author: HILL, Circuit Judge.

text:
    Donna V. ZABRISKIE, Plaintiff-Appellee, v. Reed D. LEWIS and William J. Rogers, Jr., Defendants-Appellants.
    No. 74-1015.
    United States Court of Appeals, Tenth Circuit.
    Argued Aug. 22, 1974.
    Decided Dec. 5, 1974.

      M. Richard Walker, Salt Lake City, Utah, for defendants-appellants.
    Leonard W. Burningham, Salt Lake City, Utah, for plaintiff-appellee.
    Before HILL, SETH and McWIL-LIAMS, Circuit Judges.
   HILL, Circuit Judge.

This appeal stems from a judgment against defendants-appellants in which jurisdiction was based on 15 U.S.C. § 78aa and pendent jurisdiction. Liability was predicated on violations of 17 C.F.R. § 240.10b-5 (Rule 10b-5) and Utah Code Ann. § 61-1-1 (1968).

Appellee Donna Zabriskie (now Bea-man) engaged appellant Lewis to locate investment properties for her. Lewis was a real estate agent for Max Ingalls & Associates, Realtors. Appellant Rogers, broker for the firm and Lewis’ immediate supervisor, requested that Lewis bring appellee into Rogers’ office to allow Rogers to present to the appellee a proposal for loaning funds to one John Worthen. Lewis called appellee to set up the meeting; on February 1, 1971, Lewis transported appellee to Rogers’ office. The proposal was that appellee loan $15,000 to Worthen and in exchange she would receive a promissory note signed by Worthen for $17,250 including interest paid to April 1, 1971 (maturity was April 1 with an optional demand date of March 2 and a $16,500 payoff). For security, appellee would be given a stock certificate of 1,000,000 shares of Computer Parking Systems, Inc. (hereinafter Computer) issued to Albert P. Folsom, allegedly president of Computer, and a hypothecation agreement covering the shares. Appellee testified that Rogers told her the shares were worth approximately $100,000, that she was told the shares were negotiable, that Lewis told her Worthen was almost a genius and a good man to whom she could entrust her money, and that Rogers told her the funds were to be used to promote Dax Corporation (hereinafter Dax) “ . . . which was to be one of the greatest stock developments that he had ever heard of. . . . ” Appellee accepted the proposal. Lewis drove ap-pellee to a bank where she obtained a $15,000 cashier’s check and then transported her back to the office where she gave the check to Worthen and received the note, stock certificate, and hypothe-cation agreement.

Lewis subsequently contacted appellee to arrange a second meeting for February 10. Rogers, Lewis and Worthen were present at this meeting. Appellee gave Worthen an additional $7,000 and received an $8400 promissory note from J.E.W. Inc., Worthen’s closely-held corporation. The note, payable on or before April 10, 1971, was secured by the assignment of another note in the amount of $12,500 issued by Pacific Flight Support, Inc. (hereinafter called Pacific Flight) to J.E.W. Inc. Appellee testified that she was told the money was needed to promote Dax and that Rogers and Worthen said the Pacific Flight note was valuable.

On March 1, 1971, Rogers and Lewis obtained two drafts of $15,000 . and $1,500 and delivered them to appellee at her home. Appellee retained the $1,500 draft as interest and returned the $15,-000 draft to the two men. Appellee testified Rogers and Lewis told her this reinvestment was needed for thirty days for Dax’s purposes.

The obligations were not paid in full when due; however, appellee did receive a total of $3,500. In July or August, 1971, appellee received a warranty deed with Lewis as grantee and a special warranty deed with herself as grantee. These deeds covered 100 lots in Texas. In August appellee purchased shares of Dax and paid $1,382.50 for them. Appel-lee testified Lewis told her Dax was a very good investment.

Appellee hired an attorney to recover her funds. The efforts to realize money on the collateral were unsuccessful. The Computer stock was nonnegotiable; Pacific Flight could not be contacted and appellee testified, as of the trial date, the company was no longer in operation; appellee’s attorney was unsuccessful in ascertaining the value of the Texas property. Appellee testified Lewis discouraged her from contacting the Securities and Exchange Commission (SEC) about transferring the Computer stock because he did not want Dax investigated until it was promoted further; however, appel-lee contacted the SEC and was unsuccessful in her transfer attempt.

On September 5, 1972, appellee filed an action in the United States District Court for the District of Utah. Appel-lee’s four basic claims, as distilled in the pretrial order, were (1) a violation of § 10(b) of the Securities & Exchange Act of 1934, in that the defendants fraudulently induced the plaintiff to loan money to J.E.W. Inc., through misrepresentations, and as a result of a scheme and artifices to defraud, and through practices which did operate as a fraud and deceit upon the plaintiff, (2) substantially the same allegation under Title 61 of the Utah Code Annotated; (3) common law fraud in that defendants made substantial misrepresentations, and (4) a claim under the terms and provisions of a secured note.

Following a trial to the court, judgment was entered for appellee against Rogers and Lewis, jointly and severally, in the amount of $26,373.39, including $3,500 attorneys fees.

The court concluded “[t]he acts, practices, schéme, course of business, false and misleading statements and omissions, and artifice to defraud perpetrated by the defendants on the plaintiff . ” violated Rule 10b-5 and Utah Code Ann. § 61 — 1—1. An order granting sale of the collateral and awarding judgment of any deficiency after sale was made.

Appellants attack the trial court’s determination initially on two legal grounds: (1) the promissory note involved here is not a security and (2) even if the promissory note is a security, no purchase or sale occurred.

These challenges attack both the court’s jurisdiction and the existence of a prima facie case.

It is, of course, the law that the burden is upon the plaintiff to establish jurisdiction, and coincidentally make out a case under the statute and rule [15 U.S.C. § 78j and Rule 10b-5], and to do so he must prove: (1) Use of the mails or instrumentalities of interstate commerce; (2) the purchase or sale of a security; and (3) the use of a manipulative or deceptive device [Emphasis added]. Stevens v. Vowell, 343 F.2d 374, 378 (10th Cir. 1965).

Title 15 U.S.C. § 77b(l) (Securities Act) defines security as including “any note . . [or] evidence of indebtedness ” Title 15 U.S.C. § 78c(a)(10) (Securities Exchange Act) defines security as “any note . . . but shall not include . . any note . which has a maturity at the time of issuance of not exceeding nine months . .These definitions of security have been held to be virtually identical. Tcherepnin v. Knight, 389 U.S. 332, 88 S.Ct. 548, 19 L.Ed.2d 564 (1967). Appellants argue the notes in question are not securities because of the maturity date exception. Although the stated maturities of these notes would appear to place them within the statutory exclusion, that exception is not applicable to the type of notes involved here. Numerous courts, interpreting that exception, have agreed with the Securities Exchange Commission (Securities Act Rel. No. 4412, 26 Fed.Reg. 9158 (1961)) and limited that exception to “. only . . . prime quality negotiable [commercial] paper of a type not ordinarily purchased by the general public, that is, paper used to facilitate well recognized types of current operational business requirements and of a type eligible for discounting by Federal Reserve banks.” Bellah v. First Nat’l Bank, 495 F.2d 1109 (5th Cir. 1974); Zeller v. Bogue Elec. Mfg. Corp., 476 F.2d 795 (2d Cir. 1973), cert. den’d 414 U.S. 908, 94 S.Ct. 217, 38 L.Ed.2d 146; Sanders v. John Nuveen & Co., 463 F.2d 1075 (7th Cir. 1972), cert. den’d, 409 U.S. 1009, 93 S.Ct. 443, 34 L.Ed.2d 302; Anderson v. Francis I. duPont & Co., 291 F.Supp. 705 (D.Minn. 1968).- The notes involved here certainly were not prime quality negotiable commercial paper.

A more difficult question is raised by appellants’ assertion that these notes are not within the definition of security because they are not the type of notes Congress intended federal securities law to regulate. Appellee admits that not all notes are meant to be reached by the federal securities law. Although this statement seems to be contrary to the clear language “any note”, the “unless the context otherwise requires” language of 15 U.S.C. §§ 77b and 78c(a) and the Supreme Court’s indication that we are dealing with a flexible concept, SEC v. W. J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946), have been held to compel limitation concerning notes to be considered within the definition. But see Sanders v. John Nuveen & Co., supra at 1078. Thus, not all notes are included within the protection of the anti-fraud provisions. McClure v. First Nat’l Bank, 497 F.2d 490 (5th Cir. 1974); Lino v. City Investing Co., 487 F.2d 689 (3d Cir. 1973); Zeller v. Bogue Elec. Mfg. Co., supra at 800.

This Circuit has not determined what tests should be applied in determining which notes come within the definition of security. The Supreme Court in dealing with an investment contract said of the definition of security that it embodied

a flexible rather than a static principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits. SEC v. W. J. How-ey Co., supra.

This Court has stated

[w]hether a particular investment constitutes, a security depends upon the facts and circumstances of the case. Substance is exalted over form and emphasis is placed on economic reality. Vincent v. Moench, 473 F.2d 430 (10th Cir. 1973).

At least three circuits have adopted a test placing those notes of commercial character outside the definition of security and those notes of investment character within the definition. McClure v. First Nat’l Bank, supra; Lino v. City Investing Co., supra; Zeller v. Bogue Elec. Mfg. Co., supra. This test is based on the purpose of the Act to protect investors, the “unless the context otherwise requires” language, and the practical considerations of subjecting commercial notes to the registration provisions of the Securities Act as well as fear of the resulting litigation flooding the federal courts if commercial notes were included. The test accords with the exalting of economic reality over form, Vincent v. Moench, supra, and seeks to protect investors, Associated Sec. Corp. v. SEC, 293 F.2d 738 (10th Cir. 1961).

In Sanders, supra at 1080, the Seventh Circuit stated that court’s view of the distinction between the two kinds of notes.

When a prospective borrower approaches a bank for a loan and gives his note in consideration for it, the bank has purchased commercial paper. But a person who seeks to invest his money and receives a note in return for it has not purchased commercial paper in the usual sense. He has purchased a security investment.

Clearly, if the proceeds of a note are used to purchase consumer goods or services, the note has a commercial character. Lino v. City Investing Co., supra; Joseph v. Norman’s Health Club, Inc., 336 F.Supp. 307 (E.D. Mo.1971). The proceeds in this present situation were not for a consumer purpose but rather were to be used to promote Dax. Thus the proceeds were to be used for a business purpose; the fact proceeds are to be used for a business purpose, however, does not mean an investment note is involved. See Bellah v. First Nat’l Bank, supra. The Bellah and McClure cases involved loan transactions within normal commercial circles and “business purpose” notes were held to havé a commercial character.

Making the distinction between commercial and investment notes when proceeds are to be used for a business purpose is often difficult. A test suggested by one commentator is “. whether the transaction is of the kind in which stock often actually is given.” This test seeks to prevent circumvention of the anti-fraud provisions and allows consideration of the particular facts and circumstances of each case. In the instant case, appellee testified that she was told at both the February 1 and February 10 meetings that the funds were to be used for the promotion of Dax. Appellee, an unsophisticated investor, was promised a return of about 120% on her money. She had been seeking investment properties and had secured Reed’s assistance in locating an investment for her. These were isolated transactions outside normal commercial circles. Compare McClure v. First Nat’l Bank, supra. Promotion of a corporation is a function for which stock often actually is given; in fact, this is a primary reason for stock issuance. Appellee was not in the business of making loans; she was not receiving any consumer goods or services; she made an investment and received promissory notes. Although other factors often indicia of a security are missing, the promissory notes here were given to obtain funds to promote a corporation and applying the aforementioned test are securities within Rule 10b-5. See SEC v. Addison, 194 F.Supp. 709 (N.D.Tex.1961) (there a court held promissory notes were securities when defendants needed money to get into operation and financed such operations by soliciting unconditional unsecured loans).

Appellants argue that no sale of a security has occurred here and rely principally on McClure v. First Nat’l Bank, 352. F.Supp. 454 (N.D.Tex.1973). That court held that even if the notes involved therein were securities, the transactions would not constitute the “purchase or sale”. There the court, however, notes that “ . . .• the issuance of a note which is the formal equivalent of the issuance of shares of stock would be covered by the Act.” Id. at 460.

In 15 U.S.C. § 78c(a)(14) sale and sell are said to “each include any contract to sell or otherwise dispose of.” The promissory notes were clearly “disposed of” here and value was given.

Appellants next contend that appellee did not exercise due diligence in the transaction as required by prior decisions of this court. Mitchell v. Texas Gulf Sulphur Co., 446 F.2d 90 (10th Cir. 1971), cert. den’d, 404 U.S. 1004, 92 S.Ct. 564, 30 L.Ed.2d 558, 405 U.S. 918, 92 S.Ct. 943, 30 L.Ed.2d 788 (1972); Gilbert v. Nixon, 429 F.2d 348 (10th Cir. 1970). Specifically they argue the issuer’s restriction on the transfer of the Computer stock- was noted conspicuously on the face of the stock certificate and thus clearly gave notice that the stock was not negotiable. The trial court found Lewis and Rogers

made false and misleading statements to the plaintiff concerning the value of said shares of capital stock, the negotiability of said shares of capital stock, the security of the plaintiff’s investment, and failed to disclose to the plaintiff that said shares of capital stock were unregistered shares, and that they could not be sold except in accordance with the Securities Act of 1933, as amended.

The trial court, believing appellee’s testimony, also determined that she was an unsophisticated investor.

Concerning appellee’s due diligence in the transaction, it should be noted that appellee testified she was told the shares were negotiable. The trial court determined that a false and misleading statement was made concerning the stock’s negotiability; there is evidence to support this finding. Lewis had been engaged by appellee to find her suitable investments; Rogers was Lewis’ supervisor. Appellee’s reliance on the statements of these two men would not seem to indicate a lack of diligence but rather a justifiable reliance. As to her alleged receipt of actual notice from the legend, the oral statement indicating the stock was negotiable could easily have satisfied any question the legend raised in the mind of this unsophisticated investor.

Appellants present two evidence questions concerning the trial court’s exclusion of evidence of the Computer stock’s value. Edward Bagley, president of a stock brokerage firm, attempted to testify concerning the stock’s value based on October 2, 1973, “pink sheets” (quotation sheets prepared by the National Daily Quotation Service) and calls he made to a few “market makers”. The pink sheet testimony was excluded because (1) it was irrelevant to have evidence of the market in these shares when appellee’s shares could not be negotiated and (2) the expert witness had no personal knowledge concerning the pink sheets. The testimony about the phone calls was excluded as hearsay.

Appellants argue that the value of investment stock can be established by expert testimony and the failure to allow the introduction of competent expert testimony pertaining to the present market value of the stock was prejudicial. Although there can be little dispute with appellants’ statement as to the general appropriateness of expert testimony, 31 Am.Jur.2d Expert and Opinion Evidence § 138, it must be remembered that evidence must be relevant.

The sole test is whether or not the factual information tendered for communication to the fact finder would be helpful in the determination of the factual matter that is in dispute between the parties. 1 Jones on Evidence § 4:1 (6th ed. 1972).

The question here was: Had false and misleading statements been made concerning the value of nonnegotiable Computer stock as of February 1, 1971? Evidence pertaining to the present [October 3, 1973] market value of shares of Computer would not seem naturally and logically to establish or negate the fact in issue. It is not error for a court to refuse to admit or take judicial notice of irrelevant evidence.

Appellants also contend appellee did not offer proof of the Computer shares’ value, a necessary element to show a false and misleading statement was, in fact, made. This argument relates to only one of the many statements found to have been false and misleading. Due to the statement concerning nonnegotiability, it would seem appellant was at least misled as to the value of this stock and proof of the exact intrinsic value should not be required.

Appellants finally challenge the trial court’s determination by arguing that the language of Rule 10b-5 is insufficient to include the participation of Lewis and Rogers.

The trial court, in its findings of facts, stated several events, supported by the record, in which “ . . . defendants, Lewis and Rogers, singly, acting in concert with, and aiding and abetting the defendants, J.E.W. Inc., Worth-en and Folsom . . .” violated Rule 10b-5. The words “acting in concert” would indicate a finding of participation of multiple actors and liability is imposed on participants if their participation is substantial. 2 Bromberg, Securities Law: Fraud § 8.5(520) (1973). Aiding and abetting in the violation of Rule 10b-5 is also sufficient for imposition of liability. Kerbs v. Fall River Indus., Inc., 502 F.2d 731 (10th Cir. 1974); Anderson v. Francis I. duPont Co., supra; Brennan v. Midwestern United Life Ins. Co., 417 F.2d 147 (7th Cir. 1969), cert. den’d, 397 U.S. 989, 90 S.Ct. 1122, 25 L.Ed.2d 397 (1970). Appellants interpret the trial court’s determination as being one of conspiracy and claim that no knowledge on the part of Lewis and Rogers of the scheme is shown by the evidence and that such knowledge is necessary for liability.

When liability is to be imposed on participants, aiders and abettors, and co-conspirators knowing participation in the fraudulent scheme must be shown.

Some link, then, between the defendants is essential unless vicarious liability is to lie for purely coincidental actions. It does not matter greatly what we call the link: agreement, understanding, combination, concert, mutual authorization, joint action or something else. The need is substantially the same whether we classify the defendants as participants, aider-abettors or conspirators. Certainly no formal agreement is necessary to forge the link and a tacit understanding will suffice.
The link, if not directly proved, may be inferred from parallel or complementary acts, prior relationships, common benefits, interchange of communications or other relevant factors. 2 Bromberg, supra, § 8.5(581).

In upholding the imposition of liability on a participant defendant, Senior Judge Durfee, speaking for this Court, said:

. The totality of facts and circumstances herein indicates, as the trial court found, that Thompson was a knowing participant in the fraudulent scheme against Kerbs; such participation constitutes conduct proscribed by § 10 and Rule 10b-5, and as such, is sufficient to establish liability under the statute and the rule. [Emphasis added]. Kerbs v. Fall River Indus., Inc., supra at 740.

Without recounting all the facts indicating knowing participation, a few of the more important circumstances are (1) Reed and Lewis became officers and/or directors of Dax; (2) Lewis suggested appellee should not contact the SEC to investigate Dax; (3) Rogers and Lewis obtained a finders’ fee for the “loan” and did not disclose this to appellee; (4) Lewis and Rogers did not disclose the nonnegotiable nature of the Computer stock to appellee who had hired Lewis to find suitable investment properties; and (5) Lewis and Rogers made numberous false and misleading statements concerning the collateral securities.

Affirmed.

      . Appellee testified Gordon A. Wilson, a real estate agent for Max Ingalls & Associates, was present at this meeting but apparently the trial court did not find Wilson was present at any of the transactions.

      . Appellee again testified that Wilson was present but made no statements.

      . The petition alleged several defendants had represented to appellee that a $4,000 M.I.A. appraisal, which appellee would have to pay for, was necessary before defendants could sell any of the lots.

      . Utah Code Ann. § 61-1-1 provides:
      It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly
      (1) to employ any device, scheme, or artifice to defraud,
      (2) to make any untrue statement of a material fact or to omit to state a material fact, necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or
      (3) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

      . The action was originally filed against J.E.W. Inc., Dax Corporation, John E. Worth-en, Michael F. Steed, Reed Lewis, William Rogers, Jr., Gordon A. Wilson, Albert P. Folsom and John Does 1, 2, 3, 4, and 5.
      The case was dismissed as to Dax Corporation on October 15, 1973, as to Gordon Wilson on October 3, 1973, and as to Michael Steed on September 20, 1973. Default judgment was granted against Albert P. Folsom. Judgment was entered by stipulation against J.E.W. Inc. and John E. Worthen.

      . Appellants do not use the term note in the plural so it is uncertain if they attack the determination of all notes involved herein. We, however, have treated their allegation as encompassing the promissory notes made by Worthen and J.E.W. Inc.

      . 15 U.S.C. § 77c(a)(3) exempts “[a]ny note . which arises out of a current transaction or the proceeds of which have been or are to be used for current transactions, and which has a maturity at the time of issuance of not exceeding nine months . . from the provisions of this subchapter.

      . Comment, Commercial Notes and Definition of “Security” Under Securities Exchange Act of 1934: A Note is a Note is a Note?, 52 Neb.L.Rev. 478, 501 (1972-73).

      . Id. at 511-523. The author suggests factors which could assist in the final determination that an investment note (a security) is or is not present. These include: (1) use of proceeds to buy specific assets or services (commercial) rather than general financing (investment), (2) risk to initial investment, (3) giving certain rights to a payee (investment), (4) repayment contingent on profit or out of production (investment), (5) a large number of notes or payees (investment), (6) a large dollar amount (investment), (7) fixed time notes (equivocal) rather than demand notes (commercial), and (8) characterization by the parties themselves.

        Two other commentators sum up existing law on court decisions in this manner: “Notes issued for personal loans and consumer installment purchases are not securities. Notes that are issued for investments and business acquisitions as well as commercial paper sold outside the normal institutional markets are securities.” Martin Lipton & George A. Katz, “Notes” Are (Are Not?) Always Securities — A Review, 29 Bus.Law. 861, 866 (1974).

      . In the district court opinion in McClure v. First Nat’l Bank, 352 F.Supp. 454, 458 (N.D. Tex.1973), the court said those transactions did “. . . not involve a subterfuge for stock transactions where adherence to substance over form would demand coverage by the Act.”

      . The issue of a sale of the promissory notes is not addressed in the circuit court opinion of McClure. The district court, however, said at 352 F.Supp. 459: “ . . . where the transaction complained of is one where the issuance of a note rather than of shares of stock is merely a technical difference in form, there is jurisdiction under the Act.”

      . This restriction reads as follows:
      “The shares of Stock represented by this certificate are held for investment and not for distribution, and cannot be presented for transfer until compliance with the Securities Act of 1933 as amended.”

      . The exclusion of evidence of the present fair market value is alleged to have prejudiced appellants because the stock ordered foreclosed was far in excess of appellee’s claim against appellants. The trial court provided that “ . . . any amount remaining after payment of the foregoing be paid by the United States Marshal to the Clerk of the above entitled Court for the use of the party or parties lawfully authorized to receive the same. . . .”


source: Caselaw Access Project

author: PELL, Circuit Judge.

license: Public Domain

text:
    Pearl SPENCE, Individually and as Ad-ministratrix of the Estate of Jerome W. Spence, Deceased, Plaintiff-Appellant, v. Henry D. STARAS et al., Defendants-Appellees.
    No. 74-1038.
    United States Court of Appeals, Seventh Circuit.
    Argued Sept. 16, 1974.
    Decided Dec. 16, 1974.

      Mort A. Segall, Champaign, Ill., for plaintiff-appellant.
    Tim Swain, II, Sp. Asst. Atty. Gen.; James L. Hafele, Peoria, Ill., for defendants-appellees.
    Before FAIRCHILD, CUMMINGS and PELL, Circuit Judges.
   PELL, Circuit Judge.

The plaintiff Pearl Spence brought this action, under 42 U.S.C. § 1983, individually and as administratrix of the estate of her deceased son, Jerome Spence, to recover damages for the deprivation of her son’s civil rights. Sued as defendants were eight agents and employees of the Peoria State Hospital, an institution owned and operated by the State of Illinois. Jurisdiction was invoked under 28 U.S.C. § 1343(3). The district court dismissed the plaintiff’s amended complaint and the plaintiff appeals.

The original complaint alleges that the deceased was an inmate at the Peoria State Hospital and that the defendants were jointly responsible for the exclusive care, custody, and control of the deceased. According to the complaint, the deceased, who was nonverbal, had been beaten on at least twenty separate occasions prior to May 21, 1972, by fellow patients. The complaint further charges that on May 21, 1972, the deceased was again beaten by a fellow inmate; that the deceased died on June 23, 1972, as a result of this beating; that each of the defendants knew of the twenty prior assaults and beatings committed on the deceased, and knew that the deceased was nonverbal and could not call for help or defend himself when attacked, and knew that the deceased was a frequent target of assault by fellow patients, all of whom were under the care, custody, and control of the defendants; that the defendants, jointly, acting under color of state law, willfully, wantonly, recklessly, negligently, and intentionally subjected the deceased to a deprivation of his right ■of personal security by their complete failure to provide any measure of protection for the deceased against the repeated attacks of his fellow inmates. The plaintiff, according to the complaint, has been duly qualified as administratrix of the estate of the decedent. The plaintiff seeks both actual and punitive damages.

The district court dismissed the complaint with leave for the plaintiff to amend it to allege (1) a specific constitutional violation and (2) pecuniary loss. The plaintiff amended the complaint by adding two paragraphs which alleged that the deceased had been deprived of his rights under the Fourteenth Amendment to liberty and life and that the deceased left surviving him the plaintiff as lineal next of kin, and the plaintiff sustained pecuniary loss by reason of the death of the decedent. The district court dismissed the amended complaint.

I

In a federal civil rights action where the person who has been deprived •of his rights has died, the action survives for the benefit of the estate if the applicable state law creates such a survival action. Brazier v. Cherry, 293 F.2d 401 (5th Cir. 1961), cert. denied, 368 U.S. 921, 82 S.Ct. 243, 7 L.Ed.2d 136; Evain v. Conlisk, 364 F.Supp. 1188, 1191 (N.D.Ill. 1973); Holmes v. Silver Cross Hosp., 340 F.Supp. 125, 129 (N.D.Ill.1972). See also Baker v. F & F Investment, 420 F.2d 1191, 1196 n. 7 (7th Cir. 1970), cert. denied, 400 U.S. 821, 91 S.Ct. 40, 27 L.Ed.2d 49. Illinois does provide for the survival of an action to recover damages for injury to the decedent while -he was alive (Ill.Rev.Stat. Ch. 3, § 339), and for the survival of an action to recover pecuniary losses incurred by the decedent’s next of kin due to the decedent’s death (Ill.Rev. Stat. Ch. 70, §§ 1 and 2). Under Illinois law, these actions must be brought in a representative, rather than an individual, capacity. Ill.Rev.Stat. Ch. 70, § 2; Ill. Rev.Stat. Ch. 83, § 20.

In the present case, the plaintiff sued both individually and as administratrix of her son’s estate. Although the individual action must fail under Illinois law, the action brought in the plaintiff’s representative capacity is properly maintainable.

II

Viewing the allegations of the amended complaint and all reasonable inferences which can be drawn from them as true, we are convinced that the plaintiff has stated a cause of action under § 1983. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The defendants, as agents and employees of a state hospital, were clearly acting under color of state law. See Wheeler v. Glass, 473 F.2d 983, 985 (7th Cir. 1973). It. is equally clear that the deceased had a right, under the Fourteenth Amendment, to be secure in his life and person while confined under state authority. See Brazier v. Cherry, supra. The defendants, being responsible for the decedent’s care and safekeeping, had a duty to protect him from attacks by fellow inmates. Welsch v. Likins, 373 F.Supp. 487, 502-503 (D.Minn. 1974); New York State Ass’n for Retarded Children v. Rockefeller, 357 F.Supp. 752, 764 (E.D.N.Y.1973).

The present complaint, moreover, contains sufficient allegations regarding the defendant’s knowledge of the beatings of the decedent to make the claim actionable under § 1983. Although the complaint does not allege direct participation by the defendants in the beatings, the complaint does allege more than an “isolated incident” or mere negligent supervision. The complaint here expressly alleges that the defendants knew that the decedent was the target of assaults by fellow inmates, knew that he had been beaten on at least twenty prior occasions, and knew that he was nonverbal and unable to call for help or defend himself when attacked, and yet the defendants failed to protect the deceased. Assuming, as we must on a motion to dismiss, that the plaintiff can prove these allegations, the defendants’ inaction was of sufficient magnitude to constitute a deprivation of rights under § 1983. The defendants’ reliance on Adams v. Pate, 445 F.2d 105 (7th Cir. 1971), and Williams v. Field, 416 F.2d 483, 485 (9th Cir. 1969), cert. denied, 397 U.S. 1016, 90 S.Ct. 1252, 25 L.Ed.2d 431 (1970), is, therefore, inapposite. See Curtis v. Everette, 489 F.2d 516 (3d Cir. 1973), cert. denied, Smith v. Curtis, 416 U.S. 995, 94 S.Ct. 2409, 40 L.Ed.2d 774; Parker v. McKeithen, 488 F.2d 553 (5th Cir. 1974).

The defendants contend, however, that the complaint should nevertheless be dismissed for failure to allege, with specificity, pecuniary loss, the only type of damages recoverable under the Illinois Wrongful Death Act. Ill.Rev.Stat. Ch. 70, § 1. Graul v. Adrian, 32 Ill.2d 345, 205 N.E.2d .444 (1965). The Supreme Court has indicated that, in civil rights actions, “both federal and state rules on damages may be utilized, whichever better serves the policies expressed in the federal statutes.” Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 240, 90 S.Ct. 400, 406, 24 L.Ed.2d 386 (1969).

The defendants’ argument, which was apparently accepted by the district judge, is based on Illinois case law which held that where, as here,' the plaintiff’s decedent died from the injuries allegedly caused by the defendant, the plaintiff could only bring an action for pecuniary loss under the Wrongful Death Act and not an action, under the Survival Statute, for personal injury and pain and suffering to the decedent before he died. See Holton v. Daly, 106 Ill. 131 (1882). The Illinois Supreme Court, however, has, since the time the district court dismissed the present complaint, reversed this line of cases and has expressly held that where the injury caused by the defendant results in death, the plaintiff may bring both an action under the Wrongful Death Act and one under the Survival Statute. Murphy v. Martin Oil Co., 56 Ill.2d 423, 308 N.E.2d 583 (1974). In the present case, the complaint contains a general prayer for actual damages as well as an allegation of pecuniary loss to the plaintiff as decedent’s next kin. Although the plaintiff may have difficulty, as the district court noted, in proving pecuniary loss due to the death of her nonverbal, mentally-ill son, the plaintiff may well be able to prove actual damages resulting from the decedent’s pain and suffering prior to his death.

Moreover, the complaint here requested punitive as well as actual damages. Provided certain aggravating circumstances are shown, punitive damages are recoverable under federal law in a § 1983 action, Morales v. Haines, 486 F.2d 880, 882 (7th Cir. 1973); Smith v. Losee, 485 F.2d 334, 345 (10th Cir. 1973), cert. denied, 417 U.S. 908, 94 S.Ct. 2604, 41 L.Ed.2d 212; McDaniel v. Carroll, 457 F.2d 968, 969 (6th Cir. 1972); Mansell v. Saunders, 372 F.2d 573 (5th Cir. 1967), and .under Illinois law in personal injury cases, Madison v. Wigal, 18 Ill.App.2d 564, 153 N.E.2d 90 (1958). Federal law, furthermore, permits recovery of such damages in actions under the civil rights acts even in the absence of actual loss to the plaintiff. Rogers v. Loether, 467 F.2d 1110, 1112 n. 4 (7th Cir. 1972); Basista v. Weir, 340 F.2d 74, 88 (3d Cir. 1965).

We do not suggest that the plaintiff ultimately will be able to prove facts entitling her to actual.or punitive damages or even that summary judgment procedures may not develop a lack of liability under § 1983 on the part of some or all of the defendants. We merely hold that the complaint contains sufficient allegations with regard to damages, regardless of whether the state or the federal rules on damages are applied, to withstand a motion to dismiss which here was broadly sweeping as to all defendants.

Accordingly we reverse and remand for further proceedings not inconsistent with this opinion.

Reversed and remanded.

      . We find no particular support for the plaintiff’s case in the stringing use of conduct-characterization adjectives. The defendants contend that negligence is not actionable under § 1983 and clearly “more than an isolated incident of negligent failure to protect must be alleged.” Williams v. Field, 416 F.2d 483, 485 (9th Cir. 1969), cert. denied, 397 U.S. 1016, 90 S.Ct. 1252, 25 L.Ed.2d 431 (1970). In any event, we are here not concerned with the characterization adjectives but with the course of continuing knowledge and continuing lack of protection provided to one committed to the custody of the defendants. All of the parties cite cases developed in prisoners’ actions. While we find these cases are certainly analogous, and the constitutional principles applicable are substantially identical, we also observe that a prisoner has presumably voluntarily transgressed the rules of conduct imposed by society , in the code of criminal laws while here the decedent was guilty of nothing more than succumbing to an illness.

      . We found somewhat shocking the observation in the brief of the Attorney General on behalf of the defendants that “[n]o case has been found [supporting] a specific right to exist or a right to the enjoyment of life.”

      . Dr. Staras, Superintendent of the hospital, also contends that he is immune from suit under the Illinois Tort Immunity Act, Ill.Rev. Stat. Ch. 85, §§ 2-201, 6-107. However, as this court pointed out in McLaughlin v. Tilen-dis, 398 F.2d 287, 290 (7th Cir. 1968), “[u]nder the Supremacy Clause, that statute cannot protect defendants against a cause of action grounded, as here, on a federal statute.” Since the defendants here are neither legislators nor judges, they retain “only a qualified immunity, dependent on good faith action.” Id. While some or all of the defendants may be able to assert the defense of reasonableness and good faith, the plaintiffs are nonetheless entitled to an opportunity to prove the allegations in the complaint. McLaughlin; Wheeler v. Glass, supra 473 F.2d at 985.

      . The Illinois rule is that punitive damages may not be awarded in the absence of actual damages. Tonchen v. All-Steel Equip., Inc., 13 Ill.App.3d 454, 300 N.E.2d 616, 624 (1973).


author: WEBSTER, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Mike HOWARD, Appellant.
    No. 74-1185.
    United States Court of Appeals, Eighth Circuit.
    Submitted June 11, 1974.
    Decided Dec. 13, 1974.

      Thomas M. Larson, Asst. Federal Public Defender, Kansas City, Mo., for appellant.
    Mary A. Schneider, Asst. U. S. Atty., Kansas City, Mo., for appellee.
    Before BRIGHT, STEPHENSON and WEBSTER, Circuit Judges.
   WEBSTER, Circuit Judge.

This case presents for our consideration the effect of jury verdicts finding the defendant guilty of both the offense as charged and also of a lesser included offense.

Appellant Mike Howard was tried on an indictment charging him in two counts with distributing heroin in violation of 21 U.S.C. § 841(a)(1). At appellant’s request the District Judge instructed the jury that if as to either count they found unlawful possession, but no intent to distribute, they could find Howard guilty of the lesser included offense of simple possession, a misdemeanor. When the jurors retired to deliberate they were given a verdict form on the indicted offenses and were told that a form for the lesser included offenses would follow. The District Judge cautioned them that the latter form was to be used only if Howard was found not guilty as charged in the indictment.

In accordance with the court’s request, Howard’s attorney drafted a verdict form for the lesser included offense of simple possession, which began: “If you find the defendant not guilty of distributing heroin as charged by the indictment in Count I, then you must consider whether the defendant possessed heroin and did not distribute it.” This form was delivered to the jurors while they were deliberating.

Contrary to the court’s instructions, the jury completed and returned both verdict forms, finding Howard guilty on each count as charged in the indictment and also of the two lesser included offenses. The District Judge polled the jurors as to the offenses charged in the indictment and determined that each of them intended to convict Howard of the major offense on each count. He therefore approved the verdicts on the major offenses and ordered them filed. Although the verdicts on the lesser included offenses were declared to be surplus-age, they, too, were filed.

Howard later moved to have the verdicts, set aside and to have a judgment of acquittal entered, pursuant to Rule 29(c) of the Federal Rules of Criminal Procedure. The District Court denied the motion, but granted a new trial on its own motion. When both the government and Howard objected to a new trial, the District Judge reversed himself and stated that he had erred in believing he could grant a new trial on his own motion.

At the time of allocation, Howard’s attorney requested sentencing solely on the misdemeanor verdicts. The District Judge rejected this request and sentenced Howard to two consecutive one-year terms on the felony counts and two consecutive one-year terms on the misdemeanor convictions, to be served concurrently with the felony terms.

On appeal, Howard charges that the trial court erred in accepting verdicts on both the indicted offenses and the lesser included offenses. He asserts that, at the time the verdicts were returned, the District Judge should have either (1) sent the jury out for further deliberations, (2) declared a mistrial or (3) chosen between the verdicts in a manner which would have avoided prejudice to the defendant; in the alternative Howard contends that the District Judge should have corrected the problem at the time of sentencing by disregarding the verdicts on the indicted offenses and sentencing Howard solely on the lesser included offenses. Howard asks us to vacate the felony convictions and to remand the case to the District Court with directions to amend the judgment to reflect only conviction of the lesser included offenses. For the reasons stated herein, we hold that he is not entitled to such relief.

I.

Howard complains that the District Judge erred in failing to require further deliberations after the jury returned verdicts on both the major and lesser included offenses. In his order of December 11, 1973, the District Judge stated: “It is obvious that the Court should have refused to accept the verdicts, further instructed the jury, and sent them back to their jury room. Due to the lateness of the hour and the fact that another jury case was scheduled to commence the next morning, this was not done and the Court considers that it committed error by not doing so.” We agree that such a procedure is preferable to the action taken by the District Judge and suggest that, in future cases where a verdict not in proper form or arguably unclear is rendered, the jury be returned to their room for further deliberations to correct the problem. However, it is unnecessary for us to reach the issue of whether the failure of the District Court to require further deliberations in this case was reversible error, since the defense did not request such action. Howard raised no objection at all to the verdicts at the time they were rendered and cannot at this late date be heard to complain of the District Judge’s failure to require further deliberations. See Tapley v. United States, 353 F.2d 786, 787 (5th Cir. 1965); Williams v. United States, 238 F.2d 215, 219 (5th Cir. 1956), cert. denied, 352 U.S. 1024, 77 S.Ct. 589, 1 L.Ed.2d 596 (1957).

Similarly, while Howard contends the District Court should have ordered a mistrial when it was presented with the verdicts, he neither moved for a mistrial nor would accept a new trial when it was offered, choosing instead to attack the verdict at the time of sentencing. Where the defense makes the tactical move of not requesting a mistrial, it should not be permitted to complain that the District Court failed to declare one on its own motion. Williams v. United States, supra. In that case the Fifth Circuit said:

In brief, the relief requested, a reduced sentence, is one that this Court cannot give in this case. The relief that would normally be available upon the facts found here, a new trial, is [not] desired by the appellant, presumably because of the apparent risk * * *. Defendant cannot escape his proper punishment by causing or negligently permitting error in his trial, then refusing to appeal for a new trial free from error, and finally asserting that the error was in his sentence rather than at the trial. * * * [T]here is no reason why a criminal defendant should be permitted to condone error by silence, prevent complete reconsideration by failure to request a new trial, and then assert the same error upon tenuous grounds for the limited purpose of emasculating a verdict admittedly based on sufficient, legal evidence.
We conclude that * * * failure to seek relief * * * after verdict * * * worked an effective waiver of such error as occurred. 238 F.2d at 220-221.

The District Judge herein cured any ambiguity in the verdicts by polling the jurors in open court and determining that they each intended to find Howard guilty of Counts I and II as charged in the indictment. Cf. Amos v. United States, 496 F.2d 1269 (8th Cir. 1974); Posey v. United States, 416 F.2d 545, 554 (5th Cir. 1969), cert. denied, 397 U.S. 946, 90 S.Ct. 964, 25 L.Ed.2d 127 (1970); Shiflett v. Welch, 161 F.2d 933 (4th Cir.), cert. denied, 332 U.S. 777, 68 S.Ct. 41, 92 L.Ed. 362 (1947).

II.

A defendant may not be charged and convicted of both a major offense and a lesser included offense arising out of the same facts. See United States v. Lewis, 157 U.S.App.D.C. 43, 482 F.2d 632, 647 (1973); United States v. Benn, 155 U.S.App.D.C. 180, 476 F.2d 1127, 1132 (1973). A fortiori, a defendant may not be convicted of both the offense with which he was charged and a lesser included offense with which he was not charged. We agree with Judge Collinson, however, that while the District Court should not have accepted both sets of verdicts, United States v. Johnson, 155 U.S.App.D.C. 28, 475 F.2d 1297, 1298 (1973), the verdicts on the lesser included offenses were mere surplusage. While the jury failed to follow the court’s instructions, a finding of guilty on the lesser offenses as well as on the major offenses creates per se no inconsistency in conclusions; in finding the defendant guilty of the major offenses the jury must necessarily have concluded that all of the elements of the lesser included offenses were present. See note 4 supra. For the reasons stated, however, the judgment of conviction on the lesser included offenses was error and must be reversed and the sentences thereon be vacated.

We affirm the judgment of conviction on Counts I and II as charged in the indictment. However, we note that in sentencing Howard for his violations of 21 U.S.C. § 841, the District Judge failed to impose a mandatory term of parole as required by 21 U.S.C. § 841(b)(1)(A). Since the sentence is invalid, we remand the case to the District Court for resentencing on those counts. See Bozza v. United States, 330 U.S. 160, 67 S.Ct. 645, 91 L.Ed. 818 (1947); United States v. Scott, 502 F.2d 1102 (8th Cir. 1974); United States v. Richardson, 498 F.2d 9 (8th Cir. 1974). In view of the mandatory term of parole prescribed, the District Court may, of course, reduce the length of the sentence of commitment should it desire to do so. See Fed.R. Crim.P. 35.

      . The Honorable William R. Collinson, United States District Judge, Eastern and Western Districts of Missouri.

      . Judge Collinson said:
      If you should find beyond a reasonable doubt that this defendant unlawfully, knowingly, intentionally possessed a controlled substance, as I defined controlled substance in these instructions, but you do not find that the defendant distributed the controlled substance, then you may find the defendant guilty of possession of a controlled substance under Section 844(a), Title 21, United States Code.

      . In this motion Howard also asserted that the foreman of the jury had reported to him that the jury was not unanimous in finding him guilty of distribution of heroin. His request to further interrogate the jury foreman was denied by the District Judge.
      While this issue is not directly before us (it was mentioned in Howard’s brief), we note that in such circumstances a juror cannot be heard to impeach a verdict. See 2 C. Wright, Federal Practice & Procedure § 554, at 493 (1969).

      . We note at the outset that this case does not present a situation where inconsistent verdicts have been rendered. That arises “where a guilty verdict on one count negatives some fact essential to a finding of guilty on a second count.” In such circumstances the “two guilty verdicts may not stand.” United States v. Daigle, 149 F.Supp. 409, 414 (D.D.C.), aff’d, 101 U.S.App.D.C. 286, 248 F.2d 608 (1957), cert. denied, 355 U.S. 913, 78 S.Ct. 344, 2 L.Ed.2d 274 (1958). Here the verdicts are entirely consistent — all of the elements necessary to a finding of guilt on the lesser included offense of possession are required to convict a person of distribution.

      . Such action was approved in United States v. Wolford, 144 U.S.App.D.C. 1, 444 F.2d 876, 887 (1971), wherein a jury had misinterpreted the trial court’s instructions and returned a verdict on only one of the four counts with which each defendant was charged. Accord, United States v. Walker, 456 F.2d 1037, 1039 (5th Cir. 1972).
      In United States v. Henson, 365 F.2d 282 (6th Cir.), cert. denied, 385 U.S. 974, 87 S.Ct. 513, 17 L.Ed.2d 437 (1966), the Sixth Circuit was faced with the problem of a verdict that was not in proper form. That court stated:
      The jury returned a verdict finding the defendants guilty of certain overt acts charged in the indictment. The Court, after instructions, re-submitted the case to the jury to place their verdicts in the proper form. No objection was raised by the defendants and we find this procedure was proper.
      The Court has the power, before accepting a verdict and discharging the jury to permit the jury to correct a mistake in the verdict.

        Id. at 284; accord, Helms v. United States, 310 F.2d 236, 240 (5th Cir. 1962) (in case of an inadvertent mistake, district court has the power before accepting the verdict to permit the jury to correct the verdict); see Wilder v. United States, 246 F.2d 186, 190 (5th Cir. 1957) (where first verdict, though filed, was not responsive and unintelligible, district court properly required further deliberation). See also Firemen’s Ins. Co. v. Craigie, 298 F.2d 457, 458-459 (8th Cir. 1962) (where jury disregarded instruction in civil case, district court properly sent it back to arrive at proper verdict in accordance with instructions).

      . Because of double jeopardy problems, Howard could not be forced to submit to a new trial. See Williams v. United States, 238 F.2d 215, 220 (5th Cir. 1956), cert. denied, 352 U.S. 1024, 77 S.Ct. 589, 1 L.Ed.2d 596 (1957).

      . Judge Collinson recognized this at the time of allocution and said, “[T]he Court should not have accepted the verdict at all.”


author: McWILLIAMS, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Leo Carl MUNN, Defendant-Appellant.
    No. 74-1240.
    United States Court of Appeals, Tenth Circuit.
    Dec. 16, 1974.

      Submitted on the briefs.
    Victor R. Ortega, U. S. Atty., and Richard J. Smith, Asst. U. S. Atty., for plaintiff-appellee.
    C. A. Bowerman, Albuquerque, N. M., for defendant-appellant.
    Leo Carl Munn, pro se.
    Before LEWIS, Chief Judge, and PICKETT and McWILLIAMS, Circuit Judges.
   McWILLIAMS, Circuit Judge.

Munn was convicted by a jury on both counts of a two count indictment charging him with robbery of a federally insured bank. Specifically, count one in the indictment charged Munn, and another, with forcibly taking the sum of $805 in currency from the person and presence of an employee of the Citizens Bank in Albuquerque, New Mexico, and further charged that in committing the aforesaid robbery the life of one Ben Naranjo was placed in jeopardy through the use of a revolver, in violation of 18 U.S.C. § 2113(a) and (d), and 18 U.S.C. § 2. In count two Munn and his code-fendant were charged with stealing $805 in currency from the Citizens Bank, in violation of 18 U.S.C. § 2113(b) and 18 U.S.C. § 2.

Munn’s codefendant pleaded guilty to another bank robbery charge and was dismissed from the present proceeding. As indicated, Munn was convicted by a jury on both counts, and was sentenced to fifteen years on count one, and five years on count two, such sentences to be served concurrently. Munn now appeals his conviction and seeks reversal on a wide variety of grounds. Since one ground for reversal relates to the sufficiency of the evidence, let us briefly summarize the evidence adduced upon trial.

The Government’s evidence showed that Munn’s codefendant, one Gary John Nekuda, held up a bank employee at gun point and robbed her of some $805 in currency. The robber, Nekuda, ran from the bank to a nearby vehicle which was awaiting him, and Nekuda and the driver of the vehicle fled the scene. It was the Government’s theory of the case that Munn was the driver of the getaway vehicle. Jumping ahead a bit in our summarization of the evidence, Nekuda testified in behalf of Munn, and admitted that it was he who robbed the bank, but denied that Munn was the driver of the getaway car.

The Government’s evidence tying Munn into the bank robbery was both direct and circumstantial. A bank customer, one Dan Garcia, was in the bank at the time of the robbery, and he followed the robber to the getaway car. This witness identified Munn as being the driver of the getaway vehicle. It is quite true that Garcia’s was not a positive and unequivocal identification. He conceded that he was not “100% certain.” Nonetheless Garcia did give a description of the getaway driver that fit Munn, and testified that the driver looked like Munn. In addition, there was other testimony to the effect that during the early investigation of the case Garcia was shown photographs of some seven individuals, and that he had picked out the photograph of Munn as the driver of the getaway car.

The Government offered other evidence which established that Munn and Nekuda were close friends and roommates in an Albuquerque apartment house as of the date of the robbery, had been seen together shortly before the robbery, and then both disappeared immediately after the robbery. It was undisputed that Munn had himself rented the getaway vehicle, which was a U-Haul pickup truck, from a car rental on the day of the robbery, using a fictitious name and a nonexistent address. Additionally, Munn’s fingerprint was found on the left door handle of the getaway vehicle, which had been abandoned after the robbery, indicating, according to the Government, that it was Munn who last closed the car door.

As mentioned, Nekuda testified in Munn’s behalf, the latter exercising his right not to testify. Nekuda testified that he had robbed the bank, but that Munn was not the driver of the getaway car. On rebuttal, the Government called two Government agents who testified that when Nekuda was questioned upon his arrest several weeks after the robbery, he, Nekuda, had at that time indicated that Munn was the driver.

At the conclusion of the Government’s case counsel moved for a judgment of acquittal, and upon presentation of all the evidence this motion was renewed. Both motions were denied and error is now predicated on these rulings of the trial court. It is asserted that the evidence is legally insufficient. We do not agree. At this stage of the proceedings, the testimony and the inferences therefrom must be viewed in a light most favorable to the Government. United States v. Frazier, 434 F.2d 238 (10th Cir. 1970), and McGee v. United States, 402 F.2d 434 (10th Cir. 1968). Our study of the record convinces us that there was sufficient evidence tying Munn to the robbery to warrant submission of the matter to a jury and to support the jury’s determination that Munn was in fact the driver of the getaway car. The fact that Nekuda exonerated Munn only posed an issue to be resolved by the trier of the facts. The jury has now resolved that matter, and we are not at liberty to disturb its resolution of the matter.

Munn proved to be a difficult client, and had a succession of appointed counsel, four to be exact, and he was satisfied with none. Indeed, Munn had sharp disagreement with all counsel as to how his case was to be conducted. And in addition to a difference of opinion as to trial strategy, Munn physically assaulted three of his lawyers, including the lawyer who ultimately represented him at trial. On the morning of the trial Munn’s fourth appointed counsel sought to withdraw because of his differences with Munn. This motion was denied and there is minor suggestion that this was error. We see no error, however, in this ruling. Additionally, Munn’s fourth court appointed counsel had filed certain discovery motions which were predicated upon his inability to properly communicate with his client. These were denied, and we perceive of no error under the circumstances of this case. Counsel is somewhat vague as to just what matter he sought to discover, and admits that much of the matter sought would not ordinarily be discoverable by motion. He argues, however, that a different result should obtain because of Munn’s noncooperation. We do not agree that a defendant by his own conduct can thus broaden the scope of discovery.

Perhaps the main matter urged on appeal is the sequestration of the defendant during a short portion of his trial. The facts and circumstances surrounding such sequestration should be developed. As mentioned above, Munn had physically assaulted three of his court appointed counsel, and this fact was known to the trial judge. Then, a few weeks before trial of the case, there was a hearing on some motions, at which time Munn, in open court, threatened the court with violence, and referred to certain of his prior counsel as “fascist pigs.” On that' occasion the trial court warned Munn that it would not countenance any type of a disturbance or a scene, and that if upon trial Munn acted improperly he would be taken from the courtroom proper and sequestered in a room in the marshal’s office, where he could hear the courtroom proceedings over a building broadcast system.

It was in this setting that Munn disregarded the trial court’s earlier warning and created a disturbance in the courtroom just as jury selection was about to begin. Without going into specifics, Munn directed exceedingly foul and abusive language at the trial judge and his counsel. The trial court then ordered Munn sequestered in the marshal’s office, where he could hear the proceedings. Munn was also advised that he could from time to time confer with his counsel while he was absent from the courtroom proper.

Actually, Munn was physically absent from the courtroom proper only about one hour and fifteen minutes. He was taken from the courtroom at about 10:00 A.M. on the opening day of his trial. Jury selection then ensued, and after the jury was selected there was a fifteen-minute recess. And then three witnesses were called before • court recessed for noon at about 11:30 A.M. At the opening of the afternoon session Munn was brought back into the courtroom proper, upon his promise to behave, and he remained in attendance throughout the re-, maining two days of his trial.

One other fact in connection with the sequestration of Munn should be mentioned. During the voir dire of the prospective jurors, the trial court was advised, apparently by a marshal, that Munn had indicated that he would behave himself and desired to return to the courtroom. The trial court declined to act at that particular moment, but, as indicated, did return Munn to the courtroom when court convened for its afternoon session.

It is argued here that Munn’s confrontation rights under the Sixth Amendment were violated when he was thus sequestered in the marshal’s office during a portion of his trial. In thus arguing, counsel relies on Illinois v. Allen, 397 U.S. 337, 90 S.Ct. 1057, 25 L.Ed.2d 353 (1970), and claims that the guidelines laid down in that case were not met by the trial court in the instant case. In that case the Supreme Court held that a defendant could lose his right to be present at his trial if, after he is warned by the judge that he will be removed if he continues his disruptive behavior, he nevertheless insists on conducting himself in a manner so disruptive and disrespectful of the court that his trial cannot be carried on with him in the courtroom. In our view, the trial court substantially complied with the teaching of Illinois v. Allen, supra, and any deviation therefrom was under the circumstances harmless beyond a reasonable doubt.

Counsel first claims that Munn was removed from the courtroom without prior warning. It is true that Munn was not warned in the minutes immediately preceding the outburst which resulted in his removal, but Illinois v. Allen, supra, does not in our view require such a contemporaneous warning. Several weeks before trial Munn had made a tirade against the judge and his counsel, and on this occasion the trial court fully apprised Munn of the consequences of a repeat performance. Accordingly, it was not necessary for the trial court to thereafter warn him a second time before taking affirmative action.

In connection with his removal from the courtroom, it should be noted that even though removed from the courtroom, Munn was able to hear the progress of his trial through a broadcasting system. This was greater protection than was afforded the sequestered defendant in Illinois v. Allen, supra. Also, Munn was advised, as was suggested in Illinois v. Allen, supra, that he would be afforded opportunity to confer with his attorney. Whether he did or not, the record does not reveal. However, as earlier mentioned, Munn was only out of the courtroom something over an hour before he was returned on his promise of good, behavior. But this was not soon enough, asserts counsel, who now argues that Munn should have been returned when the trial court was first advised that Munn desired to change his ways and be permitted to return to the courtroom.

It is true that Illinois v. Allen, supra, states that once a defendant’s confrontation right has been lost through misconduct, it may be regained “as soon as the defendant is willing to conduct himself consistently with the decorum and respect inherent in the concept of courts and judicial proceedings.” 397 U.S. at 343, 90 S.Ct. at 1061. We do not deem the foregoing language, however, to be an absolute mandate dictating the return of every defendant who has been removed from the courtroom simply on his verbal promise to reform. Prior conduct may indicate such a promise is of little value. Certainly some discretion is still left with a trial court to pass upon the sincerity of a defendant’s recantation.

In declining to return Munn to the courtroom on his initial request to be so returned, the judge indicated that he was fearful that despite the promise of good behavior Munn might nonetheless commit further acts of misconduct that would work to his, Munn’s, prejudice. And defense counsel was of the same view. In this regard defense counsel stated that he “shared” the trial court’s concern and stated that if subsequent acts of misconduct on the part of Munn took place in the presence of the jury, he would move for a mistrial. In fact defense counsel went a bit further than simply “sharing” the judge’s concern, and stated that he himself “anticipated” that Munn would try to cause disruption of the courtroom proceedings if he were returned to the courtroom. Under such circumstances, it is hard to fault the trial court for declining to take immediate action on Munn’s request. In any event, we find no abuse of discretion.

Additionally, any possible error by the trial court in its sequestration of the defendant was harmless beyond a reasonable doubt, and would therefore not be grounds for a reversal. Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967), and 28 U.S.C. § 2111. As indicated, it was midway through voir dire examination of prospective jurors that the trial court was first advised that Munn wanted to be brought back to court. The trial court decided to take no action at that time on Munn’s request, and the jury was impaneled and sworn. The Government then made its opening statement, with defense counsel reserving his opening statement. The Government thereafter called three witnesses before the noon recess. The first witness simply stated that the building’s broadcasting system was functioning properly so that Munn was able to hear the proceedings then taking place in the courtroom. The second witness was a Wells Fargo guard who a few minutes prior to the robbery had delivered the bank a canvas bag containing the $805 in currency which was later taken from the bank by Nekuda. He left the bank shortly before the robbery. The third witness called in the morning session was an F.B.I. agent who identified pictures of Nekuda and Munn. This was done for the purpose of having pictures of both Nekuda and Munn introduced into evidence, which pictures could then be used by subsequent witnesses for identification purposes. Court was then in recess over the noon hour and when court reconvened for the afternoon session Munn was permitted to return on his renewed promise of good behavior, and he remained in attendance for the balance of his two-day trial.

We think the mere recital of what transpired during the time Munn was absent from the. courtroom demonstrates conclusively that any possible error by the trial court was under the circumstances harmless beyond a reasonable doubt. And, as indicated, in our best judgment the trial court did not in fact commit error in its handling of Munn’s courtroom misbehavior. The manner in which the trial court handled the situation in our view squares with the rationale of Illinois v. Allen, supra. In fact, all things considered, the trial court exhibited considerable, and we might add commendable, restraint.

Complaint is also made that Dan Garcia’s in-eourt identification of Munn was tainted by the fact that he had previously been shown a gallery of some seven photographs by the F.B.I., including one of Munn, and that this “showing” was impermissibly suggestive because the other six photographs were of persons bearing little or no resemblance to Munn. The seven pictures thus shown Garcia are in the record before us, and our examination of these photographs does not indicate that there was such a suggestive showing. Each of the seven persons portrayed is a male Caucasian; each would appear to be of the same general age grouping; each has considerable hair and of a similar color; and four are clean shaven and three are not. We perceive no error in the composition of this gallery, and do not believe that it was suggestive in nature.

Even though the sentences on counts one and two were to be served concurrently, error is asserted in connection with the trial court’s imposing separate sentences on counts one and two. As indicated at the outset of this opinion, Munn was sentenced to fifteen years on count one for robbery, and five years on count two for larceny of more than $100 from a federally insured bank. Counsel argues that the imposition of two separate sentences was under the circumstances improper, since both counts grew out of one episode. Such being the case, counsel asserts that the larceny is merged in the completed robbery.

The Government agrees that under the circumstances there was a merger of offenses and that the judgment entered on count two should be vacated. We agree. See Prince v. United States, 352 U.S. 322, 77 S.Ct. 403, 1 L.Ed.2d 370 (1956); Gorman v. United States, 456 F.2d 1258 (2d Cir. 1972); and United States v. Von Roeder, 435 F.2d 1004 (10th Cir. 1970).

Munn’s dissatisfaction with counsel has continued during the proceedings on appeal. After counsel filed a brief in Munn’s behalf, Munn indicated his dissatisfaction therewith, and appointed counsel was then permitted to withdraw from further participation in the matter. Munn was then permitted to supplement his counsel’s brief with a pro se brief. In his pro se brief, however, Munn adopted verbatim the brief of his erstwhile counsel and then raised some fourteen additional matters. Suffice it to say that none of the additional matters raised by Munn, pro se, finds support in the record or in the applicable law.

Judgment and sentence entered on count one is affirmed, and the judgment and sentence entered on count two is vacated.


author: Mr. Justice CLARK.

text:
    F. M. FERGUSON et al., Appellees, v. J H N CATTLE COMPANY, A Partnership Composed of Bryant A. Harris et al., Appellant.
    No. 74-1052.
    United States Court of Appeals, Eighth Circuit.
    Submitted Nov. 11, 1974.
    Decided Dec. 23, 1974.

      Alan E. Peterson, Lincoln, Neb., for appellant.
    James A. Lane, Ogallala, Neb., for ap-pellees.
    Before GIBSON, Chief Judge, CLARK, Associate Justice, and WEBSTER, Circuit Judge.

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

   Mr. Justice CLARK.

This diversity action, filed by appellees in the District of Nebraska, arises out of a cattle sale consummated on September 4, 1970, between (1) appellees Ford Ferguson, John Van Wambeck, and Glen Borneman (a group of Illinois businessmen who joined together to form Six Quarter Circle Cattle Co.); (2) appellant J H N Cattle Co., a Texas partnership composed of Bryant Harris, Gene Newman, and George Jones; and (3) one Leslie Churchill, a disreputable Nebraska rancher, who was the intermediary in this transaction. In their complaint, appellees alleged that they had been fraudulently induced to enter into the cattle sale by appellant’s misleading conduct and statements and that the cattle herd thus purchased proved to be some 227 head short of the bargained-for number. The jury awarded appellees $19,000 in damages against J H N Cattle Co. and the latter appeals.

Appellant argues that the evidence before the jury was insufficient either to prove actual fraud by J H N itself under Nebraska law or to permit the fraudulent conduct of Churchill to be imputed to J H N under traditional agency concepts. Though we have reviewed the record and affirm, we think it appropriate to set forth the factual background of this transaction in some detail.

In May of 1970, Churchill offered to sell to J H N some 900 head of cattle located on his ranch in Nebraska, at a price of $160,000. Since J H N had been looking to expand its artificial insemination program, it accepted the offer and signed a contract of sale on May 15, 1970. It was agreed that the cattle were to be left on the ranch to graze under Churchill’s care and that he was to repair the fences and corrals, to prepare other facilities necessary for the artificial insemination program, and to brand those cattle not already so identified.

The three partners who comprised J H N decided to artifieally inseminate the cows during the summer. They contracted with Dr. Scott of Fort Collins, Colorado, to do the work, and James Kelley, an artificial insemination technician, was sent to the Churchill ranch to perform the insemination service. He first arrived at the Churchill ranch in June of 1970. Upon his arrival he noticed that the fences in the pasture to be used for J H N cattle were not in good repair and that a number of cattle appeared to be mingled with J H N cattle. He left the ranch to pick up equipment and a house trailer to move to the ranch. On about July 10 he returned to the ranch and noticed that the fences appeared to have been repaired. The J H N cattle were gathered into an area of about four sections which contained chutes and corrals for the insemination work. Kelley became aware at the time the work began that there did not appear to be 900 cattle in the pasture. He conducted a preliminary count and found 104 cattle to be missing. He immediately contacted Bryant Harris, one of the J H N partners. Harris told him to make a second count. A count was made, this time by penning and “chuting” the cattle, and all neighboring ranches and pastures were scoured for JHN cattle. This careful count showed the herd indeed to be 104 head short. Kelley so advised Harris, who immediately flew to Nebraska with Gene Newman, another of the partners, to investigate the shortage.

Prior to receiving these reports from Kelley, Harris had begun to be suspicious of Churchill’s reliability and called the sheriff of Arthur County, Nebraska, to check up on him. From that call, Harris learned that Churchill did indeed have a reputation for dishonesty. Subsequently in late July when he received Kelley’s report of the second count and flew to Nebraska, he called on Ed Williams, a local landowner from whom Churchill leased his ranch. Again, Harris was given a bad report on Churchill. During that same trip, Harris talked to a local attorney, A. R. Johnson, who told Harris that he suspected Churchill of moving cattle without authorization and that he had himself tried to get some hard evidence about the rancher’s suspected illicit activities. Finally, during this July trip to Nebraska, Harris met with Churchill, who assured him that any shortage in the cattle was there on the ranch and promised that he and his boys would round them up and get them into the breeding pasture so they could be bred artificially. Somewhat mollified, Harris returned to Texas, but the bad reports continued.

On August 8, 1970, Harris and his partner, Gene Newman, flew to Nebraska to gather all the JHN cattle together and remove them to their ranch in Montana. When they informed Churchill of their intention, the latter offered to buy the cattle back at the original purchase price plus $20,000 for J H N’s out-of-pocket expenses as well as some profit. Churchill wrote out a post-dated check to J H N for the $180,000 and a second one for $1,225 which represented interest and some miscellaneous expenses on the sale. The checks were deposited in J H N’s bank in Marfa, Texas, on their due date but were not honored by Churchill’s bank. Harris attempted to contact Churchill by phone to no avail.

While these events were transpiring, Churchill was engaged in negotiations that were soon to bring appellants and appellees into contact. In late August, Churchill had placed an advertisement in a cattleman’s paper offering pasturage on a monthly fee basis. Borneman, who became one of the Six Quarter Circle joint venturers, called Churchill to inquire about the pasturage. During the conversation, Churchill mentioned that a Texas group owned some cattle that were grazing on Churchill’s ranch and that they might be willing to sell them. Borneman expressed interest and, together with Ferguson, flew out to Nebraska at the end of August to inspect the herd. Either during or prior to this visit, Churchill called Harris, told him of Borneman’s interest, and asked him if J H N would be willing to sell the cattle to the Illinois group. According to Churchill’s testimony, Harris replied: “Sure, sell them.”

It was agreed that the sale was to be closed at the Stockmen’s National Bank on September 4,' 1970, with Bennett Johnson, the Bank’s Vice President, acting on behalf of Ferguson, Borneman, and Van Wambeek. Harris was notified of this arrangement, and flew to Nebraska on that date, picking up Churchill and going on to Rushville. He brought with him Churchill’s two dishonored checks and a form for transferring J H N’s brand, made out in blank. Enroute to Rushville, Harris returned the “hot” checks to Churchill. At the closing, it appears that Harris refused to sign a direct bill of sale to the Illinois group, preferring to give one to Churchill who could then, in turn, give one to Six Quarter. Banker Johnson telephoned Ferguson in Chicago, advising him of this development. Ferguson said he would not accept such a transfer and asked to speak to Harris. The testimony as to what was said between Harris and Ferguson is disputed. According to Harris, he told Ferguson that J H N had already sold the cattle to Churchill sometime before and could not therefore give Six Quarter a bill of sale. Ferguson testified, on the other hand, that Harris told him that he didn’t want to give a bill of sale direct to Six Quarter since “he hadn’t been on the ranch for some time; there could be some fences down and some cattle out.” The phone was then turned back over to Johnson, and Ferguson apparently told him that if he could get an endorsement indicating that the same cattle were being sold by J H N to Churchill and then to Six Quarter, he would accept the two bills of sale. Banker Johnson, however, testified that Ferguson did not request this on the telephone, but rather the request originated with Churchill after signing the bill of sale. In any event, Harris testified that he agreed to the endorsement.

Following the signing of the bills of sale, Harris completed the J H N brand transfer, which had previously been made out in blank, by filling in the name of Six Quarter and delivered it to Johnson. In return, Harris received a cashier’s check for $180,000 from Johnson based on funds furnished by Six Quarter.

Late in September, the three partners of Six Quarter Circle began hearing rumors that Churchill might be selling off part of their herd. They made another trip to Nebraska, and upon inquiry found that Churchill had a poor reputation in and around Arthur and Ogallala, Nebraska, for integrity and dependability. It appeared that Churchill had sold a number of “slick” (unbranded) calves from the herd at the Thedford Livestock Market. The partners contacted Churchill and questioned him about shortages. He denied knowledge of any shortages. After the partners talked with a law office in Ogallala they returned to Chicago. In October, the herd was replev-ined and moved to another ranch. A count by the sheriff’s office and three livestock appraisers found the herd to be 237 cattle short, and this suit followed.

We turn now from our discussion of the background of the dispute to the merits of appellant’s contentions. This case, of course, is controlled by the law of Nebraska where the transaction occurred. J H N asserts that Nebraska law requires both proof of intent to deceive by J H N and proof of justifiable reliance thereon by Six Quarter as necessary elements of a cause of action in fraud. Appellant argues that Harris’ telephone conversation with Ferguson negates the possibility of an intent to deceive since he made it clear that he wasn’t vouchsafing to Ferguson the accuracy of Churchill’s bill of sale. Moreover, appellant argues that appellees had no justifiable right to rely on the bills of sale since Harris’ statements were a “red flag” which would have caused any prudent businessman to look further.

Appellees respond that Harris knew that his bill of sale was off by at least 100 head of cattle and that Ferguson was going to be purchasing the cattle based on that document. Appellees deny that intent is an element of fraud in Nebraska, but, even if it is, assert that Harris’ intent can be inferred from the totality of the circumstances.

We need not go into quiddities of Nebraska fraud law. We have examined the record and find the evidence quite sufficient for the jury to find all of the necessary elements assertedly required under state law. The jury could well believe that J H N, through Harris, knew that the herd to be sold to Six Quarter was short at least 104 head; nevertheless, J H N suppressed this information as well as information about Churchill’s unreliability and gave a bill of sale to Churchill simultaneously with the latter’s bill of sale to Six Quarter, both of which guaranteed the existence of 900 cattle in the herd. Furthermore, there was evidence which the jury might believe that Churchill was acting as an agent of J H N and that J H N was therefore responsible for his fraudulent actions. The jury appears to have resolved any conflicts in testimony regarding the September 4, 1970, transactions against appellant, and we therefore affirm.

      . The name “Six Quarter Circle” derives from the cattle brand (a “6” over a quarter circle) registered to appellant and purchased by ap-pellees simultaneous to the cattle sale.

      . Both Leslie Churchill and the Stockmen’s National Bank of Rushville, Nebraska, whose vice-president Bennett Johnson acted as escrow agent and participated in the negotiations, were also named as defendants. A default judgment for $47,550 was entered against Churchill, while the jury found in favor of the bank at trial.