on behalf of the trust, they argued that “. . . the test for determining who is the defrauded seller (Rule 10b-5) should be the person who suffers from the fraud. . . .” id. at 713. Although the Court acknowledged interest in the argument, it concluded that the rule did not encompass such a meaning. We simply disagree with that conclusion.

The other reported case is Schoen-baum v. Firstbrook, supra, wherein the Court used the example of a trust beneficiary to indicate persons whom it viewed as not having standing to sue in 10b-5 actions. As the Court stated:

“[T]he purposes of the Securities Exchange Act, and more particularly, § 10(b), would normally not be furthered by permitting persons on whose behalf others buy, sell and trade to bring actions under § 10(b) against their agents. For example, the beneficiary of a trust agreement does not have an implied civil cause of action under § 10(b) and Rule 10b-5 against a trustee who, with full knowledge of all material information, sells shares from the trust corpus in an arm’s length transaction for what the beneficiary considers to be inadequate consideration. If the trustee made a poor decision after considering the material information, the beneficiary’s loss is not of the sort which § 10(b) was meant to prevent and even though a literal interpretation of the language in Rule 10b-5 could cover the trustee’s acts, the beneficiary is not entitled to bring a civil action in reliance upon § 10(b)’s criminal liabilities.” 405 F.2d at 212.

However, not only is this passage dictum, but the circumstance of an interlocking directorate such as presented here constitutes a much different circumstance than the “arm’s length transaction” present in Schoenbaum.

The judgment of the District Court is reversed and the cause remanded for further proceedings consistent with this opinion.

      . In the District Court appellant also alleged violations of § 14(e) of the 1934 Act, 15 U.S.C. § 78n(e), but those alleged violations are not presented here.

      . Section 10(b) provides:
      “To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”

      . Rule 10b-5, 17 C.F.R. 240.10b-5, provides:
      “It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange
      “(1) to employ any device, scheme, or artifice to defraud,
      “(2) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances ‘under which they were made, not misleading or
      “(3) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.”

      . The case of Superintendent of Insurance v. Bankers Life & Casualty Co., 404 U.S. 6 at 13 n.9, 92 S.Ct. 165, 30 L.Ed.2d 128 (1971), acknowledges the private right of action under § 10(b).

      . Other attempts to restrict Rule 10b-5 are detailed in Herpick v. Wallace, 430 F.2d 792, 805 n.12 (5th Cir. 1970).

      . Cited with approval by this Court in Simmons v. Wolfson, 428 F.2d 455 (6th Cir. 1970), cert. denied, 400 U.S. 999, 91 S.Ct. 459, 27 L.Ed.2d 450 (1971).

      . See, e. g., Kellogg, The Inability To Obtain Analytical Precision Where Standing To Sue Under Rule 10b-5 Is Involved, 20 Buffalo L.Rev. 93 (1970)-; Lowenfels, The Demise of the Birnbaum Doctrine: A New Era for Rule 10b-5, 54 Va.L.Rev. 268 (1968) ; Ruder, Current Developments in the Federal Law of Corporate Fiduciary Relations— Standing To Sue Under Rule 10b-5, 26 The Bus. Lawyer 1289 (1971) ; Ryan, Bankers Life: Birnbaum Revisited, 4 Loyola (Chicago) L.Rev. 47 (1973) ; Whitaker, The Birn-baum Doctrine: An Assessment, 23 Ala.L. Rev. 543 (1971). In addition, since 1967 the SEC has requested abandonment of the requirement. Ryan, Bankers Life: Birn-baum Revisited, supra, n.12, at 49 and n.51 at 57.

      . See footnotes 2 and 3, supra.

      . This is not to suggest that we do not view the matter as the type of fraud § 10(b) was designed to prohibit. We address the item of available state remedies since the appellees contend the matter at issue is merely a matter for state court determination.

      . See also, Affiliated Ute Citizens v. United States, 406 U.S. 128, 151, 92 S.Ct. 1456, 31 L.Ed.2d 741 (1972) ; Mader v. Armel, supra 402 F.2d at 160.

      . Because of the narrow scope of our holding, any fears as to over-abundant litigation arising as a result of our decision here are without foundation.


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    In the Matter of FREDRICK MEATS, INC., dba Fredrick’s Olde Time Butcher Shoppe, et al., Bankrupt. Edward R. BROWN, Petitioner-Appellant, v. Curtis B. DANNING, Trustee-Appellee.
    No. 71-2367.
    United States Court of Appeals, Ninth Circuit.
    Aug. 1, 1973.
    Edward R. Brown, in pro per.
    Bruce H. Spector (argued), Los An-geles, Cal., for trustee-appellee.
    Before BROWNING and ELY, Circuit Judges, and THOMPSON, District Judge.

       Honorable Gordon Thompson, Jr., United States District Judge, Southern District of California, sitting by designation.

   OPINION

PER CURIAM:

On January 18, 1969, appellant entered into a real property lease with Fredrick Meats, Inc., the bankrupt. Under the lease rental was payable in advance on the first day of each month. The lessee was also required to pay real property taxes levied against the property “not later than” ten days prior to the delinquency date.

The rent due December 1, 1970, for the ensuing month was not paid. On that date the bankrupt filed a petition for arrangement under Chapter XI of the Bankruptcy Act. A receiver was appointed the same day, and qualified and took possession of the leased premises the following day. The receiver remained in possession from December 2, 1970, to January 4, 1971. Real property taxes were levied against the property on November 1, 1970; according to the lessor they became due on December 10, 1970, after bankruptcy proceedings were commenced.

On January 14, 1971, the lessor sought an order directing the receiver, now trustee, to pay as administrative rent the full amount of rent due under the lease for the months of December and January, and to pay the full amount of the unpaid taxes.

The referee allowed administrative rent for the period January 1 through January 4, 1971, in an amount equal to the pro rata portion of the rent reserved in the lease for the month of January. He disallowed the claim for administrative rent for the balance of January and for December and the claim for unpaid taxes. The district court affirmed.

The claim for the full amount of the January rental and the claim for the unpaid taxes, as administrative expenses, were properly rejected. Both claims rested upon provisions in the lease itself. The receiver was not bound by the terms of the lease unless and until he assumed it as an asset of the estate. 3A Collier on Bankruptcy 62.14 [2] at 1513 (14th ed. 1972). This he did not do.

The claim for rent during the period January 1-4 was properly allowed. It did not rest upon the lease, but rather upon the lessor’s right to compensation for the receiver’s actual use and occupancy of the premises, and, as such, was a recognized expense of administration. Id. at 1511-13.

For the same reason, however, we conclude that the claim for December rent, based upon the reasonable value of the use of the premises during actual occupancy by the receiver, should have been allowed. There is a conflict in the authorities as to the receiver’s obligation where, as here, rent is payable in advance and the receiver takes possession after the due date. Id. at 1515. There is no entirely satisfactory answer, as ap-pellee’s able counsel recognizes, but we have concluded that the better view “requires payment as cost of administration of the pro rata rent due for the time of occupancy by the court’s officer.” Ibid. This is the rule in the Second Circuit. S & W Holding Co. v. Kuriansky, 317 F.2d 666, 668-669 (2d Cir. 1963). See also In re Buttonwood Securities, Inc., 349 F.Supp. 273, 278 (S.D.Cal.1972).

Affirmed in part, reversed in part.


text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. FISHERMEN’S & ALLIED WORKERS’ UNION, LOCAL #33 OF SAN DIEGO AND SAN PEDRO, INTERNATIONAL LONGSHOREMEN’S AND WAREHOUSEMEN’S UNION, Respondent.
    No. 72-3110.
    United States Court of Appeals, Ninth Circuit.
    Aug. 31, 1973.

      Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Patrick Hardin, Assoc. Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Joseph E. Mayer, Avrum M. Goldberg, NLRB, Washington, D. C., Wilford W. Johan-sen, Region 21 Director, NLRB, Los An-geles, Cal., for petitioner.
    Howard D. Sacks, of Margolis, Mc-Ternan, Smith, Scope & Sacks, Wilmington, Cal., for respondent.
    Before ELY, WRIGHT and GOODWIN, Circuit Judges.
   PER CURIAM:

This is a petition seeking enforcement of a decision and order of the National Labor Relations Board (198 NLRB No. 133). The Board determined that the union (ILWU) and an employer, Epsilon Fishing Co., Inc., d/b/a M/V Denise Marie, violated the-National Labor Relations Act by respectively demanding and granting union recognition and executing a labor contract while there was an unresolved question concerning representation. The employer has complied with the portion of the Board’s order issued against it.

The Board properly applied the doctrine of Midwest Piping & Supply Co., 63 NLRB No. 1060 (1945). Thereunder an employer may not recognize or enter into a contract with a union when claims by two or more rival unions raise “a real question concerning representation.” Here the respondent union demanded and accepted employer recognition claiming to represent a majority of the fishing vessel’s employees on the' strength of authorization cards from six of the crew’s eleven members.

Recognition should not have been demanded or granted, however, because representatives of another union, the Seafarers International Union, had also claimed to represent a majority of employees. In fact, the SIU had signed authorization cards from eight of the eleven crew members.

The ILWU was actually a minority union at the time its contract with the employer was signed. Two of the employees which it had signed had subsequently signed with SIU. See Intalco Aluminum Corp. v. NLRB, 417 F.2d 36, 39 (9th Cir. 1969).

The competing SIU should have been given an opportunity to submit its cards to show that the ILWU represented only a minority of the employees at the time it demanded and accepted the employer’s recognition and contract.

The order of the Board will be enforced.


text:
    CHARLIE’S GIRLS, INC., Plaintiff-Appellee, v. REVLON, INC., Defendant-Appellant.
    No. 1126, Docket 73-2022.
    United States Court of Appeals, Second Circuit.
    Argued Aug. 15, 1973.
    Decided Aug. 30, 1973.

      Gerald W. Griffin, New York City (R. Bradlee Boal, Norman H. Zivin, New York City, of counsel), for defendant-appellant.
    Joseph D. Garon, New York City (James N. Buckner, Peter D. Murray, Frederick P. Houston, New York City, of counsel), for plaintiff-appellee.
    Before MULLIGAN, OAKES and TIMBERS, Circuit Judges.
   PER CURIAM:

We hereby reverse the order of the district court dated July 3, 1973, temporarily restraining appellant, Revlon, Inc., from the use of the trademark “Charlie” for fragrance. This case is set down for trial before Judge Motley to commence September 17,1973.

One moving for a preliminary injunction assumes the burden of demonstrating either a combination of probable success and the possibility of irreparable injury or that serious questions are raised and the balance of hardships tips sharply in his favor. Stark v. New York Stock Exchange, Inc., 466 F.2d 743, 744 (2d Cir. 1972); Checker Motors Corp. v. Chrysler Corp., 405 F.2d 319, 323 (2d Cir.), cert. denied, 394 U.S. 999, 89 S.Ct. 1595, 22 L.Ed.2d 777 (1969). See also Gulf & Western Industries, Inc. v. Great Atlantic & Pacific Tea Co., Inc., 476 F.2d 687, 692-693 (2d Cir. 1973). Here appellee has failed to show either irreparable harm or that the balance of hardships tips decidedly in its favor. It appears both from the record and was necessarily conceded on argument by appellee that its sale of young women’s clothing under the registered mark “Charlie’s Girls” or any other mark in its alleged “family” of “Charlie’s” marks will in no way be affected, at least prior to trial, by the expensive advertising campaign contemplated by appellant in anticipation of Christmas sales of its fragrance “Charlie.” This is especially true in light of Revlon’s evident financial responsibility to respond in damages, if any will have occurred.

In so holding we in no way express or intimate any views on “the probability of success” of appellee at trial, or on the views of the district judges with respect to that issue expressed in granting a preliminary injunction and in denying a stay pending appeal.

Judgment reversed and cause remanded for trial on the merits.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Benjamin Allen BRANCH, Defendant-Appellant.
    No. 72-2982.
    United States Court of Appeals, Ninth Circuit.
    July 17, 1973.
    H. W. Bailey (argued), Fresno, Cal., for defendant-appellant.
    Thomas T. Couris, Asst. U. S. Atty. (argued), Dwayne Keyes, U. S. Atty., Fresno, Cal., for plaintiff-appellee.
    Before MERRILL and BROWNING, Circuit Judges, and BATTIN, District Judge.

       Honorable James F. Battin, United States District Judge, District of Montana, sitting by designation.

   PER CURIAM:

Branch appeals his conviction for possession of marihuana in violation of 21 U.S.C. § 844, a misdemeanor under federal laws. Because of a tip from a reliable informer that appellant possessed “a certain quantity of marihuana or hashish” in his car and had just “ ‘smoked a joint’ . . . with another person [the informer],” he was stopped by rangers upon entering Yosemite National Park. Both his vehicle and person were searched, the latter yielding the marihuana.

The only substantial issue raised contests the legality of the warrantless arrest of Branch. The argument seeks to distinguish an arrest and search for a suspected misdemeanor from an arrest and search for a suspected felony. According to this argument, the informer’s tip was ambiguous as to whether, under federal law, appellant was committing a felony (possession of marihuana or hashish with intent to distribute, 21 U. S.C. § 841), or a misdemeanor (simple possession, 21 U.S.C. § 844). Turning to the state law of wairantless arrests, see United States v. DiRe, 332 U.S. 581, 589, 68 S.Ct. 222, 92 L.Ed. 210 (1948), appellant construes section 836 of the California Penal Code as authorizing a peace officer to make a warrantless “felony” arrest “[w]henever he has reasonable cause to believe that the person to be arrested has committed a felony.” Cal.Penal Code § 836(3), but to authorize him to make a “misdemeanor” arrest only when he has “reasonable cause” to believe the offense is being committed “in his presence,” id. § 836(1). Appellant further contends that “reasonable cause” under this latter section must be based on the officer’s personal knowledge and cannot rest on a third-party tip. See, e. g., 5 Cal.Jur.2d, Arrest § 25, at 226 (Rev.1967); 5 Am. Jur.2d, Arrest § 31 at 721 (1962); id. § 32, at 723. From these premises appellant concludes that section 836(3) was unavailable to the arresting officers because they had no reason to believe appellant’s crime was any more than a misdemeanor, and section 836(1) was unavailable because their “reasonable cause” was based on information from others and not personal knowledge. Hence the arrest and subsequent search were unlawful.

Assuming appellant is correct in his premises that section 836 is applicable, and that, for purposes of that section, 21 U.S.C. § 841 defines a “felony” while 21 U.S.C. § 844 defines only a “misdemeanor,” we nonetheless do not agree with his conclusion that the arrest was invalid under section 836(3).

Even if the information received by the officer as to the quantity of controlled substance involved was not sufficient to support an inference of distribution or intent to distribute, the additional information that appellant had “ ‘smoked a joint’ . . . with another person [the informer]” was. That information brought appellant’s conduct within the “distribution” ban of 21 U.S.C. § 841(a). See 21 U.S.C. § 802(11).

It was possible that appellant’s conduct might eventually be found to have been only a misdemeanor in view of subsection (b) (4) of 21 U.S.C. § 841. According to that subsection, “any person who violates subsection (a) of this section by distributing a small amount of marihuana for no remuneration shall be treated as provided in subsections (a) and (b) of section 844 of this title.” Thus, if it turned out that appellant had “distributed” only this one illegal cigarette, that it contained no controlled substance other than marihuana and marihuana derivatives, that appellant had not intended to distribute any more marihuana, and that he had not been paid, it might eventually appear that he had not “committed a felony” within the meaning of California Penal Code § 836(3). But the possibility of subsection (b)(4)’s applicability was one of mitigation only. At least absent some affirmative reason apparent at the time of arrest to believe that subsection (b)(4) would apply to appellant’s “distributional” activities, the rangers were entitled to treat him under 21 U.S.C. § 841.

Affirmed.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Robert Iva GRIFFIN, Defendant-Appellant.
    No. 73-1495
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 24, 1973.
    Robert Iva Griffin, pro se.
    Stanley M. Dietz, Washington, D. C., for defendant-appellant.
    Robert W. Rust, U. S. Atty., Carol Anderson, Asst. U. S. Atty., Miami, Fla,, for plaintiff-appellee.
    Before THORNBERRY, GOLDBERG and RONEY, Circuit Judges.

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

   PER CURIAM:

Appellant, Robert Iva Griffin, was indicted for (1) transporting a stolen motor vehicle in interstate commerce in violation of 18 U.S.C. § 2312, and (2) disposing of a stolen vehicle in violation of 18 U.S.C. § 2313. Viewed in the light most favorable to the government, Glas-ser v. United States, 1942, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680, 704, the evidence established that appellant obtained an automobile from Hertz Rental Agency in Washington, D. C. through the unauthorized use of a credit card belonging to one William Prunier and then transported the automobile to Miami, Florida, where he disposed of it. After a jury trial, appellant was convicted on both counts of the indictment and received concurrent sentences of three years imprisonment. Appellant challenges his conviction on a number of grounds, none of which we find meritorious. We affirm.

In an an oral statement made to an FBI agent on January 13, 1972, appellant declared that he had come into possession of a driver’s license in the name of William Prunier, that he had utilized the driver’s license in obtaining an automobile from a rental agency, and that he had driven the automobile into Florida, abandoning it there. Before making this statement, appellant was handed a form advising him of his constitutional rights, which he read and which he stated he understood. Appellant, however, refused to sign a form acknowledging that he had been advised of his constitutional rights. He now contends that the trial judge erred in allowing the FBI agent to testify concerning his oral statement because his refusal to sign the acknowledgment form demonstrated that he had not voluntarily waived his rights. After first hearing the testimony of the FBI agent out of the presence of the jury, the trial judge determined that appellant’s oral statements were voluntary and allowed the agent to testify concerning them. We find that the procedure followed by the trial judge comported with the applicable law of this Circuit and that the finding that appellant’s statement was voluntary is fully supported in the record. See United States v. Bailey, 5 Cir. 1972, 468 F.2d 652, aff'd en banc, 480 F.2d 518 (1973); United States v. Hopkins, 5 Cir. 1970, 433 F.2d 1041, cert. denied, 1971, 401 U.S. 1013, 91 S.Ct. 1252, 28 L.Ed.2d 550.

Appellant also contends that the trial judge erred in admitting the testimony of an. FBI fingerprint expert concerning appellant’s fingerprint which was found on a Hertz .Rental Agreement issued in connection with the transaction under review. Relying on United States v. Borum, 1969, 127 U.S.App.D.C. 48, 380 F.2d 595, appellant argues that the trial judge erred in admitting the testimony because the government’s evidence did not reasonably exclude the hypothesis that appellant’s fingerprint was impressed upon the document at a time other than that of the crime. This reliance on Borum is misplaced, for Borum is not a case dealing with the admissibility vel non of fingerprint evidence. In Bor-um, the District of Columbia Circuit reversed a criminal conviction for housebreaking that was based solely on the fact that the defendant’s fingerprints were found on objects in the house that had been entered. The court held that a motion for a judgment of acquittal at the close of the government’s case should have been granted:

“With evidence so inconclusive, a reasonable person must have a reasonable doubt about Borum’s guilt. The case should not have been submitted to the jury, for'the Government produced no evidence, either direct or circumstantial, which could support an inference that the fingerprints were placed on the jars during commission of the crime.”

United States v. Borum, supra, at 597 (footnotes omitted).

In the instant case, the evidence concerning the fingerprint was clearly relevant and admissible, for it was circumstantial evidence of appellant’s involvement in the theft of the rental auto. Moreover, the fingerprint is not the only factor supporting appellant’s conviction. Unlike the situation in Borum, there is ample additional evidence, including appellant’s own statements, from which the jury could reasonably have concluded that the evidence was inconsistent with the hypothesis of appellant’s innocence. Thus the trial judge did not err in denying appellant’s motion for a judgment of acquittal. See United States v. Stephenson, 5 Cir. 1973, 474 F.2d 1353, 1355; United States v. Warner, 5 Cir. 1971, 441 F.2d 821, 825, cert. denied, 1971, 404 U.S. 829, 92 S.Ct. 65, 30 L.Ed.2d 58; United States v. Andrews, 5 Cir. 1970, 427 F.2d 539, 540; Surrett v. United States, 5 Cir. 1970, 421 F.2d 403, 405. United States v. Roustio, 7 Cir. 1972, 455 F.2d 366, 370.

Finally, we find no merit in appellant’s suggestion that the trial judge’s instruction to the jury on Count II constituted plain error meriting reversal.

Affirmed.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. John Robert LEE, Defendant-Appellant.
    No. 73-1731
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit,
    Aug. 16 1973.
    Richard M. Gale, Bernie Freed, Miami, Fla., for defendant-appellant.
    Robert W. Rust, U. S. Atty., Robert C. Byrne, Asst. U. S. Atty., Miami, Fla., for plaintiff-appellee.
    Before JOHN R. BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges.

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

   PER CURIAM:

Lee was convicted of unlawfully removing merchandise from a cargo area within the United States Customs’ custody and control in violation of 18 U.S.C. A. § 549. On appeal, he (1) attacks the sufficiency of the evidence; (2) claims that he was denied a fair trial because the district court prejudiciously commented on the evidence and disparaged the credibility of certain defense witnesses; (3) asserts that the trial court erred in denying, without an evidentiary hearing, Lee’s motion to correct the record concerning whether prejudicial comments were made by the court within the hearing of the jury; (4) maintains that the district court improperly refused to allow defense counsel to make a proffer of evidence; and (5) contends that the court’s instructions to the jury impliedly assumed the existence of a material fact in issue. We reverse.

Allegedly, Lee removed one carton of perfume, valued at $803, from the Miami International Airport on January 20, 1970. The perfume supposedly arrived on Braniff Airways flight 918 from Tocumen,' Panama, and was to be forwarded to a consignee in the Bahamas. Lee was employed by Braniff as a cargo handler; he unloaded the baggage carts and set out the goods for transfer to consignees. According to the Government, another Braniff employee, Payne, in the presence of Lee, transferred the perfume to a third employee, Blakely, at the airport’s Cuban Refugee Center, and Blakely took the perfume home; subsequently, Blakely and Lee attempted to sell some of the perfume, but ultimately the perfume was divided between Blakely, Payne and Lee.

Although Blakely and Payne testified that they had divided some stolen perfume with Lee, there was a sharp conflict in the evidence regarding the details of the transaction. Blakely testified that Payne unloaded two boxes of perfume from a blue Braniff van and that Lee merely sat in the panel truck and did nothing, whereas Payne stated that he gave only one box of perfume to Blakely and that the vehicle used to transport the perfume to Blakely was a two-and-one-half ton truck. Significantly, neither Blakely nor Payne remembered the day or even the month that this episode took place.

Because of the uncertainty as to when the transfer described by Blakely and Payne occurred, an essential issue to the determination of Lee’s innocence or guilt of the crime charged was whether the perfume described in the indictment was in fact laden aboard flight 918 in Panama and arrived at the Miami Airport on January 20, 1970; for it is axiomatic that a defendant cannot be convicted of a crime different from the crime alleged in the indictment. Although the inward foreign manifest which was presented to Customs at the time of the plane’s arrival in Miami (accompanied by the affidavit of the Captain of the aircraft indicating that the manifest was a true copy of the merchandise arriving in Miami) listed one carton of perfume, the Customs agent who inspected the cargo filed a form declaring a shortage of the perfume merchandise and stating that to the best of his knowledge the merchandise was not landed a.t the port of Miami. Moreover, the agent stated that “[t]here is nothing to indicate [the perfume] ever arrived and nothing to indicate it did not arrive.”

Over Lee’s objection, however, the district court refused to instruct the jury that it was to determine whether the perfume in fact arrived in Miami on flight 918. Instead of instructing on this material issue of fact, the court’s jury instructions impliedly assumed its existence. A district court does not have the power to direct a verdict of guilty, and instructions deciding a material fact issue as a matter of law are erroneous because they amount to a partial directed verdict of guilty. United States v. Skinner, 5 Cir. 1971, 437 F.2d 164; Mims v. United States, 5 Cir. 1967, 375 F.2d 135; Roe v. United States, 5 Cir. 1961, 287 F.2d 435; Edwards v. United States, 5 Cir. 1960, 286 F.2d 681; see United States v. Hyde, 5 Cir. 1971, 448 F.2d 815.

Because the district court improperly instructed the jury, Lee must be granted a new trial.

Reversed and remanded.

      . Our disposition of the appeal makes it unnecessary for us to consider the other errors urged by Lee.


author: SEITZ, Chief Judge.

text:
    In re GRAND JURY INVESTIGATION and Isadore H. Beilis, a witness. Appeal of Isadore H. BELLIS.
    No. 73-1514.
    United States Court of Appeals, Third Circuit.
    Argued July 2, 1973.
    Decided July 9, 1973.
    Certiorari Granted Oct. 15, 1973.
    See .93 S.Ct. 233.
    Louis Lipschitz, Lipschitz & Danella, Leonard Sarner, Philadelphia, Pa., for appellant.
    Peter F. Vira, Thomas A. Bergstrom, Sp. Attys., U. S. Dept, of Justice, for ap-pellee.
    Before SEITZ, Chief Judge, and GIBBONS and HUNTER, Circuit Judges.
   OPINION OF THE COURT

SEITZ, Chief Judge.

The district court found appellant in civil contempt and entered an appropriate order. Appellant appeals that order.

Appellant poses the following single issue:

Whether a partner of a three-man law partnership in the process of winding up after dissolution may invoke his Fifth Amendment privilege against compulsory self-incrimination to prevent the production, pursuant to a Grand Jury Subpoena Luces Tecum, of financial books and records of the partnership in his possession.

Appellant Beilis was served with a Federal Grand Jury Subpoena directing him to appear and testify and to bring with him “all partnership records currently in your possession for the partnership of Beilis, Kolsby & Wolf for the years 1968 and 1969.” Appellant appeared and refused to produce the documents or answer any questions in connection therewith, asserting his rights under the First, Fourth, Fifth and Sixth Amendments to the United States Constitution. Thereupon, the United States filed a motion in the district court to compel the appellant to produce the books and records described in the subpoena. The issue is limited, at least at this stage, to the production of documents.

A hearing was held before the district court on the government’s contempt motion. The appellant confined his claim to his Fifth Amendment privilege. The district court ruled, inter alia, that since the documents were partnership papers, they were not subject to appellant’s personal privilege. He thereupon ordered appellant to comply with the subpoena. The court excluded from its order, “any individual client files containing any advice or confidential relationships between the attorney and attorney and client.”

The appellant reappeared before the Grand Jury and on the advice of counsel repeated his refusal to produce the subpoenaed records, inter alia, on the same constitutional grounds. Thereupon the Government orally moved before the district court in the presence of appellant’s counsel for a contempt order. Such an order was entered and this appeal followed.

Fortunately, the facts material to our disposition of this case are not in dispute. The subpoenaed documents are the partnership records of a three-man law partnership for the years 1968 and 1969. The partnership also had about six additional employees. Appellant was the senior partner and personally supervised the work of the bookkeeper. The partnership was dissolved in the latter part of 1969 and is still in the process of being wound up. After formal dissolution, the partnership records remained in the office of the partnership pending the winding up. However, at the time the subpoena was served, they were in the appellant’s possession.

The sole issue is whether an individual partner, assumedly in lawful possession of partnership records of a dissolved partnership, may refuse to produce such records on the ground that such-production would violate his Fifth Amendment rights.

The judicial history of the privilege against self-incrimination is tortuous to say the least. But we are satisfied that it was not intended that the privilege was to apply to the possession of records of an entity such as a partnership which has a recognizable juridical existence apart from its members. We say this because the privilege has always been regarded as personal in the sense that it applies only to an individual’s words or personal papers. United States v. White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542 (1944). Since the subpoena and implementing order only directed the production of records of a partnership, certainly a separate legal entity, it follows that their production would constitute no encroachment on the appellant’s privilege with respect to his personal records.

We recognize that United States v. White, supra, seems to lay down a somewhat more involved test. However, we think our conclusion is consistent with the fundamental approach of that decision.

Appellant would have us distinguish between the records of a large, presumably impersonal, partnership and those of a small law firm. In this way he would distinguish our conclusion in In re Mal Bros. Contracting Co., 444 F.2d 615 (3d Cir. 1971). Not only is the distinction inconsistent with the dictum in that case, but more to the point, it would suggest a test which tends to ignore the fact that only the records of the separate entity are involved and loses sight of the personal nature of the privilege.

We think the district court correctly decided that the appellant was not entitled to assert a personal privilege with respect to the partnership records in his possession despite the modest size of the partnership entity.

The order of the district court will be affirmed.


author: CAMPBELL, Circuit Judge.

text:
    Donald E. POWERS, Plaintiff, Appellant, v. BETHLEHEM STEEL CORPORATION, Defendant, Appellee, v. McKIE LIGHTER CO., INC., Defendant, Appellee. Donald E. POWERS, Plaintiff, Appellant, v. McKIE LIGHTER CO., INC., Defendant, Appellee.
    Nos. 72-1197, 72-1198.
    United. States Court of Appeals, First Circuit.
    Submitted July 26, 1973.
    Decided Aug. 23, 1973.
    Michael B. Latti, Boston, Mass., with whom Robert S. Wolfe and Kaplan, Latti & Flannery, Boston, Mass., were on brief, for appellant.
    Leo F. Glynn, Boston, Mass., for ap-pellee, McKie Lighter Co., Inc.
    Charles E. Colson, Boston, Mass., with whom Cargill, Masterman & Cahill, Boston, Mass., was on brief, for appellee, Bethlehem Steel Corp.
    Before COFFIN, Chief Judge, ALD-RICH and CAMPBELL, Circuit Judges.
   CAMPBELL, Circuit Judge.

Appellant has filed a motion for recall of mandate alleging that our decision of April, 1973, 477 F.2d 643 (1st Cir. 1973), denying relief for injuries incurred in the course of employment, should be reexamined in light of Moun-sey v. Ellard, 1973 Mass.Adv.Sh. 871 (Sup.Jud.Ct. June 6, 1973), 297 N.E.2d 43, decided two months later by the Supreme Judicial Court of Massachusetts. Study of the Mounsey decision reveals that the mandate should stand.

We affirmed judgment for defendants on the basis of a longstanding Massachusetts doctrine maintaining that a landowner’s duty to his employees or employees of an independent contractor is only to disclose hidden defects, not to repair obvious conditions in an unsafe work area. Burr v. Massachusetts Electric Co., 356 Mass. 144, 147, 248 N.E.2d 492, 495 (1969). Mounsey does not discuss employees or the duty owed to them.

The Supreme Judicial Court abolished the common law distinction between licensees and invitees, enlarging the class of persons toward whom the standard of reasonable care is owed. The plaintiff in Mounsey was an injured police officer denied recovery because public employees on private land have been considered licensees, and therefore, merely owed the duty to refrain from inflicting wanton and willful injury. The appellant in the instant case was, on the other hand, always regarded as an invitee.

Appellant relies on the Massachusetts court’s formulation of one standard for all but trespassers: “reasonable care in all the circumstances”, but this phrase according to the Mounsey court was not intended to change the traditional standards of negligence in the invitee area. 1973 Mass.Adv.Sh. at 886, 297 N.E.2d at 52. Furthermore, the court’s own description of the duty now owed to an invitee would not justify reconsidering our opinion: “. . . it could be found that the defendants were under an obligation to warn the policeman of the dangers known to the defendants. . . .” 1973 Mass.Adv. Sh. at 887, 297 N.E.2d at 53.

Even if Mounsey had made a relevant change the Supreme Judicial Court did not indicate that the new rule should be applied retroactively. Courts generally do not abolish clear precedent retroactively when the parties may have relied upon the prior formulation of obligations. See Chevron Oil Co. v. Huson, 404 U.S. 97, 106-107, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971); Trala v. Shea, 335 F.Supp. 81 (D.Mass.1971). The Massachusetts court rejected a rule dating back to English common law, and the interpretation advanced by appellant would force employers to compensate for obvious conditions, thereby imposing a radical change in their legal obligations —a change not explicitly discussed by the Supreme Judicial Court nor even implicit in its decision.

The Supreme Judicial Court’s decision in Colby v. Carney Hospital, 356 Mass. 527, 254 N.E.2d 407 (1969), to abolish charitable immunity in the next relevant case that came before it was applied only with respect to injuries occurring after the date of the Colby decision, and not with respect to injuries that may have occurred after the date of the accident in Colby. Traía, supra. Yet appellant would have us apply Mounsey to his case because his injury occurred after the injury in Mounsey.

Recall of mandate is an inherent power of the Court of Appeals reserved for special circumstances and “sparingly exercised.” See Greater Boston Television Corp. v. Federal Communication Comm., 149 U.S.App.D.C. 322, 463 F.2d 268, 276-277 (1971). Alleged erroneous rulings of law are generally not held to be sufficiently unconscionable to justify reopening a judgment not void when issued. Hines v. Royal Indemnity, 253 F.2d 111 (6th Cir. 1958) ; Iverson v. Commissioner of Internal Revenue, 257 F.2d 408 (8th Cir. 1958). The importance of bringing an orderly end to litigation demands that recall not be liberally allowed:

“If we were in error in this appraisal, of which we are not presently persuaded, we believe it would be far greater error to permit reconsideration now after denial of petition for rehearing and certiorari. There must be an end to dispute. If a situation arose, such as a subsequent decision by the Supreme Court, which showed that our original judgment was demonstrably wrong, a motion to recall mandate might be entertained. The present case is far from that.” Legate v. Maloney, 348 F.2d 164, 166 (1st Cir. 1965).

Appellant tells us that his petition for certiorari was docketed in the United States Supreme Court on July 9, 1973, and has not yet been acted upon. The latter fact may cut both ways; but in any event it does not lead us to see this case as being governed by considerations different from those cited above.

Motion for recall of mandate and petition for rehearing denied.


author: PER CURIAM.

text:
    Dorothy KITTLE and Floyd Kittle, her husband v. CLAIROL, INC., Appellants in No. 71-1921, et al. Joseph BRULATO, Individually and t/a Jon’s House of Beauty and Darlene Waterman Schweighardt, Appellants in No. 71-1918, and Clairol, Inc., Third-Party Plaintiffs, v. Dr. Alphonsus L. DOERR, Third-Party Defendant.
    Nos. 71-1918, 71-1921.
    United States Court of Appeals, Third Circuit.
    Argued Sept. 28, 1972.
    Submitted for Rehearing en banc on March 29, 1973.
    Decided July 18, 1973.
    Bennett & Bennett, and Alvin D. Hersh, Shurkin, Hersh & Fershing, Newark, N. J., for appellants Joseph Brulato, Individually and t/a Jon’s House of Beauty and Darlene Waterman Schweighardt.
    Bernard Chazen, Englewood, N. J., for appellant Clairol, Inc.

      David W. Hanis, Passaic, N. J., for plaintiffs-appellees.
    John A. Willette, Willette & Luongo, East Orange, N. J., for third party defendant Doerr.
    Argued Sept. 28, 1972.
    Before STALEY, VAN DUSEN and ROSENN, Circuit Judges.
    Reconsidered Under Third Circuit Rule 12(6) March 29, 1973.
    Before SEITZ, Chief Judge, and STALEY, VAN DUSEN, ALDISERT, ADAMS, GIBBONS, ROSENN and HUNTER, Circuit Judges.
   OPINION OP THE COURT

PER CURIAM.

The court is in agreement that there .was no error in the district court’s determination of the liability issues involved in these appeals.

The court is also in agreement that the damage award to appellee Floyd Kittle cannot be disturbed except insofar as it' clearly appears that the district court inadvertently allowed the jury to award the amount of Dorothy Kittle’s lost wages of $3,840 to her husband, thereby duplicating to that extent the award to his wife. A new trial on the issue of his damages will therefore be required unless he agrees to a remittitur in the sum of $3,840, representing the amount of Dorothy Kittle’s lost wages.

The court is evenly divided on the issue of whether the district court abused its discretion in refusing to grant appellants a new trial on their claim that the damages awarded appellee Dorothy Kittle were excessive. Affirmance is therefore required.

The judgment of the district court in favor of appellee Dorothy Kittle will be affirmed. The judgment of the district court in favor of appellee Floyd Kittle will be affirmed on the condition that he agree to remit $3,840 of his judgment. If he does not so agree, the district court shall grant a new trial on the issue of his damages.


author: SETH, Circuit Judge.

text:
    David LONTINE et al., Appellees, v. Guy VanCLEAVE, Sheriff of Adams County, State of Colorado, Appellant.
    No. 72-1730.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Feb. 21, 1973.
    Decided Aug. 27, 1973.

      Wesley H. Doan, Yegge, Hall & Evans, Denver, Colo., for appellant.
    William L. Keating, Ashen & Fogel, Denver, Colo., for appellees.
    Before SETH, McWILLIAMS and BARRETT, Circuit Judges.
   SETH, Circuit Judge.

Guy VanCleave appeals from a judgment of the United States District Court for the District of Colorado awarding damages and granting injunctive relief to David Lontine in an action under 42 U.S.C. § 1983. The suit was based on Lontine’s dismissal from his position as a deputy sheriff of Adams County, Colorado, by VanCleave, the sheriff, for membership in a policemen’s union.

Both parties filed motions for summary judgment, and VanCleave’s motion was denied and Lontine’s granted. The court thereafter held a hearing for the proof of damages. The trial court found that Lontine, while a deputy sheriff, joined the Adams County Sheriffs Union, an affiliate of the International Brotherhood of Police Officers, in November 1971. Upon learning of union activity within his department, Sheriff VanCleave issued a memorandum stating that no deputy sheriff could join or participate in any labor union. Lontine, when given a form to sign indicating whether or not he was a member of such a union, refused to sign it. He was then suspended without further notice or hearing.

Lontine then filed suit in the state district court in Adams County, Colorado, to enjoin VanCleave’s action in dismissing him. The state court dismissed the complaint, stating that while Lon-tine had a constitutional right to join a labor union, the Sheriff could condition Lontine’s employment as a deputy on his nonmembership in such a union. The state court also held that it was without jurisdiction to review the actions of a Sheriff for discharge of an employee for union activity or membership. Following the state court ruling, VanCleave rehired him as a deputy, conditioned upon his resignation from the union. The effect of the state court proceedings has not been advanced by the parties.

Later Lontine, with others who did not appeal, filed this action. The trial court found that Lontine’s employment with the Sheriff’s office “again terminated upon the filing of this action.” The trial court held that Lontine had a constitutional right under the First Amendment to join a labor union and could not be discharged from his employment for joining or continuing membership in a union, absent a showing of compelling state interest. Van-Cleave apparently did not assert or otherwise offer to show any such compelling state interest in the belief that he had an unfettered right to hire and fire his employees at will, even for the exercise of their constitutional rights. The district court was correct in its holding that sheriff’s deputies have such a First Amendment right to participate and retain membership in a union. Thomas v. Collins, 323 U.S. 516, 65 S.Ct. 315, 89 L.Ed. 430; American Federation of State, Co. & Mun. Emp. v. Woodward, 406 F.2d 137 (8th Cir.); Melton v. City of Atlanta, Georgia, 324 F.Supp. 315 (N.D.Ga.) (three-judge court); Atkins v. City of Charlotte, 296 F.Supp. 1068 (W.D.N.C.) (three-judge court); cf. Bruns v. Pom-erleau, 319 F.Supp. 58 (D.Md.). This is not to say that the Sheriff may necessarily be required to bargain collectively with such a union, see Newport News F.F.A. Loc. 794 v. City of Newport News, Va., 339 F.Supp. 13 (E.D.Va.), nor that appropriate and defined legislation may not properly prohibit such activities as strikes, slowdowns, sick-ins, and the like on the part of such public employees, whether members of a union or otherwise. See United Federation of Postal Clerks v. Blount, 325 F.Supp. 879 (D.D.C.) (three-judge court), affirmed, 404 U.S. 802, 92 S.Ct. 80, 30 L.Ed.2d 38; cf. Bennett v. Gravelle, 451 F.2d 1011 (4th Cir.); Adley Express Co. v. Highway Truck Driv. & H. Loc. 107, 349 F. Supp. 436 (E.D.Pa.).’ The granting of summary judgment for Lontine thus was proper.

Although Lontine may not have had a right, per se, to continued public employment and under applicable Colorado law to be a sheriff’s deputy, see Colo.Rev.Stat.1963, § 35-5-5, and may not have been entitled to any form of notice or hearing either under the Colorado Administrative Procedure Act, Colo.Rev.Stat.1963, § 3-16-16, as amended, Perm.Supp. Vol. II (1969), or under constitutional principles, see Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570, he could not be suspended or dismissed for the exercise of his constitutional rights. Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570. He has, therefore, established a cause of action under 42 U.S.C. § 1983. VanCleave was, of course, acting under color of state law when he suspended Lontine, as is apparent from his reliance on the provisions of Colo. Rev.Stat.1963, § 35-5-5, which provides that Sheriffs may revoke the appointment of their deputies at their pleasure, to justify his suspension of Lontine.

However, the question remains as to whether or not VanCleave possessed any form of official privilege in relation to the damage award of the district court and, if so, the extent thereof. We express no view on this matter and the case must be remanded to the district court for further proceedings in order to resolve this issue in view of our recent decision in Smith v. Losee, 1973, 485 F. 2d 334 (10th Cir.). The disposition of this case has been held pending the decision in Smith v. Losee.

The case is, therefore, affirmed as to the injunctive relief granted by the district court, and reversed and remanded for consideration of the award of damages.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Arthur Jay LEE, Defendant-Appellant.
    No. 73-1319
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 23, 1973.

      Morris M. Reese, Jr., court-appointed, Laredo, Tex., for defendant-appellant.
    Anthony J. P. Farris, U. S. Atty., James R. Gough, Asst. U. S. Atty., Houston, Tex., for plaintiff-appellee.
    Before GOLDBERG, DYER and SIMPSON, Circuit Judges.

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

   PER CURIAM:

In a trial by jury Lee was convicted of conspiracy with others to unlawfully, knowingly, and intentionally possess with intent to distribute forty-five pounds of marihuana (Count l), and of the substantive offense of unlawfully, knowingly, and intentionally possessing forty-five pounds of marihuana with intent to distribute. (Count 2). Lee was sentenced to three years’ imprisonment with a special parole term of two years on both Counts 1 and 2, the sentences to run concurrently. His sole point on appeal is that having offered evidence of an alibi, the district court failed to instruct the jury that the burden remained on the government to prove his guilt beyond a reasonable doubt. We affirm.

We find it unnecessary to dwell upon the sufficiency of the alibi instruction in this case because the evidence is overwhelming that Lee and his three co-conspirators entered into a conspiracy, the overt acts of which were performed by the latter.

Once the existence of the agreement or common scheme of conspiracy is shown, however, “slight evidence” is all that is required to connect a particular defendant with the conspiracy. United States v. Jones, 9 Cir. 1970, 425 F.2d 1048, 1951 [sic] ; United States v. Knight, 9 Cir. 1969, 416 F.2d 1181, 1184; Lopez v. United States, 5 Cir. 1969, 414 F.2d 909, 911. And once it is shown that a particular defendant joined the conspiracy, the acts of his co-conspirators done in furtherance of the conspiracy are attributable to him and he becomes equally liable for them. Grimes v. United States, 5 Cir. 1967, 379 F.2d 791, 795; Hernandez v. United States, 9 Cir. 1962, 300 F.2d 114, 121.

United States v. Warner, 5 Cir. 1971, 441 F.2d 821, 830, cert. denied, 404 U.S. 829, 92 S.Ct. 65, 30 L.Ed.2d 58. .

The alibi, if believed by the jury, established no more than that Lee was not present at the time that one or .more of the conspirators performed an overt act in furtherance of the conspiracy. Since it was unnecessary for the government to have proved his presence, the alibi defense failed and no instruction concerning it was required.

The evidence on Count 1 being sufficient to sustain the verdict, consideration of whether the instruction on alibi was insufficient in connection with the substantive offense charged in Count 2 is rendered unnecessary by the concurrent sentence doctrine. Hawkins v. United States, 5 Cir. 1972, 458 F.2d 1153; United States v. Wilson, 5 Cir. 1971, 451 F.2d 209, cert denied sub nom., Fairman v. United States, 1972, 405 U.S. 1032, 92 S.Ct. 1298, 31 L.Ed.2d 490.

Affirmed.

      . 21 U.S.C.A. §§ 841(a) (1) and 846.

      . 21 U.S.C.A. § 841(a)(1).


author: MERRILL, Circuit Judge:

text:
    James J. PRENDERGAST, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
    No. 72-1644.
    United States Court of Appeals, Ninth Circuit.
    Aug. 6, 1973.
    Raymond D. Torbenson, Torbenson, Thatcher, Burns & McGrath, Seattle, Wash., for petitioner.
    Lee H. Henkel, Jr., Acting Chief Counsel, IRS, Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Bennett N. Hollander, Gary R. Allen, Tax Div., Dept, of Justice, Washington, D. C., for respondent.
    Before MERRILL, TRASK and CHOY, Circuit Judges.
   MERRILL, Circuit Judge:

Petitioner seeks review of a decision of the Tax Court, 57 T.C. 475, upholding the Commissioner's determination of a deficiency in taxpayer’s 1967 income tax. The issue presented is whether the Tax Court correctly decided that taxpayer did not qualify as a head of a household, since the household maintained by taxpayer for himself and his son was not the son’s principal place of abode for the entire taxable year.

Section 2(b) of the Internal Revenue Code, 26 U.S.C. § 2(b), provides:

“For purposes of this subtitle, an individual shall be considered a head of household if, and only if, such individual is not married at the close of his taxable year, and is not a surviving spouse (as defined in subsection (a)), and either—
(A) maintains as his home a house- • hold which constitutes for such taxable year the principal place of abode, as a member of such household, of— (i) a son * *

During the period in question taxpayer maintained as his residence a home in Bothell, Washington. His son, then 26 years old, lived with taxpayer during a part of 1964 after returning from military service. During the next two and a half years, he was away from home while attending college. Following his graduation from college, in March, 1967, he returned to taxpayer’s home and resided there until September, 1967, when he moved to a rented home with two other young men, taking with him the greater part of his personal belongings and leaving behind out-of-season clothing and sportswear and discarded books. In May, 1968, the son returned to taxpayer’s home for a three-month period, after which he lived elsewhere until he was married in 1969.

Taxpayer computed his income-tax liability for 1967 on the basis of a head of a household under § 1(b) of the Code. The Commissioner determined that he did not qualify for these rates and computed a deficiency. The Tax Court sustained this determination.

The Commissioner’s ruling was based on the fact that during the latter part of 1967, from September on, taxpayer’s son was not living at taxpayer’s home and thus that home was not the son’s principal place of abode for the entire year.

Taxpayer contends that since his home was his son’s place of abode for the greater part of the year, it was, for that year, his son’s principal place of abode. He thus reads “principal place of abode” to mean “place of abode for the principal part of the year.”

This is not what the Code provides. The taxpayer’s home must be his son’s principal place of abode “for such taxable year.” By regulation, the Service construes this to mean for the entire taxable year. 26 C.F.R. 1.2-2(c). That this construction is in accordance with congressional intent is clear from legislative history. S.Rep. No. 781, 82d Cong., 1st Sess., 9, 14; H.Rep. No. 586, 82d Cong., 1st Sess., 9,106.

Taxpayer, in support of his contention, relies on the decision of this court in Smith v. CIR, 332 F.2d 671 (9th Cir. 1964). That case, however, did not question the regulation’s requirement that the household must, for the entire year, meet the necessary standard. There we held the regulation in question to be contrary to the provisions of the Code in that it required the household to be the taxpayer’s principal place of abode as well as that of his dependent. The Code makes no such requirement. As to the taxpayer, it requires only that the household be his home. We noted that a taxpayer may well have more than one home and that the Code places no restrictions on the manner in which he divides his occupancy between them. Not sp, however, with the son. As to the son, the household must be his principal place of abode. “Principal” does not permit of multiplicity.

Judgment affirmed.


text:
    STATE OF LOUISIANA and Louisiana Public Service Commission, Petitioners, v. FEDERAL POWER COMMISSION, Respondent.
    No. 72-2233.
    United States Court of Appeals, Fifth Circuit.
    June 28, 1973.
    Arnold D. Berkeley, Washington, D. C., for petitioners.
    Gordon Gooch, Gen. Counsel, Leo E. Forquer, Solicitor, George W. McHenry, Jr., 1st Asst. Solicitor, F.P.C., Washington, D. C., for respondent.
    Alvin M. Owsley, Jr., Robert A. Webb, ■Perry Barber, Houston, Tex., for United Gas Pipe Line Co.
    Before JOHN R. BROWN, Chief Judge, and BELL and MORGAN, Circuit Judges.
   PER CURIAM:

This is a sequel to two other opinions which are issued this date by this court. See Louisiana Power & Light Co. v. F.P.C. et al., 483 F.2d 623, this date rendered; Louisiana Gas Service Company v. F.P.C., 480 F.2d 933, this date rendered. Petitioners in this case challenge the exercise of federal regulatory control during the period from the time that the FPC has made a determination that federal jurisdiction exists until a conclusive upholding of such a finding by the last available court.

The general chronology of proceedings before the Commission involving the jurisdictional status of certain of United’s facilities in southern Louisiana is set forth in Louisiana Gas Service Company v. F.P.C., supra. These petitioners, however, are challenging a later rate order than were the petitioners in that case. This challenge revolves around the Commission allowing United to charge the higher rates contained in its supplemental rate filing of November 30, 1971, pending a determination of jurisdiction and certification. The Commission suspended these additional proposed tariffs under section 4(e) of the Natural Gas Act. Because of this suspension, these supplemental revised tariffs could not go into effect until June 1, 1972. On February 9, 1972, the FPC issued Opinion 610, holding that suffi-eient jurisdictional facts were present to confer federal jurisdiction over the facilities in question. Then, on February 25, 1972, the FPC refused to delay these supplemental increases for much the same reasons that it had refused a similar request from Louisiana Gas Service Company to suspend the original increases in its order of July 8, 1971. It is that order on the original rate filing which we uphold today in Louisiana Gas Service Company v. F.P.C., supra.

Our decision in Louisiana Gas Service Company is sufficiently broad to require the rejection of the contentions made by these petitioners. However, because these petitioners have taken a somewhat different tack and because we feel there is an independent ground not dependent on the grounds used in Louisiana Gas Service Company, we have decided not to rest our opinion on the grounds in that case alone, although we incorporate those reasons herein.

These petitioners seem to suggest that the FPC cannot regulate these facilities merely because it has determined that it has jurisdiction. As we stated in Louisiana Gas Service, which we now adopt we think the FPC has the authority to regulate, with adequate safeguards, pending its own first conclusive finding of federal jurisdiction. Therefore, it is obvious that those same reasons would support the FPC regulation once it has made an initial determination of jurisdiction. After the initial binding determination of jurisdiction, however, there is an even stronger argument for the Commission regulation. Section 19 of the Natural Gas Act makes clear that neither application for re-hearing before the Commission nor the institution of court review of a Commission order operates to stay that order unless such a stay is specifically ordered by the Commission or court. Therefore, once the Commission has made its finding of jurisdiction, until stayed or reversed by a court, this adjudication is binding. We reject any argument that the Louisiana authorities have a right to regulate unfettered until the courts have conclusively reviewed the FPC’s finding of jurisdiction. The Act clearly provides otherwise unless the court grants a stay. Therefore, even if the FPC had not had power to regulate before the issuance of Opinion 610, it certainly had such power thereafter.

For the reasons stated in Louisiana Gas Service Company, supra, we reject the claim that rate regulation must await certification. We also reject any claim that section 5(a) is applicable to this situation. We find that section inapplicable on its face.

Section 5(a) sets forth the procedures to be followed by the Commission when the Commission, on its own motion, or any party other than a natural gas company, presents a challenge to the existing rates and requests a change. Section 4, the section used by United here, sets forth the procedures for the Commission to follow in entertaining a request from a natural gas company to change the rates of that company which are subject to Commission jurisdiction.

The refusal by the FPC to suspend United’s request pending court adjudication of jurisdiction and issuance of a certificate is, therefore,

Affirmed.

      . This court today affirmed that finding of jurisdiction in Louisiana Power & Light Company v. F.P.C., supra. We note that the FPC has continued the refund provisions of its orders to ensure that all parties would be adequately protected.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Doris MARTIN, Defendant-Appellant.
    No. 73-2404
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Sept. 16, 1973..
    Fred J. Morton, El Paso, Tex., for defendant-appellant.
    William S. Sessions, U. S. Atty., San Antonio, Tex., Ronald Ederer, Asst. U. S. Atty., El Paso, Tex., for plaintiff-ap-pellee.
    Before THORNBERRY, GOLDBERG and RONEY, Circuit Judges.

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

   PER CURIAM:

Appellant, Doris Martin, and her roommate, Graciela San Miguel Zuniga, were charged with violating the Federal Juvenile Delinquency Act, 18 U.S.C. §§ 5031-5037, by possessing with intent to distribute approximately one ounce of mescaline in violation of 21 U.S.C. § 841(a)(1). Miss Zuniga admitted her delinquency and was sentenced. Appellant was tried by the court without a jury and found guilty. She raises two issues here: the sufficiency of the evidence and the constitutional validity of the search. In view of our reversal on the evidence issue, we need not reach the latter point.

There is no evidence that appellant actually possessed the mescaline. In support of the conviction, the government argues that constructive possession was established by her presence during several conversations between Miss Zuniga and the undercover agent concerning the sale, by comments made by Miss Zuniga and the police’s informant allegedly linking appellant to the sale, and by appellant’s own remarks concerning her past use of drugs. Such evidence, at most, may show appellant’s knowledge of the sale of the illegal drug. It does not indicate that appellant took an active part in the sale, much less that she ever exercised any dominion or control over the drug. To establish constructive possession, however, there must be proof of dominion and control. Garza v. United States, 5th Cir. 1967, 385 F.2d 899; Smith v. United States, 5th Cir. 1967, 385 F.2d 34. We think this case is squarely governed by the rule that “mere presence in the area where the narcotic is discovered or mere association with the person who does control the drug or the property where it is located, is insufficient to support a finding of possession.” United States v. Stephenson, 5th Cir. 1973, 474 F.2d 1353 [1973], The evidence here is clearly insufficient.

Reversed.


author: HUFSTEDLER, Circuit Judge:

text:
    In the Matter of UNITED GENERAL WOOD PRODUCTS CORPORATION, a California corporation. Richard R. CLEMENTS, Trustee-Appellant, v. The INTERNAL REVENUE SERVICE, Defendant-Appellee.
    No. 71-1451.
    United States Court of Appeals, Ninth Circuit.
    Aug. 17, 1973.
    Lawrence A. Diamant (argued), Herbert Wolas of Robinson & Wolas, Los Angeles, Cal., for trustee-appellant.
    Karl Schmeidler (argued), Johnnie M. Walters, Asst. Atty. Gen., Tax Div., Dept, of Justice, Washington, D. C., Robert L. Meyer, U. S. Atty., Charles H. Magnuson, Lawrence V. Brooks, Asst. U. S. Attys., Los Angeles, Cal., Meyer T. Rothwacks, Crombie J. D. Garrett, Tax Div., Dept, of Justice, Washington, D. C., for defendant-appellee.
    Before ELY and HUFSTEDLER, Circuit Judges, and TURRENTINE, District Judge.

       Southern District of California, sitting by designation.

   OPINION

HUFSTEDLER, Circuit Judge:

The only issue on appeal is whether the district court, 320 F.Supp. 322, correctly held that the bankruptcy court could not exercise summary jurisdiction to adjudicate the conflicting claims of the Government and the trustee to a fund derived from the debtor’s accounts receivable. We hold that the debtor constructively possessed the fund when it filed its bankruptcy petition and thus that the bankruptcy court had summary jurisdiction.

United General Wood Products Corporation, the debtor, factored its accounts with Trans-West Factors (“Trans-West”). In June 1969, it recorded a financing statement evidencing Kalof Aluminum Company’s (“Kalof”) security interest in the accounts. Two months later the debtor authorized Trans-West to pay Kalof the proceeds of the receivables. In October 1969, when the balance of the proceeds was $2303.28, the Government, to whom the debtor owed taxes, served notice of levy on Trans-West. The debtor filed its voluntary bankruptcy petition on December 12, 1969. The trustee instituted a turnover proceeding to recover the fund. Over the Government’s protest, the referee exercised summary jurisdiction and, after a hearing, held that the Government’s interest in the fund was subordinate to the trustee’s. Kalof did not protest the proceedings. Trans-West at all times was solely a stakeholder. The district court did not reach the merits because it decided that the referee erred in asserting summary jurisdiction.

The bankruptcy court had summary jurisdiction if United General had constructive possession of the fund when it filed its bankruptcy petition. (Thompson v. Magnolia Petroleum Co. (1940) 309 U.S. 478, 60 S.Ct. 628, 84 L.Ed. 876; see Engelbrecht v. Wildman (9th Cir. 1959) 268 F.2d 133, 134.) Constructive possession “exists where the property was in the physical possession of the debtor at the time of the filing of the petition in bankruptcy, but was not delivered by him to the trustee; where the property was delivered to the trustee, but was thereafter wrongfully withdrawn from his custody; where the property • is in the hands of the bankrupt’s agent or bailee; where the property is held by some other person who makes no claim to it; and where the property is held by one who makes a claim, but the claim is colorable only.” (Taubel-Scott-Kitzmiller Co. v. Fox (1924) 264 U.S. 426, 432-433, 44 S.Ct. 396, 398, 68 L.Ed. 770 (Brandeis, J.). Footnotes omitted; emphasis added.)

The case falls squarely within the italicized language of Taubel, because Trans-West, which had actual possession of the fund when the debtor filed its petition, made no claim whatever to the fund. Accordingly, the bankruptcy court had summary jurisdiction to adjudicate the conflicting claims to the fund. {Accord, 2 Collier, Bankruptcy 505 (14th ed. 1972).)

The Government’s contentions to the contrary are that the debtor’s constructive possession was destroyed either by its assignment to Kalof or by the Government’s notice of levy. Neither argument is sound. For jurisdictional purposes, a debtor constructively possesses an asset in which he has any colorable interest when the person in actual possession does not himself assert any interest in it. Claims of third persons to the same asset are irrelevant to the jurisdictional issue.

The Government attempts to escape the impact of Taubel by creating its own fiction that either the assignment to Kalof or its notice of levy transferred the debtor’s, interest to those creditors. No actual transfer ever took place. We are bound by Taubel, and we refuse to substitute the Government’s fiction for the Supreme Court’s. (Cf. In re Brewster-Raymond Co. (6th Cir. 1965) 344 F.2d 903.)

The Government’s alternative fiction is that service of its notice of levy reduced the fund to its possession by operation of 26 U.S.C. § 6331, Internal Revenue Code of 1954. Section 6331 must be stretched beyond its elasticity to reach the Government’s result. But even if we could read it the Government’s way, we would reject the argument because we adhere to the Supreme Court’s admonishment against transferring tax fictions into bankruptcy cases. (See United States v. Randall (1971) 401 U.S. 513, 91 S.Ct. 991, 28 L.Ed.2d 273.)

The creation of legal fictions is not a sport for the unwary. The pastime should be steadfastly avoided when the result is, as here, to fragment and to delay the administration of bankruptcy proceedings.

Reversed and remanded.

      . Thompson v. Dachner (9th Cir. 1954) 214 F.2d 922 and Goggin v. Consolidated Liquidating Corp. (9th Cir. 1951) 190 F.2d 553 are not in point because the actual possessors of the assets asserted claims against the assets.

      . The Government’s reliance on San Fernando Restaurants, Inc. (S.D.Cal.1964) 236 F. Supp. 777; Rosenblum v. United States (1st Cir. 1962) 300 F.2d 843, and United States v. Eiland (4th Cir. 1955) 223 F.2d 118 is misplaced. None of them involves the jurisdictional issue.
      To the extent that the broad language of San Fernando Restaurants, Ine., implies that a fictional transfer affects the jurisdictional determination, we disapprove the implication.


text:
    Robert CARROLL, Plaintiff-Appellant, Security Insurance Company, Intervenor-Plaintiff-Appellant, v. John C. KILROY and Exxon Corporation, Defendants-Appellees.
    No. 73-1940
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 31, 1973.
    Joseph W. Cole, Jr., William L. Kim-ball, Port Allen, La., for Carroll.
    William H. Cooper, Baton Rouge, La., for Security Ins.
    Ben W. Lightfoot, Calvin E. Hardin, Jr., Baton, Rouge, La., for Exxon.
    George R. Covert, Baton Rouge, La., for Kilroy.
    Before GEWIN, COLEMAN and MORGAN, Circuit Judges.

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

   PER CURIAM:

In this case the only question presented is whether Exxon Corporation is the statutory employer of appellant Carroll. Carroll was injured while delivering a load of hot asphalt that had been sold by Exxon to one of its customers. He alleged that his injuries were caused by Exxon’s negligence. Exxon countered with the argument that the work being performed by Carroll was an integral part of its regular trade, business, or occupation and that therefore Exxon was his statutory employer. The district court granted summary judgment in Exxon’s favor.

We have carefully reviewed the briefs and record and are convinced that the district court correctly decided the issue involved. A copy of the district court’s memorandum opinion is attached as Appendix A. See also Cole v. Chevron Chemical Co., 477 F.2d 361 (5th Cir. 1973). The judgment of the district court is affirmed.

Affirmed.

APPENDIX A

This case is before the Court on the motion of the sole remaining defendant, Exxon Corporation (originally sued as Humble Oil & Refining Company) for summary judgment. This case grows out of an accident wherein the plaintiff, Robert Carroll, received personal injuries as a result of alleged negligence on the part of Exxon Corporation, or its predecessor, Humble Oil & Refining Company, and its employee, John C. Kilroy. The facts insofar as they pertain to this motion, are not disputed. Exxon Corporation refines and manufactures various products, and many of those products are delivered from its plant to its customers in their own trucks. They own some 22 tractors and 24 trailers and employ approximately 41 truck drivers who deliver various petroleum products from the defendant’s plant to its customers. One of the products which they manufacture is hot asphalt. This particular product is usually not delivered by Exxon Corporation itself, but instead they engage others to deliver this particular material. In this case plaintiff’s employer, Asphalt Transport, Inc., was employed by Exxon to deliver this product to its customers. It was in the course of the plaintiff’s employment with Asphalt Transport, Inc., and while in the course of handling hot asphalt for Exxon Corporation, that plaintiff was injured. This motion for summary judgment is based on the defendant’s contention that the work being performed by the plaintiff was part of the regular trade, business or occupation of Exxon, and that therefore plaintiff’s exclusive remedy is under the workmen’s compensation law of the State of Louisiana. After considering the uncontested facts in this case, this Court comes to the conclusion that the plaintiff was indeed engaged in the regular trade, business or occupation of Exxon Corporation (Humble Oil & Refining Company) at the time of his injury, and that therefore he is barred from asserting a tort action against Exxon, but must rely completely on the workmen’s compensation laws of the State of Louisiana for his recovery. Many prior decisions of both the State and Federal Appellate Courts demand this conclusion, among which are Cole v. Chevron Chemical Company, Oronite Division, 427 F.2d 390 (CA 5 — 1970); Gant v. Jackson Brewing, Inc., La.App., 112 So.2d 767 (1959); Whittington v. Gulf Oil Corporation, 337 F.Supp. 952 (W.D.La.— 1971), aff’d 5 Cir., 453 F.2d 892; Foster v. Western Electric Company, La. App., 258 So.2d 153 (2nd Cir. 1972).

For these reasons:

It is ordered that the motion of Exxon Corporation for summary judgment be, and it is hereby granted, and this case is hereby dismissed.

/s/ E. Gordon West

United States District Judge


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Richard Ernest CREWS, Defendant-Appellant.
    No. 73-1739
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit
    Aug. 30, 1973.
    Robert A. Harper, Jr., Gainesville, Fla., (Court-appointed), for defendant-appellant.
    William H. Stafford, Jr., U. S. Atty., Robert L. Crongeyer, Jr., Asst. U. S. Atty., Pensacola, Fla., for plaintiff-ap-pellee.
    Before GEWIN, COLEMAN and MORGAN, Circuit Judges.

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

   PER CURIAM:

This appeal is taken from appellant’s conviction by a jury trial of possessing a quantity of marihuana in violation of Section 844(a) of the United States Code. The appellant’s single assignment of error complains of the district court’s re-instruction to the jury. After the original charge had been given by the district court and the jury had been deliberating for approximately one hour the jury requested the court for a re-instruction of the definitions of actual and constructive possession. After consultation with counsel for both the government and the defendant the district court re-instructed the jury by redefining both types of possession.

We find no error in the original instruction nor the later instruction given by the district court. The appellant’s assignment of error is without merit.

Affirmed.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Maurice REX and Potchernick’s, Inc., Defendants-Appellants.
    No. 73-1150
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 30, 1973.
    Rehearing Denied Sept. 19, 1973.

      Warren N. Weir, San Antonio, Tex., for defendants-appellants.
    William S. Sessions, U. S. Atty., W. Ray Jahn, Asst. U. S. Atty., San Antonio, Tex., for plaintiff-appellee.
    Before GEWIN, COLEMAN and MORGAN, Circuit Judges.

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

   PER CURIAM:

After a jury trial appellants Maurice Rex and Potchernick’s Inc. were convicted of conspiring to violate various provisions of the Gun Control Act of 1968, 18 U.S.C. § 921 et seq. Potchernick’s, Inc. was also convicted of numerous substantive violations of that Act. On appeal the following contentions are made: (1) Rex contends that there was a fatal variance between the indictment and the proof offered at trial; (2) that the evidence was insufficient to support his conviction on the conspiracy count; and (3) both Rex and Potchernick’s, Inc. contend that they were denied their right to a jury trial because the jurors were prevented from communicating with the trial court.

We have reviewed the briefs and record and find all of these contentions to be devoid of merit. There is more than ample evidence in the record tending to show that Rex engaged in a conspiracy and that Potchernick’s, Inc. committed substantive violations of the Gun Control Act. Moreover, in our judgment appellants received a fair trial. Accordingly the judgment of conviction entered by the district court is affirmed.

Affirmed.