author: BOLDT, District Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. William M. HICKOK, Defendant-Appellant.
    No. 73-1372.
    United States Court of Appeals, Ninth Circuit.
    July 9, 1973.

      Milton Stern, Jr. (argued), San Francisco, Cal., for defendant-appellant.
    Gary K. Shelton, Asst. U. S. Atty. (argued), James L. Browning, U. S. Atty., John M. Youngquist, Asst. U. S. Atty., San Francisco, Cal., for plaintiffappellee.
    Before HAMLIN and CARTER, Circuit Judges, and BOLDT, District Judge.

       Tlie Honorable George H. Boldt, United States District Judge, Western District of Washington, sitting by designation.

   BOLDT, District Judge:

On December 6, 1972, a jury found appellant guilty of four counts of attempting to evade payment of federal income taxes in violation of § 7201 of the Internal Revenue Code of 1954, 26 U.S.C. § 7201, and four counts of wilfully making and subscribing false corporate income tax returns in violation of 26 U.S.C. § 7206(1), on behalf of the small business corporation (within the meaning of Subtitle A, Subchapter S of the 1954 I.R.C., 26 U.S.C. §§ 1371-1379) of which he was president and 51% shareholder. The corporation operated a 24-hour steam bath in San Francisco. Appellant understated the gross receipts of the corporation and his personal income therefrom by the amount of one dollar per customer in his tax returns for the years 1965 through 1968. We find the assignments of error without merit, and affirm.

Appellant’s principal assignment of error concerns the refusal of the trial court to grant an evidentiary hearing on appellant’s pretrial motion to suppress evidence under Rule 41(e) of the Federal Rules of Criminal Procedure, 18 U.S. C.A., and its refusal to permit appellant to present evidence on this motion during the trial. The evidence sought to be suppressed were documents and records obtained by Internal Revenue Service agents from the accountant for appellant and the corporation. Appellant makes the general assertion that these materials were obtained by improper use of administrative summonses solely to build a criminal tax case against him.

Federal Rule of Criminal Procedure 41(e) provides in part that on a motion to suppress evidence “The judge shall receive evidence on any issue of fact necessary to the decision of the motion .... The motion shall be made before trial . . . but the court in its discretion may entertain the motion at trial or hearing.” In United States v. Carrion, 463 F.2d 704, 706 (9th Cir. 1972), this court held that allegations of relevant factual issues must be set forth with “definiteness, clarity, and specificity” in the moving papers before the movant is entitled to an evidentiary hearing. This is true whether the motion is made before or at trial. “Moreover, factual allegations which are general and conclusory or based upon suspicion and conjecture will not suffice .” Cohen v. United States, 378 F.2d 751, 760 (9th Cir. 1967), cert. denied, 389 U.S. 897, 88 S.Ct. 217, 19 L.Ed.2d 215 (1967).

The affidavit of a special revenue agent assigned to the investigation of appellant’s tax returns states that the investigation originated as a civil tax examination in 1968; that in January, 1970 a joint investigation was commenced to correctly determine civil tax liability and whether criminal liability was indicated; and that criminal prosecution was not recommended until September 17, 1970. It is conceded that no administrative summons was issued after that date. It is well established that “an internal revenue summons may be issued in aid of an investigation if it is issued in good faith and prior to a recommendation for criminal prosecution.” Donaldson v. United States, 400 U.S. 517, 536, 91 S.Ct. 534, 545, 27 L.Ed.2d 580 (1971). Appellant’s affidavit in support of his motion to suppress contained no assertions of fact putting in issue the statements of the I.R.S. affiant, nor did appellant allege any facts to substantiate his general, conclusory allegation that administrative summonses were improperly used solely to develop a criminal case against him. Thus no factual issues were presented requiring an evidentiary hearing.

In addition to the alleged violation of Fourth Amendment rights regarding procurement of records by I.R.S. from the accountant, appellant also claims his Fifth Amendment right against self-incrimination was violated by use of the same materials. In appellant’s reply brief, however, it is admitted that the only documents obtained from the accountant which were offered or received in evidence at the trial were business records of the corporation. It has long been recognized that an individual cannot “assert his personal privilege against self-incrimination as a valid ground for refusing to produce corporate records.” United States v. Bell, 448 F.2d 40, 41 (9th Cir. 1971); see Grant v. United States, 227 U.S. 74, 33 S.Ct. 190, 57 L.Ed. 423 (1913).

Appellant asserts a further violation of his constitutional rights in that his personal records were used by I.R.S. to confirm information obtained from corporate records and an informant. However, there is no evidence, nor purported showing by appellant, that any records or other evidence admitted at trial were derived from appellant’s personal records. Furthermore, it should be noted that the summonses involved in this case were issued to the accountant and not to the appellant. The privilege against self-incrimination is strictly a. personal right. While the accountant had control of appellant’s personal and business records, he also had control of the corporate records, and appellant knew information from’ each source would be disclosed in order for the accountant to prepare both the corporate and personal income tax returns in question. Therefore, any question of appellant’s privilege against self-incrimination or of an accountant-client privilege is disposed of by the recent decision of Couch v. United States, 409 U.S. 322, 336, 93 S.Ct. 611, 34 L.Ed.2d 548 (1973) in which the Supreme Court held that “no Fourth or Fifth Amendment claim can prevail where, as in this case, there exists no legitimate expectation of privacy and no semblance of governmental compulsion against the person of the accused.”

Appellant assigns three additional errors by the trial court. Each of these has been carefully reviewed and found without merit.

(1) Appellant sought to impeach the testimony of a former employee at the steam bath, a Government informer, by questions addressed to police officers who were located near the premises at the time of an alleged robbery. The court limited examination to the amount of money the employee told the officers had been taken, which amount assertedly was inconsistent with statements made by the employee to appellant. Any other inquiry of the police officers concerning details of the robbery necessarily would have been an attempt to show the employee committed the robbery. The trial court properly held that the credibility of a witness cannot be impeached by evidence of prior acts of misconduct that did not result in criminal conviction. See United States v. Norman, 402 F.2d 73, 77 (9th Cir. 1968), citing Michelson v. United States, 335 U.S. 469, 482, 69 S.Ct. 213, 93 L.Ed. 168 (1948).

(2) The next asserted error was denial of a motion to dismiss the indictment on the ground it was founded on hearsay evidence presented to the grand jury and on the further ground that a court reporter was not present at the grand jury proceedings. However, the Supreme Court in an income tax evasion case held a defendant can be required to stand trial and his conviction can be sustained where only hearsay evidence was presented to the grand jury which returned an indictment valid on its face, Costello v. United States, 350 U.S. 359, 76 S.Ct. 406, 100 L.Ed. 397 (1956); and this court has repeatedly held that the testimony of witnesses at grand jury proceedings need not be reported. United States v. Thoresen, 428 F.2d 654, 666 (9th Cir. 1970); Loux v. United States, 389 F.2d 911, 916 (9th Cir. 1968).

(3) Appellant assigns error upon the denial of his motion for pretrial discovery of persons giving the Government statements exculpatory of appellant. The constitutionality of the so-called Jencks Act, 18 U.S.C. § 3500, providing that witness statements in the possession of the Government need not be disclosed prior to trial of a criminal case, was upheld in Seales v. United States, 367 U.S. 203, 257-258, 81 S.Ct. 1469, 6 L.Ed.2d 782 (1961). In the present case, at commencement of trial the prosecution gave appellant the names and statements of the only two witnesses who had made statements which could possibly be deemed favorable to appellant, and at oral argument in this court, counsel for appellant stated he had no knowledge or reason to believe that the Government had any other exculpatory statements.

For the reasons herein stated the judgment of conviction is

Affirmed.


source: Caselaw Access Project

author: SETH, Circuit Judge.

license: Public Domain

text:
    UNITED STATES of America, Appellee, v. Mark POTVIN and Chuck Winslow, Appellants.
    Nos. 73-1151, 73-1152.
    United States Court of Appeals, Tenth Circuit.
    July 3, 1973.
    Rehearing Denied Aug. 24, 1973.

      Daniel D. Bremer, Denver, Colo., for appellants.
    Stephen M. Duncan, Sp. Asst. U. S. Atty. (James L. Treece, U. S. Atty., with him on the brief), for appellee.
    Before HILL, SETH and HOLLOWAY, Circuit Judges.
   SETH, Circuit Judge.

Appellants, with other persons not parties to this appeal, were charged in a two count indictment with cutting and chopping standing timber and commencing to build a structure on lands of the United States, and making settlement upon lands of the United States without a permit or the approval of a Forest Service officer. Appellants refused trial before the United States Magistrate (18 U.S.C. § 3401) and when brought before the District Court demanded a jury trial which was denied them.

The record shows that the defendants went on the National Forest and without a permit, other than a purported mineral location, built a lean-to and tepees. They began to live at this location; trees were cut down, and the construction of a log building was there begun. The walls of this building were constructed to a height of five to eight feet. The testimony by the Government witnesses established the charged settlement, the cutting of the trees, and the work on the log building by defendants and others. These actions were not denied by defendants.

Upon trial to the court, appellants were found guilty on both counts of the indictment. Each appellant was sen-fenced to serve ninety days on count I and each was placed on six months probation as to count II, the probation to begin following the ninety day sentence. The appellants then appealed to this court.

Appellants recognize and concede that a person charged with a petty offense has no constitutional right to a trial by jury. They do argue, however, that where Congress has not eliminated the right by specific legislation, there is a right to trial by jury for all federal crimes. Our decision in United States v. Floyd, Tenth Circuit, 1973, 477 F.2d 217, is dispositive of this argument. There we held that if an offense comes within the definition of a petty offense contained in 18 U.S.C. § 1(3), and has not been held to be a serious offense under prior United States Supreme Court decisions, a jury trial is not required.

The appellants’ second contention presents the major issue on this appeal, which is whether a person charged with two or more petty offenses arising out of the same act, transaction, or occurrence, is entitled to a trial by jury when the potential aggregate penalty on all counts is in excess of six months imprisonment.

There appears to be no direct authority on the issue. In United States v. Merrick, 459 F.2d 644 (4th Cir.), the court by way of dictum noted that where the offense is “minor” as opposed to “petty,” and the penalty may exceed six months imprisonment, the defendant has the right to trial by jury in the district court. It appears that the question as to cumulative penalties was not presented to the court. Cf. James v. Headley, 410 F.2d 325 (5th Cir.), wherein the question was presented in light of the right to counsel.

The District of Columbia and the state of New Mexico have held that the potential sentences facing a defendant should not be cumulated, and instead that each offense should be treated separately. See Scott v. District of Columbia, D.C.Mun.App., 122 A.2d 579; State v. James, 76 N.M. 416, 415 P.2d 543. New Jersey and Wisconsin, on the other hand, have held that a defendant facing a potential sentence in excess of that imposed for a petty offense, standing alone, because charged with more than one petty offense was entitled to a jury trial. State v. Owens, 54 N.J. 153, 254 A.2d 97, cert. den. 396 U.S. 1021, 90 S. Ct. 593, 24 L.Ed.2d 514; State v. Burke, 24 Wis.2d 82, 128 N.W.2d 422.

Appellants urge that unless we find that a person charged with more than one petty offense is entitled to a jury trial, prosecutors throughout the nation will charge offenders with a series of petty offenses to obviate the requirement of a trial by jury. The Government, in support of its position, urges that unless we find no such right exists, an intolerable burden will be placed on the courts and prosecutors’ offices or offenders will be allowed to commit numerous offenses and face a maximum of six months imprisonment. Neither argument is particularly persuasive.

Appellants also refer us to the appeals of the criminal contempt convictions of the “Chicago Seven,” United States v. Seale, 461 F.2d 345 (7th Cir.), and In re Dellinger, 461 F.2d 389 (7th Cir.), in support of their position that the potential sentences should be aggregated for the purposes of determining whether they were entitled to trial by jury. In Seale, the court looked to the actual penalty imposed in determining that the appellant was entitled to a jury trial since Congress had not passed on the seriousness of the offense by prescribing a maximum penalty. The court did note that in the ordinary course the maximum authorized penalty was the determinative factor. This case,, while instructive, is not authority for appellants’ position since in the present situation Congress has imposed a maximum penalty for the offenses charged.

The right to trial by jury has historically been limited to “serious” criminal cases. District of Columbia v. Colts, 282 U.S. 63, 51 S.Ct. 52, 75 L.Ed. 177; Cheff v. Schnackenberg, 384 U.S. 373, 86 S.Ct. 1523, 16 L.Ed.2d 629; Duncan v. Louisiana, 391 U.S. 145, 88 S.Ct. 1444, 20 L.Ed.2d 491; Baldwin v. New York, 399 U.S. 66, 90 S.Ct. 1886, 26 L.Ed.2d 437. The Supreme Court has defined as “serious” any offense which carries a maximum penalty of more than six months imprisonment. Baldwin v. New York.

We believe that the defendants can view as no less serious a possible penalty of a year in prison when charged with two offenses arising out of the same act, transaction, or occurrence, than if charged with one offense having a potential penalty of one year’s imprisonment. Nor, in our view, should the court view the offenses any less seriously. Mr. Justice White, in the opinion in Baldwin v. New York, 399 U.S. 66, 73, 90 S.Ct. 1886, 1890, 26 L.Ed.2d 437, said:

• “ . . . Where the accused cannot possibly face more than six months’ imprisonment, we have held that these disadvantages [the lack of the right to trial by jury], onerous though they may be, may be outweighed by the benefits that result from speedy and inexpensive non jury adjudications. We cannot, however, conclude that these administrative conveniences, . . . can similarly justify denying an accused the important right to trial by jury where the possible penalty exceeds six months’ imprisonment. . . . ”

The same principles are applicable in the cases before us. Thus we must hold that the defendants were here entitled to a jury trial. The two charges here concerned were so closely related, and arose out of the same acts.

The case is thus reversed and remanded to the District Court for further proceedings in accordance herewith.


author: ELY, Circuit Judge:

text:
    Jose Manuel Quijada GAXIOLA, Appellant, v. UNITED STATES of America, Appellee.
    No. 72-2319.
    United States Court of Appeals, Ninth Circuit.
    June 1, 1973.
    Jerry M. Stewart, Phoenix, Ariz., for appellant.
    William C. Smitherman, U. S. Atty., Morton Sitver, Asst. U. S. Atty., Phoenix, Ariz., for appellee.
   OPINION

Before CHAMBERS, BROWNING and ELY, Circuit Judges.

ELY, Circuit Judge:

Gaxiola was convicted after pleading guilty to the charge of importing marijuana without paying a tax required under 26 U.S.C. § 4744(a). He contends that he should be afforded an opportunity to plead anew because (1) he did not knowingly and intelligently waive his right to claim the privilege against self-incrimination as a complete defense to the marijuana tax charge since that right was not established until one year after his plea was entered (Leary v. United States, 395 U.S. 6, 89 S.Ct. 1532, 23 L. Ed.2d 57 (1969)); and, (2) he was denied effective assistance of counsel by virtue of his attorney’s failure to advise him “that there was a case pending in the United States Supreme Court (Leary v. United States, supra) which afforded him the right to claim the privilege against self-incrimination” as a complete defense to the marijuana tax charge.

In reviewing the District Court’s determination that “petitioner waived any possible self-incrimination privilege by his plea of guilty,” we note that the Supreme Court has recently addressed itself to this issue. In Tollett v. Henderson, 411 U.S. 258, 93 S.Ct. 1602, 36 L.Ed. 2d 235 (1973), the Court held that an accused in state criminal proceedings, who, unaware of unconstitutional grand jury discrimination and his right to challenge it, pleaded guilty to a murder charge on the advice of counsel cannot obtain release through federal habeas corpus by proving only that the indictment to which he pleaded was returned by an unconstitutionally selected grand jury. The Court held that a guilty plea represents a “break in the chain of events which preceded it in the criminal process” and that, as a consequence, the issue is not the merits of the constitutional claims as such, but rather, whether the advice received from counsel fell within the standards set forth in McMann v. Richardson, 397 U.S. 759, 90 S.Ct. 1441, 25 L.Ed.2d 763 (1970).

“In the instant case, the facts relating to the selection of the Davidson County grand jury in 1948 were found by the District Court and the Court of Appeals to have been unknown to both respondent and his attorney. If the issue were to be cast solely in terms of ‘waiver,’ the Court of Appeals was undoubtedly correct in concluding that there had been no such waiver here. But just as the guilty pleas in the Brady trilogy (Brady v. United States, 397 U.S. 742, 90 S.Ct. 1463, 25 L.Ed.2d 747 (1970); McMann v. Richardson, 397 U.S. 759, 90 S.Ct. 1441, 25 L.Ed.2d 763 (1970); and Parker v. North Carolina, 397 U.S. 790, 90 S.Ct. 1458, 25 L.Ed.2d 785 (1970)) were found to foreclose direct' inquiry into the merits of claimed antecedent constitutional violations there, we conclude that respondent’s guilty plea here alike forecloses independent inquiry into the claim of discrimination in the selection of the grand jury.”

Tollett v. Henderson, supra 411 U.S. at 266, 93 S.Ct. at 1607.

Thus, the fact that Gaxiola did not foresee the fifth amendment defense at the time he entered his plea does not, of itself, establish an adequate basis for the reversal of the Order here challenged. Our inquiry must therefore shift to an examination of the nature of the advice Gaxiola received and the voluntariness of his plea.

For the purposes of deciding Gaxiola’s sixth amendment contention, the focus must necessarily be upon the conduct and advice of Gaxiola’s appointed counsel. The District Court found that Gaxiola was “exceptionally well represented” and that, at the time the plea was entered, his counsel was aware of the Marchetti trilogy which supplied the principal basis of the Supreme Court’s subsequent decision in Leary. Accordingly, the District Court determined that Gaxiola’s sixth amendment claim was “frivolous and without merit.”

Nothing in the record suggests that the defense attorney’s recommendation that Gaxiola accept the plea arrangement was not “reasonably competent” advice. McMann v. Richardson, 397 U.S. at 770, 90 S.Ct. 1441. Plea bargain judgments involve difficult assessments concerning the weight of the Government’s case and the desirability of the offered exchange and, accordingly, a review of their effectiveness “depends as an initial matter, not on whether a court would retrospectively consider counsel’s advice to be right or wrong, but on whether that advice was within the range of competence demanded of attorneys in criminal cases. Id.

“A prospect of plea bargaining, the expectation or hope of a lesser sentence, or the convincing nature of the evidence against the accused are considerations that might well suggest the advisability of a guilty plea without elaborate consideration of whether pleas in abatement, such as unconstitutional grand jury selection procedures, might be factually. supported.”

Tollett v. Henderson, supra, 411 U.S. at 268, 93 S.Ct. at 1608.

Here, the record reveals that the marijuana tax charge was added to the indictment as a result of plea bargaining in which the Government agreed to abandon the original two counts charging illegal importation of heroin and marijuana (21 U.S.C. §§ 174, 176(a)) in exchange for Gaxiola’s plea of guilty to the tax count. Thus, “while claims of prior constitutional deprivation may play a part in evaluating the advice rendered by counsel”, Tollett, supra, 411 U.S. at 267, 93 S.Ct. at 1608, it would have apparently been fruitless for Gaxiola’s counsel to explore possible defenses to the marijuana transfer charge because Gaxiola, in the plea bargaining process, was not presented with the alternative of defending against that charge. Had any defense to the tax count been attempted, the plea bargain would have evaporated, leaving Gaxiola to risk the far more serious consequences flowing from his possible conviction of heroin and marijuana importation.

“The principal value of counsel to the accused in a criminal prosecution often lies not in counsel’s ability to recite a list of possible defenses in the abstract, nor in his ability, if time permitted, to amass a large quantum of factual data and inform the defendant of it. Counsel’s concern is the faithful representation of the interest of his client and such representation frequently involves highly practical considerations as well as specialized knowledge of the law.”

Tollett v. Henderson, supra at 267, 93 S.Ct. at 1608.

Furthermore, our review of the record convinces us that Gaxiola, acting through his attorney, made a strategic decision deliberately to by-pass the possible defenses to the section 4744(a) charge in an effort to gain the perceived advantages of the plea bargain. These kinds of strategic decisions are not necessarily inconsistent with traditional notions of voluntariness:

“We decline to hold, however, that a guilty plea is compelled and invalid under the Fifth Amendment whenever motivated by the defendant’s desire to accept the certainty or probability of a lesser penalty rather than face a wider range of possibilities extending from acquittal to conviction and a higher penalty authorized by law for the crime charged.”

Brady, supra, 397 U.S. at 751, 90 S.Ct. at 1470.

Accordingly, we agree with the District Court that the legal advice given to Gaxiola was well within the required range of competence, and that the plea was voluntarily entered.

Finally, an accused who has received the guidance of competent counsel should not be allowed to disown voluntary admissions in open court unless there is cause “to question (their) accuracy and reliability.” Id. at 758, 90 S.Ct. at 1474. Nothing in the present record intimates that Gaxiola’s admissions fall within that category.

Affirmed.

      . Gaxiola’s motion to vacate judgment, originally filed as a Writ of Error Coram Nobis, was correctly treated by the District Court as a motion for relief under 28 U.S.C. § 2255. The Government, following the District Court’s grant of the motion in favor of Gaxiola, appealed. We reversed the order, remanding the case for an evidentiary hearing on two issues that had not been decided by the District Court. Quijada Gaxiola v. United States, 435 F.2d 204 (9th Cir. 1970). The hearing resulted in determinations adverse to Gaxiola, and the present appeal followed.

      . In Tollett, supra, the Court reversed the Court of Appeals’ decision that “where both petitioner and counsel are without knowledge of a substantial constitutional right that right is not waived even by a guilty plea.” Henderson v. Tollett, 459 F.2d 237, 243 (6th Cir. 1972). The Sixth Circuit had based its reasoning on a line of cases holding that a petitioner could not knowingly relinquish a right of which he was unaware at the time of his plea. Bannister v. United States, 446 F.2d 1250 (3d Cir. 1971) ; Scogin v. United States, 446 F.2d 416 (8th Cir. 1971) ; United States v. Liguori, 430 F.2d 842 (2d Cir. 1970), cert. denied, 402 U.S. 948, 91 S.Ct. 1614, 29 L.Ed.2d 118 (1971) ; United States v. Michael, 426 F.2d 1067 (7th Cir. 1970). Cf. Castro v. United States, 403 U.S. 903, 91 S.Ct. 2215, 29 L.Ed.2d 678 (1971), 436 F.2d 975 (9th Cir. 1971) ; Weber v. United States, 402 U.S. 939, 91 S.Ct. 1633, 29 L.Ed.2d 107 (1971), vacating United States v. Weber, 429 F.2d 148 (9th Cir. 1970) ; Cochran v. United States, 402 U.S. 939, 91 S.Ct. 1634, 29 L.Ed.2d 107 (1971), 432 F.2d 1356 (9th Cir. 1970) ; Brunei v. United States, 450 F.2d 952 (9th Cir. 1971) ; United States v. Dix, 449 F.2d 1373 (9th Cir. 1971) ; Navarro v. United States, 449 F.2d 113 (9th Cir. 1971) ; United States v. Jones, 447 F.2d 991 (9th Cir. 1971) ; United States v. Ingman, 426 F.2d 973 (9th Cir. 1970) ; Meadows v. United States, 420 F.2d 795 (9th Cir. 1969).

      . In Brady v. United States, 397 U.S. 742, 90 S.Ct. 1463, 25 L.Ed.2d 747, the Supreme Court held that:
      “A defendant is not entitled to withdraw his plea merely because he discovers long after the plea has been accepted that his calculus misapprehended the quality of the State’s ease or the likely penalties attached to alternative courses of action. More particularly ... a voluntary plea of guilty intelligently made in the light of the then applicable law does not become vulnerable because later judicial decisions indicate that the plea rested on a faulty premise.”
      397 U.S. at 757, 90 S.Ct. at 1473 (emphasis added).

      . The Marehetti trilogy (Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968) ; Grosso v. United States, 390 U.S. 62, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968), and Haynes v. United States, 390 U.S. 85, 88 S.Ct. 722, 19 L.Ed.2d 923 (1968)) Held that the Fifth Amendment provides a complete defense to prosecutions under 26 U.S.C. §§ 4411 and 4412 (conspiring to evade payment of the occupational tax relating to wagers), 26 U.S'.C. §§ 4401 and 4411 (failure to pay the excise and occupational tax imposed on wagering), and 26 U.S. C. §§ 5841 and 5851 (knowingly possessing a defined firearm that had not been registered, or possessing a defined firearm without its registration). This line of cases set the stage for the Supreme Court’s 1969 decision in Leary v. United States, supra.

      . Conviction of the heroin importation charge, for example, carried a minimum sentence of five years and a maximum of twenty years, and, under 26 U.S.C. § 7237(d), as it then read, a person so convicted was ineligible for parole. In contrast, the charge to which Gaxiola pleaded guilty carried a minimum sentence of two and a maximum of ten years and did not preclude parole.

      . In the circumstances of this case, we can perceive no utility in remanding for an evidentiary hearing. The record clearly demonstrates that Gaxiola received the effective assistance of counsel and that he voluntarily entered a guilty plea that presents no doubts of accuracy or reliability. Had we detected any substantial reason to question these findings, the remanding of the cause for an evidentiary hearing to resolve the issues would have been required.


author: SIMPSON, Circuit Judge:

text:
    Francis SNIDER et al., Plaintiffs-Appellants, v. ALL STATE ADMINISTRATORS, INC., et al., Defendants-Appellees.
    No. 72-3326.
    United States Court of Appeals, Fifth Circuit.
    July 3, 1973.
    Rehearing and Rehearing En Banc Denied Aug. 15, 1973.

      Richard H. Frank, Ronald G. Meyer, Tampa, Fla., for plaintiffs-appellants.
    John M. Robertson, Ronald P. Teevan, Orlando, Fla., for defendants-appellees.
    Before, GEWIN, THORNBERRY and SIMPSON, Circuit Judges.
   SIMPSON, Circuit Judge:

The appellants, members of the Bricklayers, Masons and Plasterers International Union of America, Local No. 15, Florida, initiated this action to “conserve, recover and protect funds” entrusted to a health and welfare fund established under a collective bargaining agreement with certain contractor-employers. The district court enjoined further expenditure of trust funds except for specified purposes. However, the court denied all further relief for lack of jurisdiction. This appeal timely followed. We affirm.

I. THE FACTS

While contract negotiations were under way between Local 15 and a number of bricklaying, masonry, and plastering contractors in the central Florida area, defendants George C. Stuart, president of the plaster contractors association, Don Goad, business manager of Local 15, and David W. Foley, a licensed insurance broker, organized several corporations for the purpose of administering union health and welfare trust funds. The district court found that these corporations were organized in anticipation that negotiations then under way would result in the establishment of trust funds for which the defendants Goad and Stuart, through their respective positions with the union and employers, could control the selection of an administrator.

As a result of the negotiations, Local 15 and the employers’ associations entered into two collective bargaining agreements, one covering plasterers and the other bricklayers and cement masons, which provided that the employers would pay certain amounts per hour worked by union employees into a health and welfare fund to be established in accordance with Section 302 of the Labor Management Relations Act of 1947, 29 U.S.C. Sec. 186.

Prior to the effective date of the collective bargaining agreement, Local 15 elected Goad, and another union member, defendant C. L. Dickson, as the two trustees to represent the union. Stuart, apparently without the concurrence of other employers, selected defendants C. L. McCullough and W. S. Pyne, both former employees of Stuart’s plastering company, as trustee nominees of the employers. Pursuant to the authority conferred upon them under the trust agreement, the four trustees selected All State Administrators, Inc. of Orlando as the administrator of the trust fund.

After All State of Orlando took over administration of the Fund, all monies contributed by employers were deposited in the name of the Administrator and expenses of both the Trust and the Administrator were paid out of the common fund. Among other expenditures, the Administrator paid out of trust funds the costs and fees, including attorneys’ fees incident to the incorporation of itself, of the remaining five All State corporations and of Orange Services, Inc. The Administrator also used trust funds to pay premiums on life insurance for its officers, Stuart and Foley, as well as travel and entertainment expenses unconnected with the purpose of the Trust. Trust funds were likewise used to pay entertainment expenses incident to Goad’s unsuccessful campaign for reelection as Business Manager of Local 15. In addition to these expenditures, which the district court, characterized as an improper diversion of trust funds, All State of Orlando executed a lease with its president, George C. Stuart, for office space in the building occupied by the Stuart plastering company and paid the rent under this lease out of the trust fund.

Simultaneous with the selection of All State of Orlando as the Administrator of the Trust, the trustees signed an agreement with Aetna Life & Casualty Company to underwrite the health and welfare fund. This policy was placed through Aetna Agent John M. Tate, a stockholder in Orange Services, Inc. Tate agreed to rebate 70% of his commission from Aetna to defendant Foley, stockholder, secretary, and a moving party in the organization of the All State corporate family.

As a result of Union members’ discontent with the management of their trust fund, Goad and Dickson were removed as union trustees and replaced by Francis Snider and Guy Ashcraft. Following an audit of the trust fund, Snider and Ashcraft initiated this action on behalf of themselves and other members of Local 15. The complaint prayed for immediate injunctive relief against the improper disbursement of trust funds. Additionally, the plaintiffs sought (a) to nullify the administration agreement between the trust fund and All State of Orlando, (b) to have the court appoint a disinterested professional administrator during the pendency of the litigation, (c) to require complete disclosure of the books and records of All State of Orlando and the fund, (d) to have the court remove the defendants from any position of trust which they occupy in connection with the fund, (e) to require the employers’ association to appoint two new trustees, and (f) to order an accounting of all money due and owing to the fund from each defendant.

The district court enjoined further improper disbursements, but with the exception of ordering disclosure of records, refused additional relief on the ground that federal labor statutes did not provide jurisdiction to grant the remedies sought. The order of dismissal recommended that, if the parties were unable to resolve their differences by compromise, they should seek relief in State courts.

II. STATUTORY JURISDICTION

The complaint filed below sought to invoke the jurisdiction of the district court pursuant to Sec. 302(e) of the Labor Management Relations Act of 1947 [29 U.S.C. Sec. 186(e)]. This subseetion provides that the district court shall have jurisdiction to restrain violations of Sec. 302 [29 U.S.C. Sec. 186], which restricts payments or loans by employers to employee representatives, to labor organizations, and to employees in excess of their normal compensation. In thus limiting its judicial function to the grant of injunctive relief against future diversion of trust funds, the district court followed the decisions of four other courts of appeal which have similarly interpreted the jurisdictional grant of Sec. 302(e). Bowers v. Ulpiano Casal, Inc., 393 F.2d 421 (1st Cir. 1968); Moyer v. Kirkpatrick, 387 F.2d 955 (3rd Cir. 1968), aff’g 265 F.Supp. 348 (E.D.Pa. 1967); Blassie v. Kroger Co., 345 F.2d 58 (8th Cir. 1965); and Employing Plasterers Ass’n v. Journeymen Plasterers, 279 F.2d 92 (7th Cir. 1960).

The scope of federal court jurisdiction under See. 302(e) is a question of first impression in this circuit. Cf. Pidgeon v. Brunswick Port Auth., 324 F.Supp. 140 (S.D.Ga.1971). We are -persuaded, however, by the weight of reason and authority and by the plain language of the statute that district court jurisdiction under Sec. 302(e) is limited to restraining future violations of the statute and does not include granting relief by way of accounting, receivership, or removal of defalcating trustees or administrators.

Trust funds for the benefit of union members are established under the laws of the respective states. Federal law affects union trust funds only to the extent that Congress has elected to exempt employer contributions to such funds made under the terms of a labor-management contract from the general prohibition on employer payments to employee organizations. While Congress thought it necessary in order to prevent potential abuse of this exemption to stipulate the conditions under which payments can be legally made, State authority remains the legal foundation upon which such funds are constructed. In Arroyo v. United States, a case involving a criminal prosecution of a larcenous trustee of a union welfare fund, the Supreme Court described the purposes and the jurisdictional scope of See. 302 as follows:

“Congress believed that if welfare funds were established which did not define with specificity the benefits payable thereunder, a substantial danger existed that such funds might be employed to perpetuate control of union officers, for political purposes, or even for personal gain. ... To remove these dangers, specific standards were established to assure that welfare funds would be established only for purposes which Congress considered proper and extended only for the purposes for which they were established. . . . Continuing compliance with these standards in the administration of welfare funds was [see 359 U.S.] made explicitly enforceable in federal district courts by civil proceedings under § 302(e). The legislative history is devoid of any suggestion that defalcating trustees were to be held accountable under federal law, except by way of the injunctive remedy provided in that subsection.” 359 U.S. 419, 426-427, 79 S.Ct. 864, 868-869, 3 L.Ed.2d 915 (1959).

In actions brought under section 302(e), a district court is in nowise limited in how deeply it may inquire into the structure and the administration of a union welfare trust fund into which employers have made contributions since a detailed study may be necessary to determine whether or not violations of federal law have occurred which would necessitate injunctive relief. However, the federal court’s ultimate exercise of adjudicatory power under this section is limited to the prevention of future violations since the Congress, as architect of its jurisdictional gambit, has not chosen to empower it to require an accounting or similar noninjunctive relief. Blassie v. Kroger Company, supra, 345 F.2d at 67; Employing Plasterers Ass’n v. Journeymen Plasterers, supra, 279 F.2d at 97.

III. PENDENT JURISDICTION

Arroyo and numerous lower court decisions have emphasized that breaches of fiduciary duty by trustees and administrators of union welfare funds constitute violations of state law governing the management of trust property. Pointing out that their complaint stated grounds for relief under state law, the appellants suggest that the district court was empowered to grant the relief sought under the doctrine of pendent jurisdiction.

That we agree with this principle as an abstract assertion does not change the outcome here. Pendent jurisdiction of a federal court to entertain both federal and state claims in a single action exists wherever the relationship between the two claims

. permits the conclusion that the entire action before the court .comprises but one constitutional “case.” . The state and federal claims must derive from a common nucleus of operative fact. But if, considered without regard to their federal or state character, a plaintiff’s claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues, there is power in federal courts to hear the whole. (Emphasis in original.)

United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). See also Connecticut General Life Ins. Co. v. Craton, 405 F.2d 41, 48-49 (5th Cir. 1968); Whirl v. Kern, 407 F.2d 781, 793 (5th Cir.), cert. denied 396 U.S. 901, 90 S.Ct. 210, 24 L. Ed.2d 177 (1969). The Gibbs court distinguished sharply, however, betwen the constitutional power to entertain state law claims under pendent jurisdiction and the discretionary exercise of that power.

“It has consistently been recognized that pendent jurisdiction is a doctrine of discretion, not of plaintiff’s right. Its justification lies in considerations of judicial economy, convenience and fairness to litigants; if these are not present a federal court should hesitate to exercise jurisdiction over state claims. . . . Needless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicable law. . . . [I]f it appears that the state issues substantially predominate, whether in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought, the state claims may be dismissed without prejudice and left for resolution to state tribunals. There may, on the other hand, be situations in which the state claim is so closely tied to questions of federal policy that the argument for exercise of pendent jurisdiction is particularly strong.” 383 U.S. at 726-727, 86 S.Ct. at 1139.

The theory that the doctrine of pendent jurisdiction gives federal district courts plenary authority to adjudicate state law claims in cases involving union welfare trust funds was first suggested by the First Circuit in Copra v. Suro, 236 F.2d 107, 116 (1956):

“In the course of giving an injunction that falls within this narrower scope of § 302(e), the district court can add to its decision, we believe, the resolution of questions, such as those raised in the instant case. . ' . . [0]nee a case is brought clearly within the scope of the § 302(e) jurisdiction, there will not be any serious limitations on the power of the district court, as a court of equity, to dispose of the entire controversy between all the parties who were brought into court because of their interest in the narrower issue.” (Emphasis in original.)

The exercise of pendent jurisdiction over state law claims is particularly appropriate in actions brought for injunctive relief under Sec. 302(e) because the state claims based on abuse of welfare trusts are closely tied to questions of federal labor policy. See Giordani v. Hoffmann, 295 F.Supp. 463, 471-472 (E.D.Pa.1969); Insley v. Joyce, 330 F. Supp. 1228, 1234 (N.D.Ill.1971).

However, while we believe that the district court could have exercised pendent jurisdiction over all the claims presented in the complaint and considered the propriety of granting any of the types of relief sought which it found appropriate, its refusal to do more than act on the prayer for restraint was a matter of discretion.

We refuse, in this case, to set aside that decision for two reasons. First, it appears that completely adequate state court relief is available to the appellants. Second, the collective bargaining contract and trust agreement which gave rise to this litigation expired on February 28, 1973, long before this case was orally argued before us on May 28, 1973. Except for the accounting, all the relief sought, e. g., setting aside the administrator’s contract, appointment of a receiver, and removal of the employer-appointed trustees, was after that date free to be obtained by a new trust arrangement to be worked out between the union and the employers. Accordingly, to that extent those issues are now moot.

IV. ATTORNEYS’ FEES

The appellants also appeal from the refusal of the district court to assess costs, including attorneys’ fees, against the defendants. Attorneys’ fees may, of course, be awarded in the absence of specific statutory authority where a party has by his own effort and expense preserved a fund which benefits others. Mills v. Electric Auto-Lite, 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970). In the present case, the appellants obtained a preliminary injunction against improper disbursements of trust funds and compelling disclosure of books and records. However, the election of the appellants as trustees of the fund prior to the initiation of this litigation had the practical effect of terminating questionable disbursements, since from that time they were able to prevent such practices. Likewise, the books and records of the fund were open to inspection and to audit prior to the initiation of this litigation. As to the further relief sought in regard to the recovery and conservation of trust property, we have, in this opinion, affirmed the district court’s order of dismissal. Thus, we find an insufficient connection between the appellants’ prosecution of this present action and the preservation of welfare trust funds to require reversal of the district court’s decision in regard to costs and counsel fees. Compare Thomas v. Honeybrook Mines, Inc., 428 F.2d 981, 985-986 (3d Cir. 1970).

CONCLUSION

Since the district court’s statutory jurisdiction under Section 302(e) of the Labor Management Relations Act extended only to the granting of injunctive relief, and since its refusal to grant other relief under the doctrine of pendent jurisdiction was in no sense an abuse of its discretion, the order of dismissal is

Affirmed.

      . The six corporations organized by the defendants were : All State Administrators, Inc., All State Administrators, Ine. of Orlando, All State Administrators, Inc. of Jacksonville, All State Administrators, Inc. of Miami, All State Administrators, Inc. of Tallahassee, and All State Administrators, Inc. of Tampa. The beneficial ownership of the stock in each of the “All State” corporations was divided among defendants, Stuart, Foley, and Billie Jean Rhan, Don Goad’s stepdaughter. A seventh corporation, Orange Services, Inc., was organized with the plan that it would eventually serve as a holding company for the other six. The stock of Orange Services, Inc. was held by Stuart, Rlinn, and John M. Tate, another insurance broker.

      . Both collective bargaining agreements were signed by defendant Don Goad as Business Agent of Local 15. The plasterers’ contract was signed on behalf of the employers by defendant George C. Stuart as President of the Plasterers Association, Inc., Orange, Osceola, Lake, and Seminole Counties.

      . The preliminary injunction entered November 4, 1969 forbade the expenditure of trust assets for any purpose other than the payment of salaries of clerical employees who perform duties associated solely with the administration of the Fund, postage, computer expense, and premiums for health insurance for Union members due to Aetna Life Insurance Company. Specifically, the defendants were enjoined from expending trust assets for legal expenses, rents, life insurance, travel expenses, and advertising. Additionally, the court required posting of a surety bond against future defalcations, periodic accounting for receipts and expenditures, and disclosure of the books and records of the trust fund and of defendant All State Administrators, Inc.

      . (e) The district courts of the United States and the United States courts of the Territories and possessions shall have jurisdiction, for cause shown, and subject to the provisions of section 381 of Title 28 (relating to notice to opposite party) to restrain violations of this section, without regard to the provisions of section 17 of Title 15 and section 52 of this title, and the provisions of sections 101-115 of this title.

      . But cf. Bowers v. Ulpiano Casal Inc., supra, 393 F.2d at 423-424.


author: AINSWORTH, Circuit Judge:

text:
    Travis Wayne JONES et al., by Mrs. Jeanette Jones Griggs, next friend and guardian, Plaintiffs-Appellants, v. Mrs. Jacquelyn STEINER, who goes under the name of Mrs. Jacquelyn Jones, et al., Defendants-Appellees.
    No. 72-3293.
    United States Court of Appeals, Fifth Circuit.
    July 9, 1973.

      Dixon L. Pyles, Betty B. Tucker, Danny E. Cupit, Jackson, Miss., for plaintiffs-appellants.
    Leonard B. Melvin, Jr., Laurel, Miss., for Jones and others.
    D. Gary Sutherland, Hattiesburg, Miss., for General Motors.
    E. Brooke Ferris, III, William S. Mullins, III, Laurel, Miss., for Bush Dairy & Emp. Mut. Liability Ins. Co.
    Richard E. Stratton, III, Brookhaven, Miss., James T. Flynt, Mineóla, Tex., for Babst and others.
    Before THORNBERRY, AINSWORTH and RONEY, Circuit Judges.
   AINSWORTH, Circuit Judge:

This unusual Mississippi diversity suit for declaratory and injunctive relief and for damages for wrongful death grows out of the death of Travis G. Jones, Jr., in an automobile accident in April 1970 in Jones County, Mississippi. It involves a contest between rival groups of survivors for the right to damages and other proceeds resulting from Jones’ death. Jones was first lawfully married to Jeanette English (now Mrs. Jeanette Jones Griggs), and three children, Travis Wayne, Donna Maria, and Jeffrey Grant, minors, were bom of this marriage. Travis and Jeanette Jones were divorced in 1969, and immediately thereafter, Jones began living with Mrs. Jacquelyn Steiner (who now is called Mrs. Jacquelyn Jones). Of this relationship, one minor child was bom, Scotia Michele Jones. Mrs. Jacquelyn Jones has two minor children, Kimberly Lynn Steiner and Sharon Paige Steiner, by a former marriage, and these children are alleged to be the decedent Jones’ stepchildren and dependents.

Mrs. Jacquelyn Jones was appointed administratrix of Jones’ estate by the Chancery Court for the Second Judicial District of Jones County. Thereafter, Mrs. Jeanette Griggs, in her representative capacity as guardian of her three minor children, filed in the Chancery Court of the First Judicial District of Harrison County, Mississippi, a petition to determine the heirs of Travis G. Jones, Jr., deceased. Process was issued to defendants Mrs. Jacquelyn Jones and her minor child, Scotia Michele, who appeared through counsel. By agreement, the matter was transferred to the Chancery Court for the Second Judicial District of Jones County and was set for hearing, at which time plaintiffs’ attorneys filed a written motion to dismiss the petition, which was granted.

Then Mrs. Jacquelyn Jones, as administratrix of the estate of Travis Jones, Jr., filed a petition to determine heir-ship in the Chancery Court for the Second Judicial District of Jones County, and service of process (allegedly defective) by publication was made upon Mrs. Jeanette Jones Griggs and her minor children, commanding them to appear at the hearing and show cause why Mrs. Jacquelyn Jones, Scotia Michele Jones (issue of the relationship between Mrs. Jacquelyn Jones and the decedent), Travis Wayne Jones, Donna Maria Jones, and Jeffrey Grant Jones (issue of the marriage of' Mrs. Jeanette Jones Griggs and the decedent) should not be decreed the sole heirs and next of kin of Travis G. Jones, Jr. The named respondents made no appearance; the Chancery Court held a hearing, received oral and documentary evidence, and issued a decree recognizing the parties named as the sole and only heirs of Travis G. Jones, Jr. The Mississippi Chancery Court also decreed that the rights of these heirs under Section 1453 of the Mississippi Code of 1942, Recompiled, the Wrongful Death Statute, had been established to the satisfaction of the court, and held that each of the five heirs was entitled to an undivided interest in and to all claims to property of the decedent.

Prior to these proceedings, applications for Workmen’s Compensation benefits had been filed with the Mississippi Workmen’s Compensation Commission for the minors Scotia Michele Jones, Kimberly Lynn Steiner, and Sharon Paige Steiner, children of Jacquelyn Steiner Jones, and for Travis Wayne Jones, Donna Maria Jones, and Jeffrey Grant Jones, children of Jeanette Jones Griggs. The Commission duly entered an order authorizing payment of death benefits to all claimants.

The present suit was filed by Mrs. Jeanette Griggs. She seeks to have the Decree Adjudicating Heirship, entered by the Chancery Court for the Second Judicial District of Jones County, declared void. She also seeks to have Mrs. Jacquelyn Jones and her children enjoined from representing that they have any legal relationship to the decedent, Travis G. Jones, Jr. Mrs. Griggs further asks that Workmen’s Compensation payments to Mrs. Jacquelyn Jones and her children be enjoined, and that the federal district court award damages against named defendants to Travis, Donna, and Jeffrey Jones for the wrongful death of their father. The defendants filed motions to dismiss, asserting that the court lacked jurisdiction over any Workmen’s Compensation claims because the Mississippi Workmen’s Compensation Commission’s exclusive original jurisdiction had been invoked, and that, under Mississippi law, the prior suit for wrongful death filed by Mrs. Jacquelyn Jones as administratrix of the estate precludes the filing of any other suits on the same claim. The defendants further asserted as grounds for dismissal the plaintiffs’ failure to seek appropriate and available remedies in the Mississippi state courts. The district court granted the motion to dismiss as to the Workmen’s Compensation claim because the Mississippi Workmen’s Compensation Commission has exclusive original jurisdiction of this claim, and the appropriate administrative and state remedies prescribed by statute have not been pursued. The court also held that under settled Mississippi law, the administratrix or the heirs, but not both, may bring suit for wrongful death, pursuant to Section 1453 of the Mississippi Code of 1942, Recompiled. See Bush v. Carpenter Brothers, Inc., 5 Cir., 1971, 447 F.2d 707, 711; Allen v. Baker, N.D. Miss., 1968, 327 F.Supp. 706, 709; Southern Pine Electric Power Assn. v. Denson, 214 Miss. 397, 414, 57 So.2d 859, 864 (1952), suggestion of error overruled, 214 Miss. 397, 417, 59 So.2d 75 (1952). Only one suit under this statute is allowed, and the first person to file sues for the benefit of all concerned parties and has the right to prosecute the suit to conclusion. Thus the wrongful death suit filed by Mrs. Jacquelyn Jones precludes consideration of the same claim as subsequently filed by Mrs. Jeanette Griggs. The court also found that the proper forum for the claims raised in this suit is the Mississippi Chancery Court, that adequate state remedies exist, and that the subject matter of this suit is more amenable to disposition by state courts. Finding that the plaintiffs had a proper litigable interest, the court dismissed the request for declaratory and injunctive relief without prejudice to plaintiffs’ right to follow the appropriate procedures in the state courts.

Attached as exhibits to the defendants’ motions to dismiss were: the entire Chancery Court file; the pleadings filed in Mrs. Jacquelyn Jones’ suit for wrongful death; the guardianship letters of Mrs. Jeanette Griggs; and Social Security awards to Mrs. Jacquelyn Jones, Scotia Michele Jones, Kimberly Steiner, and Sharon Steiner. Also attached was the Workmen’s Compensation file which includes the Report of Injury form and the Application for Benefits form, both of which were filed separately by Mrs. Jacquelyn Jones and Mrs. Jeanette Griggs; Mrs. Jacquelyn Jones’ affidavit; an affidavit by Travis G. Jones Sr., that his son, the decedent, and Jacquelyn Jones were married to each other at the time of the son’s death, a stipulation by Mrs. Jacquelyn Jones and Mrs. Jeanette Griggs that Travis, Donna, and Jeffrey Jones, and Scotia Michele Jones, Kimberly and Sharon Steiner were dependents of Travis G. Jones, Jr; and the orders of the Workmen’s Compensation Commission.

We find no error in the district court’s dismissal of the Workmen’s Compensation Claim. See Everitt v. Lovitt, 192 So.2d 422 (Miss.Sup.Ct.) (1966). We also agree with the court below that, under Mississippi law, the dismissal of the wrongful death claim was proper. The district judge, exercising the discretion he thought warranted by the circumstances, declined to grant the declaratory and injunctive relief sought. See Gordon v. Matthews, 1959, 106 U.S.App.D.C. 400, 273 F.2d 525; Powell v. McCormack, 1968, 129 U.S.App.D.C. 354, 395 F.2d 577, aff’d in part, rev’d in part, 395 U.S. 486, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969). We do not believe the district judge abused his discretion, and we concur in the holding that plaintiffs may validly vindicate their rights of heirship in Mississippi courts where heirship proceedings were first filed. See Buechold v. Ortiz, 9 Cir., 1968, 401 F.2d 371; Magaziner v. Montemuro, 3 Cir., 1972, 468 F.2d 782. The dismissal without prejudice to the right to proceed further in Mississippi state courts was proper.

Affirmed.

      . The district court also held, and we concur, that there was no jurisdiction relative to the Social Security benefits since plaintiffs have not exhausted their remedies under the Administrative Procedure Act, 5 U.S.C. § 551 st seq., and the Social Security Act, 42 U.S.C. § 405.


author: PER CURIAM.

text:
    COLORADO LABOR COUNCIL, AFL-CIO, an unincorporated association, et al., Plaintiffs-Appellees, v. AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS, an unincorporated association, et al., Defendants-Appellants.
    No. 72-1701.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Dec. 11, 1972.
    Decided June 20, 1973.
    Rehearing Denied Aug. 6, 1973.
    Philip Hornbein, Jr., Denver, Colo. (Roy O. Goldin, Denver, Colo., with him on the brief), for plaintiffs-appellees.
    Thomas E. Harris, Associate Gen. Counsel, AFL-CIO, Washington, D. C. (J. Albert Woll, Gen. Counsel, AFL-CIO, Robert C. Mayer, Laurence Gold, Washington, D. C., Donald P. MacDonald and James C. Fattor, Denver, Colo., with him on the brief), for defendants-appellants.

      Harlington Wood, Jr., Asst. Atty. Gen., James L. Treece, U. S. Atty., Morton Hollander and William Kanter, Attys., Dept, of Justice; and Richard F. Schubert, Sol. of Labor, Beate Bloch, Associate Sol., Harper Barnes, Regional Sol., and Cornelius S. Donoghue, Jr., Atty., Dept, of Labor, of counsel, on the brief, on behalf of the Secretary of Labor, as amicus curiae.
    Before LEWIS, Chief Judge, and BREITEN STEIN and McWILLIAMS, Circuit Judges.
   PER CURIAM.

This is an appeal 'from a preliminary injunction issued by the United States District Court for the District of Colorado prohibiting the effectuation of a trusteeship sought to be imposed by the AFL-CIO over the Colorado Labor Council. In our view, the trial court had no jurisdiction over the subject matter sought to be litigated and accordingly lacked jurisdiction to enter the injunctive order here complained of. Resolution of the controversy involves a consideration of the Labor-Management Reporting and Disclosure Act of 1959, hereinafter referred to as the Act. Some background information is needed if the narrow issue here to be decided is to be placed in focus.

The AFL-CIO is an unincorporated association, headquartered in Washington, D. C., whose membership is composed of affiliated national and international unions, local unions, state and local central bodies, and trade and industrial departments. As concerns state and local central bodies, the Rules of the AFL-CIO provide that state and local central bodies which are granted charters by the AFL-CIO shall conform their activities on national affairs to the policies of the AFL-CIO.

The Colorado Labor Council, hereinafter referred to as the Council, is an unincorporated association j chartered by the AFL-CIO in 1956 and headquartered in Denver, Colorado, with its membership being composed of national and international unions affiliated with the AFL-CIO and operating in Colorado, and as such the Council is a state central body.

Without going into great detail, sometime in July 1972, a controversy arose between the AFL-CIO and the Council concerning the endorsement of a candidate for the office of President of the United States. AFL-CIO, on the one hand, determined not to endorse any candidate for the office, but at the same time permitted “affiliates” to endorse any candidate of their choice. By subsequent statement, “affiliates” were declared by the AFL-CIO to be only national and international unions, and not state and local central bodies, such as the Council. The Council, however, interpreted the foregoing pronouncements from its parent body to mean that it was free to endorse a candidate of its choice, notwithstanding the clarification pronouncement that it was not considered to be an affiliate. Accordingly, the Council on August 7, 1972, adopted a resolution endorsing the candidacy of Senator George McGovern for President.

Based on the foregoing events, AFL-CIO instituted internal disciplinary proceedings against the Council, which culminated in a suspension of the Council’s charter and the appointment of a trustee to take charge of and conduct the business of the Council in place of its duly elected officials, the latter being suspended from office. When the trustee arrived in Denver, Colorado, prepared to assume control of the Council as trustee, the Council rejected the trusteeship and brought suit in the United States District Court for the State of Colorado seeking to enjoin the imposition of the trusteeship.

Council’s complaint was based upon Sections 302 and 304 of the Act, and it was alleged that the proposed imposition of a trusteeship over the Council by the AFL-CIO was in contravention of the provisions of the aforesaid Sections 302 and 304 of the Act. Jurisdiction was based upon those sections of the Act and also upon 28 U.S.C. § 1337. After an evidentiary hearing, the trial court determined that it had jurisdiction and entered a preliminary injunction enjoining the AFL-CIO from imposing a trusteeship on the Council. Pursuant to the provisions of 28 U.S.C. § 1292(a), AFL-CIO now seeks review of that injunctive order. As indicated, we are of the view that the trial court lacked jurisdiction over the subject matter of the controversy and accordingly was without jurisdiction to enter the preliminary injunction here complained of.

In arguing that the trial court had jurisdiction over the subject matter of the controversy between the parties to the end that the trial court had the requisite jurisdiction to enter the injunctive relief prayed for, the Council, as indicated, relies primarily on Sections 302 and 304 of Title III of the Act as conferring such jurisdiction.

Before considering the several sections of Title III, it would be well to bear in mind one of the several definitions appearing in the preamble to the Act itself. The phrase “labor organization” is first carefully defined in considerable detail in affirmative language, and then the definition concludes with the negative language that a “labor organization” is something “other than a State or local central body.” In this regard, counsel are in apparent agreement that the Council is a state central body and not a “labor organization,” as the latter is defined in the Act.

The fact that the Council is not a “labor organization” as defined in the Act goes to the heart of the controversy. In this regard, AFL-CIO and the Secretary of Labor, as amicus curiae, contend that the provisions of Title III relating to the imposition of a trusteeship by a labor organization contemplate only the imposition of a trusteeship by a parent labor organization over a subordinate labor organization and have no application to the situation where, as here, a labor organization attempts to impose a trusteeship over a state central body, since the latter is not a labor organization.

The Council argues that on the contrary, Sections 302 and 304 refer to the imposition of a trusteeship by a labor organization over a “subordinate body” and that the Council, being a “subordinate body” to the AFL-CIO, is entitled to avail itself of the limitations placed on the imposition of a trusteeship by Section 302 and of the provisions of Section 304 permitting a subordinate body to seek injunctive relief in the federal district court. In rejoinder to this particular argument, the AFL-CIO counters that if the phrase “subordinate body,” as used in Sections 302 and 304 of the Act, be read in context, then the phrase “subordinate body” means “subordinate labor organization.” We agree with this latter interpretation.

Counsel for both sides rely to some extent on the legislative history of the Act as supporting their particular interpretation of Title III. We regard the legislative history to be inconclusive, and prefer to resolve the matter on the basis of the Act itself. In reaching the conclusion that Title III is concerned only with the imposition of a trusteeship by a labor organization over a subordinate labor organization, and does not concern itself with the imposition of a trusteeship over a subordinate body such as a state central body, we are influenced by the following factors:

1. As indicated, in the definition section of the Act, the phrase “labor organization” is defined, inter alia, as being something “other than a State or local central body.” The Act consists of six titles, and it is undisputed that Titles I, II, IV, V and VI have no application to state central bodies. In such circumstance we are disinclined to hold that out of the entire Act, Title III alone, and only two sections at that, has application to state central bodies, in the absence of a clear and unmistakable legislative intent that such was in fact intended. We find no such clear and unmistakable legislative intendment.

2. Section 301 of Title III by its express terms clearly applies only in the case of a trusteeship imposed on a subordinate labor organization, with that particular section requiring periodic accounting by the parent body when it imposes a trusteeship on a subordinate labor organization. Such being the case, it is difficult for us to understand why Congress would not similarly provide that when a labor organization imposes a trusteeship over a “subordinate body,” such as a state central body, it must also make a periodic accounting of its trusteeship. Yet such is clearly not the case. So, assuming for the moment that Sections 302 and 304 of Title III be held to encompass state central bodies, as well as subordinate labor organizations, then in the case of a trusteeship over a subordinate labor organization the parent body must make a periodic accounting, but when it imposes a trusteeship over a subordinate body, such as a state central body, it need not make any periodic accounting. We do not believe that Congress intended any such different handling, all of which leads us to conclude that it was not the intent of Congress to include state central bodies under the coverage of any section of Title III.

3. Section 303 of Title III uses the phrase “labor organization under trusteeship” in its heading. Hence, we assume, and with justification we believe, that the body of Section 303 is concerned with, and limited to, “labor organizations under trusteeship.” Nevertheless, the phrase “subordinate body” is used in the body of that section four times and then a switch is made and the phrase “labor organization” is next and last used in the proviso clause. Thus the two phrases “labor organization under trusteeship” and “subordinate body” are used, in a very real sense we submit, interchangeably in Section 303. Such suggests to us quite strongly that Congress contemplated that the “subordinate body” under trusteeship would be a “subordinate labor organization.”

We concede that the Council in a literal sense is a “subordinate body” of the AFL-CIO. However, the Supreme Court has cautioned against a literal reading of labor legislation in general, and the Act in particular. Wirtz v. Bottle Blowers Association, 389 U.S. 463, 88 S.Ct. 643, 19 L.Ed.2d 705 (1968). And for the reasons above stated we are of the firm view that Sections 302 and 304 of Title III should not be read literally, and that, when read in context, the phrase “subordinate body” as used in those two sections means, and is limited to, “subordinate labor organizations.”

The Council also contends that regardless of the construction given Sections 302 and 304 of the Act, the trial court nonetheless had subject matter jurisdiction by virtue of the provisions of 28 U.S.C. § 1337. In this regard, it has been held that although § 1337 confers jurisdiction, it does not in and of itself create a cause of action. See, for example, B. F. Goodrich Company v. Northwest Industries, Inc., 424 F.2d 1349 (3d Cir. 1970). Assuming that the requirements of § 1337 .were otherwise met, it is- clear to us that the action which the Council seeks to maintain in nowise arises under the Act. For the reasons set forth above, we have held to the contrary. Accordingly, § 1337 does not in and of itself confer jurisdiction upon the trial court to enter the preliminary injunction here complained of.

The Third Circuit, in a factual situation akin to that of the instant one, has quite recently reached the same result as have we and on similar reasoning. New Jersey County and Municipal Council No. 61 v. American Federation of State, County and Municipal Employees, 3 Cir., 478 F.2d 1156, their case decided May 4, 1973. There, as here, the trial court enjoined the effectuation of a trusteeship by a parent labor organization over a subordinate body which, under the Act, was not a labor organization. There, the subordinate body over which the trusteeship was sought to be imposed was not a state central body, but a local union which limited its membership to public employees and accordingly under the terms of the Act was not a labor organization. In such setting, the Third Circuit stated that the “only conclusion which we can reasonably reach is that public employee unions are not covered by the phrase ‘subordinate body’ in §§ 302 and 304.” Accordingly, the Third Circuit reversed the trial court on the ground that under the circumstances it had “no subject matter jurisdiction.”

The preliminary injunction heretofore entered by the trial court is accordingly vacated and the cause is now remanded to the trial court with directions to dismiss the action.

      . “Sec. 302. Trusteeships shall be established and administered by a labor organization over a subordinate body only in accordance with the constitution and bylaws of the organization which has assumed trusteeship over the subordinate body and for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures, or otherwise carrying out the legitimate objects of such labor organization.” (Emphasis added.)

      . “Sec. 304. (a) Upon the written complaint of any member or subordinate body of a labor organization alleging that such organization has violated the provisions of this title (except section 301) the Secretary shall investigate the complaint and if the Secretary finds probable cause to believe that such violation lias occurred and has not been remedied he shall, without disclosing the identity of the complainant, bring a civil action in any district court of the United States having jurisdiction of the labor organization for sucli relief (including injunctions) as may be appropriate. Any member or subordinate body of a labor organization affected by any violation of this title (except section 301) may bring a civil action in any district court of the United States having jurisdiction of the labor organization for such relief (including injunctions) as may be appropriate.” (Emphasis added.)

      . “See. 301. (a) Every labor organization which lias or assumes trusteeship over any subordinate labor organization shall file witli the Secretary within thirty (lays after [the date] of any such trusteeship, and semiannually thereafter, a report, signed by its president and treasurer or corresponding principal officers, as well as by the trustees of such subordinate labor organization, containing the following information: (1) the name and address of the subordinate organization; (2) the date of establishing the trusteeship ; (3) a detailed statement of the reason or reasons for establishing or continuing the trusteeship; and (4) the nature and extent of participation by the membership of the subordinate organization in the selection of delegates to represent such organization in regular or special conventions or other policy-determining bodies and in the election of officers of the labor organization which has assumed trusteeship over sucli subordinate organization. The initial report shall also include a full and complete account of the financial condition of such s\¿bordinate organization as of the time trusteeship was assumed over it. During the continuance of a trusteeship the labor organization which has assumed trusteeship over a subordinate labor organization shall file on behalf of the subordinate labor organization the annual financial report required by section 201(b) signed by the president and treasurer or corresponding principal officers of the labor organization which has assumed such trusteeship and the trustees of the subordinate labor organization.” (Emphasis added.)

      . “Unlawful Acts Relating to Labor Organizations under Trusteeship.

      “Sec. 303. (a) During any period when a subordinate body of a labor organization is in trusteeship, it shall be unlawful (1) to count the vote of delegates from such body in any convention or election of officers of the labor organization unless the delegates have been chosen by secret ballot in an election in which all the members in good standing of such subor

        dinate body were eligible to participate or (2) to transfer to such organization any current receipts or other funds of the subordinate body except the normal per capita tax and assessments payable by subordinate bodies not in trusteeship: Provided, That nothing herein contained shall prevent the distribution of the assets of a labor organization in accordance with its constitution and bylaws upon the bona fide dissolution thereof.” (Emphasis added.)

      . “The district courts shall have jurisdiction of any civil action or proceeding arising under any act of Congress regulating commerce or protective trade and commerce against restraints and monopolies.”


author: FEINBERG, Circuit Judge:

text:
    SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, Securities Investor Protection Corporation, Applicant-Appellee, v. ALAN F. HUGHES, INC. and Alan F. Hughes, Defendants-Appellants.
    No. 636, Docket 72-2166.
    United States Court of Appeals, Second Circuit.
    Argued May 29, 1973.
    Decided June 21, 1973.
    John Barry Donohue, Jr., Washington, D. C. (Shipley, Akerman, Stein & Kaps, Washington, D. C., on the brief), for defendants-appellants.

      Wilfred R. Caron, Associate Gen. Counsel, Washington, D. C. (Theodore H. Focht, Gen. Counsel, Francis L. Carter, Washington, D. C., on the brief), for appellee Securities Investor Protection Corp.
    Winthrop J. Allegaert, New York City, for Trustee.
    Before MOORE, FRIENDLY and FEINBERG, Circuit Judges.
   FEINBERG, Circuit Judge:

In August 1971, the Securities and Exchange Commission (SEC) filed a complaint in the United States District Court for the Northern District of New York alleging that Alan F. Hughes, Inc., a registered broker-dealer, aided and abetted by its president, Alan F. Hughes, had violated various provisions of the Securities Exchange Act of 1934. The complaint sought an injunction and appointment of a receiver. This relief was granted. Thereafter, the Securities Investor Protection Corporation (SIPC) determined that Hughes, Inc. was in danger of failing to meet its obligations to its customers and that there existed one or more of the conditions specified by section 5(b)(1)(A) of the Securities Investor Protection Act of 1970 (the 1970 Act), 15 U.S.C. § 78eee(b)(1)(A). In January 1972, Chief Judge James T. Foley, agreeing with SIPC’s conclusions, granted its application for appointment of a trustee for liquidation of Hughes, Inc. under the 1970 Act. The application by SIPC was hotly contested both in the district court and on appeal to this court on a number of grounds. The decision of this court, with which familiarity will be assumed, was the first to interpret the 1970 Act in a number of important respects. SEC v. Alan F. Hughes, Inc., 461 F.2d 974 (2d Cir. 1972). Among other things, we held that a broker-dealer resisting an application by SIPC for liquidation is entitled to a de novo judicial determination that “the broker-dealer has failed or is in danger of failing to meet its obligations to its customers.” 461 F.2d at 979.

So much is prologue to this proceeding, in which counsel for defendants in the prior litigation claim that for their services in resisting the SIPC application they are entitled to attorneys fees* as a matter of first priority from the estate of Hughes, Inc. or from SIPC funds, or from both. Their fee application was denied by Judge Foley on the ground that there was no legal basis for allowing such a fee, and this appeal followed. Appellants argue that the 1970 Act and the Bankruptcy Act both authorize the compensation requested and that failure to so construe these Acts denies due process of law to those against whom SIPC proceeds, and is arbitrary, capricious and a denial of the equal protection of the laws.

The 1970 Act

In pressing their claim for compensation, appellants rely upon subsection 6(f)(2) of the 1970 Act, 15 U.S.C. § 78fff (f) (2), which provides that in addition to advancing funds for claims of customers against the broker-dealer being liquidated, “SIPC may advance to the trustee such moneys as may be required to effectuate subsection (b)(1)(A) of this section.” Subsection 6(b)(1)(A) sets forth the powers of a trustee under the 1970 Act, which include the power, with SIPC approval, to

hire and fix the compensation of all personnel . . . and other persons (including but not limited to accountants) that are deemed by such trustee necessary for all or any purposes of the liquidation proceeding. [Emphasis added.]

Appellants argue that since this court held in its prior opinion that a de novo judicial hearing is an integral aspect of an SIPC liquidation proceeding, one of the “purposes” of that proceeding must be to give a broker-dealer a chance to show that the claims against it are insufficient or incorrect. For legal services in that endeavor, they claim, the 1970 Act thus clearly authorizes compensation. However, this argument confuses a defendant’s rights at an SIPC hearing with the congressionally-defined powers of an SIPC trustee. Section 6(a) of the 1970 Act, 15 U.S.C. § 78fff(a), enumerates the “purposes of the liquidation proceeding” to which subsection 6 (b)(1)(A) refers. These are to return specifically identifiable property to the debtor’s customers, to pay customers, to operate the debtor’s business in order to complete open contractual commitments, to enforce rights of subrogation, and to liquidate the debtor’s business. The legal services in question do not fit into any of these categories. Appellants’ argument in its simplest form is that resisting liquidation is a purpose of the liquidation proceeding. While Congress could so provide we do not believe that it has.

Appellants also argue that unless we accept their construction of the 1970 Act, respondents to SIPC liquidation applications will be unconstitutionally' deprived of the assistance of counsel. Appellants point out that the SEC and SIPC frequently act in tandem to tie up a firm’s assets pending judicial determination of the application for a trusteeship and liquidation, and argue that counsel will not undertake a defense without assurance of subsequent payment. Defendants obviously suffered no deprivation of legal services here, and the same willingness of attorneys to represent a debtor resisting involuntary proceedings under the Bankruptcy Act is a frequent phenomenon. Quite apart from the observation that we do not understand the law to be that, as a general matter, the Constitution requires the appointment of counsel for litigants in civil cases, the analogy to the Bankruptcy Act is compelling. We have long held that legal services in resisting a bankruptcy petition are not compensable under that Act, see, e. g., In re Evenod Perfumer, Inc., 67 F.2d 878 (2d Cir. 1933), cert. denied, 291 U.S. 671, 54 S.Ct. 455, 78 L.Ed. 1060 (1934), and it has not been seriously doubted that this interpretation is constitutional. Moreover, if the Constitution does not require exemption from a filing fee for an indigent who seeks to take advantage of the bankruptcy laws, see United States v. Kras, 409 U.S. 434, 93 S.Ct. 631, 34 L.Ed.2d 626 (1973), it surely does not require that a brokerage firm resisting an application under SIPC be entitled to have its attorneys paid out of the estate.

The Bankruptcy Act

Appellants also rely upon sections 60d and 64a of the Bankruptcy Act, 11 U.S.C. §§ 96(d), 104(a), both of which, under section 6(c)(1) of the 1970 Act, 15 U.S.C. § 78fff(c)(1), apply to SIPC liquidations. Section 64a gives a first priority claim against the estate of the debtor for

one reasonable attorney’s fee . irrespective of the number of attorneys employed, to the bankrupt in voluntary and involuntary cases . in such amount as the court may allow.

Appellants concede that the cases take a narrow view of the protection offered attorneys’ fees by section 64, limiting compensation to services that “aid in the administration of the estate.” Despite the authority that resisting a bankruptcy application does not so “aid” the estate, see In re Evenod Perfumer, Inc., supra; 3A Collier on Bankruptcy ¶ 62.31 [4] (14th ed. 1972), appellants argue that in the context of an SIPC liquidation the section should be construed differently to allow compensation for such services. The reasons given for distinguishing the two situations are that an SIPC proceeding is initiated by a public, not a private, body; that the proceeding may commence even though the broker-dealer may be solvent; and that allowing such attorneys’ fees could greatly reduce the amount available for creditors in a straight bankruptcy proceeding, but would not affect the moneys going to broker-dealer customers in an SIPC proceeding.

The first of these arguments is, in this context, a distinction without a difference. The second is no distinction at all, since a creditor petitioning in bankruptcy and SIPC seeking a liquidation may each err in their allegations. Perhaps appellants’ point is that SIPC may base a petition upon “technical” violations, such as bookkeeping deficiencies or an inability to meet net capital requirements,® whereas a creditor in straight bankruptcy must allege something more substantial. The two-fold answer is that “technical” violations under the 1970 Act are frequently most significant, and, in any event, an SIPC liquidation cannot be ordered unless the court finds that the broker-dealer has failed or is in danger of failing to meet its obligations to its customers, surely not just a “technical” matter. The final point is the only one that gives pause at all — although not for long. It may be true that allowing fees to the attorneys for defendants in an SIPC proceeding would not reduce the fund available for most broker-dealer customers. But it still does not follow that when incorporating section 64a into the 1970 Act “[ejxcept as inconsistent with the provisions of” the Act, 15 U.S.C. § 78fff(c)(1), Congress intended to exclude well-settled judicial interpretations of that section.

Appellants’ argument based upon section 60d of the Bankruptcy Act requires little discussion. That provision, reproduced in relevant part in the margin, is not a grant of authority to pay counsel fees, as appellants suggest, but rather a vehicle for protecting estates against payment by a debtor of an excessive legal fee; the section permits attorneys to retain compensation only to the extent of reasonable value of services rendered before the filing of a bankruptcy petition and is not authority for allowance of fees for services after filing. See 3 Collier on Bankruptcy f[ 60.68, at 1143 (14th ed. 1971). On this view there is no basis for appellants’ claim that the section authorizes payment of counsel fees for work done after the filing of the petition and that it is therefore arbitrary to treat such services differently, depending on whether the fee is paid before or after the filing. In any event such distinctions based upon arbitrary dates abound in the Bankruptcy Act, and they are not unconstitutional.

Judgment affirmed.

      . Section 5(b)(3) of the 1970 Act, 15 U.S.C. § 78eee(b)(3).

      . The attorneys are seeking $7,117.26 in unpaid fees and expenses.

      . Judge Foley, however, did allow counsel to retain payments of $2,118.86 previously received from defendants for legal fees and expenses, and granted counsel’s application to be relieved except to pursue this appeal.

      . SIPO First Annual Report, 1971, pp. 22-23.

      . See, e. g., Peterson v. Nadler, 452 F.2d 754, 757 (8th Oir. 1971) (per curiam); Bethea v. Crouse, 417 F.2d 504, 505 (10th Cir. 1969); cf. United States ex rel. Gordon v. Reincke, 415 F.2d 1126, 1128 (2d Cir. 1969) (per curiam). But see Note, The Right to Counsel in Civil Litigation, 66 Colum.L.Rev. 1322 (1966). We do of course recognize that a federal district judge is given discretion to appoint counsel in civil cases pursuant to the salutary provisions of 28 U.S.C. § 1915(d).

      . See 15 U.S.C. § 78eee(b) (1) (A).

      . Customers of a broker-dealer with claims outstanding are entitled to share ratably in the “single and separate fund,” composed of property held by the firm for customer accounts but not identified to a specific customer (specifically identifiable property is returned to the customer if he is entitled to it). 15 U.S.C. §§ 78fff(c)(2)(B), (C). SIPC is authorized to advance to the trustee funds for payment of customer claims up to $50,000 per account, except that no more than $20,000 per account will be advanced to cover claims for cash. 15 U.S.C. § 78fff(f) (1). If a customer’s claim is still not fully satisfied, he can share in the general estate of the firm with the general creditors. Thus, unless a customer, because of his firm’s inability to meet its obligations, faces a loss greater than the maximum coverage provided by SIPC, there is no likelihood that payment of a priority claim to the firm’s attorneys will reduce the customer’s recovery. It should be noted, however, that while most customers are thus fully protected, a minority of large investors could face substantial losses in spite of SIPC’s coverage. See So-wards & Mofsky, The Securities Investor Protection Act of 1970, 26 Bus.Law. 1271, 1283-84 n. 60 (1971). Furthermore, to the extent that a priority claim for attorneys’ fees would reduce the general estate, the rights of general creditors would be adversely affected. For an evaluation of the early performance of SIPO, see Note, The Securities Investor Protection Act of 1970: An Early Assessment, 73 Colum.L.Rev. 802 (1973).

      . If a debtor shall . . . , in contemplation of the filing of a petition . . . , pay money or transfer property to an attorney at law, for services rendered or to be rendered, the transaction may be examined by the court on its own motion or shall be examined by the court on petition of the trustee or any creditor and shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the trustee for the benefit of the estate.

        If, whether before or after filing, a debtor shall agree orally or in writing to pay money or transfer property to an attorney at law after the filing, the transaction may be examined by the court on its own motion or shall be examined by the court on petition of the bankrupt made prior to discharge and shall be held valid only to the extent of a reasonable amount . . . , and any excess obligation shall be cancelled, or . . . returned to the bankrupt.

      . E. g„ 11 U.S.C. § 96(a) (1) (preference is transfer “to or for the benefit of a creditor . . . within four months before the filing” of bankruptcy petition) .


author: GOLDBERG, Circuit Judge:

text:
    Alfred E. GRIZZELL, #010977, Petitioner-Appellee, v. Louie L. WAINWRIGHT, Director, Florida Division of Corrections, Respondent-Appellant.
    No. 72-3361.
    United States Court of Appeals, Fifth Circuit.
    July 6, 1973.
    Robert L. Shevin, Atty. Gen., Wallace E. Allbritton, Asst. Atty. Gen., Tallahassee, Fla., for respondent-appellant.
    P. Donald DeHoff, Jacksonville, Fla., Court-appointed, for petitioner-appellee.
    Before GOLDBERG, SIMPSON and CLARK, Circuit Judges.
   GOLDBERG, Circuit Judge:

This appeal challenges the granting of habeas corpus relief pursuant to 28 U. S.C. § 2254. The sole issue before us is: Was the District Court correct in giving retroactive application to the Supreme Court’s decision in Mayberry v. Pennsylvania, 1971, 400 U.S. 455, 91 S.Ct. 499, 27 L.Ed.2d 532. In affirming the District Court, we join the Seventh Circuit, United States v. Seale, 7 Cir. 1972, 461 F.2d 345; In re Dellinger, 7 Cir. 1972, 461 F.2d 389, and the District of Columbia Circuit, United States v. Meyer, 1972, 149 U.S.App.D.C. 212, 462 F.2d 827, which are the only two circuits to have passed on the question, and hold that Mayberry v. Pennsylvania, supra, should be given retroactive application.

In Mayberry, a criminal defendant had repeatedly vilified the trial judge during the course of his trial. At the close of the trial, after the jury had returned its verdict, the trial judge found the defendant guilty of eleven criminal contempts and sentenced him to serve from eleven to twenty-two years imprisonment. The Supreme Court reaffirmed its holding in Illinois v. Allen, 1970, 397 U.S. 337, 90 S.Ct. 1057, 25 L.Ed.2d 353, which outlined “an arsenal of authority [including summary contempt] to keep order in the courtroom” during a trial, Mayberry v. Pennsylvania, supra, 400 U.S. at 463, 91 S.Ct. at 504, 27 L.Ed. 2d at 539, but held that when the vilified judge does not instantly cite the defendant for contempt, the Due Process Clause of the Fourteenth Amendment requires that “a defendant in criminal contempt proceedings should be given a public trial before a judge other than the one reviled by the contemnor.” Mayberry v. Pennsylvania, supra, 400 U.S. at 466, 91 S.Ct. at 505, 27 L.Ed.2d at 540.

On January 16, 1967, petitioner, Alfred E. Grizzell, appeared in a Florida state court for the empaneling of a jury that would hear his criminal trial. At that time he began presenting several motions to the court, and when the court denied his motions, petitioner began interrupting the proceedings and insulting the trial judge. The next day, the trial judge who had been vilified by petitioner found petitioner to have been in contempt of court and sentenced him to two years in prison.

In May of 1972, petitioner sought habeas relief based upon the Supreme Court’s holding in Mayberry v. Pennsylvania, supra. He contended that he had been denied due process when the very trial judge whom he had vilified convicted him of and sentenced him for contempt at a post-trial proceeding. Respondent primarily defended upon the ground that the decision in Mayberry should not be given retroactive application. Ruling on petitioner’s § 2254 motion, the United States District Court held:

“The facts presently before this Court show that petitioner was charged with contempt, and sentenced at a time not contemporaneous to petitioner’s disruptive conduct by the same judge who was reviled by him. As stated in Mayberry v. Pennsylvania, supra, [400 U.S. 455] at 466 [91 S. Ct. 499, 27 L.Ed.2d 532], due process ‘. . . can be satisfied only if the judgment of contempt is vacated so that on remand another judge, not bearing the sting of these slanderous remarks and having the impersonal authority of law, sits in judgment on the conduct of petitioner so shown by the record’.”

An examination .of Mayberry shows that there are two rationales underlying the Court’s decision: (1) the belief that it is difficult for a vilified judge to avoid bias; Mayberry v. Pennsylvania, supra, 400 U.S. at 465, 91 S.Ct. 505, 27 L.Ed.2d at 540; and (2) the institutional consideration that where the judge has been personally vilified the appearance of justice is sacrificed if the vilified judge acts as the prosecutor, fact finder, and senteneer, even if the vilified judge is totally unbiased. Id. See also In re Dellinger, supra, 461 F.2d at 394-395. This reasoning was fully and lucidly analyzed in United States v. Meyer, 1972, 149 U.S.App.D.C. 212, 462 F.2d 827, where the District of Columbia Circuit stated:

“In other words, once a judge has been personally attacked in such a manner that a judge of ordinary sensibilities might naturally be expected to harbor ‘marked personal feelings’ against the attacker, the law must assume that such feelings exist, even though the judge through admirable forbearance, gives no outward indication that he has been personally affected. This assumption is necessary, presumably, for two reasons. First, personal animosity may in fact exist in a judge who is outwardly unperturbed; and, second, even if the judge possesses singularly charitable instincts and in fact entertains no personal feelings, the public might reasonably suspect that such was not the case. In this latter situation, disqualification would be necessary in order to protect the integrity of the judiciary-so that ‘justice . . . [can] satisfy the appearance of justice.’ Id. [Mayberry v. Pennsylvania, 400 U.S. 455] at 465, [91 S.Ct. 499] at 505, [27 L.Ed.2d 532] quoting Offutt [v. United States], 348 U.S. [11], at 14, 75 S.Ct. 11, 99 L.Ed. 11.”

In determining whether the District Court here was correct in applying May-berry retroactively, we recognize “that retroactivity is essentially a pragmatic, case-by-case, result oriented process whereby the often competing interests of society, the accused . . . and the efficient administration of justice are balanced and weighed.” Vaccaro v. United States, 5 Cir. 1972, 461 F.2d 626, 629. This balancing process must necessarily involve reliance upon Stovall v. Denno, 1967, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199,

“which announced the most frequently quoted epitome for retroactivity determinations :
(a) the purpose to be served by the new standards, (b) the extent of reliance by law enforcement authorities on the old standards, and (c) the effect on the administration of justice of a retroactive application of the new standards.”

Gosa v. Mayden, 5 Cir. 1971, 450 F.2d 753, 761 (citations omitted).

In our view, the purpose of Mayberry is two-fold: (1) to guarantee an accused a totally fair and impartial tribunal, and (2) to protect the integrity and dignity of the judicial process from any hint or appearance of bias. Thus, the- decision in Mayberry goes to both the core of the single judicial determination involved (the individual defendant’s guilt or innocence), and to the heart of the entire judicial process (the appearance of fairness and the consequent public acceptance of the role of the courts in our society). We find that these purposes outweigh the factors favoring prospectivity arising from (1) the justifiable reliance of the courts upon then-existing contempt procedures and (2) the effect that retroactive application of Mayberry will have on the administration of justice, see Williams v. United States, 1971, 401 U.S. 646, 653, 91 S.Ct. 1148, 28 L.Ed.2d 388, 395, and mandate a retroactive application of Mayberry v. Pennsylvania.

Respondents’ reliance on the Supreme Court’s decision in Adams v. Illinois, 1972, 405 U.S. 278, 92 S.Ct. 916, 31 L.Ed.2d 202, which denied retroactive application to Coleman v. Alabama, 1970, 399 U.S. 1, 90 S.Ct. 1999, 26 L.Ed.2d 387, is misplaced. Coleman v. Alabama held that a preliminary hearing is a critical stage of the criminal process at which the accused is constitutionally entitled to the assistance of counsel. In denying retroactivity to Coleman v. Alabama, the Court in Adams v. Illinois held that the absence of counsel at preliminary hearings did not greatly affect the validity of the fact finding process and thus its purpose was overborne by the competing factors of good faith reliance by law enforcement officers and by the possible disruptive effect retroactive application might have on the administration of the criminal law. The Mayberry ruling, however, concerns the heart of the fact finding process, the fairness of the fact finder, and thus should be “given complete retroactive effect . . . regardless of the good faith reliance by law enforcement authorities or the degree of impact on the administration of justice.” Adams v. Illinois, supra, 405 U.S. at 280, 92 S.Ct. at 918, 31 L.Ed.2d at 207.

We therefore join the District of Columbia Circuit and the Seventh Circuit in holding that Mayberry v. Pennsylvania should be given retroactive application. The District Court is affirmed.

Affirmed.

      . In fairness to the trial judge, we note that he conducted the disrupted proceedings and issued the contempt citation without the guidance of the Supreme Court’s decision in Illinois v. Allen, 1970, 397 U.S. 337, 90 S.Ct. 1057, 25 L.Ed.2d 353, which outlined the measures available to a trial judge faced with a disruptive defendant.

      . We also do not consider De Stefano v. Woods, 1968, 392 U.S. 631, 88 S.Ct. 2093, 20 L.Ed.2d 1308, dispositive, although there is some language which might indicate a contrary result. The Supreme Court decision in De Stefano refused to give retroactive effect to Bloom v. Illinois, 1968, 391 U.S. 194, 88 S.Ct. 1477, 20 L.Ed.2d 522, which held that an individual being prosecuted for serious con-tempts was constitutionally entitled to a jury trial, and does not control the question of whether Mayberry, which came after De Stefano and which emphasized the need for both a fair and unbiased judge and for the appearance of fairness, should be applied retroactively.