author: TALBOT SMITH, Senior District Judge.

text:
    UNITED STATES of America, Appellee, v. Gilbert Clarence YOUNG, Appellant.
    No. 73-1258.
    United States Court of Appeals, Eighth Circuit.
    Submitted Sept. 14, 1973.
    Decided Dec. 6, 1973.

      Mark V. Meierhenry, Rosebud, S.D., for appellant.
    David Gienapp, Asst. U. S. Atty., Sioux Falls, S. D., for appellee.
    Before GIBSON and BRIGHT, Circuit Judges, and TALBOT SMITH, Senior District Judge.

       Talbot Smith, Senior District Judge, Eastern District of Michigan, sitting by designation.

   TALBOT SMITH, Senior District Judge.

Appellant was charged with and convicted of burglary and larceny following jury trial. Involved are two saddles taken from the barn on the Tom Valandra ranch.

The charge made was violation of 18 U.S.C. § 1153 and 661, in two counts, one of burglary and the other of larceny. Following jury trial he was found guilty of the burglary and of larceny of property having a value of less than one hundred dollars.

Briefly stated, the evidence showed that appellant and three companions drove to Cody, Nebraska, where one of the group, McCloskey, “hocked a jack and a tire” for two quarts of wine. They then drove to Spring Creek to the ranch of Tom Valandra, from the barn of which appellant and McCloskey, it was testified, each removed a saddle, appellant later stating that “he was going to hock them- — the saddles — in Cody.” There was no showing that the saddles were the property of either appellant or his companion and the evidence adduced by the government, if believed, well warranted the verdict of the jury.

It is urged to us that the trial court erred in not instructing as to a lesser-included offense involved in the crime of burglary. Title 18, U.S.O., § 1153, supra, n. 1, states in part that “As used in this section, the offenses of burglary [and others] shall be defined and punished in accordance with the laws of the State in which such offense was committed.” Under Count I appellant was charged with a violation of South Dakota’s third degree burglary statute, SDCL 1967, 22-32-9. The offense asserted to be one lesser-included is a South Dakota’s misdemeanor offense set forth in SDCL 1967, 22-32-16. The insurmountable obstacle to the maintenance of appellant’s position in this respect is that the statutes concern two separate and distinct crimes, and it has been so held by South Dakota’s highest court on two occasions, State v. Vierck, 23 S.D. 166, 120 N.W. 1098 (1909), and State v. O’Connor, 194 N.W.2d 246 (S. D.1972). The error in the dictum in the earlier case, upon which appellant places must reliance, indicating that the offense charged in the misdemeanor section is necessarily included in the crime of burglary in the third degree, was pointed out in the O’Connor case, with the statement that to the extent that it could be so construed “we decline to follow it.”

In this situation appellant’s reliance upon Keeble v. United States, 412 U.S. 205, 93 S.Ct. 1993, 36 L.Ed.2d 844 (1973) is misplaced. Keeble held, substantially, see United States v. Grant, 489 F.2d 27 (8th Cir. 1973), that an Indian charged under the Major Crimes Act is entitled to the same lesser-included offense instructions as a non-Indian charged with the same crime. But here no defendant, Indian or not, would be entitled to the lesser-included offense instruction under consideration.

Error is also asserted with respect to the court’s refusal to reopen the government’s case to permit appellant to further cross-examine Miss Beverlyn Lena Brave Hawk for impeachment purposes, on the basis of a tape recording of an interview with her by a law student. A hearing conducted in camera, in the presence of all counsel and Miss Brave Hawk, disclosed not only that the tape was in part inaudible, but also that it contained no impeaching materials. There was no error in such ruling. Whether or not a case will be reopened for the purpose of permitting further testimony rests within the sound discretion of the trial court, United States v. Levin, 443 F.2d 1101 (8th Cir. 1971), cert. denied, 404 U.S. 944, 92 S.Ct. 297, 30 L.Ed.2d 260 (1971) and we find no abuse thereof upon this record. It is, as well, within the sound discretion of the trial court to ascertain whether inaudibility of portions of a tape renders the entire tape untrustworthy. Should the garbled portions be so substantial, in view of the purpose for which the tapes are offered, as to render the recording as a whole untrustworthy, admissibility will be denied. United States v. Avila, 443 F.2d 792 (5th Cir. 1971), cert. denied, 404 U.S. 944, 92 S.Ct. 295, 30 L. Ed.2d 258 (1971); United States v. Skillman, 442 F.2d 542 (8th Cir. 1971), cert. denied, 404 U.S. 833, 92 S.Ct. 82, 30 L.Ed.2d 63 (1971). There was no improper limitation of cross-examination, as asserted by appellant, upon these facts. The trial court’s discretion in limiting the scope of cross-examination is broad and will not be disturbed on appeal unless clearly prejudicial. United States v. Miller, 460 F.2d 582 (10th Cir. 1972); United States v. Cole, 449 F.2d 194 (8th Cir. 1971), cert. denied, 405 U. S. 931, 92 S.Ct. 991, 30 L.Ed.2d 806 (1972).

Error is also asserted with respect to the introduction into evidence of the two stolen saddles. The evidence showed that since being impounded as evidence they had been oiled, and stitched at one spot, by “trusties” at the jail, according to the testimony of Mr. Spencer Bear Heels. The objection made was that “since they came into the Government’s possession they have been materially altered in that condition with an oil being applied to them. Tears — at least one tear has been repaired and laced up.” The court ruled that identity had been sufficiently established, that “here he clearly identified the saddle because of the name, his own, his tag and so forth.” There was no error in this ruling. The trial judge’s determination that the showing as to identification is sufficient to warrant reception of an article into evidence will not be overturned except for a clear abuse of discretion, which we do not here find. United States v. De Larosa, 450 F.2d 1057 (3rd Cir. 1971); West v. United States, 359 F.2d 50 (8th Cir. 1966), cert. denied, 385 U.S. 867, 87 S.Ct. 131, 17 L.Ed.2d 94 (1966).

We have carefully examined the remaining assignments of error concerning the conduct of the trial and the reception of evidence and find no merit therein.

Affirmed.

      . 18 U.S.C. § 1153 “Offenses committed within Indian country”
      Any Indian who commits against the person or property of another Indian or other person any of the following offenses, namely, murder, manslaughter, rape, carnal knowledge of any female, not his wife, who has not attained the age of sixteen years, assault with intent to commit rape, incest, assault with intent to kill, assault with a dangerous weapon, assault resulting in serious bodily injury, arson, burglary, robbery, and larceny within the Indian country, shall be subject to the same laws and penalties as all other persons committing any of the above offenses, within the exclusive jurisdiction of the United States.
      :¡: % 'Jfi sh sK
      As used in this section, the offenses of burglary * * * shall be defined and punished in accordance with the laws of the State in which such offense was committed.

      . 18 U.S.C. § 661 “Within special maritime and territorial jurisdiction”
      Whoever, within the special maritime and territorial jurisdiction of the United States, takes and carries away, with intent to steal or purloin, any personal property of another shall be punished as follows: If the property taken is of a value exceeding $100, or is taken from the person of another, by a fine of not more than $5,000, or imprisonment for not more than five years, or both; in all other cases, by a fine of not more than $1,000 or by imprisonment not more than one year, or both.
      If the property stolen consists of any evidence of debt, or other written instrument, the amount of money due thereon, or secured to be paid thereby and remaining unsatisfied, or which in any contingency might be collected thereon, or the value of the property the title to which is shown thereby, or the sum which might be recovered in the absence thereof, shall be the value of the property stolen.

      . SDCL 1967, 22-32-9. “Breaking curtilage —Vehicles.—A person breaking or entering at any time any building within the curtilage of a dwelling house but not forming a part thereof, or any building or part of any building, booth, tent, railroad ear, vessel, vehicle as defined in § 32-14-1, or any structure or erection in which any property is kept, with intent to commit larceny or any felony, is guilty of burglary in the third degree.”

      . SDCL 1967, 22-32-16. “Entry of other enclosures — Misdemeanor.—Every person who under circumstances not amounting to any burglary enters any building or part of any building, booth, tent, warehouse, railroad car, vessel, or other structure or erection with intent to commit felony, larceny, or malicious mischief, is guilty of a misdemeanor.”

      . Our jurisdiction in this case is based upon the fact that defendant is an Indian and that the crime occurred within the Rosebud Indian Reservation.

      . Mote 1, supra.

      . The Court: “* * * The tape is not physically and in such condition that it could be used properly, in my opinion, before the jury. It’s been admitted by counsel that the tape is . far from perfect. There were a number of questions asked at the completion or toward the tailend of the tape, and if they had been audibly answered, this may have settled the question. But there is no question there and counsel agrees that the answers are inaudible. For this reason I am not going to allow any further reference to the tape in front of the jury. Additionally, I am not going to allow the attorneys to reopen Government’s case and call the witness back for cross-examination.” (Transcript, pp. 101-2.)
      * sit sis $
      “If there were even the slightest possibility that this were impeachment material I would, of course, let it in.” (Transcript, p. 103.)


source: Caselaw Access Project

author: WEBSTER, Circuit Judge.

license: Public Domain

text:
    John J. HARTMANN, Individually, and on behalf of all others similarly situated, Appellant, v. George M. SCOTT, Individually, and as County Attorney for the County of Hennepin, et al., Appellees.
    No. 72-1692.
    United States Court of Appeals, Eighth Circuit.
    Submitted Sept. 10, 1973.
    Decided Dec. 6, 1973.

      Lynn S. Castner, Minneapolis, Minn., for appellant.
    Craig R. Anderson, Special Asst. Atty. Gen., St. Paul, Minn., for appellees.
    Before HEANEY, STEPHENSON and WEBSTER, Circuit Judges.
   WEBSTER, Circuit Judge.

John J. Hartmann appeals from an order of the District Court denying his motion to convene a three-judge court to consider his challenge to the constitutionality of certain provisions of the Minnesota statute adopting the Interstate Compact on Mental Health; dismissing defendants-appellees Hursh, Sheppard and Lightburn for failure of appellant to exhaust state remedies ; denying appellant’s motion for a preliminary injunction; and striking all class action allegations.

This case presents for our consideration, in light of Preiser v. Rodriguez, 411 U.S. 475, 93 S.Ct. 1827, 36 L.Ed.2d 439 (May 7, 1973), whether one in custody may avail himself of the Civil Rights Act, 42 U.S.C. § 1983, to challenge the constitutionality of portions of a statute which is the basis for his confinement.

Hartmann was originally civilly committed to the Minnesota Security Hospital by the State of Minnesota on November 1, 1951, as mentally ill and dangerous. In 1967 he unsuccessfully challenged his commitment in State ex rel. Hartmann v. Lund, 277 Minn. 398, 152 N.W.2d 514 (1967), cert. denied, 390 U. S. 967, 88 S.Ct. 1078, 19 L.Ed.2d 1171 (1968). After experiencing a series of coronary seizures, Hartmann was temporarily transferred to Anoka State Hospital, from which he escaped on April 14, 1970.

Acting on an order issued by Minnesota Probate Judge Melvin Peterson, Hart-mann was apprehended September 18, 1970 by police in New Mexico, where he had resided without incident and without hiding his identity following his escape in Minnesota. He thereupon brought an action for habeas corpus in a New Mexico state court, pursuant to which a complete psychiatric examination was conducted. A hearing was held at which the State of Minnesota was represented by a Minnesota psychiatrist and by defendant-appellee Gaffney, who appeared as a special prosecutor. Finding Hartmann to be sane and safe to be at large, on December 18, 1970 the New Mexico court ordered him released.

Early in January, 1971, Hartmann was arrested and jailed in Littleton, Colorado on a misdemeanor charge. He was represented by two Colorado public defenders but was never brought before the court. On or about January 11, 1971, Deputy Sheriffs from Hennepin County, Minnesota at the direction of defendants-appellees Scott and Gaffney transported Hartmann against his will and without a hearing from Colorado to Minnesota. There, Minnesota health officials (defendants-appellees Hursh, Sheppard and Lightburn) reincarcerat-ed him in the Minnesota Security Hospital, where he remains. The Deputy Sheriffs acted pursuant to a second order of apprehension issued by Minnesota Probate Judge Peterson after the New Mexico decree of sanity and release. Judge Peterson’s order was predicated on Minnesota Department of Public Welfare Regulations VII-7222 and VII-7223 and on Articles V and VI of the Interstate Compact on Mental Health, Minn. Stat.Ann. § 245.51 (1971), of which Minnesota, New Mexico, Colorado, and approximately 37 other states are member-parties.

Hartmann filed a class action in the United States District Court in Minnesota alleging deprivation of his civil rights in violation of 42 U.S.C. § 1983 and conspiracy to deprive him of his civil rights in violation of 42 U.S.C. § 1985(2) and (3) and § 1986. His complaint named as defendants George M. Scott, individually and as County Attorney for the County of Hennepin; James Gaffney, individually and as Assistant County Attorney for the County of Hennepin ; John W. Haack, individually and as Deputy Sheriff and Jailer for the Littleton Jail, County of Arapahoe, State of Colorado; Morris Hursh, individually and as Commissioner of the Minnesota State Department of Public Welfare; Charles Sheppard, individually and as Medical Director of the Minnesota Security Hospital; William Light-burn, individually and as Administrator of the Minnesota Security Hospital; and John Doe, Richard Roe and Mary Hoe.

The Relief Sought. Hartmann requested that a three-judge court be convened pursuant to 28 U.S.C. §§ 2281 and 2284 on the ground that the relief sought was an injunction against the enforcement of the state statute adopting the Interstate Compact and the Minnesota regulations as well as a declaratory judgment that the statute and regulations are unconstitutional, facially and as applied. In addition, Hartmann asked for a declaratory judgment pursuant to Fed.R.Civ.P. 81(b) on the binding nature of the New Mexico decree and on the unconstitutionality of defendants’ transportation of him from Colorado to Minnesota. He further sought an order in the nature of mandamus requiring the named defendants to discharge him from the Minnesota Security Hospital and to provide him free transportation back to Littleton, Colorado, and monetary damages ($1.00 plus costs and attorneys’ fees) against defendants Scott and Gaffney, who allegedly conspired to deprive him of his constitutional rights.

Action by Trial Court. In an unpublished memorandum, Judge Lord ordered stricken all references to class representation because there was (a) no definition of the class represented, (b) no allegation that the class was so numerous that all members could not be joined and (c) no indication that Hartmann would be a proper representative of a class. He then sustained a motion to dismiss defendants Hursh, Sheppard and Light-burn, holding that the action was in reality a habeas corpus action and that Hartmann had failed to exhaust his state remedies; and Judge Lord likewise denied the request for a three-judge court, holding that the provisions of §§ 2281 and 2284 do not apply to habeas corpus. However, he overruled the mo- . tion for summary judgment by defendants Scott and Gaffney, against whom Hartmann sought only nominal damages.

I

Since appellees contend that the trial court’s order dismissing some, but not all of the defendants, was not appeala-ble, we turn first to a consideration of our jurisdiction to entertain this appeal.

As a result of the trial court’s order only Scott and Gaffney remain as defendants. Against them Hartmann seeks $1.00 in damages for transporting him from Littleton, Colorado to St. Peter, Minnesota, under circumstances which he contends deprived him of his constitutional rights under color of state law. The trial court made no express determination that there was no just reason for delay. Its order is therefore not a final judgment and, under ordinary circumstances, would not be appeal-able. Fed.R.Civ.P. 54(b); 28 U.S.C. § 1291.

Nor does it follow that because Hart-mann sought injunctive relief against defendants Hursh, Sheppard and Light-burn the appeal must be entertained as an appeal from an interlocutory order refusing an injunction. See 28 U.S.C. § 1292(a)(1). The trial court’s order did not dispose of any of the demands.for injunctive relief. It did result in the dismissal of the defendants who, as state officials would be necessary parties in an action to enjoin enforcement of a state law, and thereby precluded the designation of a three-judge court with authority to grant such injunctive relief. 28 U.S.C. § 2281.

Appellate jurisdiction under the three-judge court statute has been described as “so complex as to be virtually beyond belief.” ALI Study of the Division of Jurisdiction Between State and Federal Courts 332 (1969). It has been well established, however, that a Court of Appeals has jurisdiction to review a District Court’s refusal to convene a three-judge court. Schackman v. Arnebergh, 387 U.S. 427, 87 S.Ct. 1622, 18 L.Ed.2d 865 (1967); Idlewild Bon Voyage Liquor Corp. v. Epstein, 370 U.S. 713, 82 S.Ct. 1294, 8 L.Ed.2d 794 (1962); Firkins v. State of Colorado, 434 F.2d 1232 (10th Cir. 1970) ; McMillan v. Board of Education of State of New York, 430 F.2d 1145, 1148 (2d Cir. 1970); Gold v. Lomenzo, 425 F.2d 959 (2d Cir. 1970).

In this case, the court did not directly pass upon the question “whether the constitutional issue raised is substantial, whether the complaint at least formally alleges a basis for equitable relief, and whether the case presented otherwise comes within the requirements of the three-judge statute.” Idlewild Bon Voyage Liquor Corp. v. Epstein, supra 370 U.S. at 715, 82 S.Ct. at 1296.

Instead, the trial court addressed itself to the motion of Hursh, Sheppard and Lightburn to dismiss the complaint on the grounds that the complaint as to them was in the nature of a habeas corpus petition and that Hartmann had not exhausted state court remedies. The court held that because Hartmann was “attacking the legality of his detention” his civil rights action was a plea for ha-beas corpus relief in disguise. Accordingly, he granted the motion to dismiss without expressly ruling upon Hart-mann’s request to designate a three-judge court.

We conclude from this procedural background that we have jurisdiction to hear this appeal for two reasons. First, we perceive no practical difference in terms of our power to review under Schackman, supra, between a formal order denying the motion to designate a three-judge court and the situation presented in this case by dismissal of the parties defendant necessary to the maintenance of a three-judge case. If in fact a substantial constitutional question has been presented, the single trial judge has no authority to dismiss the case. 28 U.S.C. § 2284(5). Snyder’s Drug Stores v. Taylor, 227 F.2d 162 (8th Cir. 1955). See Aaron v. Cooper, 261 F.2d 97, 105 (8th Cir. 1958).

Second, the dismissal of the state defendants disposed of Hartmann’s constitutional attack upon the Minnesota statute and regulations issued thereunder. Unlike in Lyons v. Davoren, supra, no avenue of declaratory relief remained; no opportunity for injunctive relief could be afforded against those responsible for the statute’s implementation. Only a claim based upon rough handling and kidnapping under the statute was left in the case, a claim so trivial in relation to the main thrust of the suit that Hartmann asked only $1.00 in damages from the remaining county defendants Scott and Gaffney. The available relief has been severely contracted. Build of Buffalo, Inc. v. Sedita, 441 F.2d 284 (2d Cir. 1971). See 6 J. Moore, Federal Practice |f 54.30 [2.-1], at 452 (2d ed. 1972). For all practical purposes, the litigation has been terminated. “Where the effect of a district court’s order, if not reviewed, is the death knell of the action, review should be allowed.” Eisen v. Carlisle & Jacquelin, 370 F.2d 119, 121 (2d Cir. 1966), cert. denied, 386 U.S. 1035, 87 S. Ct. 1487, 18 L.Ed.2d 598 (1967), cert. granted, 414 U.S. 908, 94 S.Ct. 235, 38 L.Ed.2d 146 (1973). See also Cohen v. Beneficial Loan Co., 337 U.S. 541, 69 S. Ct. 1221, 93 L.Ed. 1528 (1949).

Having found the requisite appellate jurisdiction, we proceed to an examination of the basis for the order of the trial judge dismissing the state defendants.

II

Judge Lord’s memorandum filed October 12, 1972 predated the decision of the Supreme Court in Preiser v. Rodriguez, supra. Anticipating in part but unguided by its teachings, he found that “[t]he declaratory relief requested in the instant case is totally integrated with the claim that plaintiff’s detention is illegal and by its very nature encompasses the same questions as must be determined in the habeas corpus action.” Observing that Hartmann was directly challenging the legality of his detention and that the ultimate relief sought was his release from custody, Judge Lord held that this was “a case that should be treated as a habeas corpus petition.” He thereupon dismissed the complaint as to defendants Hursh, Sheppard and Lightburn for failure of Hartmann to exhaust state court remedies. In so doing, he distinguished this case from Sostre v. McGinnis, 442 F.2d 178 (2d Cir. 1971), cert. denied, sub nom. Sostre v. Oswald, 404 U.S. 1049, 92 S.Ct. 719, 30 L.Ed.2d 740, cert. denied sub nom. Oswald v. Sostre, 405 U.S. 978, 92 S.Ct. 1190, 31 L.Ed.2d 254 (1972), and Wilwording v. Swenson, 404 U.S. 249, 92 S.Ct. 407, 30 L.Ed.2d 418 (1971), in which the respective plaintiffs were permitted to pursue their civil rights claims challenging conditions of their confinement because they were not seeking release from custody as their ultimate objective.

At the heart of any distinction between resort to the Civil Rights Act to vindicate a constitutional right by one in custody, on the one hand, and use of the federal habeas corpus statute, 28 U.S.C. § 2254, on the other, is the requirement that under § 2254 state remedies shall first have been exhausted.

In a civil rights action, the plaintiff need not first seek redress in a state forum. Monroe v. Pape, 365 U.S. 167, 180-183, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961); McNeese v. Board of Education, 373 U.S. 668, 83 S.Ct. 1433, 10 L.Ed.2d 622 (1963); Damico v. California, 389 U.S. 416, 88 S.Ct. 526, 19 L.Ed. 2d 647 (1967) ; Houghton v. Shafer, 392 U.S. 639, 88 S.Ct. 2119, 20 L.Ed.2d 1319 (1968) . To some extent, the two remedies have been held to be mutually available to persons in custody. Thus, a prisoner may challenge the conditions of his confinement by habeas corpus without the necessity of exhausting state remedies. Johnson v. Avery, 393 U.S. 483, 89 S.Ct. 747, 21 L.Ed.2d 718 (1969) ; Wilwording v. Swenson, supra 404 U.S. at 251, 92 S.Ct. 407. At the same time, since prisoners in custody are not held to any stricter standard of exhaustion than other civil rights plaintiffs, Houghton v. Shafer, supra, conditions of confinement have been properly challenged in § 1983 actions. Haines v. Kerner, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972) ; Wilwording v. Swenson, supra; Cooper v. Pate, 378 U. S. 546, 84 S.Ct. 1733, 12 L.Ed.2d 1030 (1964); Jackson v. Bishop, 404 F.2d 571 (8th Cir. 1968). In Preiser v. Rodriguez, supra, the Supreme Court did not attempt to delineate the limits of habeas corpus as an alternative remedy to a proper action under § 1983, but considered instead “the extent to which § 1983 is a permissible alternative to the traditional remedy of habeas corpus.” 411 U.S. at 500.

In Preiser, three separate New York actions were consolidated on appeal. In each action, the petitioners combined with a habeas corpus petition a civil rights complaint under § 1983 challenging some aspect of their terms of confinement. Rodriguez contended that he had been unconstitutionally punished for refusal to disclose the source of contraband material in his possession, thereby depriving him of good-conduct-time credits without due process of law. Katzoff contended that he had been deprived of good-conduct time as a result of disciplinary charges brought against him for making derogatory comments about prison officials in his diary. Kritsky contended that he had been summarily punished by deprivation of good-conduct-time credits for refusing to admit his part in advocating insurrection during a prison demonstration. The District Court in each case permitted the petitioner to proceed under § 1983, notwithstanding his failure to exhaust state remedies. The Second Circuit en banc affirmed, relying upon Wilwording v. Swenson, supra. The Supreme Court granted certiorari to consider the bearing of Wilwording upon this situation, saying:

In that context, the question whether a state prisoner may bring an action for equitable relief pursuant to § 1983, or whether he is limited to the specific remedy of habeas corpus, presents an unresolved and important problem in the administration of federal justice.

411 U.S. at 482, 93 S.Ct. at 1832.

Writing for the Court, Justice Stewart noted that habeas corpus had been extended through the years from a very limited inquiry into the jurisdiction of the committing court to “a remedy available to effect discharge from any confinement contrary to the Constitution or fundamental law, even though imposed pursuant to a conviction by a court of competent jurisdiction.” Id. at 485, 93 S.Ct. at 1834.

From an examination of the evolution of habeas corpus relief in this country, Justice Stewart concluded that “the essence of habeas corpus is an attack by a person in custody upon the legality of that custody, and . . . the traditional function of the writ is to secure release from illegal custody.” Id. at 484, 93 S.Ct. at 1833. To the argument that the Civil Rights Act was available to prisoners in custody as an alternative remedy since its language was broad and no exhaustion was required, Justice Stewart responded that a state prisoner challenging his underlying conviction and sentence in a federal court was limited to habeas corpus by a more specific act of Congress. He concluded:

[T]he result must be the same in the case of a state prisoner’s challenge to the fact or duration of his confinement, based . . . upon the alleged unconstitutionality of state administrative action. Such a challenge is just as close to the core of habeas corpus as an attack on the prisoner’s conviction, for it goes directly to the constitutionality of his physical confinement itself and seeks either immediate release from that confinement or the shortening of its duration.
. In short Congress has determined that habeas corpus is the appropriate remedy for state prisoners attacking the validity of the fact or length of their confinement, and that specific determination must override the general terms of § 1983.
Id. at 489-490, 93 S.Ct. at 1836 (emphasis added).

Turning then to Hartmann’s claim for relief, we are bound by Preiser to hold that insofar as he seeks to challenge the fact or duration of his confinement his remedy is in habeas corpus and cannot be entertained in this action, for want of exhaustion of state remedies. Other relief demanded included: (1) to have dismissed defendants-appellees Hursh, Sheppard and Lightburn along with Scott and Gaffney enjoined from enforcing the Interstate Compact on Mental Health and regulations thereunder to cause the involuntary transfer of Hartmann or members of his class from another state to the State of Minnesota; (2) to compel them to discharge him from the Minnesota Security Hospital; and (3) to provide free transportation to Littleton, Colorado, pendente lite. Further, Hartmann sought a declaratory judgment that the Interstate Compact on Mental Health statute and regulations thereunder were unconstitutional on their face or as applied. The holding in Preiser precludes the federal court at this time from entertaining Hartmann’s prayer for release. The only appropriate and permissible avenue for such relief is by habeas corpus.

We do not agree with the district court’s finding, however, that Hartmann’s other claims are so totally integrated with his claim of illegal detention that they cannot be separated from the habeas corpus action. Hartmann seeks declaratory relief that the Minnesota statute and regulations are facially unconstitutional. He seeks to enjoin the enforcement of that law and those regulations insofar as they would permit the involuntary transportation of Hartmann and members of his class from another- state to the State of Minnesota. Hartmann is presently in Minnesota and neither the declaratory relief nor the injunctive relief would effect his release from confinement, if as alleged, the statute and the regulations are facially unconstitutional. We know of no other means by which a person in custody could obtain declaratory and injunc-tive relief against the enforcement of such statutes. These claims, separate and distinct from Hartmann’s claim for release, are not foreclosed simply because Hartmann is in custody and has not exhausted state remedies. Houghton v. Shafer, supra; McDonnell v. Wolff, 483 F.2d 1059 (8th Cir. Aug. 2, 1973). As the Court said in Preiser:

If a prisoner seeks to attack both the conditions of his confinement and the fact or length of that confinement, his latter claim, under our decision today, is cognizable only in federal ha-beas corpus, with its attendant requirement of exhaustion of state remedies. But, consistent with our prior decisions, that holding in no way precludes him from simultaneously litigating in federal court, under § 1983, his claim relating to the conditions of his confinement.

411 U.S. at 499 n. 14, 93 S.Ct. at 1841.

Ill

The appellant has argued extensively and persuasively the substantiality of the constitutional question presented in his request below • for. a three-judge court. That issue was not considered by the District Court and we do not pass upon it here. Neither do we attempt to resolve the right of appellant to maintain his action as a class action. We have recently held that under certain circumstances a class action could be appropriate in a habeas corpus proceeding. Williams v. Richardson, 481 F.2d 358 (8th Cir. 1973). In so doing, we called attention to the observation of the Ninth Circuit in Mead v. Parker, 464 F.2d 1108, 1112 (9th Cir. 1972):

It may be that the [district] court will ultimately decide that it is unnecessary to treat this as a class action, perhaps on the theory that, if the petitioners are entitled to relief, the relief will benefit all inmates, whether made parties or not. Or, the court might decide to treat the ease as a class action on one or more of the grounds stated in Rule 23(b). A court has considerable latitude in deciding how best to proceed.

What was said there is of course clearly applicable to a § 1983 proceeding, and a class action may be unnecessary to obtain the desired relief by a three-judge court. In any event, an order refusing to permit an action to be maintained as a class action which does not operate as the death knell of the action is not ap-pealable as a final or interlocutory order, and the order of the trial court in striking the class action allegations is not properly before us at this time. Korn v. Franchard, 443 F.2d 1301 (2d Cir. 1971). See Lamarche v. Sunbeam Television Corp., 446 F.2d 880 (5th Cir. 1971); Lipsett v. United States, 359 F. 2d 956 (2d Cir. 1966). See also Eisen v. Carlisle & Jacquelin, supra.

We reverse the order of the District Court dismissing defendants Hursh, Sheppard and Lightburn. Upon remand, the District Court is directed to rule upon appellant’s motion to designate a three-judge court. The pendency of this ease will not preclude the appellant from simultaneously seeking habeas corpus relief in the appropriate state jurisdiction.

Reversed and remanded.

      . The District Court denied the motion of defendants Scott and Gaffney for judgment on the pleadings and for summary judgment.

      . The case describes the circumstances surrounding Hartmann’s original commitment.

      . See Minn. Dept. of Public Welfare Manual, Revised, August 25, 1969:

        Interstate Movement of Patient VII-7222
      When a person admitted to a state hospital is found to be a non-resident, the hospital is to send full information about him at once to the Medical Services Division, Attention: Patient Transfers. Before deportation is authorized by the Department, there must be commitment in this state.
      Action to return a Minnesota resident who has been committed or apprehended in another state is a responsibility of the Department of Public Welfare, Division of Medical Services.

        Interstate Compact VII-7223
      If a nonresident mentally ill or mentally deficient patient has settlement in a state that is a member of the Interstate Compact, authorization may be given to provide care and treatment in a Minnesota state hospital.
      The Interstate Compact authorizes the party states to give such care and treatment to the mentally ill and mentally deficient as is necessary and desirable regardless of the residence or citizenship of the patient, the controlling factors being community safety and humanitarianism. The purpose of the Compact between the party states is to provide the necessary legal basis for institutional or other appropriate care and treatment of the mentally ill and mentally deficient under a system that recognizes the paramount importance of patient welfare and to establish the responsibilities of the party states in terms of such welfare, (see Minn.Stat., Sec. 245.51) •,
      States Carrying membership in the Compact are:
      Alaska
      Arkansas
      Colorado
      Connecticut
      Delaware
      Hawaii
      Idaho Illinois
      Indiana
      Iowa
      Kansas
      Kentucky
      Louisiana
      Maine
      Maryland
      Massachusetts
      New Jersey
      New Mexico
      New York
      North Carolina
      North Dakota
      Ohio
      Oklahoma
      Oregon
      Pennsylvania
      Rhode Island
      South Carolina
      South Dakota
      Texas
      Vermont
      Virginia
      Washington
      West Virginia
      Wisconsin
      Wyoming
      All plans involving the Compact are determined by the Division of Medical Services, Attention: Patient Transfers Supervisor, acting for the Commissioner of Public Welfare, who is designated as ‘Compact Administrator’.
      Minn. Dept, of Public Welfare
      Revised August 25, 1969

      . Minn.Stat.Aim. § 245.51 Art. V & VI:
      ARTICLE V
      Whenever a dangerous or potentially dangerous patient escapes from an institution in any party state, that state shall promptly notify all appropriate authorities within and without the jurisdiction of the escape in a manner reasonably calculated to facilitate the speedy apprehension of the escapee. Immediately upon the apprehension and identification of any such dangerous or potentially dangerous patient, he shall be detained in the state where found pending disposition in accordance with law.
      ARTICLE VI
      The duly accredited officers of any state party to this compact, upon the establishment of their authority and the identity of the patient, shall be permitted to transport any patient being moved pursuant to this compact through any and all states party to this compact, without interference.

      . Hartmann invoked the District Court’s jurisdiction on the basis of 28 U.S.C. § 1343.

      . But cf. Lindauer v. Oklahoma City Urban Renewal Authority, 439 F.2d 761 (10th Cir. 1970), relying upon Lyons v. Davoren, 402 F.2d 890 (1st Cir. 1968), cert. denied, 393 U.S. 1081, 89 S.Ct. 861, 21 L.Ed.2d 774 (1969). The court in Lyons distinguished Idlewild Bon Voyage Liquor Corp. v. Epstein, supra, where the denial of the request for a three-judge court effectively operated to throw plaintiff out of court.

      . “An incidental effect of [Rule] 54(b) should, however, be noted. If the district court fully adjudicates a claim for an injunction, its adjudication is, nevertheless, interlocutory if one or more other claims remain pending and the district court does not execute its certificate, but in that event the interlocutory order is appealable as an order granting or denying an injunction [under § 1292(a)(1)].” 6 J. Moore, Federal Practice 1f 54.30, at 452 (2d ed.1972).

      . 28 U.S.C. § 2254 provides in pertinent part:
      (a) The Supreme Court, a Justice thereof, a circuit judge, or a district court shall entertain an application for a writ of habeas corpus in behalf of a person in custody pursuant to the judgment of a State court only on the ground that he is in custody in violation of the Constitution or laws or treaties of the United States.
      (b) An application for a writ of habeas corpus in behalf of a person in custody pursuant to the judgment of a State court shall not be granted unless it appears that the applicant has exhausted the remedies available in the courts of the State, or that there is either an absence of available State corrective process or the existence of circumstances rendering such process ineffective to protect the rights of the prisoner.
      (c) An applicant shall not be deemed to have exhausted the remedies available in the courts of the State, within the meaning of this section, if be lias the right under the law of the State to raise, by any available procedure, the question presented.
      The Civil Rights Act, 42 U.S.C. § 1983, provides :
      “Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory, subjects, or causes to be subjected, any citizen . . . or other person ... to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.

      . Gomez v. Miller, 341 F.Supp. 323 (S.D.N. Y.1972), decided before Preiser, has, subsequent to Preiser, been affirmed without opinion. Miller v. Gomez, 412 U.S. 914, 93 S.Ct. 2728, 37 L.Ed.2d 141 (May 29, 1973). In that case, a three-judge court held that a person indicted but neither tried nor convicted of a felony may challenge in a § 1983 action the constitutionality of a statute under which he was committed to a hospital for the criminally insane, since the limited relief sought would not result in his release from custody.


author: COLEMAN, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Robert B. BRUCE et al., Defendants-Appellants.
    No. 73-1398.
    United States Court of Appeals, Fifth Circuit.
    Dec. 18, 1973.
    Rehearing Denied Jan. 25, 1974.
    Rehearing and Rehearing En Banc Denied March 18, 1974.

      H. A. Stephens, Jr., Atlanta, Ga. (court-appointed), for Bruce.
    Charles D. Read, Jr., Decatur, Ga., Gerald M. Bimberg, Houston, Tex., for Walker.
    John W. Stokes, U. S. Atty., P. Bruce Kirwan, William P. Gaffney, Asst. U. S. Attys., Atlanta, Ga., for plaintiff-appel-lee.
    Before BELL, COLEMAN and RO-NEY, Circuit Judges.
   COLEMAN, Circuit Judge:

Judge Edenfield, of the United States District Court for the Northern District of Georgia, sitting without a jury, convicted these appellants on various counts of securities fraud, 15 U.S.C., § 77q(a), mail fraud, 18 U.S.C., § 1341, sale of unregistered securities in interstate commerce, 15 U.S.C., § 77e(a), and conspiracy to violate the aforesaid statutes, 18 U.S.C., § 371, with individual variations, all counts basically charged the defendants with the unlawful use of the mails in the execution of a fraudulent scheme to sell certain securities.

The appellant, Walker, was convicted on twelve counts and sentenced to serve concurrent terms of three years.

Bruce was convicted on two counts and sentenced to concurrent terms of two years, of which six months must be spent in a penal institution.

Blackwood, an attorney, was convicted on three counts and sentenced to consecutive terms of five years¿ suspended, with three years probation, as Black-wood was by that time already in prison on other charges.

Except as to Blackwood’s conviction on Count 14, which will be reversed, the judgment of the District Court is affirmed.

On appellate review this Court must view the evidence and the reasonable inferences to be drawn therefrom in that light most favorable to the verdict and must determine as a matter of law whether there is substantial evidence, direct or circumstantial, to support the verdict, Glasser v. United States, 315 U. S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942); United States v. Jacobs, 5 Cir., 1971, 451 F.2d 530. In circumstantial evidence cases, the trier of fact must “reasonably find that the evidence excludes every reasonable hypothesis, except that of guilt”, United States v. Sidan-Azzam, 5 Cir., 1972, 457 F.2d 1309. If a conviction is attacked on the ground that the evidence was insufficient to support it there will be an affirmance if it is evident that the findings are not clearly erroneous, United States v. Davis, 5 Cir., 1971, 443 F.2d 560, cert. denied, 404 U. S. 945, 90 S.Ct. 298, 30 L.Ed.2d 260 (1971) ; United States v. Graves, 5 Cir., 1970, 428 F.2d 196, cert. denied, 400 U. S. 960, 91 S.Ct. 360, 27 L.Ed.2d 269 (1970).

In one way or another, each appellant challenges the sufficiency of the evidence.

The Fraud

The alleged scheme in this case is predicated upon the incorporation and operation of American Capital Corporation [hereafter referred to as American or as the Company]. The defendants were either officers of the Company or professionally retained by it. The list included those responsible for the drawing of the two prospectuses which the prosecution contends were false and misleading. Defendant Walker was the primary incorporator and also the President of American.

On December 13, 1966, American was incorporated in Atlanta, Georgia. To avoid coming within the provisions of the Investment Company Act of 1940, 15 U.S.C. § 80a-l et seq., and to aid in the composition of the required prospectus, Walker retained Robert A. Blackwood, an Atlanta attorney. Georgia laws and regulations required the prospectus to contain an elaboration upon the financial condition of the Company by way of certain certified statements. To meet this condition, Walker first approached an accountant with a national accounting firm. After ascertaining what Walker wanted in the financial statement, this accountant turned Walker down because the policy of his firm toward the use of appraisal values in financial statements for newly formed companies would not allow him to do what Walker wanted. [The particular controversy surrounding the use of certain appraisal values will be discussed later.] Walker then contacted Defendant Robert B. Bruce, at the time a C.P. A. in Florida, who agreed to do the necessary accounting work. The first prospectus was offered to the public on January 31, 1967.

As a means of obtaining capital funding, the Company offered two types of securities to the general public: common stock and interest-bearing investment certificates. Initially, the incorpo-rators (and others close to them) received 47% of the stock. On its face, this was not illegal. The problem arises from the fact that while the stock was selling to the general public for $2 a share, the insiders received stock for “incorporation services” amounting to 285,000 shares in return for evaluated consideration of only $20,000.

In the very first year, American went from a surplus to a deficit net worth. In the early part of 1968, the Georgia Securities Commission forbade American to sell any more securities until a new prospectus had been filed. On or about April 5, 1968, a new prospectus, dated June 1, 1968, was submitted to the Commission and offered to the public. On the face of the financial statements contained in the new prospectus, it was obvious that the Company was insolvent. Finally, in May of 1969, the Company went out of business.

The Government concedes that neither the 1967 nor the 1968 prospectus was false per se, but it does contend that they were deliberately and fraudulently misleading.

In the Bench trial below, the hotly contested issues seemed to center around the commissions paid to the securities salesmen, the use of the proceeds received from the sale of the securities, the way the cash assets were presented, certain notes receivable, the value of the land in Florida, listing of unaudited values of a subsidiary alongside audited values, certain footnotes in the prospectuses, and the failure to list certain assets and debts.

The first prospectus represented that the expense of the sale and distribution of the securities would be no higher than 4% for the certificates and 15% for the stock. In actuality, the salesmen received 20% on the certificates and 33% % on the stock.

Next came the use of the proceeds of the securities sales. The prospectus showed that the Company would engage in the investment banking business by purchasing eommerical paper, making secured loans, and purchasing securities of other companies. In actuality no funds were ever advanced toward the stated purposes — although American did assume certain obligations in the acquisition of the assets in Babee-Tenda Products Corporation, a wholly owned subsidiary of American. Instead, many loans were made to insiders, totalling $54,499, of which only $33,415 was ever repaid.

The third alleged misrepresentation concerns the cash assets stated in both prospectuses. In the first, the financial statement was drawn on the 13th day of December, 1966. Two days later, but before the prospectus was completed, a disbursement of $15,000 was made and recorded on the company’s books as an exchange item. This item was later removed by an adjusting entry against capital.

In the second prospectus, the cash entry in the financial statement showed $42,809.25. The chief accountant with the Atlanta Regional Office of the Securities and Exchange Commission, the government’s expert witness, testified that $40,000 of the sum was borrowed from a bank, placed in a savings account, and then pledged as collateral for the original loan. About a month later, the loan was repaid, and the savings account was closed. A footnote was included explaining this loan but when told such had to be included Walker asked that it not be the first one.

Another irregularity in the case was the failure of Bruce to include an outstanding check for $2,000 which was written prior to the date of the statement. This $2,000 was given as a down payment for an airplane which was not included in the assets of the Company, nor was the debt thus incurred included in the liabilities. Had the prospectus clearly reflected these items, the cash would have actually been $809.35, not $42,809.35.

The next questionable entry concerned a note for $20,000 given to American by Blackwood as payment for 40,000 shares of stock. The government contends that the entry and accompanying footnote were misleading. A footnote stated that Blackwood owed the Company $20,000 on a note receivable bearing 6% interest on or before December 8, 1967. It stated further that the only security for the note was 40,000 shares of American Capital Corporation. In actuality, the note contained a stipulation on the back that it could only be satisfied from the 40,000 shares and did not represent a general indebtedness on the part of Blackwood. The government contended that this was not a valid, enforceable note and should not have been included as such.

The biggest dispute arose over the use of a MAI appraisal for the value of the land American had title to in Florida. This property was purchased from Diversified Enterprises of Florida by incurring obligations amounting to $380,387.74 and issuing 35,000 shares of American stock. The government contended that the true value of the entire parcel did not amount to any more than the debt against it.

The value in the prospectus, based upon a MAI appraisal while the land was still in the hands of Diversified, was listed at $1,076,600. The government produced a witness who aided in the composition of the report and who stated that the report was an aggregate value based upon total sale of the individual lots, plus certain additions to the land which were to be made. He stated it did not represent the current value of the land as a whole, prior to subdivision and development.

A note in the first prospectus recorded the various debts of the Company but in exact terms it never stated how much the Company owed on the Florida property, nor did the prospectus reveal that the mortgage on the land was overdue when the Company purchased it. The Government contends that the use of the MAI appraisal overstated the stockholders’ equity by $716,212.26.

The second prospectus reported that the Florida property had been foreclosed. The Government was particularly affronted by the inclusion of the loss of this property in the comparative statement of income and expenses for the year 1968, contending that it should have been included in 1967’s statement as that was the year the foreclosure actually occurred. By placing the loss in 1968, the Government contends that the stockholders’ equity was grossly misstated for the year 1967.

Another of the Government’s objections related to the inclusion of unaudited figures with audited figures in a footnote explaining the acquisition of Babee-Tenda Products Corporation. This entry, it contends, could be misleading to the buying public, as to the actual value of the property.

The controversial footnote showed, in essence, that the assets of Babee-Tenda Safety Products Corporation were acquired from Babee-Tenda’s creditors in bankruptcy by exchanging 26,388 shares of American stock and by the assumption of $75,000 in notes payable. It further stated that the unaudited sales of the newly acquired company was approximately $2,000,000 per year, and the unaudited net worth was reported to be $289,000. Accordingly, this acquisition represented an unrealized, unaudited appreciation in the book value of American in excess of $211,000.

Evidence was also introduced clearly implicating Walker and Blackwood in a scheme whereby they bribed certain Labor Union officials to invest union pension funds in American investment certificates in violation of federal law. The fact that the Union had invested in these certificates was later used as a selling point in some of the Company’s promotional material.

In getting down to the nuts and bolts, the Government conceded that the financial statements were not patently false, but asserted that by .the addition of footnotes the perpetrators of this alleged fraud intended to mislead and did mislead the buying public into believing that the Company, although inescapably insolvent, had a good chance of becoming a one and a half million dollar company by paying $300,000 on an option to get back the Florida property and by merging with Diversified, which by the time of the second prospectus was in the throes of bankruptcy proceedings.

As a final clincher, the Government introduced evidence of wasteful spending by Walker and Blackwood. For instance, Walker rented a Cadillac, for which the Company paid $1,512. Payments amounting to $2,486.50 were made on Walker’s personal automobile loans. The Company also paid $5,822.96 on apartment rent and furniture for Walker, and he received loans totalling $6,315.96 of which only $2,529.35 was ever repaid. In total, Walker received $47,907.14 in benefits from American.

Blackwood also received the use of a rented Cadillac for which the Company paid $1,576. At the time he had the Cadillac Blackwood did not receive any legal fees. Blackwood also received loans of $1,705.60. In total, Blackwood received $10,421.60.

Bruce only received $1,800 in professional fees, plus some expenses.

In the aggregate, the three Defendants received $60,128.74, or 20% of the cash taken in during the life of the Company.

The Government contends that each of the Defendants helped produce the means of inducement — both prospectuses —in the fraudulent scheme. The proof, viewed in the light most favorable to the prosecution, showed that Walker, Black-wood, and Bruce were primarily responsible for the compilation of “facts” which went into each of the prospectuses and that Blackwood actually prepared the footnotes for the second one. As the accountant, Bruce was responsible for the compilation and formulation of the financial data contained in both. It is argued that since this wás purely a professional service, involving matters of judgment, and was not per se false, Bruce should have been acquitted. Ordinarily, this should be so, but the record contains evidence clearly indicating that Bruce knew the full implications of what he was doing, yet hesitated not.

The appellate record is composed of twelve typewritten volumes.

In his written verdict, filed February 8, 1973, Judge Edenfield stated that he had “no hesitation in holding the defendant Walker guilty as charged” except for one count on which he found both Walker and Bruce not guilty.

He found Bruce and Blackwood not guilty on ten counts connected with the first prospectus.

As to the second prospectus, Judge Edenfield found that “all of the defendants knew and could not have failed to know (emphasis added) that the business they were conducting was a fraud”; that while the Company had collected “over $200,000 from the sale of stock and investment certificates, it had not devoted a single dollar of the Company’s assets to the purposes for which the corporation was purportedly created, but instead had squandered and spent vast sums of the Company’s assets * * * all without having earned one dime for stockholders or investors”.

Essentially, a scheme to defraud is measured by a nontechnical standard. “It is a reflection of moral uprightness, of fundamental honesty, fair play and right dealing in the general and business life of members of society”, Gregory v. United States, 5 Cir., 1958, 253 F. 2d 104, 109.

The scheme need not be fraudulent upon its face or misrepresent any material fact. All that is necessary is that it be a scheme reasonably calculated to deceive persons of ordinary prudence and comprehension. The intent of the crime is shown by the scheme itself— here, the active promotion of a company known to be inescapably insolvent by making impossible representations of possible wealth to potential investors, Silverman v. United States, 5 Cir., 1954, 213 F.2d 405, cert. denied, 348 U.S. 828, 75 S.Ct. 46, 99 L.Ed. 653 (1954).

We must conclude that there was substantial evidence in this case from which the Judge could determine that the defendants were guilty. That being so, his verdict stands impervious to appellate attack.

Former Jeopardy

Defendant Walker, being the only one in a position to do so, objects to his conviction on Counts II and XII of the indictment, arguing that conviction of both violated his privilege against former jeopardy. Basically, Counts II and XII arose from the same set of facts, but the counts alleged violations of different statutes.

Although Walker does not show how he was prejudiced or harassed, such would be irrelevant as each count alleges commission of a separate offense.

Generally speaking, “where the same act or transaction constitutes a violation of two or more distinct statutory provisions, the test to determine whether there are two offenses or only one is whether each provision requires proof of a fact which the others do not”, Gavieres v. United States, 220 U.S. 338, 342, 31 S.Ct. 421, 55 L.Ed. 489 (1911).

Both statutes involved here have mutual elements of proof in all but one point. 15 U.S.C. § 77q(a) requires that the following elements be proved beyond a reasonable doubt:

“1. The offer or sale of a security;
“2. By use of the mails or some means of transportation or communication in interstate commerce; and
“3. That the defendant intentionally did any of the following:
(a) employed a device, scheme, or artifice to defraud;
(b) obtained money or property by means of material misrepresentations or material misleading missions ;
(c) engage in a transaction, practice or course of business which would or did operate as a fraud or deceit upon a purchaser of securities.”

All that is required to prove a mail fraud charge is (1) the scheme to defraud; representations known by the defendants to be false or misleading; some person or persons must have been defrauded, and (2) causing something to be sent through the mails in execution of the fraudulent scheme, Bass v. United States, 5 Cir., 1969, 409 F.2d 179, cert. denied, 396 U.S. 863, 90 S.Ct. 138, 24 L. Ed.2d 117, rehearing denied, 396 U.S. 950, 90 S.Ct. 378, 24 L.Ed.2d 256 (1969); Silverman v. United States, supra.

Although, as mentioned before, there are mutual elements of proof, there is one element in 77q(a) which is not present in § 1341 — the offer or sale of a security. The result is that Walker’s attack must fail for lack of complete mu-tality. See, also, United States v. Williams, 5 Cir., 1970, 424 F.2d 344; 447 F.2d 1285 (En Banc, 1971).

The Sale of Unregistered Securities in Interstate Commerce

The ultimate question to be answered here is whether Blackwood could be considered an “underwriter” at the time of the attempted transfer to Mrs. Ruth Gaygan of stock which he personally owned.

15 U.S.C., § 77d(l) exempts the application of § 77e(a) to all “transactions by any person other than an issuer, underwriter, or dealer”. The Government, in its brief here, strongly contends that Blackwood comes within the definition of an underwriter as found in 15 U.S.C. § 77b (11). The pertinent portion of that section is as follows:

“The term ‘underwriter’ means any person who has purchased from an issuer with a view to, or offers or sells for an issuer in connection with, the distribution of any security, or participates or has a direct or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any such undertaking. . . . ” [Emphasis added.]

The Government has overlooked two essential elements to a valid conviction. First, it argues that Blackwood does not come within the § 77d(l) exemption because he is an underwriter; i. e., one who provides an outlet for the stock of an “issuer”, United States v. Re, 2 Cir., 1964, 336 F.2d 306, cert. denied, 379 U.S. 904, 85 S.Ct. 188, 189, 13 L.Ed.2d 177 (1965). The fact is apparent that the government is in actuality arguing that Blackwood falls within a class — i. e., “underwriters” — while overlooking the point that § 77d(l) exempts transactions, not classes, Pennaluna & Company v. S. E. C., 9 Cir., 1969, 410 F.2d 861, cert. denied, 396 U.S. 1007, 90 S.Ct. 562, 24 L.Ed.2d 499 (1969).

Since it is the transaction which provides the indicia of the crime, the Government must prove that the transaction complained of is, in fact, a violation. As § 77b(ll) stated, an underwriter is one who takes from an issuer with a view toward distribution to the general public. The Government has failed to produce any evidence that Blackwood did anything but acquire stock from American for his own personal account. The facts further show that the circumstances under which Blackwood attempted to transfer 2,000 shares of his stock to Mrs. Gaygan was a personal matter, spanning a four to five year period, and in no way involved a solicitation of the type covered by 15 U.S.C. § 77e(a).

The result is that we reverse Black-wood’s conviction on Count 14.

Except as to Blackwood’s conviction on Count 14, which is reversed, the judgment of the District Court is, in all other respects, affirmed.


author: FEINBERG, Circuit Judge:

text:
    UNITED STATES of America, Appellee, v. Thomas Joseph WILSON and Bobby Antonio Bryan, Appellants.
    Nos. 83, 101, Dockets 73-1574, 73-1575.
    United States Court of Appeals, Second Circuit.
    Argued Oct. 15, 1973.
    Decided Nov. 28, 1973.
    Sheila Ginsberg, New York City (Robert Kasanof, The Legal Aid Society, New York City, on the brief), for appellant Wilson.

      Herbert Ira Handman, New York City, for appellant Bryan.
    Kenneth R. Feinberg, Asst. U. S. Atty. (Paul J. Curran, U. S. Atty. for the Southern District of New York, John D. Gordan III, Asst. U. S. Atty., on the brief), for appellee.
    Before LUMBARD, FRIENDLY and FEINBERG, Circuit Judges.
   FEINBERG, Circuit Judge:

Thomas Joseph Wilson and Bobby Antonio Bryan appeal from judgments of the United States District Court for the Southern District of New York, Morris E. Lasker, J., finding them guilty of criminal contempt for refusing to testify in the trial of Robert Joel Anderson for armed bank robbery. Both Wilson and Bryan were sentenced by Judge Lasker to six months imprisonment. They challenge their contempt convictions, arguing that they had the right to refuse to incriminate themselves and that, in any event, the procedure followed by the judge was defective. For reasons set forth below, we reject the fifth amendment claim but reverse for further proceedings before Judge Lasker under Rule 42(b) of the Federal Rules of Criminal Procedure.

I

The indictment on which Anderson was tried charged him with armed robbery of the Nanuet National Bank in Mt. Ivy, New York, and the Empire National Bank in Tuxedo, New York. The same indictment charged appellant Wilson, too, with robbery of the latter bank. This case was assigned to Judge Lasker. A separate indictment also charged appellant Bryan with the Nanuet bank robbery. This indictment was assigned to Judge Irving Ben Cooper. By the time Anderson’s case came to trial before Judge Lasker in March 1973, both appellant Wilson and appellant Byran had pleaded guilty to charges against them. However, neither had been definitively sentenced. Wilson's plea had been taken by Judge Lasker, who had deferred sentence. Bryan had pleaded before Judge Cooper, who had imposed a provisional 25-year sentence (the statutory maximum), pending an evaluation under 18 U.S.C. § 4208(b).

During Anderson’s trial, the Government called appellants Bryan and Wilson as witnesses, the former on the Nanuet, and the latter on the Empire, bank robbery. Each refused to testify on self-incrimination grounds and persisted in this stance even though each received immunity under 18 U.S.C. §§ 6002-6003, and the judge warned that a contempt finding would follow. When Wilson and Bryan continued to balk, Judge Lasker immediately found each one separately in contempt, and sentenced both to six months in prison consecutive to whatever sentences they received on the counts to which they had pleaded guilty. Counsel for Wilson was present throughout and, in the absence of counsel for Bryan, she attempted with the court’s sanction to represent the latter as well.

II

As previously noted, at the time appellants were called as witnesses in the trial of Anderson, they had not yet been finally sentenced on their own guilty pleas. Their uncertainty as to the eventual sentences forms the basis for their broadest argument on appeal. They claim that any admission by them of the details of participation in armed robbery might weigh against them with the sentencing judge — in Wilson’s case, the very judge who would hear the testimony, and in Bryan’s, a judge of the same court who could obtain the transcript. The Government responds that the privilege against self-incrimination ends immediately and completely with a guilty plea and that, in any event, the claim of privilege was not justified on these facts. Although the first argument raises substantial issues and there is much to commend the second, we need not deal with either. The grant of immunity under 18 U.S.C. §§ 6002-6003 is dispositive here.

One of the major purposes of that statute was to prevent what occurred in this case: the refusal of accomplices to testify about a crime, thereby aborting a conviction. (Indeed, Bryan succeeded admirably — if that was his motive — since the Nanuet bank robbery counts were, without his testimony, dismissed at the close of the Government’s case.) Because of the asserted danger of adverse use of the compelled testimony in sentencing, however, appellants contend that the immunity given was not coextensive, as is required, with the scope of the fifth amendment privilege. Kastigar v. United States, 406 U.S. 441, 449, 92 S.Ct. 1653, 32 L. Ed.2d 212 (1972). But neither Wilson nor Bryan followed what we deemed to be proper procedure in raising the issue of “forbidden use.” If appellant Wilson doubted the ability of Judge Lásker to put out of his mind Wilson’s statements at Anderson’s trial, he should nevertheless have testified as ordered, but requested a different judge for sentencing on the robbery charge. Cf. Goldberg v. United States, 472 F.2d 513, 516 (2d Cir. 1973). Similarly, if Bryan genuinely feared an increased sentence on his guilty plea as a result of testifying in the Anderson case, he, too, should have given evidence, then asked that proper precautions be taken (e. g., sealing the record) to insure that Judge Cooper would not be privy to the statements made under grant of immunity. Both were, however, required to obey the mandate of 18 U.S.C. § 6002 that “the witness may not refuse to comply with the order on the basis of his privilege against self-incrimination . . . . ” Since appellants, on the contrary, selected a wholly improper means of testing their constitutional claim, the contempt judgments would stand regardless of the true extent of the privilege (an issue we need not reach), were it not for the fact that the trial judge erred procedurally in arriving at his findings. To this additional problem we now direct our attention.

Ill

Our recent opinion in United States v. Marra, 482 F.2d 1196 (1973), held that use of the summary criminal contempt sanction of Fed.R.Crim.P. 42(a) was inappropriate in the case of an orderly refusal to testify on fifth amendment grounds despite a grant of immunity. The proper course would have been to proceed under subdivision (b) of the Rule, which calls for disposition on notice and hearing, permitting “a reasonable time for the preparation of the defense.” Since the district judge here immediately found both Wilson and Bryan in contempt upon their separate orderly refusals to answer the prosecution’s questions, appellants argue that Marra governs, and compels reversal of the judgments. We agree, and therefore remand for further proceedings pursuant to Rule 42(b).

At the outset, appellee contends that the failure of appellants to object to the summary procedure below bars them from raising the claim on appeal. We hold, however, that under the circumstances, the request by counsel for Wilson for more time to research the fifth amendment issue constituted sufficient objection. And we refuse to penalize appellant Bryan for his failure to make timely objection to the Rule 42(a) proceeding, since his own counsel was not present. Although counsel for Wilson did her best to protect Bryan, the court having sanctioned her efforts in this regard, only a defendant's own lawyer could be fully aware of the considerations which might be raised in his behalf to mitigate a charge of contempt or the sentence thereunder, and of the likely usefulness of a hearing for development of these considerations.

Appellee also contends, in an effort to distinguish Marra, that Bryan and Wilson received the substance, if not the form, of a Rule 42(b) proceeding since both were represented by counsel and given a full opportunity to be heard. Mere presence of counsel, however, even had it been each defendant’s own counsel, would not be determinative. In Harris v. United States, 382 U.S. 162, 86 S.Ct. 352, 15 L.Ed.2d 240 (1965), upon which Marra relies, counsel was also present.

Nor is the bare “opportunity to be heard” dispositive here since the “hearing” was confined to the matter of sentence. If, however, counsel had been given “a reasonable time for the preparation of the defense,” Fed.R.Crim.P. 42(b), she might have marshalled and presented facts in mitigation of the charge. Significantly, the record reveals the possibility of a psychiatric defense, at least for Wilson. Some of Wilson’s psychological problems, disclosed by a court-ordered study, were explored at an abortive sentencing hearing on his guilty plea, preceding the refusal to testify. With respect to that conviction, Judge Lasker concluded: “I do not believe that in this complicated case I have sufficient information before me to permit me justly to proceed to sentence with Mr. Wilson.” Shortly thereafter, nonetheless, he proceeded to sentence him for contempt. With additional time to prepare a defense, counsel for Wilson might have enlarged on the issue of appellant’s mental health, and perhaps shown a relationship between any psychological difficulties and the refusal to serve as a witness. Finally, becaue of the posture of the case, the record is silent on other facts which may well exist in defense or mitigation of the charge against both appellants, and which could be properly developed at a plenary hearing.

Accordingly, since United States v. Marra, supra, controls, we reverse the judgments of contempt and remand for further proceedings pursuant to Rule 42(b).

      . On June 1, 1973, the judge committed Wilson as a Young Adult Offender for an indeterminate term under 18 U.S.C. § 5010(b), as extended by 18 U.S.C. § 4209.

      . On August 14, 1973, after Anderson’s trial, and after receipt of a report under 18 U.S. C. § 4208(b), Judge Cooper reduced Bryan’s sentence to ten years.

      . None of the eases cited by the Government hold that a guilty plea immediately and completely ends the privilege even though sentence has not yet been imposed. The statement in United States v. Sanchez, 459 F.2d 100, 103 (2d Cir.), cert. denied, 409 U.S. 864, 93 S.Ct. 156, 34 L.Ed.2d 112 (1972), relied on by the Government, was made without discussion; the dispositive factor was that the witness had not even been called. Although United States v. Gernie, 252 F.2d 664, 670 (2d Cir.), cert. denied, 356 U.S. 968, 78 S.Ct. 1006, 2 L.Ed.2d 1073 (1958), contains a similar statement, the witness in that case had already been sentenced. Cf. United States ex rel. Sniffen v. Follette, 439 F.2d 1082, 1083-1084 (2d Cir. 1971). But cf. United States v. Sclafani, 487 F.2d 245, 250-252 (2d Cir. 1973), cert. denied, - U.S. —, 94 S.Ct. 445, 38 L.Ed.2d 313 (1973). See generally McCormick on Evidence § 121 (2d ed. 1972) for the proposition that — at least when there has been a conviction after a trial rather than after a guilty plea — the privilege continues not only until after sentencing but also until after the time for appeal as of right has expired.

      . The record shows, and oral argument substantiated, that Wilson refused to testify out of “adolescent loyalty” in order “to save a friend”- — a motive possibly shared by Bryan, who had already been provisionally sentenced. Moreover, Wilson had earlier told the details of his complicity in the crime to the pre-sentence investigator from the Probation Office.

      . We do not decide that the potential uses would have been “forbidden.”

      . Wilson’s default in this respect is another factor that casts in doubt the legitimacy of his invocation of privilege. See note 4 supra and accompanying text.

      . Fed.R.Crim.P. 42 provides.
      (a) Summary Disposition. A criminal contempt may be punished summarily if the judge certifies that he saw or heard the conduct constituting the contempt and that it was committed in the actual presence of the court. The order of contempt shall recite the facts and shall be signed by the judge and entered of record.
      (b) Disposition Upon Notice and Hearing. A criminal contempt except as provided in subdivision (a) of this rule shall be prosecuted on notice. The notice shall state the time and place of hearing, allowing a reasonable time for the preparation of the defense, and shall state the essential facts constituting the criminal contempt charged and describe it as such. The notice shall be given orally by the judge in open court in the presence of the defendant or, on application of the United States attorney or of an attorney appointed by the court for that purpose, by an order to show cause or an order of arrest. The defendant is entitled to a trial by jury in any case in which an act of Congress so provides. He is entitled to admission to bail as provided in these rules. If the contempt charged involves disrespect to or criticism of a judge, that judge is disqualified from presiding at the trial or hearing except with the defendant’s consent. Upon a verdict or finding of guilt the court shall enter an order fixing the punishment.


author: PER CURIAM:

text:
    UNITED STATES of America and Lawrence H. Pennington, Special Agent, Internal Revenue Service, Petitioners-Appellees, v. Arnold BERKOWITZ and A & M Berk Tax Service, Inc., Respondents-Appellants.
    No. 73-1360.
    United States Court of Appeals, Third Circuit.
    Argued Nov. 1, 1973.
    Decided Dec. 10, 1973.
    Arthur L. Gutkin, Berkowitz & Gut-kin, Philadelphia, Pa., for respondents-appellants.
    Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwaeks, John P. Burke, Daniel F. Ross, Tax Div. Dept, of Justice, Washington, D. C., for petitioners-appel-lees; Robert E. J. Curran, U. S. Atty., of counsel.
    Before ALDISERT and WEIS, Circuit Judges and LATCHUM, District Judge.
   OPINION OF THE COURT

PER CURIAM:

As part of its Tax Preparer’s Project which surveyed the accuracy of commercially prepared tax returns, the Internal Revenue Service seeks to secure the names and addresses of all customers of the A & M Berk Tax Service, Inc. for the year 1971. A summons was issued pursuant to the authority granted by 26 U. S.C. § 7602, and, on refusal of appellants to comply, the district court entered an order of enforcement.

The summons was issued after an undercover agent of the Internal Revenue Service, posing as a customer, had an income tax return prepared by the appellant tax service. The completed form did not accurately reflect the financial data furnished by the “customer,” and the tax preparer’s signature was not affixed as required by Treasury Regulation § 1.605-1.

The Commissioner seeks the requested information to determine if other returns prepared by appellants were faulty and whether additional sums are due the government by the taxpayer customers. While no criminal prosecution against appellants has been commenced, it is not beyond possibility that such action may occur in the future, depending on future investigation.

The appellants defend their noncompliance by asserting:

(1) The requested information is already in the government’s possession ;
(2) A Section 7602 summons may not be used to gather information on unidentified taxpayers;
(3) The summons is so broad as to violate Fourth Amendment prohibitions against unreasonable searches; and
(4) A Section 7602 summons cannot be used to conduct a criminal investigation.

Even if the corporate appellant had indicated its role on every form which it had prepared, from a practical standpoint those returns would not be readily available to the government since there is no method of retrieval for the 1971 documents. To require the Internal Revenue Service to review individually the millions of forms filed in 1971 is so obviously burdensome as to make the procedure prohibitive. Furthermore, the action of the Berk Tax Service in failing to sign the return secured by pretext naturally leads to suspicion that other customers’ returns are similarly deficient and would not be identifiable.

Appellants also claim that the summons is defective because it does not name any particular taxpayers whose returns are being examined and therefore, the procedure is a “fishing expedition” not sanctioned by the statute.

While there are cases which deny the Commissioner the right to compel a third party to produce records pertaining to the financial affairs of unnamed persons, Bisceglia v. United States, 486 F.2d 706 (6th Cir. 1973), United States v. Theodore, 479 F.2d 749 (4th Cir. 1973), we have found none which have denied the request for tax preparers’ customer lists. In fact, United States v. Theodore, supra, denied the enforcement of a subpoena to examine the records of customers but did approve the propriety of requiring a list of names and addresses of those for whom returns were prepared.

The recent case of Bisceglia v. United States, supra, dealt with an attempt to examine the records of a bank to learn the identity of a customer who had negotiated a certain transaction. The court refused to countenance the use of a Section 7602 summons for that purpose. But, there is an obvious distinction in that ease which sought documents to secure information not otherwise in the control of the Internal Revenue and the request here which is to secure enough facts so that the Commissioner may locate data which he now possesses. Furthermore, since the regulations require that a return prepared by a commercial tax preparer be identified as such, the data which the summons seeks is required by law in any event.

In addition to United States v. Theodore, supra, United States v. Turner, 480 F.2d 272 (7th Cir. 1973) expressly approves the procedure of furnishing customer lists. While we are not disposed to extend the scope of a Section 7602 summons, we see no real conflict between Bisceglia and this case and conclude that the precedents of Turner, supra, and Theodore, supra, correctly state the applicable law.

The contention that this data may be used in the preparation of a criminal charge against the petitioner is without merit and is ruled by Donaldson v. United States, 400 U.S. 517, 91 S.Ct. 534, 27 L.Ed.2d 580 (1971).

The judgment of the district court will be affirmed.


author: BARRETT, Circuit Judge.

text:
    ENERDYNE CORPORATION, Plaintiff-Appellant, v. WM. LYON DEVELOPMENT CO., INC., Defendant-Appellee, and Panorama Company, Inc., Intervenor-Appellant.
    Nos. 73-1345, 73-1346.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Oct. 17, 1973.
    Decided Dec. 28, 1973.
    Thomas McKenna, Albuquerque, N. M. (John P. Dwyer, Albuquerque, N. M., on the brief), for plaintiff-appellant.

      Peter G. Prina, Albuquerque, N. M. (Bruce D. Hall, Albuquerque, N. M., on the brief), for defendant-appellee.
    Vance Mauney, Albuquerque, N. M. (Graham E. Evans, Albuquerque, N. M., on the brief), for intervenor-appellant.
    Before HILL, McWILLIAMS and BARRETT, Circuit Judges.
   BARRETT, Circuit Judge.

Enerdyne Corporation (Enerdyne) brought this suit against William Lyon Development Company (Lyon) for damages, alleging wrongful termination and breach of a written contract to purchase land. The trial court granted Lyon’s Motion to Dismiss. The Court also dismissed Panorama Company’s (Panorama) intervenor action for a brokerage commission. The Court held that a firm commitment from the FHA guaranteeing an insurable mortgage in the amount of $2,561,000 by Enerdyne was a condition precedent to a valid and binding contract and that Enerdyne failed to perform the condition precedent.

In January, 1971, Enerdyne filed an Application-Project Mortgage Insurance with the FHA requesting a feasibility letter for Dorado Village Apartments, Albuquerque, New Mexico. The feasibility letter was issued on May 13, 1971 to Enerdyne. It stated that the insurable mortgage would not exceed $2,561,000.

A Purchase Agreement between Ener-dyne, Seller, and Lyon, Buyer, was executed on June 15, 1971. It contained the following as a condition precedent to closing:

Seller shall have obtained from the Department of Housing and Urban Development, and/or the Federal Housing Administration a commitment guaranteeing an insurable mortgage in the amount of Two Million Five Hundred Sixty-One Thousand and No/100 Dollars ($2,561,000.00) for Dorado Village Apartments, Project Number 116-35031-PM Section 221(d)(4) said commitment to be transferred to Buyer.

Thus Lyon was not obligated to pay Enerdyne the purchase-money consideration until the firm commitment had been obtained.

Lyon was to obtain bids from contractors and determine construction costs on the Dorado Village Apartments. Lyon brought personnel to Albuquerque and opened an office. It asked Enerdyne for several delays in filing the application for conditional commitment, each of which Enerdyne agreed to. Building costs in the Albuquerque area rose substantially between June and November of 1971. The bids Lyon obtained far exceeded the costs allowed in the feasibility letter. Lyon’s and Enerdyne’s representatives met in October of 1971 in attempts to solve the high cost problem. However, no solution was reached.

On November 2, 1971 Lyon wrote Enerdyne advising that it was terminating all negotiations between them. Enerdyne had not furnished the firm commitment, the condition precedent to closing the Purchase Agreement.

Enerdyne contends that: (1) Lyon was not justified in terminating the contract; (2) there is evidence of bad faith; and (3) the District Court erred in granting Lyon’s Motion to Dismiss and further that the Court should have granted it a new trial.

Enerdyne alleges that Lyon was responsible for its failure to secure the firm commitment in that it could not obtain the firm commitment until Lyon had fulfilled its tasks. Enerdyne argues that Lyon took over the tasks of obtaining bids, cost estimates, and the preparation of applications to be submitted to the FHA for the firm commitment, and that Enerdyne could not obtain the firm commitment until Lyon had acted to completion. The delays requested by Lyon and granted by Enerdyne . for changes in the specifications caused a time lapse during which the cost of building construction materials rose dramatically. Enerdyne contends that Lyon’s performance was, accordingly, a condition precedent to its perform-anee and that Lyon’s delays placed Ener-dyne in a position where it could not perform.

The trial court’s findings cannot be set aside unless they are clearly erroneous. Sta-Rite Industries, Inc. v. Johnson, 453 F.2d 1192 (10th Cir. 1971), cert. denied, 406 U.S. 958, 92 S.Ct. 2062, 32 L.Ed.2d 344 (1972); Dailey v. City of Lawton, Oklahoma, 425 F.2d 1037 (10th Cir. 1970); United States v. Goldfield Corporation, 384 F.2d 669 (10th Cir. 1967).

We uphold the Court’s finding that Enerdyne’s failure to furnish the FHA firm commitment in accordance with the contract was no fault of Lyon and thqt Lyon did not assume Enerdyne’s duty to obtain the commitment. Enerdyne could not obtain the firm commitment because the costs of the project rose in excess of the amount estimated for the project in the feasibility letter by the time Lyon terminated the agreement.

A contracting party may repudiate his performance if a condition precedent to that performance cannot be satisfied. 3A Corbin, Contracts § 762 (1960). On the date that Lyon terminated the agreement Enerdyne could not have obtained a firm FHA commitment in accordance with the feasibility letter. The risk of a rise in construction costs belonged to Enerdyne,

Enerdyne contends that there is substantial evidence of bad faith because there was testimony that Lyon was looking for loopholes in order to terminate the agreement. The credibility of one of Lyon’s witnesses was in question. He testified that Lyon’s profits were off and it would lose profits if the contract was carried out. His credibility was a function of the trial court to evaluate. Ruth v. Utah Construction & Mining Co., 344 F.2d 952 (10th Cir. 1965). The court did not err in finding that “at all times material herein, Buyer dealt with the Seller in good faith.”

Enerdyne asserts that the Court erred in granting Lyon’s Motion to Dismiss and in refusing to grant a new trial. These contentions have been answered; we hold that they have no merit.

The intervenor, Panorama, alleges that it earned a brokerage commission when it brought Enerdyne and Lyon together.

Christopher Kelly, a real estate broker, is president of Panorama. Lyon engaged Panorama, as a broker, to find single family lots and multi-family lots where townhouses and apartments could be built. Subsequently, Kelly met Han-osh, president of Enerdyne. Hanosh had just received the feasibility letter earlier referred to from the FHA relating to an apartment development and was seeking out a buyer. Following initial negotiations between Kelly and Han-osh, Kelly brought representatives of Enerdyne and Lyon together for final discussions regarding a purchase agreement. Enerdyne was made an offer by Lyon which it accepted. Kelly, for Panorama, was then instructed by Lyon to prepare the Purchase Agreement. The contract, as drawn by Kelly and later redrafted by Lyon, contained this identical clause:

5. Commission. SELLERS agree to pay Christopher T. Kelly, d/b/a Panorama Company, Inc., a commission in the amount of six percent (6%) of the sale price of the land under this contract, plus four percent (4%) tax on the amount of the commission. (Emphasis ours).

The trial court held that Panorama (the broker) was a party to the Real Estate Purchase Agreement and was to be paid a commission only if the sale was completed and closed. We agree.

The general rule is that a broker has earned, and is entitled to his commission, when he has procured a purchaser who either consummates the purchase, or who is ready, able and willing to do so upon the terms given to the agent by the owner. Williams v. Engler, 46 N.M. 454, 131 P.2d 267 (1942). See also 12 Am.Jur.2d Brokers § 182 (1964); Harp v. Gourley, 68 N.M. 162, 359 P.2d 942 (1961); Sanders v. Freeland, 64 N.M. 149, 325 P.2d 923 (1958); Stewart v. Brock, 60 N.M. 216, 290 P.2d 682 (1955). Panorama contends that the general rule applies here.

The facts in this case indicate that Panorama’s commission was contingent upon the completion of the contract, although the contract is silent on the question. It states only that the commission is to come from the “sale price of the land.” Kelly, Panorama’s broker, prepared the original sales contract; he met with Lyon’s representatives, Han-osh, president of Enerdyne, and the architect between the dates the contract was executed and the date it was terminated. Kelly knew that the contract was contingent upon Enerdyne obtaining a firm FHA commitment letter and he was further aware of the rising costs of the project. He was asked to make suggestions to cut costs.

Hanosh testified that he told Kelly that he would pay him 6% on $130,680 at the time of closing and 6% on the balance of $300,000 as the $100,000 purchase installments were paid by Lyon. Hanosh stated that Kelly insisted on 7% interest on the commission relating to the $300,000 to be paid in installments, and that Hanosh agreed. Hanosh’s testimony is corroborated by Kelly. When Kelly was asked whether the only way he was going to get a commission was if the project was “made to go between these two parties” he replied, “Well, this is — the project is going to have to be sold, let’s put it that way.” Kelly further testified that he was still dealing • with the parties after the contract was signed because he was working on some deals with Lyon at that time.

The record before us indicates that Kelly remained involved and was more of a party to the contract than a broker, in view of his attempts to consummate the contract in order to realize his commission. If Kelly’s commission was earned when the contract was signed his duties would have ended at that time.

In addition to the general rule supportive of Panorama’s claim based upon its production of a ready, willing and able purchaser at the time the contract was executed, there is authority that a broker is entitled to his commission even though the sale was not consummated where the contract entitled the broker to the commission based on the “sale price” where the amount is expressly stated. Evans v. Rublee, 108 Wash. 174, 183 P. 83 (1919). However, the facts and circumstances above related support the trial court’s ruling that Panorama’s commission was contingent upon a consummated sale.

We affirm.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Tommy ROGERS and Rufus Lee Tyson, Defendants-Appellants.
    No. 73-2199
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Dec. 19, 1973.

      George W. Cameron, Jr., Montgomery, Ala., (court-appointed), for Rogers.
    L. Wayne Collier, Montgomery, Ala. (court-appointed), for Tyson.
    Ira DeMent, U. S. Atty., D. Broward Segrest, Asst. U. S. Atty., Montgomery, Ala., 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:

Appellants, Rogers and Tyson, were convicted of a conspiracy involving the interstate transportation of stolen automobiles in violation of 18 U.S.C. §§ 2312 and 2313. Additionally, Rogers was found guilty of receiving and concealing stolen automobiles in violation of 18 U. S.C. § 2313. The contentions presented by appellants on appeal are totally without merit and thus the judgments of conviction entered by the district court are affirmed. See Local Rule 21.

      . Appellant Tyson claims that the district court failed to give cautionary instructions to the jury concerning incriminating testimony delivered by a co-conspirator and that there was insufficient evidence to sustain the jury’s verdict of guilt. Appellant Rogers asserts that two forged automobile registration certificates were introduced at trial in violation of his Miranda rights, and that the trial court erred in failing to exclude the jury when it considered the voluntariness of statements given by him to government agents.

      . See NLRB v. Amalgamated Clothing Workers of America, 5th Cir. 1970, 430 F.2d 966.