author: LEWIS R. MORGAN, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Erle W. McGOUGH, Defendant-Appellee.
    No. 74-1035.
    United States Court of Appeals, Fifth Circuit.
    March 31, 1975.

      John L. Briggs, U. S. Atty., Jacksonville, Fla., William J. James, Jr., Claude H. Tison, Jr., Asst. U. S. Attys., Tampa, Fla., for plaintiff-appellant.
    Charles Luckie, Tampa, Fla., E. B. Larkin, Dade City, Fla., for defendantappellee.
    Before BROWN, Chief Judge, and BELL and MORGAN, Circuit Judges.
   LEWIS R. MORGAN, Circuit Judge:

I. FACTS

Erie W. McGough, the vice president and general manager of the Withlacoochee River Electric Cooperative (the Cooperative), was indicted on May 16, 1973, by a federal grand jury on four counts of violating 18 U.S.C. § 1001 by filing four false financial statements on behalf of the Cooperative with the Rural Electrification Administration (REA). The indictment charged that the financial statements, which were filed on January 20, 1969, February 10, 1970, February 8, 1971, and July 23, 1971, were knowingly false in that McGough had understated the amount of the Cooperative’s accounts receivable on each of them.

The government’s charges that the accounts receivable were understated were based upon alleged misappropriations of Cooperative funds by Mc-Gough. The government contends that McGough’s alleged embezzlement created a debt from him to the Cooperative, and that the existence of that debt should have been carried on the Cooperative’s financial statements as an “account receivable.” The amounts involved in individual instances of embezzlement were aggregated to arrive at the alleged amount of the understatement. Thus, the first count alleged an understatement of $44,438.17, based on transactions occurring as early as November 12, 1959, and up to December 31, 1968, the end of the twelve-month period covered by the financial statement filed with the REA on January 20, 1969. The second count alleged an understatement of approximately $49,000, representing the $44,000 understatement on the statement for 1968, plus $5,000 allegedly misappropriated during the twelve-month period ending December 31, 1969. The third and fourth counts similarly aggregated the amount of the understatement. As alleged in count four, it totalled $59,014.90.

McGough’s alleged misuse of Cooperative funds came to the attention of the REA in May 1971, when it received unverified information that McGough had arrangements with automobile dealers in Brooksville, Florida, under which he had received automobiles from the dealerships at virtually no cost to himself, while the prices of cars purchased by the Cooperative were inflated to make up the difference. The matter was referred to the Office of the Inspector General, Department of Agriculture (OIG), which thereupon launched a detailed and extensive investigation into the Cooperative’s financial affairs. This investigation uncovered numerous other suspected irregularities, including the falsification of expense account claims and the personal use of Cooperative equipment and employees by McGough. In November 1971 the REA notified the Cooperative’s Board of Directors of the investigation and its findings thus far, although the investigation was not then complete. McGough was present and represented by two attorneys at the meeting held for this purpose. Several days later he was suspended with pay from his job as general manager of the Cooperative, and in January 1972, he was fired.

In the meantime, the Florida state authorities had begun to take an interest in the situation. McGough was eventually indicted by the state on a total of seventeen counts of grand larceny based upon several of the transactions underlying the federal § 1001 prosecution. A number of the state’s charges were eventually dismissed. McGough was acquitted on four charges in July 1972. He was found guilty after another trial in October 1972, on charges arising from his deal with the Brooksville automobile dealers. In October 1974, while this case was being appealed, the Florida Supreme Court reversed McGough’s state court conviction holding that the evidence was insufficient to prove McGough’s guilt beyond a reasonable doubt.

The federal investigation by the OIG continued throughout most of the period during which McGough was standing trial on the state charges. The OIG’s final investigative report was referred to the United States Attorney in August 1972. The government concedes that it did not pursue indictments against McGough then because it was aware of the state prosecutions pending against him and it wanted to await the outcome of those prosecutions before deciding whether federal prosecution was justified. The decision to prosecute was made in November 1972, after McGough decided to appeal the state court conviction, but the matter was not taken to the federal grand jury until May 1973. After the return of federal indictments, the case was set for trial in September 1973, then reset for December 1973 on motion of the trial court. On November 2, 1973, McGough filed a motion to dismiss the indictment, alleging either a violation of his right to a speedy trial under the Sixth Amendment or a deprivation of due process under the Fifth Amendment by virtue of the delay. He alleged numerous grounds for prejudice resulting from the government’s delay, including the death of several witnesses. The trial court granted the motion to dismiss the indictment on November 28, 1973, ruling that the indictment was fatally defective in its failure to sufficiently allege materiality, an essential element of a § 1001 offense. In addition, the court determined that an unusual combination of factors and circumstances warranted the evocation of the due process clause to insulate McGough from further prosecution by the United States for the offenses charged in the indictment.

The government instituted this appeal from the order dismissing the indictment, pursuant to 18 U.S.C.A. § 3731 (Supp.1975). For the reasons discussed below, we hold that the trial court erred in holding that the indictment was insufficient and in its application of the due process clause to the facts of this case.

II. MATERIALITY

The district court dismissed the indictment against McGough for its failure to explicitly allege the materiality of the false document, or to allege facts sufficient to show materiality, relying on Gonzales v. United States, 286 F.2d 118, 121 (10th Cir. 1960), cert. denied, 365 U.S. 878, 81 S.Ct. 1028, 6 L.Ed.2d 190, a case very similar to this one in its underlying facts. During the course of two oral hearings on McGough’s motion to dismiss, the district court expressed great concern over the ultimate question of whether the charges against McGough met the materiality requirement of a § 1001 offense as a matter of law. However, its order of dismissal was explicitly based solely on the facial insufficiency of the indictment’s allegation of materiality. Thus we have before us only the narrow preliminary question of whether materiality was sufficiently alleged in the indictment, not the question of whether McGough’s understatement of the Cooperative’s accounts receivable is, as a matter of law, a materially false representation to the government.

The “false writing or document” portion of § 1001 under which McGough was indicted does not contain the word “material,” but this court has held that materiality is an essential element of every § 1001 violation. Rolland v. United States, 200 F.2d 678 (5th Cir. 1953), cert. denied, 345 U.S. 964, 73 S.Ct. 950, 97 L.Ed. 1383. Therefore it is necessary, in order to state an offense, that the indictment either expressly allege materiality or otherwise indicate that the falsity charged is allegedly material. In the context of § 1001, materiality means that the false statement must have a natural tendency to influence, or be capable of affecting or influencing, a government function. United States v. Krause, 5th Cir. 1975, 507 F.2d 113; Freidus v. United States, 96 U.S.App. D.C. 133, 223 F.2d 598, 601 (1955). The statement or representation need not have actually influenced an action of a government agency. Gonzales v. United States, 286 F.2d 118, 122 (10th Cir. 1960), cert. denied, 365 U.S. 878, 81 S.Ct. 1028, 6 L.Ed.2d 190.

The proper question to ask, therefore, in determining whether an indictment sufficiently alleges materiality is whether the statement or representation alleged to be false could conceivably have a tendency or capacity to influence or affect a government function; that is, whether it is potentially capable of being proved material by the government at trial. If the facts alleged in the indictment warrant an inference that the false statement is material, the indictment is not fatally insufficient for its failure to allege materiality in haec verba. Dear Wing Jung v. United States, 312 F.2d 73 (9th Cir. 1962). The district court however, appears to have applied an unrealistically harsh standard in determining the sufficiency of this indictment’s allegation of materiality. Relying upon the language from Gonzales, supra, 286 F.2d at 121, which states that a § 1001 indictment which does not expressly allege materiality must allege facts sufficient to “show” materiality, the district court apparently viewed it as necessary for the indictment to allege an array of facts which would enable it to conclusively determine whether the false statement was material.

The word “show” in Gonzales is indeed misleading in that it fails to draw a clear distinction between an allegation of materiality and proof of materiality. A clearer statement of the requirement, and the approach we follow here, is that stated in Bins v. United States, 331 F.2d 390, 392 (5th Cir. 1964), that the indictment need only allege materiality “in substance.”

The four counts of the indictment in this case are admittedly terse. However, each count clearly identified the specific financial statement involved, the specific item which is alleged to be false, the specific manner in which the item is alleged to be false, i. e., an understatement, and the amount of each understatement.

The REA, to whom these financial statements were submitted, subsidizes the furnishing of electric power to rural areas where private utility companies may find it uneconomical to operate. 7 U.S.C. § 901 et seq. This is accomplished by the making of low interest, long term loans of public money to nonprofit cooperative associations, often thinly capitalized. As security for these high risk loans, the REA takes a mortgage on the entire assets of these cooperatives, and is authorized to take reasonable steps to protect the public investment. The requirement of a periodic financial statement from the cooperatives, a standard term of the mortgage to the REA, is one such safeguard.

Examining the facts alleged in McGough’s indictment, and putting them in this historical context, it is apparent to us that four consecutive understatements ranging from $44,000 to $59,000 are significant misrepresentations in a cooperative’s financial statement. They could conceivably have a capacity to influence the REA’s proper governmental function of overseeing the status of the security for a large public investment. This is sufficient to make out, in substance, a facial allegation of the materiality of the false writings and documents McGough is alleged to have submitted to the REA.

III. DUE PROCESS

In addition to dismissing the indictment against McGough, the district court held that McGough was “constitutionally insulated from further prosecution with respect to the offenses which were defectively charged,” because in its opinion, the “totality of the circumstances” amounted to a denial of due process. In reaching this conclusion, the trial court applied a vague due process rationale, stating that “the peculiarities and rarities and unusual circumstances attendant to this case” amounted to a denial of due process when considered cumulatively.

The facts comprising the “totality of the circumstances” are set forth fully in Part I, supra. The factors cited by the district court, none of which independently would have constituted a denial of due process in its view, were: the “unique ■ and strained application” of § 1001 to the facts of this case, by virtue of the government’s underlying theory; the fact that that theory entailed the aggregation of approximately 150 transactions, dating back over a period of several years; a relatively short deliberate delay by the government between August 1972 and November 1972 pending the outcome of McGough’s trial on state charges; and “actual prejudice” stemming from a lengthy time lapse from the date of the first of the underlying transactions to the date of the indictment.

McGough has strongly urged upon us that the due process issue involved here is not merely whether prejudicial delay has occurred, but whether, as the district court held, the “totality of the circumstances” operates to breach a due process concept of fairness. McGough’s argument, however, must be viewed in the context of the myriad of cases which have dealt with alleged prejudice resulting from a time lapse between the commission of the offense and the government’s indictment or prosecution therefor. All of the factors cited by the district court are permeated with delay or staleness considerations.

The delay which McGough complains of occurred prior to both arrest and indictment on the federal § 1001 charges. In United States v. Marion, 404 U.S. 307, 92 S.Ct. 455, 30 L.Ed.2d 468 (1971), the Supreme Court held that the Sixth Amendment guarantee of a speedy trial has no application until a putative defendant becomes an “accused,” by arrest, indictment or information. Id. at 313, 92 S.Ct. 455. The primary protection against undue government delay prior to that time is the applicable statute of limitations. United States v. Ewell, 383 U.S. 116, 122, 86 S.Ct. 773, 15 L.Ed.2d 627 (1966); United Stats v. Smith, 487 F.2d 175, 177 (5th Cir. 1973). In Marion, the Supreme Court made it clear that when preindictment delay is asserted, actual prejudice and not merely “the real possibility of prejudice inherent in any extended delay,” id., 404 U.S. at 326, 92 S.Ct. at 466, is a necessary element which must be shown before the restraints of the due process clause will be applied to bar a prosecution because of a delay.

McGough’s assertion of actual prejudice to his defense is based primarily upon the death of some six potential defense witnesses. Some of these witnesses, McGough claimed, would have testified as to firsthand knowledge of several of the transactions which entered into the government’s calculation of the amount understated; the testimony of others might impeach government witnesses. The government, on the other hand, vigorously contested that the deaths of these six potential defense witnesses had been shown to be actually prejudicial to McGough. In fact, the government asserted at the hearings that it had expected two of them to be government witnesses, rather than witnesses for the defense.

We have carefully examined the transcript of the oral hearings held below, and can find no indication that the trial court weighed the contradictory factual assertions before stating that there was actual prejudice. Rather, the court seemingly viewed the prejudice to the defense to be inherent in the delay. It stated, “[N]ot only have some witnesses died, but I think the Court could almost judicially notice, in view of the size of the transactions individually and their age, that the witnesses that remain would have poor or dim memories, and that records could not be located for the same reason.” “A general allegation of loss of witnesses and failure of memories is insufficient to establish prejudice.” United States v. Zane, 489 F.2d 269, 270 (5th Cir. 1973), cert. denied, 416 U.S. 959, 94 S.Ct. 1975, 40 L.Ed.2d 310 (1974).

The record simply will not support a factual conclusion that McGough has been actually prejudiced, nor did the district court purport to have made such a finding of fact. It merely accepted McGough’s speculative and disputed allegations of prejudice and labeled them actual prejudice. This does not meet the clear requirement of Marion that actual prejudice be shown. “Events of the trial may demonstrate actual prejudice, but at the present time appellees’ due process claims are speculative and premature.” Marion, supra, at 326, 92 S.Ct. at 466.

For the reasons discussed above, the order of the district court is reversed, and the case is remanded for a prompt trial.

      . Title 18 U.S.C. § 1001 provides:
      Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both.

      . The reason given by the district court for the dismissal was influenced by the district court’s desire to preserve the government’s right to appeal the dismissal under 18 U.S.C.A. § 3731 (Supp.1975). A ruling in McGough’s favor that the false statement was not material as a matter of law, if based upon extraneous facts outside the face of the indictment, would have raised serious questions of appealability. See United States v. Brewster, 408 U.S. 501, 506, 92 S.Ct. 2531, 33 L.Ed.2d 507 (1972); United States v. Sisson, 399 U.S. 267, 90 S.Ct. 2117, 26 L.Ed.2d 608 (1970); United States v. Southern Railway Co., 485 F.2d 309 (4th Cir. 1973). The record of the oral hearings reflects the court’s awareness of this fact, and that it “hope[d] and encourage[d] the Government to appeal.”

      . Whether the understatements alleged here were material as a matter of law is a question which should only be resolved after consideration of facts and testimony to be adduced at trial on remand. As an appellate court, we decline to consider this difficult question in this case without a full trial record.

      . Noting that the indictment did not allege materiality in haec verba, the court stated, “nor is that fatal omission cured by the allegations of any ultimate facts from which the Court could, by inference or other determination, perform its function in deciding whether the falsity alleged was or was not material.”

      . This Circuit has, on at least one occasion, followed Gonzales in judging the sufficiency of an allegation of materiality, United States v. Satterfield, 411 F.2d 602 (5th Cir. 1969). Satterfield does not discuss the ambiguity in Gonzales which we have pointed out here. However, since Satterfield upheld the sufficiency of the indictment in question there, we think it is fair to assume that Satterfield is consistent with the emphasis we put here on allegation as opposed to proof of materiality in an indictment.

      . The Withlacoochee Cooperative, for example, obtained federal loans at two per cent interest. Its debt-equity ratio was in excess of 80% — 20%.

      . Much of the staleness stems from the government’s novel and highly unusual theory of the case. We view it as inappropriate to even consider at this juncture the merits of that theory, since the government has had no opportunity to present the facts and evidence upon which it is based.


source: Caselaw Access Project

author: ALDRICH, Senior Circuit Judge.

license: Public Domain

text:
    Isidro Prieto VELEZ, Petitioner-Appellant, v. Tomas Concepcion MARTINEZ, Warden, etc., Respondent-Appellee.
    No. 74-1352.
    United States Court of Appeals, First Circuit.
    Submitted Feb. 5, 1975.
    Decided Feb. 10, 1975.
    Santos P. Amadeo and Jose Enrique Amadeo, Rio Piedras, P. R., on brief for appellant.
    Miriam Naveira de Rodon, Sol. Gen., and Hector R. Orlandi-Gomez, Asst. Sol. Gen., San Juan, P. R., on brief for appellee.
    Before COFFIN, Chief Judge, and ALDRICH and CAMPBELL, Circuit Judges.
   ALDRICH, Senior Circuit Judge.

This is, hopefully, the nadir of frivolous petitions for habeas corpus. Petitioner is a Puerto Rican prisoner serving a life term for murder as a result of a conviction in the Puerto Rico court in 1962. During the trial a juror at the request of defendant’s counsel and concurred in by defendant orally, was excused for cause. Thereafter the jury returned a verdict of guilty. The conviction was affirmed on appeal. Some years later petitioner sought further review by a “Motion in Nature of a Habeas Corpus, Coram Nobis or Rehearing,” on the ground that his conviction by eleven jurors violated the Constitution of Puerto Rico, and that his waiver was in violation of the Fifth Amendment because not intelligently and understandably given. The Supreme Court of Puerto Rico denied the motion. Petitioner then sought a writ of habeas corpus from the district court, which was denied in a considered opinion. He appeals.

Petitioner in his brief asserts that he presents two questions: A, whether his trial by less than twelve jurors violated Article II § 11 subsection 2, of the Puerto Rico Constitution, requiring trial by twelve jurors, and B, whether petitioner validly waived his rights under the said subsection.

28 U.S.C. § 2254(a), under which the petition is brought, provides in terms that relief is to be granted “only on the ground that [petitioner] is in custody in violation of the Constitution or laws or treaties of the United States.” Plainly, under this, the federal courts have no jurisdiction over a claim alleging simply a violation of the state constitution. It has been settled for 100 years that the state court is the final arbiter of its own laws. Thus in In re Duncan, 1891, 139 U.S. 449, at 461, 11 S.Ct. 573, at 577, 35 L.Ed. 219, the Court referred to “the well settled rule . . . that the courts of the United States adopt and follow the decisions of state courts on questions which concern merely the constitution and laws of the state.” See also Storti v. Massachusetts, 1901, 183 U.S. 138, 142, 22 S.Ct. 72, 46 L.Ed. 120; Rogers v. Peck, 1905, 199 U.S. 425, 434, 26 S.Ct. 87, 50 L.Ed. 256.

We remark, parenthetically, that were the matter before us we would see no possible ground for criticizing the interpretation adopted by the Puerto Rico Supreme Court. The relevant section of its Constitution provides as follows.

“In all prosecutions for a felony the accused shall have the right of trial by an impartial jury composed of twelve residents of the district, who may render their verdict by a majority vote which in no case may be less than nine.”

Respondent observes with some merit that petitioner was prima facie benefit-fed by the removal of one juror, as it made it pro tanto more difficult for the prosecution to gather the requisite nine votes. We are not unmindful, in this, of Parker v. Gladden, 1966, 385 U.S. 363, 87 S.Ct. 468, 17 L.Ed.2d 420. In that case a bailiff had made a prejudicial remark to two jurors. The state court held that this affected no rights of the defendant because a vote of ten was sufficient to convict. The Supreme Court reversed, holding that whether or not this offended the state constitution, it was a violation of defendant’s federal constitutional rights. The difference between the case at bar and Gladden is manifest, for there the unlawfully prejudiced jurors were left on the panel, with the opportunity of influencing the others.

We see no basis for a claim and, indeed, none is advanced, that petitioner was deprived of rights under the federal constitution by a withdrawal of a juror for cause under the circumstances of this case, whether or not he consented.

The judgment of the district court is affirmed.

       The brief abandons the previous charge that trial by less than twelve jurors was a violation of the Due Process clause. Petitioner evidently recognizes on this appeal that this claim is baseless. Williams v. Florida, 1970, 399 U.S. 78, 90 S.Ct. 1893, 26 L.Ed.2d 446. Williams, incidentally, was decided two years before the petition was filed.


author: FRANKEL, District Judge:

text:
    UNITED STATES of America, Appellee, v. Samuel KAPLAN, Appellant.
    No. 1232, Docket 74-1580.
    United States Court of Appeals, Second Circuit.
    Argued Aug. 13, 1974.
    Decided Oct. 15, 1974.
    Rehearing Denied Feb. 19, 1974.

      Kenneth J. Kaplan, Asst. U. S. Atty., E. D. N, Y. (David G. Trager, U. S. Atty., E. D. N. Y., Paul B. Bergman, Brooklyn, N. Y., of counsel), for appellee.
    Gerald L. Shargel, New York City (La Rossa, Shargel & Fischetti, New York City, of counsel), for appellant.
    Before OAKES, Circuit Judge, and FRANKEL and KELLEHER, District Judges.

       Of the Southern District of New York and the Central District of California, respectively, sitting by designation.

   FRANKEL, District Judge:

Appellant assails a judgment sentencing him to prison for eight years for unlawful possession and distribution of 25.6 grams of heroin on January 6, 1972v Though the trial was brief and the Government’s case depended almost entirely upon the testimony of a single narcotics agent, the sufficiency of the evidence is not questioned. The case was carefully and thoughtfully tried. Nevertheless, we find error in an evidentiary ruling sufficiently serious in the setting of the small record to require reversal.

I.

Drug Enforcement Agent Nicholas Alieva was in charge of the case and gave the evidence upon which the jury convicted. (One other agent, who told of surveillance, completed the roster of government witnesses.) Alieva reported, and the jury was permitted to find, that he came to know one Frank Lange, a young man of 24 or so, in November 1971. During that and the following month he and Lange discussed narcotics on four occasions. Late in November he purchased an ounce of heroin from Lange. Lange died, evidently before the instant indictment, never having been brought to trial either for the 1971 transaction or for the one involved in the present case.

So far as the competent evidence reveals, the defendant here, Samuel Kaplan, came into Alieva’s view only on January 6, 1972, the date of the transaction charged in the indictment. On that date, having arranged for this in a telephone conversation the day before, Alieva went to the home of Lange’s parents, where Lange lived. Arriving at about 2:00 p. m., he was taken by Lange to the latter’s bedroom. Appellant was there, half sitting, half lying on a mattress on the floor. There were no introductions. Lange went to a night table and produced a plastic bag that was later shown to contain 25.6 grams of heroin.

While the package was still in Lange’s hands, Alieva’s testimony continued, the agent said, looking at both of the others in the room: “Either one of you or both of you are going to have to come down with me to get the money.” Appellant asked: “Why do we have to go down and get the money?” “Because,” Alieva responded, “you guys beat me once, you’re not going to do it again.” Appellant then motioned to Lange and said: “All right, go down and get the money.” Before leaving with Lange, Alieva asked Kaplan about the quality of the package. Kaplan said: “It’s five hit stuff. I hit the same stuff five times myself.” (Alleva explained to the jury the meaning of this: that the heroin in the -package could be diluted with five times its weight in cheaper, non-narcotic substances for resale purposes.) Then Alieva and Lange left, to be arrested shortly thereafter in the street. Some minutes later appellant was also arrested after he had left the Lange residence.

We must retrace our steps now to describe the disputed evidence and its further setting. From his opening to the jury, having described this as a case made by “[bjasically . . . one witness,” the Assistant United States Attorney contended that Lange had been Kaplan’s “lackey,” that Kaplan had been “acting as a supplier for Mr. Lange,” and that the latter worked throughout “at the direction, at the behest” of Kaplan. With this as his thesis, the Assistant informed the trial judge at the outset that an item of evidence “crucial for the government’s case” would be Alieva’s testimony that in the telephone conversation of January 5, arranging the next day’s meeting, Lange had said “his connection would be there with him.” The question whether and how this potent hearsay could be received was debated at great length. Expressing grave doubts, Judge Weinstein finally concluded that the testimony should be allowed, but only for the purpose of explaining Alieva’s “state of mind” in what might otherwise have seemed an oddly unreal meeting, without introductions or questions, on January 6 in Lange’s bedroom. Having reached this determination and allowed the evidence, the judge instructed the jury with meticulous care as to its limited purpose. We reproduce both the testimony and the instructions in a footnote.

In allowing Agent Alieva to report Lange’s reference to his “connection” the trial judge carefully limited the ground of the ruling to the “state-of-mind” exception. He observed that the record might have justified reception of this hearsay under the exception for a co-conspirator’s declarations made during, and in furtherance of, the conspiracy. But he proceeded then “to protect the defendant” by limiting instructions based upon express elimination of the co-conspirator exception as a justification for receiving the testimony.

Our disposition of the appeal requires only passing reference to the remainder of the evidence. Defendant, testifying for himself, explained his personal relationships with Lange and his family; admitted he had seen the contraband package delivered to Alieva and suspected the transaction was wrongful but denied flatly any participation in that transaction or other narcotics dealings. A married sister of the deceased Frank Lange corroborated defendant’s story in a number of respects.

II.

The evidence against appellant, though enough for a valid conviction, was by no means overwhelming. Whether it was “crucial” or not, the disputed hearsay was properly appraised by the prosecutor as a potent addition to this case. We conclude, however, that its potency lay not in the ostensible purpose of its technical use, as illuminating Alieva’s “state of mind,” but in its overwhelmingly probable misuse by the triers of fact — as evidence that appellant was in fact Lange’s connection, as Alieva said Lange had said. The great danger of such misuse was enhanced because Alieva’s state of mind was not, after all, a material issue in the case. In all the circumstances, therefore, appellant is entitled to a new trial at which this hearsay will be excluded.

In arguing that Alieva’s state of mind was material, so that the alleged Lange statement was relevant as a kind of “verbal act,” the Government stresses that Alieva’s conduct in Lange’s bedroom would seem “bizarre” without this background fact. There are, however, empirical and logical flaws in this justification. As a matter of sense and experience, if the jury was disposed to find Alieva generally credible, his behavior need not have seemed bizarre at all. Ordinary folk, not less than federal judges, may come to know that criminal behavior is not always prudent or circumspect. Countless juries have found guilty verdicts for reckless dealings in contraband between newly met traders —“reckless” at least on the part of the seller whose customer turned out to be a government agent. The jury in this case had learned that Lange and Alieva had a history of talking together about, and dealing in, narcotics. If Alieva’s competent testimony was otherwise plausible, the jurors could have inferred that Alieva had reason to trust Lange and to know he would not have an innocent chum lolling about while heroin was changing hands. Moreover, Alieva’s testimony — that he accused appellant and Lange of having “beaten” him once, and that he addressed primarily the appellant about the money and the quality of the heroin, all coupled with appellant’s seeming lack of protest or incomprehension — served the asserted inference the jury was being asked to draw without an inescapable need for the hearsay.

That the hearsay might have helped some more for Alieva’s state of mind is not a powerful ground for finding relevance, or, certainly, relevance in more than an attenuated and deeply ambiguous sense. The assertedly meaningful state of Alieva’s mind was its state of believing appellant to be Lange’s connection. If that was found credible by the jury, it was an almost certain corollary that the jury would have been moved toward sharing Alieva’s state of mind about appellant’s role. It is not possible as a practical matter to imagine the jury’s having isolated Alieva’s state of mind as a subject of interest separate from the genuinely ultimate issue as to appellant’s activities. Kaplan’s role, if any, in Lange’s narcotics business was the heart of the case; in contrast, Alieva’s state of mind when he went to the Lange house bore “only a remote or artificial relationship to the legal [and] factual issues raised in the ease.” United States v. Brown, 490 F.2d 758, 774 (D.C.Cir.1973).

The prosecutor’s summation drifted in notable fashion around the shadowy areas of the supposed line between the “hearsay” use of the testimony and the “state-of-mind” use to which it was said to be limited. Speaking of the January 5 telephone call, he said:

“What does Alieva say at that time? He complains about the quality of the heroin. He wants a better quality. Lange represents that it’s going to be a good quality. In fact, it is a good quality, as we have heard.
“He also represents that his connection will be there the next day, you’ve got to remember. When Alieva came into the room, Kaplan was lying on the mattress and Lange was there. There were no introductions at that time. You might ask yourself why there were no introductions. Well, Alieva knew that the connection was to be there, so it was a presumption on his part that the man in the room was the connection. Lange knew that the connection was to be there. He was the one who made that statement, so he doesn’t have to introduce Kaplan. Kaplan, of course, knows, if you believe that he was the connection.” '

So many states of mind “knowing” and “presuming” the ultimate fact in contention could not fail to suggest that the fact existed.

This is a case, in short, where the technically admirable instructions limiting the effect of the evidence may not be accepted as effective. Troubled on this score, the trial judge expressed during the lengthy arguments on the evidence question his disbelief that “the jury [could] . . . make the distinction as a practical matter.” It is sound doctrine, to be sure, that juries must be supposed usually to be able and determined to follow instructions. Bruton v. United States, 391 U.S. 123, 135, 88 S.Ct. 1620, 20 L.Ed.2d 476 (1968); Lutwak v. United States, 344 U.S. 604, 619, 73 S.Ct. 481, 97 L.Ed. 593 (1953); United States v. Bell, 500 F.2d 1287 (2d Cir., 1974). But there are limits upon the powers of jurors — or judges or anyone — to keep interconnected thoughts separated from each other. Bruton v. United States, supra, 391 U.S. at 129-134, 88 S.Ct. 1620; Jackson v. Denno, 378 U.S. 368, 388, 84 S.Ct. 1774, 12 L.Ed.2d 908 (1964); United States v. Bozza, 365 F.2d 206, 215 (2d Cir. 1966). The effort in this case must be deemed to have exceeded those limits because the “authorized” use of the evidence shaded so closely and uncontrollably into the forbidden. See Shepard v. United States, 290 U.S. 96, 104, 54 S.Ct. 22, 78 L.Ed. 196 (1933).

There remains the Government’s alternative argument “that the District Court could have properly admitted Lange’s statements not merely to explain Alieva’s actions, but as a hearsay statement of a co-conspirator uttered in furtherance of a conspiracy.” The prosecution does not conjecture idly in supposing that this exception to the ban against hearsay “could have” been applicable; as we have noted, the trial judge expressed in passing the thought that he “would be warranted” in so ruling. While the judge then proceeded to eschew any such ruling, our study of the record leads to a clear sense that he would have been sustained had he allowed the hearsay to come in under the co-conspirator exception.

We are constrained, nevertheless, to hold that the seemingly plausible alternative, because it was explicitly eliminated in the court below, cannot be imported here to justify the disputed evidence. The co-conspirator exception would have been a simpler ground to adopt and administer than the one to which the court carefully limited itself. The problem of instructions we have found unworkable would have been avoided. More importantly for present purposes, however, the availability of this exception depended upon findings that were for the trial judge to make in the first instance, United States v. Geaney, 417 F.2d 1116, 1119 (2d Cir. 1969), cert. denied, 397 U.S. 1028, 90 S.Ct. 1276, 25 L.Ed.2d 539 (1970); Carbo v. United States, 314 F.2d 718, 737 (9th Cir. 1963), cert. denied, 377 U.S. 953, 84 S.Ct. 1625, 12 L.Ed.2d 498 (1964); United States v. Dennis, 183 F.2d 201, 230-231 (2d Cir. 1950), aff’d, 341 U.S. 494, 71 S.Ct. 857, 95 L.Ed. 1137 (1951), findings which, had they been made, would have been highly likely to stand on appeal. United States v. Geaney, supra, 417 F.2d at 1120-1121; United States v. D’Amato, 493 F.2d 359, 363-364 (2d Cir. 1974); United States v. Calabro, 449 F.2d 885, 889-891 (2d Cir. 1971), cert. denied, 404 U.S. 1047, 92 S.Ct. 728, 30 L.Ed.2d 735 (1972); United States v. Ragland, 375 F.2d 471, 477 (2d Cir. 1967), cert. denied, 390 U.S. 925, 88 S.Ct. 860, 19 L.Ed.2d 987 (1968); United States v. Von Clemm, 136 F.2d 968, 971 (2d Cir.), cert. denied, 320 U.S. 769, 64 S.Ct. 81, 88 L.Ed. 459 (1943). The decisive point now is that the findings were not made. It is not enough to suppose that the judge “would have” or “might have” made them. The fact is he did not. And it was for him, not for an appellate court, to confront and assess the evidence at the point of decision. In the absence of any such decision, this is in the class of cases where “the grounds upon which the . . . [ruling] is based are those upon which it must be judged. Cf. S. E. C. v. Chenery Corp., 318 U.S. 80, 88, 93-94, 63 S.Ct. 454, 87 L.Ed. 626.” Oser v. Wilcox, 338 F.2d 886, 893 (9th Cir. 1964). See also In re Adoption of a Minor, 90 U.S.App.D.C. 107, 194 F.2d 325, 326 (1952); Amador Beltran v. United States, 302 F.2d 48, 52 (1st Cir. 1962); Dubern v. Girard Trust Bank, 454 F.2d 565, 571 (3d Cir. 1972).

We cannot say that the course of events “put the defendant off his guard,” Shepard v. United States, 290 U.S. 96, 103, 54 S.Ct. 22, 25, 78 L.Ed. 196 (1933), against the use of the exception for co-conspirators’ declarations. We do say, considering all the circumstances, that this doctrine cannot retrospectively justify the damaging evidence allowed on a different ground by the district court.

For this reason, the judgment of conviction is reversed.

ON PETITION FOR REHEARING.

The Government, seeking reargument, urges that the decision herein conflicts with that in United States v. Rosenstein, 474 F.2d 705 (2d Cir. 1973). In the cited case this court held that the trial judge had erred when he ruled certain documents admissible under the business records exception to the hearsay rule. The conviction was affirmed, nevertheless, on the ground that the documents were admissible under the exception for statements of co-conspirators, though this ground had not been taken, or considered, in the trial court. This was, in its setting, a suitable application of the general rule that a judgment on appeal may, and commonly will, be affirmed for reasons different from those followed in the lower court. There are, however, three substantial grounds for distinguishing Rosenstein from the case at hand and for reaching a different result on this appeal.

(1) As was repeatedly stressed in Rosenstein, the rules governing co-conspirators’ statements and business records are both “recognized exceptions to the hearsay rule.” 474 F.2d at 710. Thus, as the case stood here, “there [was] no difference in the purpose for which the evidence [was] sought to be admitted on the alternative grounds. The purpose of admission under any such exception is to establish the truth of that which is contained in the declaration which otherwise would be hearsay.” Id. (italics in original). Distinguishing Shepard v. United States, 290 U.S. 96, 54 S.Ct. 22, 78 L.Ed. 196 (1933), and United States v. DeMasi, 445 F.2d 251 (2d Cir.), cert. denied, 404 U.S. 882, 92 S.Ct. 211, 30 L.Ed.2d 164 (1971), the court again emphasized, again with italics, that the Government’s alternative ground of affirmance on appeal was simply another hearsay exception, identically serving to make “the documents . . . admissible for the same purpose, to establish the truth of what they say.” 474 F.2d at 711.

Here, of course, the purpose of admissibility asserted on appeal is not the same as, but signally different from, the limited purpose which was all the trial judge saw fit to allow. Arguments defense counsel could have made to cope with hearsay were never made because they were not apposite. To affirm upon the alternative ground would lack the doctrinal base of Rosenstein and effect a potential unfairness absent from that case.

(2) Unlike the trial judge in Rosenstein, who never considered the alternative ground urged on appeal, the trial judge here addressed that possibility and chose not to adopt it. Whatever he said as to what he could or might have done, this non-adoption is a significant exercise of a power which is primarily the trial judge’s. To “affirm” on the alternative ground would be in effect to overrule the decision on which the trial court acted. The ground not adopted at the trial was intellectually and administratively simpler than the narrower one taken. Able trial jurists like Judge Weinstein do not seek out complexities for nothing. We must go on the premise that the pertinent evidence failed to supply him with assurance sufficient to justify the exception for co-conspirators’ declarations. This seems specially evident when we compare the character of this evidence in the present ease with that in Rosenstein.

(3) In Rosenstein the non-hearsay evidence of the conspiracy was extensive and compelling. This court observed that the prosecution had “established without any doubt” the use of a corporate dummy by which the conspirators had “brazenly and fraudulently evaded . . . taxes .,” 474 F.2d at 708, referred to the “overwhelming” proof of this central element, id., and noted the heavy weight of testimony by many witnesses to “amply demonstrate the charade.” Id. at 709. In that setting, especially where the trial judge had not touched the subject or intimated that he might have done otherwise, there was solid basis for exercising the power to make “the post hoc determination on appeal.” Id. at 712. This ease is sharply different. The evidence, from a single witness, was sufficient to sustain the judgment on appeal, but scarcely “overwhelming.” It does not entitle us to assume that the trial judge would — or should — have madejthe determination he withheld and which we have been asked to make for him on appeal.

The petition for rehearing is denied.

      . “Q. Now, Agent Alieva, did you have a conversation with Frank Lange on the day previous, January 5, 1972?
      “A. Yes, sir I did.
      “Q. And where did this conversation take place?
      “A. It took place over the telephone.
      “Q. Did you call him or did he call you?
      “A. I called him.
      “Q. And can yon toll us what you said to him and what did he say to you?
      “Mr. La Bossa: Objection.
      “The Court: I am going to sustain that objection to a limited extent.
      “Now, ladies and gentlemen of the jury, as I understand the witness is going to tell you something that Mr. Lange told him over the phone that preceding day.

        “Mr. Lange is not available to be cross-examined so that this defendant does not have his constitutional right to confront this person and to cross-examine him before you so you could watch him.
      “I am allowing this testimony therefore to come in only so that, assuming you find it to be true, and that is entirely up to you, you will better understand what was in this witness’ mind when he went to the home of Mr. Lange; is that clear, and what, if you believe him to be telling the truth, he expected to find there so that you can evaluate the activities of this defendant — of this witness and the others in the room. But you are not to assume and you may not use this evidence to find that there had been any prior conversations between Mr. Lange and the defendant. Is that clear? There is no evidence at all of that from anything that this witness now describes to you.
      “We don’t know what was in Mr. Lange’s mind and he is not here to tell us. It is only being introduced so that you will understand what was in this witness’ mind when he went into that room.
      “Any other further limitation ?
      “Mr. La Rossa: Nothing further, your Honor.
      “The Court: Thank you.

        “By Mr. Kaplan:

      “Q. You had a conversation with him over the phone; is that correct?
      “A. Yes, sir, that is correct.
      “Q. Tell us what you said to him.
      “A. I asked him about the qualify of the next purchase.
      “And he said the quality would be very good.
      “I asked him when and where, how we could, you know, perform the next purchase.
      “He told me that I should be at his residence at 2:00 p. m. the following day, which would be January 6, at 2:00 p. m., and his connection would be there with him.
      “Q. Where was that?
      “A. I am sorry?
      “Q. Where was that he and his connection was supposed to be?
      “A. At this residence which was 1939
      “Q. Now, did you have any conversation I-Iomecrest Avenue in Brooklyn, with him about the previous quality of the substance in question?
      “A. At that particular day?
      “Well, when I asked him about the quality of the subsequent purchase I told him that it had better be better than the original purchase.
      “Q. What was your experience with the original purchase?
      “Mr. La Rossa: Objection.
      “The Court: Sustained to a limited degree.
      “Again, ladies and gentlemen, there is no evidence whatsoever that this defendant had anything to do with any prior transaction that this witness may have had with Mr. Lange.
      “I am allowing this evidence in only so that you can understand better what was in the witness’ mind and perhaps in Mr. Lange’s mind so you can better understand what was happening the next day if you credit his testimony.
      “But there is no evidence whatsoever that this defendant had anything to do with any prior transaction or with Mr. Lange prior to the day in which he was actually in the room with Mr. Lange.
      “Do you wish any further instructions?
      “Mr. La Rossa: No, sir.”

      . “The Court: I’m not allowing it in as hearsay. I reject the Government’s conspiracy theory, with all due respect—
      “Mr. La Rossa: Well, with all due respect — I am sorry. Had you completed your statement?
      “The Court: — but Judge Feinberg in the Puco case [United States v. Puco, 476 F.2d 1099 (2d Cir.), cert. denied, 414 U.S. 844, 94 S.Ct. 106, 38 L.Ed.2d 82 (1973)] — I do not believe that we should allow the exception to be pushed as far as it was pushed in that case, assuming there was no independent evidence.
      “I think you can still justify it on the ground that subsequent activities can be used to infer a prior agreement. In this case I would be warranted, based on my following the testimony of the agent, and based upon how he described Mr. Kaplan’s reaction, in believing independent of the hearsay that there was a prior existing conspiracy and that it is hardly [highly] likely that it existed at least one day in advance of the event.
      “So I think in this case I would be entitled to allow it in as a hearsay exception under the conspiracy rule or under the Hillman [sic] Doctrine. [Mutual Life Insurance Co. v. Hillmon, 145 U.S. 285, 12 S.Ct. 909, 36 L.Ed. 706 (1892)].”
      “But I think in order to protect the defendant fully I will give a limiting instruction not permitting them to use it for hearsay purposes.”

      . Brief for the Appellee, p. 13, citing, inter alia, Lutwak v. United States, 344 U.S. 604, 73 S.Ct. 481, 97 L.Ed. 593 (1953).

      . Since the case must presumably be retried, we mention the appellant’s other contentions only to note that they have been considered and found unmeritorious.


author: HUFSTEDLER, Circuit Judge: KILKENNY, Circuit Judge

text:
    John Wesley CLUTCHETTE et al., Appellees, v. Raymond K. PROCUNIER et al., Appellants.
    No. 71-2357.
    United States Court of Appeals, Ninth Circuit.
    Oct. 21, 1974.
    As Modified on Denial of Rehearing and Rehearing En Banc Feb. 27, 1975.
    Certiorari Granted June 9, 1975.
    See 95 S.Ct. 2414.

      William D. Stein, Deputy Atty. Gen. (argued), San Francisco, Cal., for appellants.
    William Bennett Turner (argued), San Francisco, Cal., for appellees.
    Before TUTTLE, HUFSTEDLER, and KILKENNY, Circuit Judges.

       Honorable Elbert P. Tuttle, Senior Judge, Fifth Circuit, sitting by assignment.

   OPINION ON REHEARING

HUFSTEDLER, Circuit Judge:

We granted rehearing to assess the impact of Wolff v. McDonnell (1974) 418 U.S. 539, 94 S.Ct. 2963, 41 L.Ed.2d 935 upon our prior opinion stating the constitutional protections due inmates of San Quentin prison in the context of prison disciplinary proceedings (497 F.2d 809). We modify our opinion in respect of loss of privileges, confrontation and cross-examination of witnesses, and the right to counsel or a counsel-substitute in disciplinary proceedings (other than those involving infractions also punishable by state authorities as crimes) to conform it to the views expressed in Wolff. We reaffirm our prior opinion in all other respects because the remaining portions are in harmony with Wolff, or are related to issues untouched by Wolff.

We are mindful of the Court’s encouragement of the continued development of prison disciplinary procedures and of experiments within the disciplinary context directed toward rehabilitative goals. We are particularly aware of the Court’s admonition that the minimum constitutional protections mandated by Wolff are not “graven in stone” (418 U.S. at 572, 94 S.Ct. at 2982) and that the underlying constitutional concepts will be subject to reevaluation as changes in prison discipline evolve.

I.

“Privileges”

Our prior opinion extended the due process protections therein described “[e]ven [to] a temporary suspension of ‘privileges,’ by restricting the prisoner’s activities to a greater extent than the general- prison population . . . .” (497 F.2d at 815.) Because the Court in Wolff suggested that the due process procedures it commanded might not be required in proceedings involving “lesser penalties such as the loss of privileges” (418 U.S. at 571, 94 S.Ct. at 2982, n. 19) we reconsider the point.

Any deprivation of the small store of “privileges” accorded a confined or relatively confined group causes a far greater sense of loss than a similar deprivation in a free setting, as anyone can attest who has been a student in a strict boarding school, a sailor aboard ship, a combat soldier, or a prisoner in time of war or peace. Within prison walls, the denomination “privileges” can encompass a host of matters, ranging from simple amenities through such' cherished concerns as access to visitors, schooling, recreation, and institutional employment. Grievousness of the loss depends upon the nature and extent of the privileges withdrawn for disciplinary purposes and upon the circumstances and makeup of the prisoner who suffers the loss. Deprivation of the more highly valued privileges can have as debilitating an effect on the amenability of a prisoner to rehabilitation as the loss of some good-time credit or a period of isolation from the general prison population. We therefore believe that some process is due to prisoners whose privileges are to be removed. Because the severity of the loss of privileges depends on multiple variables, we do not purport to draw a detailed constitutional blueprint governing the removal of privileges for disciplinary purposes. Process due can and should be flexible to meet the exigencies of the situation. We require only that any plan establishing disciplinary procedures attending withdrawal of privileges embrace at least these due process mini-ma: A prisoner subject to removal of one or more privileges (1) must be given notice of intent to remove one or more stated privileges, (2) together with a statement of grounds for removal, (3) at a reasonable time before discipline is imposed, and (4) must be given an opportunity to respond before such discipline is imposed. We leave to the prison administration the fashioning of a plan to implement these guarantees, with appropriate regard for the seriousness of the infraction, the severity of the deprivation, and the circumstances of the affected prisoner.

II.

Confrontation and Cross-Examination

Wolff held that confrontation and cross-examination are not “at the present time” constitutionally compelled. (418 U.S. at 567, 94 S.Ct. 2980.) “[I]n the current environment, where prison disruption remains a serious concern to administrators, we cannot ignore the desire and effort of many States, including Nebraska and the Federal Government, to avoid situations that may trigger deep emotions and that may scuttle the disciplinary process as a rehabilitation vehicle.” (Id.) The Court thereupon committed the allowance or denial of confrontation and cross-examination “to the sound discretion of the officials of state prisons.” (Id.)

The Court did not prescribe any method by which the soundness of the discretion thus accorded could be subjected to scrutiny. We do so now. Whenever a prisoner requests and is denied the' privilege of confrontation and cross-examination in a disciplinary proceeding in which a serious sanction can be imposed (excluding a proceeding for an infraction that is also a crime), the prison authorities must enter in the record of the proceeding and make available to the prisoner an explanation for the denial. Failure to make that explanation or an explanation setting forth reasons not related to the prevention of those ills about which the Supreme Court was concerned — reprisals, unmanageability, disruption, safety of prison personnel — will be deemed prima facie evidence of abuse of discretion that can be called to the attention of parole authorities and, under appropriate circumstances, of the courts as well.

III.

Counsel and Counsel-Substitutes

In Wolff, the Court declined to hold “that inmates have a right to either retained or appointed counsel in disciplinary proceedings.” (418 U.S. at 570, 94 S.Ct. at 2981.) “Where an illiterate inmate is involved, however, or where the complexity of the issue makes it unlikely that the inmate will be able to collect and present evidence necessary for an adequate comprehension of the case, he should be free to seek the aid of a fellow inmate, or if that is forbidden, to have adequate substitute aid in the form of help from the staff or from a sufficiently competent inmate designated by the staff.” (Id.)

A provision for counsel-substitute does not depend upon the seriousness of the disciplinary sanction threatened, as we had contemplated in our prior opinion, but, under Wolff, turns on the ability of the prisoner to handle his own case. The consideration is crucial because any guaranty of process due is empty if the particular inmate is incompetent meaningfully to avail himself of it. Accordingly, we hold that in submitting a plan to the district court, the prison authorities must make provision for a counsel-substitute whenever a prisoner subjected to disciplinary proceedings is unable competently to handle his \ case without help.

Wolff did not reach the question of the right to counsel when a prisoner “is required to appear before a prison disciplinary committee for violation of a prison rule which may also be punishable by state authorities.” (497 F.2d at 823.) Nothing in Wolff suggests to us that our reasoning or our conclusion on this issue requires reconsideration, and we decline the appellants’ request that we do so.

Finally, respondents complain that the prison authorities seek to avoid the due process protections that the Supreme Court and we have required by relabeling some disciplinary proceedings as “administrative classifications.” If the complaint has foundation, the ruse will be defeated. But the record before us does not reveal any facts bearing on the issue, and the district court has not had an opportunity to consider it. If any facts do exist tending to support the claim, they can be developed on remand.

We adhere to our prior opinion as herein modified. The cause is remanded for further proceedings consistent with the views herein expressed.

KILKENNY, Circuit Judge

(dissenting):

I would vacate and remand to the district court for a full fledged hearing in which the court would determine and judicially declare whether appellants’ disciplinary rules and regulations, currently in effect, meet the four constitutional requirements enunciated in Wolff v. McDonnell, 418 U.S. 539, 94 S.Ct. 2963, 41 L.Ed.2d 935 (1974). If the court finds that the procedural due process safeguards required by Wolff are recognized in the current rules and regulations, the case should be dismissed. Otherwise, the court should direct appellants to amend the rules and regulations to comply with such safeguards.

      . Footnote 11 of the original opinion is modified by striking from the first sentence thereof the -word “voluntarily” ancl substituting therefor “ordered to be.”


author: ALFRED T. GOODWIN, Circuit Judge:

text:
    A. Frederic LEOPOLD and Walter A. Keane, as Executors of the Estate of Hans G. M. de Schulthess, Deceased, Appellees. v. UNITED STATES of America, Appellant.
    No. 72-2435.
    United States Court of Appeals, Ninth Circuit.
    Jan. 2, 1975.

      Ernest J. Brown, Atty. (argued), Tax Div. U. S. Dept, of Justice, Washington, D. C., for appellant.
    Richard Hungate (argued), of Young-man, Hungate & Leopold, Los Angeles, Cal., for appellees.
   OPINION

Before DUNIWAY, HUFSTEDLER and GOODWIN, Circuit Judges.

ALFRED T. GOODWIN, Circuit Judge:

The district court awarded the executors of the estate of Hans G. M. de Schulthess a refund of federal estate taxes, and the government appeals.

The government asserts: (1) that the entire value of the corpus and the undistributed accumulated income of two identical inter vivos trusts created by the decedent for the benefit of two of his daughters is includible in his gross estate; and (2) that a payment made by the executors to the guardian of a third daughter was a nondeductible testamentary gift and ’ not a deductible claim against the estate.

The decedent died in an automobile accident in 1962 at the age of 44. He was not married at the time of his death. Two former wives, Amelie de Schulthess and Constance Trevor de Schulthess, and three daughters, Catherine, Celeste and" Beatrice Tina survived. Catherine and Celeste were the children of his first wife, Amelie, and Beatrice Tina was the child of his second wife, Constance. All three daughters were minors at the time of his death.

I. Trusts for the Benefit of Catherine and Celeste

The first issue is the includibility in-the decedent’s gross estate of the entire corpus and accumulated income of two inter vivos trusts, one for the primary benefit of his daughter Catherine, and the other for the primary benefit of his daughter Celeste.

The relevant portions of the trust for Catherine are quoted below. The trust for Celeste was identical except for the difference in names. Decedent designated himself and a friend as trustees of both trusts.

“FIRST: The Trustees shall receive, hold, manage, sell, exchange, invest and reinvest such property and every part thereof in the manner hereinafter specified, and shall collect, recover and receive the rents, issues, interest and income thereof, hereinafter called ‘income’ and, after deducting such expenses in connection with the administration of the trust as, in the opinion of the Trustees, are properly payable from income, shall pay the balance of the said income to CATHERINE J. H. DE SCHUL-THESS, the daughter of the Donor, during the term of her natural life, at such intervals as the Trustees, in their sole discretion, may determine. During the minority of the said CATHERINE J. H. DE SCHULTHESS the said income may be accumulated or paid to AMELIE DE SCHULTHESS, the mother of the said CATHERINE J. H. DE SCHULTHESS, or to the guardian of CATHERINE J. H. DE SCHULTHESS, for the support, education, maintenance and general welfare of the said infant, but such decision to accumulate or pay the income during such minority is to be made, solely in the uncontrolled discretion of the Trustees. Any income accumulated when the said CATHERINE J. H. DE SCHULTHESS shall attain the age of twenty-one (21) years shall be paid over to her at that time.
“SECOND: Upon the death of the said CATHERINE J. H. DE SCHUL-THESS, this trust shall terminate, and the principal thereof shall then be paid and distributed to the issue of the said CATHERINE J. H. DE SCHULTHESS, in equal shares per stirpes and not per capita. If the said CATHERINE J. H. DE SCHUL-THESS shall die leaving no issue then the trust principal shall be paid and distributed to her sister * * *.
“THIRD: The Donor hereby authorizes and empowers the Trustees at any time during the continuance of the trust to pay to the said CATHERINE J. H. DE SCHULTHESS, or to apply for her benefit out of the principal of the trust, such amounts, if any, as the Trustees may deem necessary or proper, and their judgment with respect to the time and amount of any such payments of principal shall be final and conclusive beyond any dispute or appeal. Any payment or payments of principal under this Article may only be made in the event both Trustees hereunder concur in such payment or payments, and such payment or payments may in no manner be applied, directly or indirectly, to the benefit of the Donor.
x * X
“FOURTEENTH: In case of the death, resignation, removal, disability or inability (for any reason whatsoever) further to act of any Trustee hereunder, the surviving or remaining Trustee shall have the right to appoint a successor Trustee from time to time, such successor Trustee, upon executing a duly acknowledged written acceptance of the trusteeship, to be and become vested with all the estate, title, authorities, rights, powers, duties, privileges, immunities and discretions granted to his predecessors, with like effect as if originally named as Trustee hereunder.
«X X- X
“EIGHTEENTH: All questions pertaining to the validity, construction and administration of the trust shall be determined in accordance with the laws of the State of New Jersey.
“X X X

Each trust was created in December 1956 with a corpus of approximately $641,000. Prior to the decedent’s death each trust earned approximately $63,000 in net income, $37,000 of which was paid to each beneficiary in five annual installments and $26,000 of which was allowed to accumulate in the trust.

On decedent’s federal estate tax return, the trusts were identified, but no portion of either was included in 'the gross estate. The Commissioner determined that the entire corpus and undistributed accumulated income of each trust were includible under sections 2036 and 2038 of the Internal Revenue Code, 26 U.S.C. §§ 2036, 2038, and asserted a deficiency in estate taxes. The district court, rejecting part of the Commissioner’s determination, held that none of the accumulated income and only the actuarial value of the remainder interests (21.-187 per cent of the corpus of Catherine’s trust and 20.021 per cent of the corpus of Celeste’s) was includible in the gross estate.

The appeal asserts the Commissioner’s original position. The taxpayers have not cross-appealed from the district court’s holding that the actuarial value of the remainder interests is includible, and that issue is not before us.

Section 2038(a)(1) of the Code provides that there shall be included in a decedent’s gross estate all property gratuitously transferred by the decedent “where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power * * * by the decedent alone or by the decedent in conjunction with any other person * * * to alter, amend, revoke, or terminate * * Similarly, section 2036(a)(2), which often overlaps section 2038 in its coverage, requires the inclusion of all gratuitously transferred property over which the decedent has retained “the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy * * * the income therefrom.”

The government contends that the powers of decedent and his co-trustee to distribute principal to decedent’s daughters whenever they deemed such payments to be “necessary and proper” and to accumulate trust income or to pay it out in their “uncontrolled discretion” for the girls’ “support, education, maintenance and general welfare” constituted a power “to alter, amend, revoke, or terminate” within the meaning of section 2038. The government also contends that these powers gave the decedent the ability to shift income from his daughters to their heirs and, thus, to designate the persons who would receive the enjoyment of the property within the meaning of section 2036(a) (2).

The district court concluded, and the taxpayers do not dispute, that since the decedent had the power to pay out principal as he deemed “necessary and proper,” he retained sufficient- control over the remainder interest of each trust to justify its inclusion in his gross estate. However, the court also held that the decedent had retained no power to affect the beneficial enjoyment of the income of either trust, except to the extent that such power was limited by an ascertainable, external, objective standard. Although the question is a close one, we agree with the district court that the standard was ascertainable. The Court of Appeals for the First Circuit has said:

“The trust provision which is uniformly held to provide an ascertainable standard is one which, though variously expressed, authorizes such distributions as may be needed to continue the beneficiary’s accustomed way of life * * * ” Old Colony Trust Co. v. United States, 423 F.2d 601, 604 (1st Cir. 1970).

The provision at issue here, authorizing payments of income for the “support, education, maintenance and general welfare” of decedent’s daughters, requires the trustees to maintain the daughters in their accustomed way of life and, hence, provides a sufficiently objective standard. See Estate of Ford v. Commissioner, 450 F.2d 878 (2d Cir. 1971), aff’g 53 T.C. 114 (1969); United States v. Powell, 307 F.2d 821, 826-828 (10th Cir. 1962); Jennings v. Smith, 161 F.2d 74 (2d Cir. 1947); C. Lowndes, R. Kramer & J. McCord, Federal Estate and Gift Taxes, § 8.9 at 157-58. See generally Note, The Doctrine of External Standards Under Sections 2036(a)(2) and 2038, 52 Minn.L.Rev. 1071 (1968).

From this conclusion it follows that the present value of a portion of the income interests was properly excluded from the decedent’s gross estate. At the time of decedent’s death, the daughters had an enforceable right to enjoy that portion of the trust income necessary to maintain them in their accustomed way of life. The government has elsewhere conceded the propriety of excluding from the gross estate the present value of a fixed, indefeasible income right even though the decedent retained the power to pay corpus prematurely to the income beneficiary. See Walter v. United States, 295 F.2d 720 (6th Cir. 1961). See also Revenue Ruling 70-513, 1970-72 Cum.Bull. 194, which holds that under section 2038 only the value of the remainder interest, and not the entire corpus, of a trust is includible in the decedent’s gross estate where the enjoyment of a life estate is vested in the beneficiary and is not subject to reduction through exercise of the decedent’s reserved power to terminate the trust and to pay over the corpus to the life beneficiary.

But the daughters here had an enforceable right to enjoy currently only a portion of the full income stream prior to reaching twenty-one years of age — i. e., that amount necessary to maintain them in their accustomed way of life. With respect to the remaining income, the decedent had two options: he could either allow that income to accumulate until the girls reached 21, or he could provide for present enjoyment of the income by paying over the corpus with its full income-generating capacity. Thus, the decedent possessed a degree of control over the enjoyment of that segment of the future income he was not required to distribute currently which precludes exclusion of its actuarial value from his gross estate. See United States v. O’Malley, 383 U.S. 627, 631, 86 S.Ct. 1123, 16 L.Ed.2d 145 (1966); Lobor v. United States, 346 U.S. 335, 337, 74 S.Ct. 98, 98 L.Ed. 15 (1953).

The government argues that under Estate of Varian v. Commissioner, 396 F.2d 753 (9th Cir. 1968), aff’g 47 T.C. 34 (1966), the entire corpus of the trusts must be included in the gross estate. Varían does not compel such a result. In Varian, the trust instrument provided:

“3. Distribution of Income and Principal.
“(a) The Trustees shall pay to or apply for the benefit of the child such sums as may in the Trustees’ discretion be necessary for the child’s support, maintenance and education.
“(b) In the discretion of Trustees, the principal and income or any portion thereof, may be payable to the child at any time before attaining the age of 21 years.
“ * * 47 T.C. at 38.

The Tax Court held that the second clause conferred a completely unrestricted power over the distribution of income and principal which destroyed whatever objective standard may have been contained in the first clause. 47 T.C. at 43-44. We are presented with trust provisions which are substantially similar to those in Varían in all significant respects but one: Here, the unrestricted power extends only to the payment, of principal. We recognize, of course, that in terms of economic effect the addition of an unrestricted power over a future income stream adds very little to the discretion possessed by a trustee with an unrestricted power over the principal.

But in determining whether an unrestricted power in one provision of a trust destroys an ascertainable income standard in another trust provision, we refuse to extend the logic of Varían to the situation where the unfettered power applies only to payment of principal. To do so would create conflict with the concededly proper principle that the present value of a fixed income right is excludible where the decedent retains a discretionary power to pay the corpus prematurely to the income beneficiary.

The amount of previously accumulated income was properly excluded. Once the decision had been made to accumulate part of the income, this accumulation was placed beyond the reach of the trustees. The accumulated income would be paid to the children when they reached 21. Although the trustees could pay out the principal early, they could not prematurely distribute the accumulated income. Unlike the accumulated income held taxable in United States v. O’Malley, the accumulated income here did not become part of the trust principal and was not subject to the powers decedent reserved over the principal,

We hold, then, that under sections 2036(a)(2) and 2038(a)(1) the decedent’s reserved power to distribute the principal of the trusts at any time requires the inclusion of the corpus of each trust, reduced by the actuarial value of that segment of the future income stream which the decedent would be obligated to distribute currently to his daughters. We further hold that the exclusion of previously accumulated income was proper. The case must be remanded to the district court for a factual determination of the amount of the includible sum.

II. Payment to Guardian of Beatrice Tina

The second issue on this appeal involves the deductibility for estate-tax purposes of a $264,000 payment by the executors of decedent’s estate to Constance Trevor de Schulthess, as guardian for her daughter Beatrice Tina.

The decedent and his second wife, Constance, were married on February 2, 1958. On August 13, 1958, their daughter, Beatrice Tina, was born. One year later Constance filed an action for divorce. Following extensive negotiations, the decedent and Constance entered into a property-settlement agreement, one clause of which provided as follows:

“12A. Testamentary Gift to Child. —The Husband shall promptly make and execute and keep in effect until his death a Will under which he shall devise and bequeath property to Beatrice Tina de Schulthess in an amount at least equal to the sum of the following :
(a) $250,000, and
(b) the greater of:
(i) the difference between an amount equal to the product of $6,000.00 multiplied by the number of January 15ths since the date of this agreement and the aggregate of the amounts contributed to the trust estates referred to in Paragraphs 11 and 12 of this agreement, or
(ii) the difference between $54,-000.00 and the aggregate of the amounts contributed to the trust estates referred to in Paragraphs 11 and 12 of this agreement.
The provisions contained in this Paragraph 12A are in addition to those contained in any and all other paragraphs hereof.”

This property-settlement agreement was approved and incorporated into an interlocutory judgment of divorce entered on January 17, 1961.

Although the decedent did make a bequest to Beatrice Tina, the amount was uncertain. Constance filed a creditor’s claim for $273,900 based on the quoted clause of the property-settlement agreement. The executors rejected the claim in part, but after Constance had filed suit in state court, the matter was settled, and $264,000 was paid to Constance in satisfaction of the claim filed on behalf of Beatrice Tina.

In their claim for refund, the taxpayers contended that this payment was a deductible claim against the estate under section 2053(a)(3) of the Internal Revenue Code, 26 U.S.C. § 2053(a)(3). The government replied that although Beatrice Tina had an enforceable claim under local law, the claim was not supported by adequate and full consideration in money or money’s worth, as required by section 2053(c)(1)(A). See Lyeth v. Hoey, 305 U.S. 188, 194, 59 S.Ct. 155, 83 L.Ed. 119 (1938). The district court agreed with the taxpayers, finding that the $264,000 payment was based upon a promise by the decedent contracted bona fide and for an adequate and full consideration, and concluding that the payment was deductible.

Section 2053(a)(3) does authorize deductions from the gross estate for amounts paid to satisfy “claims against the estate.” However, subsection (c) (1) (A) further provides that deductions “shall, when founded on a promise or agreement, be limited to the extent that they were contracted bona fide and for an adequate and full consideration in money or money’s worth * * One purpose of this limitation is to prevent testators from depleting their estates by transforming bequests to the natural objects of their bounty into deductible claims. United States v. Stapf, 375 U.S. 118, 130-133, 84 S.Ct. 248, 11 L.Ed.2d 195 (1963).

We begin our analysis by looking to two decisions of this court construing an analogous provision of the Internal Kevenue Code. In United States v. Past, 347 F.2d 7 (9th Cir. 1965), we scrutinized a property-settlement agreement made in anticipation of divorce. There the husband and wife jointly transferred certain community property into a trust, with the income payable to the wife for her life and the remainder payable to the couple’s children. When the wife died, the Commissioner included the entire corpus of the trust in her gross estate. The district court held instead that none of the property was includible because the decedent had received adequate and full consideration from her husband for making the transfer. We reversed, holding that the fact that the transfer was part of a property-settlement agreement incident to a divorce was insufficient in itself to make the transfer one for an adequate and full consideration. The value of what the decedent received must be measured against the value of what she transferred. Since in Past the decedent received less than she transferred, we held that the trust property was not excludible from federal estate tax upon her death.

In Estate of Haskins v. United States, 357 F.2d 492 (9th Cir. 1966), we again were faced with a property-settlement agreement incident to a divorce. There, as part of the agreement, the husband placed money in a trust in which he reserved a life estate with the remainder to his children. We affirmed a district court decision holding that the corpus of this trust was includible in the decedent’s gross estate. We noted that both parents were devoted to their children and keenly mindful of parental obligation. Testamentary provisions for the care of children, even though required by a property-settlement agreement, were not necessarily made for monetary consideration but could be viewed as a form of estate planning by the couple.

The government contends that Has-kins requires us to reverse the judgment of the district court holding that the payment to Constance was a deductible claim against the estate. However, in Haskins the district court specifically found that there was no consideration for the transfer; here, the district court found that there was. Moreover, Has-kins did not establish a per-se rule that a testamentary provision for one’s own children could never be made for monetary consideration.

In Hartshorne v. Commissioner, 402 F.2d 592, 594 n. 2 (2d Cir. 1968), the government did take the position that a bequest to one’s own children can never be a “claim against the estate” within the meaning of section 2053 because such a bequest is simply an agreement to make a testamentary disposition to persons who are the natural objects of one’s bounty. The Court of Appeals for the Second Circuit rejected this absolute position, and so do we. The Second Circuit noted, in language which conforms to the test laid down in Past and Has-kins :

“* * * Under exceptional circumstances * * * it may be that a claim by someone who might otherwise inherit from the decedent should be deductible under section 2053. If the claim is not simply a subterfuge for a nondeductible legacy, if the claim is supported by ‘adequate and full consideration,’ and if the consideration is a non-zero sum which augmented the decedent’s estate, then it would seem that the deduction should be allowed. Whether or not a particular claim is deductible, then, will depend on the facts in each case.” 402 F.2d at 594-595 n. 2.

Constance’s claim on behalf of Beatrice Tina meets this standard. The case presents the “exceptional circumstances” to which the Second Circuit alluded.

The testimony before the district court was sharply conflicting on the question whether the decedent’s agreement to make the bequest to Beatrice Tina was bargained for or merely gratuitous. Because the taxpayers prevailed below, this court must view the evidence in the light most favorable to them. United States v. Disney, 413 F.2d 783, 787 n. 2 (9th Cir. 1969). Viewing the evidence in this light, we affirm as not clearly erroneous the district court’s finding that decedent’s promise was contracted bona fide and for an adequate and full consideration.

Decedent’s will suggests that Beatrice Tina might not necessarily have been a natural object of the decedent’s bounty. His will established his first wife and her daughters as the residuary beneficiaries of his estate; by contrast, nothing was left to Constance and no more to Beatrice Tina than was required by the property-settlement agreement. His attorney testified that the decedent knew that his first two daughters’ share of the residuary estate would be worth considerably more than the amount promised to Beatrice Tina. Moreover, these two daughters already had the inter vivos trusts which are the subject of the first issue on this appeal.

The record strongly suggests that the decedent and Constance were not equally concerned with the financial welfare of their daughter, and that Constance felt she had to wrench from her husband'— or at least from her husband’s lawyers —the promise to leave a bequest to Beatrice Tina. She feared that because of the circumstances concerning the marriage and the birth of their daughter, her child might not be treated equally with the children of the first marriage. The decedent’s attorney testified that the decedent did give a preference in financial matters to his first two daughters, in part because he felt that Constance was more self-assertive than his first wife and would always manage to provide for her child.

Constance’s initial demands for support payments for herself were within the range of California court awards in similar cases. Nonetheless, she accepted a substantially smaller sum, partly in consideration for her husband’s promise to bequeath more than $250,000 to their daughter. Constance apparently felt that she could spend her support payments more freely and would not have to set aside part for her estate if she knew that her child would be taken care of in the event of her ex-husband’s death. Thus, by accepting reduced alimony, Constance paid for her husband’s promise to leave money to their daughter; in effect, she diverted to her daughter that consideration which otherwise would have flowed to herself. Although the property-settlement agreement might have spelled out more precisely what Constance relinquished in exchange for her husband’s pimmise to leave their daughter a bequest, the record supports the finding that the promise was contracted for in good faith for value which augmented the decedent’s estate.

The district court’s holding that only the actuarial value of the remainder interests in the trusts for Celeste and Catherine was includible in the gross estate is reversed. The remainder of the district court’s holding is affirmed.

The district court’s judgment is vacated and remanded for entry of a modified judgment consistent with this opinion. Neither party shall recover costs.

      . The findings and conclusions of the district court may be found at 29 A.F.T.R.2d 1518 (C.D.Cal.1972).

      . See Walter v. United States, 295 F.2d 720 (6th Cir. 1961); Rev.Rul. 70-513, 1970-72 Cum. Bull. 194.

      . The government also contends that these trusts are includible in decedent’s gross estate under section 2036(a)(1), 26 U.S.C. § 2036(a)(1), because the decedent retained the right to apply trust income in satisfaction of his legal obligation to support his daughters. See Treas.Reg. § 20.2036-1(b)(2) (1960). However, this issue was never raised at the time of audit or in the district court, but only for the first time on this appeal. Since this issue presents genuine factual questions, we decline to consider it now. See Hormel v. Helvering, 312 U.S. 552, 558-559, 61 S.Ct. 719, 85 L.Ed. 1037 (1941); Helvering v. Tex-Penn Oil Co., 300 U.S. 481, 497-498, 57 S.Ct. 569, 81 L.Ed. 755 (1937); MacRae v. Commissioner, 294 E.2d 56, 59 (9th Cir. 1961), cert. denied, 368 U.S. 955, 82 S.Ct. 398, 7 L.Ed.2d 388 (1962).

      . Although these two cases both involve inter vivos transfers and therefore were decided under section 2043 rather than section 2053, the taxpayers and the government agree that they are still in point, since the two sections are similar in purpose and language. See Hartshorne v. Commissioner, 402 F.2d 592, 595 n. 4 (2d Cir. 1968).


author: BARNES, Circuit Judge: J. BLAINE ANDERSON, District Judge

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Steven Edward MOLLET et al., Defendants-Appellants.
    Nos. 72-2945, 72-3135.
    United States Court of Appeals, Ninth Circuit.
    Jan. 30, 1975.
    Lowell Chatburn (argued), of Scholz & Shecter, Millbrae, Cal., for defendants-appellants.
    Douglas G. Hendricks, Asst. U. S. Atty. (argued), San Diego, Cal., for plaintiff-appellee.
    . Before BARNES and GOODWIN, Circuit Judges, and ANDERSON, District Judge.

      The Honorable J. Blaine Anderson, District Judge of Idaho, sitting by designation.

   OPINION

BARNES, Circuit Judge:

This is an appeal from three convictions of conspiracy to introduce marijuana into the United States. We affirm the convictions, but vacate the sentences.

On May 9, 1972, oral argument was heard on the appeal. On May 25, 1972, we reserved, by order, our opinion upon the applicability of United States v. Almeida-Sanchez, 452 F.2d 459 (9 Cir. 1971), because Almeida was on appeal, awaiting determination by the Supreme Court.

I

On June 21, 1973, the Supreme Court, ruled in Almeida-Sanchez v. United States, 413 U.S. 266, 93 S.Ct. 2535, 37 L.Ed.2d 596 (1973), that a “roving search” of an automobile, without a warrant and without probable cause, when not a border search, or the functional equivalent thereof, violated the Fourth Amendment.

On September 5, 1973, we handed down an opinion in this case holding that since this case did not involve a roving search but occurred at San Onofre immigration checkpoint, Almeida-Sanchez did not apply and the search was valid. On October 31, 1973, an order was entered by this court en banc, vacating the decision of the panel herein, withdrawing the assignment theretofore made to this panel and reassigning the case to the court en banc. On May 9, 1974, the court en banc decided United States v. Bowen, 500 F.2d 960, cert. granted, 419 U.S. 824, 95 S.Ct. 40, 42 L.Ed.2d 47 (October 15, 1974) (No. 73-6848), holding, contrary to the views hereinbefore expressed by this panel, that the Supreme Court rule in Almeida-Sanchez did apply to fixed checkpoints as well as to roving searches unless the fixed checkpoint was the functional equivalent of the border, but that as to fixed checkpoint searches the Supreme Court rule in Almeida-Sanchez would apply prospectively only. This court, on June 14, 1974, in United States v. Morgan, 501 F.2d 1351 (en banc), held that the checkpoint at San Onofre is not the functional equivalent of the border. On July 22, 1974, this court en banc ordered this case returned to the original panel for disposition. Accordingly we proceed pursuant to the remand.

We are now controlled by the decision of the court en banc in Bowen, supra, holding that searches at fixed checkpoints not the functional equivalent of the border are subject to the ruling of the Supreme Court in Almeida-Sanchez, but effective only as of the date of that opinion. Since the search here occurred on March 8, 1972, prior to the decision in Almeida-Sanchez on June 21, 1973, it was valid under the law of the circuit as of that date.

II

At the time of oral argument the court, on its own motion, raised the question of the legality of imposing both fines and confinement in sentences rendered on September 8, 1972, under the Federal Youth Corrections Act, 18 U.S. C. §§ 5005 to 5024.

Yamron (20 years old), was fined $5,000, and committed for supervision under 18 U.S.C. § 5010(b), and sentenced to 6 months, plus 5 years probation.

Mollet (22 years old), was fined $1,000 and imposition of sentence as to imprisonment suspended under § 5010 (a), with 5 years probation.

Moxley (25 years old), was fined $2,-000, and imposition of sentence as to imprisonment suspended under § 5010 (a) with 5 years probation.

On March 5, 1973, 6 months after date of sentencing, the consolidated cases of United States v. Hayes, and United States v. Meicke were decided by a panel of this court (474 F.2d 965), holding that punitive fines are inconsistent with the rehabilitative theory and provisions of the Youth Corrections Act; and hence that a trial court’s election to commit a youthful offender for rehabilitative treatment and supervision under the alternative sentencing provisions of the Federal Youth Corrections Act forecloses the imposition of retributive punishment under other provisions of the Act, including the imposition of a fine (and we would assume, imprisonment).

We are bound by the previous opinion of this Court in United States v. Hayes and Meicke, supra.

Therefore, we affirm the convictions of each defendant, but each sentence is vacated and each case is remanded to the district court for the re-sentencing of each defendant.

J. BLAINE ANDERSON, District Judge

(concurring and dissenting):

I concur in the affirmance of the convictions as to all three defendants, but must respectfully dissent as to Part II vacating the sentences and remanding for re-sentencing as to Mollet and Moxley. I agree that because of the decision in Hayes and Meicke (474 F.2d 965), the sentence must be vacated and remanded as to Yamron.

The point which distinguishes Mollett and Moxley from Yamron and from the result in Hayes and Meicke lies in the fact that Mollet and Moxley were both sentenced under Section 5010(a), whereas Yamron, Hayes and Meicke were sentenced under Section 5010(b). In Hayes and Meicke Judge Trask and the panel were dealing only with a Section 5010(b) sentence. A Section 5010(a) sentence was not involved, discussed, nor is that sentencing alternative even cited by that panel. I recognize the seemingly broad language of the Hayes panel that “a combination of rehabilitative treatment and retributive punishment is not intended and is improper” when sentencing under the Federal Youth Corrections Act. 474 F.2d at 967. Nevertheless, it is my view that as a matter of judicial interpretation and application and Congressional intent, Hayes must be confined to the issue there, namely, a Section 5010(b) sentence.

The Hayes decision holds that:

“ . . .a judge electing to commit a youth offender for treatment and supervision under the alternative sentencing provisions of the Federal Youth Corrections Act is foreclosed from imposing an additional punitive penalty under another provision.” (emphasis added)

I have studied the Hayes decision very carefully and I am compelled to conclude that it does not apply to a Section 5010(a) sentence. The court in Hayes uses the language: “treatment and supervision” which is identical to the words used in Section 5010(b). I have no quarrel with the Hayes decision if it is limited to Section 5010(b) which is the subsection dealing specifically with “treatment and supervision.” The fact that there are five separate subdivisions in Section 5010 leads one to the conclusion that Congress intended to vest in the District Judges five separate sentencing alternatives. The Hayes conclusion that “a combination of rehabilitative treatment and retributive punishment” was not intended by Congress, must, in my view, be confined to a Section 5010(b) sentence.

I am of the opinion that when probation is given under Section 5010(a) (a separate sentencing alternative), the district judge is free to invoke the alternatives specified in 18 U.S.C. § 3651 and to utilize various combinations thereof. As Section 5023, 18 U.S.C., states:

“(a) Nothing in this chapter shall limit or affect the power of any court to suspend the imposition or execution of any sentence and place a youth offender on probation or be construed in any wise to amend, repeal, or affect the provisions of chapter 231 of this title . .

The Ninth Circuit has previously drawn a distinction between a Section 5010(a) and a Section 5010(b) sentence. Cherry v. United States, 299 F.2d 325 (9 Cir. 1962), holds: “[T]hat ‘probation’, as used in § 5010(a) means probation as defined in §§ 3651 and 3653 . . . .” Section 3651 expressly provides for payment of a fine as a condition of probation and would seem also to .permit incarceration in a jail-type institution or treatment center for a period of time as a further condition of probation. The sentence meted out under Section 5010(a), as was done with respect to Mollet and Moxley, when read with the probation statute, Section 3651, seems obviously to contemplate a discretionary combination of elements of punishment and rehabilitation for a youthful or young adult offender, but combined with and retaining for the offender the beneficent prospects of total expungement of the record of a felony conviction. 18 U. S.C. § 5021. These combined sentencing alternatives may well have been the aim and purpose of the district judge as to Mollet and Moxley and, to him, based upon his knowledge of the background and personality traits of these two young men, may have seemed to be peculiarly appropriate for these two youthful offenders. When one reads the Youth Corrections Act as a whole and in combination with 18 U.S.C. §§ 3651 and 3653, it would seem that Congress intended the very flexibility used in this case with respect to a Section 5010(a) sentence. While I recognize that the need for judicial flexibility in sentencing does not of itself spell out or support an argument as to a particular Congressional intent, nevertheless the district judges are in need of this flexibility in fashioning a hopefully enlightened sentence, particularly when dealing with the sensitive problems of youthful and young adult offenders. Thus, I would conclude that the sentences with respect to Mollet and Moxley were proper, were within the Congressional intent and within the discretion of the District Judge.

      . “5010. Sentence

      (a) If the court is of the opinion that the youth offender does not need commitment, it may suspend the imposition or execution of sentence and place the youth on probation.”

      . § 3651. Suspension of sentence and proiation

      “Upon entering a judgment of conviction of any offense not punishable by death or life imprisonment, any court having jurisdiction to try offenses against the United States when satisfied that the ends of justice and the best interest of the public as well as the defendant will be served, thereby, may suspend the imposition or execution of sentence and place the defendant on probation for such period and upon such terms and conditions as the court deems best.
      “Upon entering a judgment of conviction of any offense not punishable by death or life imprisonment, if the maximum punishment provided for such offense is more than six months, any court having jurisdiction to try offenses against the United States, when satisfied that the ends of justice and the best interest of the public as well as the defendant will be served thereby, may impose a sentence in excess of six months and provide that the defendant be confined in a jail-type institution or a treatment institution for a period not exceeding six months and that the execution of the remainder of the sentence be suspended and the defendant placed on probation for such period and upon such terms and conditions as the court deems best.
      “Probation may be granted whether the offense is punishable by fine or imprisonment or both. If an offense is punishable by both fine and imprisonment, the court may impose a fine and place the defendant on probation as to imprisonment. Probation may be limited to one or more counts or indictments, but, in the absence of express limitation, shall extend to the entire sentence and judgment.
      “The court may revoke or modify any condition of probation, or may change the period of probation.
      “The period of probation, together with any extension thereof, shall not exceed five years.
      “While on probation and among the conditions thereof, the defendant—
      May be required to pay a fine in one or several sums; and
      May be required to make restitution or reparation to aggrieved parties for actual damages or loss caused by the offense for which conviction was had; and May be required to provide for the support of any persons, for whose support he is legally responsible.
      “The defendant’s liability for any fine or other punishment imposed as to which probation is granted, shall be fully discharged by the fulfillment of the terms and conditions of probation.”