author: GIBSON, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Leslie Gene UNTIEDT, Appellant.
    No. 73-1742.
    United States Court of Appeals, Eighth Circuit.
    Submitted Feb. 14, 1974.
    Decided March 21, 1974.
    Rehearing and Rehearing En Banc Denied May 9, 1974.

      Robert C. Gross, Dumbaugh, Gutz, Booth & Gross, Cedar Rapids, Iowa, for appellant.
    Robert L. Sikma, Asst. U. S. Atty., Sioux City, Iowa, for appellee.
    Before GIBSON, STEPHENSON, and WEBSTER, Circuit Judges.
   GIBSON, Circuit Judge.

On September 27, 1973, a jury found defendant guilty in a single count of violating 18 U.S.C. §§ 2 and 659. The District Court sentenced defendant to five years imprisonment.

Defendant argues three contentions on this appeal: (a) there was insufficient evidence to support the jury’s guilty verdict on receiving and possessing the stolen goods, (b) the District Court erred in prohibiting cross-examination of certain Government witnesses who might have revealed the name of the driver of the stolen truck, who allegedly was a Government informer, and (c) defendant’s conviction as an aider and abettor was legally deficient since the Government knew the principal, but did not prosecute him. Rejecting each argument, we affirm the judgment of conviction.

On April 21, 1972, the FBI and Cedar Rapids Police Department learned that Charles Frederick Joss was organizing a theft of a semi-trailer load of meat from the LCL Transit Company terminal, an interstate truck terminal located in Cedar Rapids, Iowa. On April 22, 1972, Joss and Jack Alan McCausland, who had been organizing this scheme for at least eight days prior to April 22nd, asked defendant to help them in hijacking a truck and unloading the meat. Defendant agreed to assist in the scheme, according to defendant, only by unloading the meat. Defendant knew that he would be paid for his efforts.

During the evening of April 22, 1972, Joss and McCausland met at the home of defendant’s girl friend. Also that same evening, the FBI had been keeping the LCL Transit Company terminal under surveillance and witnessed the theft of a semi-trailer loaded with meat, which was valued at over $12,000 and was in transit from Iowa to Wisconsin. FBI agents followed the stolen trailer to Cedar Acres Custom Processing Plant, while other FBI agents had earlier observed defendant and two others drive into the same parking lot. Defendant knew that a trailer load of stolen meat would arrive at that location and that he was expected to assist in unloading the stolen meat. When the trailer arrived at the plant’s parking lot, defendant was arrested as he stood at the rear door of the parked truck. The unloading had not yet begun.

First, defendant argues that the evidence was legally insufficient to demonstrate that defendant had possession under 18 U.S.C. § 659 of the stolen meat at the time of his arrest. Defendant contends that he cannot be said to have had constructive possession of the stolen meat, since he allegedly did not intend to steal the meat and since he had no capability to control and exercise dominion over the stolen property.

Of course, on appeal we take the view of the evidence that is most favorable to support the jury’s verdict and accept as established all reasonable inferences that tend to uphold the jury’s verdict. United States v. Gaskill, 491 F.2d 981 (8th Cir., filed February 14, 1974); Cross v. United States, 392 F.2d 360, 361 (8th Cir. 1968). Although defendant argues that the verdict is invalid due to insufficiency of the evidence to support a finding of possession of the stolen meat by defendant, it is unnecessary to decide that issue in order to support the jury’s verdict of guilty. Defendant was charged in Count II as an aider and abettor under 18 U.S.C. § 2 for the offense under 18 U.S.C. § 659. In Johnson v. United States, 195 F.2d 673, 675 (8th Cir. 1952), this court stated:

Generally speaking, to find one guilty as a principal on the ground that he was an aider and abetter, it must be proven that he shared in the criminal intent of the principal and there must be a community of unlawful purpose at the time the act is committed. As the term “aiding and abetting” implies, it assumes some participation in the criminal act in furtherance of the common design, either before or at the time the criminal act is committed. It implies some conduct of an affirmative nature and mere negative acquiescence is not sufficient.

In this case, defendant admits that he met with Joss and McCausland, the principals, and agreed to unload the stolen meat from the tractor-trailer for pay. Defendant was present at the Cedar Acres plant and directed the parking of the tractor-trailer. He was ready to help unload the stolen meat. Under these facts, defendant shared the criminal intent of the principals both at the planning and commission stages of the crime. Defendant clearly was an aider and abettor of receiving and possessing goods stolen from an interstate shipment and stood ready as an active participant to direct and assist in unloading the stolen goods and utilize them for unlawful purposes. ****8He was no mere innocent bystander.

Second, defendant argues that he should have been allowed to cross-examine certain Government witnesses to attempt to learn the name of the person who was the driver of the stolen truck. Defendant contends that this truck driver, who was not arrested by officers at the scene of the crime, was a confidential informant for. the Government and that this confidential informant helped to entrap defendant in some unexpressed manner. Finally, defendant states that the driver's name and his testimony could have established that the driver “lured” defendant into the entire scheme, and therefore cross-examination of the Government’s witnesses to learn the identity of the driver was essential to defendant’s presentation of a defense of entrapment.

Our first comment is that this argument taxes our credulity. Defendant is contending that he does not know the identity of the truck driver who supposedly lured him into a major theft, who agreed with defendant to pay him for unloading the stolen meat, and who also allegedly was a confidential informant for the Government. Assuming that the truck driver was the informant and assuming that this person entrapped defendant into committing this theft, it seems more than strange to us that defendant would not himself have known this truck driver. If defendant was lured into this scheme and if he was to be paid by this “informant,” certainly defendant had some means of identifying him. The more reasonable conclusion is that the truck driver did not lure defendant into this theft and his identity was not essential to a defense of entrapment. In fact, the record reveals that defendant did know the identity of the truck driver and that defendant had refused to testify against the driver if brought to trial.

In this case, the District Court conducted an in camera hearing to determine if the defendant’s claim concerning entrapment had a basis in fact. The District Court instructed defense counsel that the “name of the informant should not be disclosed to the defendant” and restricted defendant’s cross-examination of a Government witness to learn that name. The District Court concluded from the in camera hearing that the identity of the informant and any possible testimony by him “would not contribute to the guilt or innocence of the defendant in any way.”

In United States v. Barnes, 486 F.2d 776, 778 (8th Cir. 1973), we held that “the government’s disclosure of [an informant’s] name and whereabouts must necessarily turn on the facts and circumstances involved.” In Roviaro v. United States, 353 U.S. 53, 62, 77 S.Ct. 623, 628, 1 L.Ed.2d 639 (1957), the Court stated:

We believe that no fixed rule with respect to disclosure [of a Government informer’s identity] is justifiable. The problem is one that calls for balancing the public interest in protecting the flow of information against the individual’s right to prepare his defense. Whether a proper balance renders nondisclosure erroneous must depend on the particular circumstances of each case, taking into consideration the crime charged, the possible defenses, the possible significance of the informer’s testimony, and other relevant factors.

The defendant’s own testimony shows the insignificance of any possibly favorable testimony that could have been elicited from the Government informer. We think that defendant’s own admissions indicate that he knew the name of the truck driver himself and that he was approached by Joss to participate in the theft. Joss had been planning the theft some time before the FBI learned of the scheme. It, therefore, is apparent to us, as it was to the District Court, that revealing the informant’s name and producing the informant would not have been helpful to the accused’s defense. See, Roviaro v. United States, supra, at 60-61, 77 S.Ct. 623, quoted in United States v. Barnes, supra at 778. Joss, not the Government informer, induced the defendant to enter the scheme.

Last defendant argues that he cannot be found guilty as an aider and abettor of the charged offenses when the Government does not prosecute the principal. Evidently defendant is arguing that no crime was committed, since the principal purportedly was a Government informant who lured defendant into the scheme. However, this court has held that the principal need not be identified or convicted in order to sustain a conviction of an aider and abettor. Pigman v. United States, 407 F.2d 237, 239 (8th Cir. 1969). We have held that in order to sustain a conviction of an aider and abettor, evidence must be presented to demonstrate that an offense was committed by a principal and that the principal was aided and abetted by the defendant. Pigman v. United States, supra at 239. Sufficient evidence was presented to show that Joss and McCausland were principals and that defendant knowingly and willfully participated in the criminal offense. The evidence was sufficient for the jury to find the defendant guilty under the court’s instruction as an aider and abettor in violating 18 U.S.C. § 659 in receiving and possessing goods stolen from an interstate shipment.

Judgment of conviction affirmed.

      . Defendant was initially charged in a two-count indictment with two others. Count I was an alleged violation of 18 U.S.C. § 871, and Count II was the violation herein under 18 U.S.C. §§ 2 and 659. On July 17, 1972, defendant pled guilty to Count II, and Count I was dismissed. However, on October 20, 1972, Count I was dismissed for reasons not connected with the dismissal of that same count on July 17th. Thereafter, defendant sought to change his guilty plea, which this court, in reversing the District Court, allowed. Defendant pled not guilty to a one-count indictment, the violation of 18 U.S.C. §§ 2 and 659. The trial and guilty verdict followed, and defendant now timely appeals.

      . The Honorable Edward J. McManus, Chief Judge, United States District Court, Northern District of Iowa.

      . The indictment in this case charged defendant in one count with aiding and abetting in stealing, receiving, possessing, and concealing goods stolen from an interstate shipment. The District Court charged the jury in three instructions concerning the nature of the charge. In Instruction Number 5 the District Court stated that the defendant was charged with “receiving and possessing property stolen from an interstate shipment in violation of 18 U.S.C. Section 659.” In this instruction, stealing was not mentioned. Instruction Number 6 defined the crime of receiving and possessing stolen goods from interstate shipment. In Instruction Number 8, the court instructed according to the words of the statute, including stealing goods moving in interstate shipment and receiving, possessing, and concealing goods stolen from interstate shipment. The court also instructed on the definitions of possession, but did not explain the meaning of the word “stealing.” Defendant did not object to the instructions, except for proffering an instruction relating to entrapment. On appeal, defendant has not argued that the evidence was insufficient to support a conviction of stealing goods from interstate shipment. He has only argued that there was allegedly insufficient evidence to support a conviction of receiving and possessing the stolen goods. We think it is clear from the instructions taken as a whole that the case was submitted to the jury only on the charge of receiving and possessing goods stolen from interstate shipment and not on the separate offense of stealing goods in interstate shipment.
      It is clear that the duplicitous indictment should not have charged the defendant with two separate offenses under § 659 in one count; however, defendant did not object to the indictment with a pretrial motion and this failure to object constitutes a waiver. Fed.R.Crim.P. 12(b) ; Flying Eagle Publications, Inc. v. United States, 273 F.2d 799, 803 (1st Cir. 1960) ; Wm. Barron, 4 Federal Practice and Procedure § 8.04 [1] at 8-12 (1973). The proper procedure for defendant to have followed concerning duplicity of this indictment would have been to move for the Government to elect on which charge or charges it desired to proceed. Barron, supra § 8.04 at 8-12. The failure of defendant to make such a pretrial motion precludes a review of the duplicitous indictment. Defendant also has not argued that the jury’s verdict was insufficient on the charge of stealing goods moving in interstate shipment, and, therefore, we do not review the jury’s verdict to determine the resolution of that question. We, therefore, are left with reviewing defendant’s argument that there was insufficient evidence to support the jury’s conviction on receiving and possessing goods stolen from interstate shipment.


source: Caselaw Access Project

author: FEINBERG, Circuit Judge:

license: Public Domain

text:
    Robert FRITSCH and Peter Rossiter, Plaintiffs-Appellants, v. DISTRICT COUNCIL NO. 9, BROTHERHOOD OF PAINTERS, DECORATORS AND PAPER HANGERS OF AMERICA, et al., Defendants-Appellees, Isaac Schwartz et al., Intervenors-Appellants. Frank SCHONFELD, Individually and as Secretary-Treasurer of District Council 9, International Brotherhood of Painters & Allied Trades, AFL-CIO, Plaintiff-Appellant, v. S. Frank RAFTERY, as President of the International Brotherhood of Painters & Allied Trades, AFL-CIO, et al., Defendants-Appellees, Isaac Schwartz et al., IntervenorsAppellants.
    Nos. 541 to 545, Dockets 73-2198, 73-2205, 73-2207, 73-2208, 73-2210.
    United States Court of Appeals, Second Circuit.
    Argued Feb. 25,. 1974.
    Decided March 26, 1974.
    Basil R. Pollitt, Brooklyn, N. Y., for plaintiffs-appellants Fritsch and Rossi-ter.
    Julius S. Impellizzeri, New York City, for intervenors-appellants Isaac Schwartz and others, and plaintiff-appellant Frank Schonfeld.
    Stephen C. Vladeck, New York City (Vladeck, Elias, Vladeck & Lewis, New York City, David S. Barr, Barr & Peer, Washington, D. C., on the brief), for defendants-appellees S. Frank Raftery and Michael DiSilvestro.
    Before KAUFMAN, Chief Judge, and FEINBERG and MULLIGAN, Circuit Judges.
   FEINBERG, Circuit Judge:

We are faced once again with an offshoot of the bitter conflict among various local painters’ unions, District Council No. 9, and the International Brotherhood of Painters and Allied Trades, AFL-CIO. Plaintiffs Robert Fritsch and Peter Rossiter are members of a local affiliated with defendant District Council. Plaintiff Frank Schonfeld is a member of another such local and, more importantly, was Secretary-Treasurer of the District Council at the time these complaints were filed against it and the International. All three plaintiffs, supported by six individual intervenors, appeal from a decision of Judge Charles L. Brieant, Jr., after a non-jury trial in the United States District Court for the Southern District of New York, rejecting their claims under the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. § 401 et seq. For reasons set forth below, we affirm the judgment of the district court.

Judge Brieant wrote a thorough opinion, D.C., 359 F.Supp. 380, which so well summarized the facts and prior history of these consolidated cases that we shall restate them only briefly, incorporating by reference the more detailed findings of the trial judge. Plaintiffs’ complaints focus on the office of the Secretary-Treasurer of the District Council and his functions with regard to two sets of constituent local unions, which the parties call “painters’ ” locals and “autonomous” locals. Plaintiffs are all members of painters’ locals. The Secretary-Treasurer performs a number of traditional duties for all of the constituent locals. For the painters’ locals alone, however, he is intimately involved in the negotiation, administration and policing of collective bargaining agreements, functions handled for the autonomous locals by their own local officials. Nevertheless, the Secretary-Treasurer is elected by the vote of all the members of both types of locals. Plaintiffs allege that this arrangement is a “dilution” of the voting rights of the painters because the members of the autonomous locals may vote for the principal collective bargaining representative of the painters, while the latter have no reciprocal right to vote for the collective bargaining representatives of the autonomous locals. In the past, the painters’ locals have attempted to change the powers and duties of the Secretary-Treasurer and to create a Painters’ Section in the District Council by proposing by-law changes and an amendment to the International constitution. Such a Section would have given the painters’ locals exclusive control over the negotiation and administration of their collective bargaining agreements. The painters’ locals voted to approve the by-law changes but the International’s General Executive Board ruled them inconsistent with the constitution. A convention of the International the same year approved this ruling and also rejected the proposed constitutional amendment. A later proposed by-law change to give greater autonomy to the painters was defeated in a District-wide referendum.

Plaintiffs argued to the district court, as they do to us, that the alleged dilution of their voting rights violates Title I of the LMRDA, 29 U.S.C. § 411(a) (1), and that the rejection of the proposed Painters' Section by-law by the International was in bad faith and therefore illegal under both federal and state law. After a four-day trial, Judge Brieant rejected both contentions. Analyzing the judicial decisions interpreting the LMRDA, the judge held that plaintiffs’ claim of dilution arose not under Title I, but under Title IV of the Act, 29 U.S.C. § 481(e), and was therefore cognizable in the district court only at the instance of the Secretary of Labor. As to the rejection of the Painters’ Section by-law, the judge found that the International had acted properly and in good faith.

On plaintiffs’ principal claim, we hold that they did not prove a violation of Title I of the Act. As the Supreme Court held in Calhoon v. Harvey, 379 U.S. 134, 139, 85 S.Ct. 292, 13 L.Ed.2d 190 (1964), and as we emphasized in Schonfeld v. Penza, 477 F.2d 899, 902-903 (1973), the essence of Title I is the command not to discriminate against members and classes of members in their right to vote and nominate. As in Calhoon, “[t]he complaining union members here have not been discriminated against in any way and have been denied no privilege or right to vote or nominate which the union has granted to others.” 379 U.S. at 139, 85 S.Ct. at 295. Certainly, the plaintiffs here cannot claim, as did those in Acevedo v. Bookbinders Local 25, 196 F.Supp. 308 (S.D.N.Y.1961), and Hughes v. Bridge Ironworkers Local 11, 287 F.2d 810 (3d Cir.), cert. denied, 368 U.S. 829, 82 S.Ct. 51, 7 L.Ed.2d 32 (1961), that they have been totally denied the right to vote for important union offices. Nor is there a claim that the votes of some members count more than the votes of others in the election of the Secretary-Treasurer. Cf. Sargent v. United Transp. Union, 333 F.Supp. 956 (W.D.N.Y.1971) (relief, if any, for such a claim available only under Title IV). Plaintiffs’ chief complaint is that the members of the autonomous locals should not be allowed to vote at all for the Secretary-Treasurer. But it is at least doubtful whether the autonomous locals alone could be denied a vote for the Secretary-Treasurer so long as he continued to perform a number of duties for them as well as for the painters. This is not a case where “members” are permitted by by-law or constitution to vote for an official who performs no functions for them. Cf. Clark v. Town of Greenburgh, 436 F.2d 770, 772 (2d Cir. 1971). We are not insensitive to the District Council’s sorry history of suppression of dissent, but, on the record before us, the voting scheme for Secretary-Treasurer does not now operate as an instrument of repression. We conclude that the command of Title I does not require a district court to enforce the “one-man-one-vote” rule in the sense urged here. Cf. American Federation of Musicians v. Wittstein, 379 U.S. 171, 181-183, 85 S.Ct. 300, 13 L.Ed.2d 214 (1964); Gordon v. Laborers Int’l Union, 351 F.Supp. 824, 832-833 (W.D.Okl.1972).

The true gravamen of plaintiffs’ case appears to be a desire for redefinition of the powers and duties of the Secretary-Treasurer. As to that, the present union procedures for amendment do not appear to be unreasonable and “intermeddling by the courts” would seem inappropriate. Gurton v. Arons, 339 F.2d 371, 375 (2d Cir. 1964). Assuming arguendo that it was proper for the district judge to reach the claim relating to the interpretation of the International constitution, we affirm on his opinion.

Judgment affirmed.

      . Some, but by no means all, of the related lawsuits involving these organizations are summarized in Schonfeld v. Penza, 477 F.2d 899, 901 n. 2 (2d Cir. 1973).

      . Also named as defendants were various officers and members of the District Council and the International.

      . The membership of the painters’ locals is approximately double that of the autonomous locals.

      . Although plaintiffs disclaim any intention to assert Title IV rights, the district court indicated that they might well have a meritorious claim under that title. We need not decide that question,

      . In Acevedo, even “Class B” union members who were denied the right to vote for local president, first vice-president and secretary-treasurer were held to have a claim cognizable only under Title IV since the challenged election had already taken place. 196 F.Supp. at 314. Of course, we do not pass upon the correctness of the Acevedo holding at this time.

      . Several judges of the district court have considered this argument and have reached different conclusions. In 1964, Judge Sugar-man dismissed a complaint making similar attacks on the voting scheme for Secretary-Treasurer. Schonfeld v. Caputo, 49 Labor Cases ¶ 19,078 at 31,765 . (S.D.N.Y.). Partly on the basis of this decision, Judge Frankel denied a motion, by plaintiffs Fritsch and Rossiter at an earlier stage of their case, for a preliminary injunction against the 1967 election for Secretary-Treasurer. 66 L.R.R.M. 2366. On the other hand, Judge Lasker denied a pre-trial motion to dismiss Schonfeld’s complaint, holding that the complaint alleged a direct attack upon voting rights guaranteed to the painters by Title I. Schonfeld v. Raftery, 335 F.Supp. 846, 850-851 (D.C.1971), relying upon Navarro v. Gannon, 385 F.2d 512, 520 (2d Cir. 1967), cert. denied, 390 U.S. 989, 88 S.Ct. 1184, 19 L.Ed.2d 1294 (1968). For tbe reasons stated in text, we hold that the attack on plaintiffs’ voting rights is in fact far from direct; we also note that the Title I claim in Navarro was upheld not because of the threat to the voting rights of the union members but because of the invasion of their right of free discussion. 385 F.2d at 520.

      . See, e. g., Schonfeld v. Penza, 477 F.2d 899, 904 (2d Cir. 1973) ; Schonfeld v. Raftery, 381 F.2d 446 (2d Cir.) (per curiam), aff’g, 271 F.Supp. 128 (S.D.N.Y.1967) ; Salzhandler v. Caputo, 316 F.2d 445 (2d Cir.), cert. denied, 375 U.S. 946, 84 S.Ct. 344, 11 L.Ed. 2d 275 (1963).

      . Plaintiff Schonfeld, an indefatigable opponent of the union leadership, was himself elected Secretary-Treasurer in 1967 and again in 1970 under the challenged voting scheme. He was defeated in 1973, but we are informed that he would have lost even if the votes of members of the autonomous locals had not been taken into account.

      . Nor do we find any basis in Title I for accepting an alternative, and rather theoretical, formulation of plaintiffs’ complaints and granting the painters the right to vote for the collective bargaining agents of the autonomous locals. These agents, for all that appears, perform no duties whatsoever for the painters.


author: COFFIN, Chief Judge.

text:
    CARIBTOW CORPORATION, Petitioner, v. OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION, Respondent.
    No. 73-1285.
    United States Court of Appeals, First Circuit.
    Argued Feb. 4, 1974.
    Decided March 18, 1974.

      Edelmiro Salas Garcia, Guaynabo, P. R., for petitioner.
    Morton Hollander, Atty., Dept, of Justice, with whom Irving Jaffe, Acting Asst. Atty. Gen., Stephen F. Eilperin, and Jean A. Staudt, Attys., Dept, of Justice, were on brief, for respondents.
    Before COFFIN, Chief Judge, Mc-ENTEE and CAMPBELL, Circuit Judges.
   COFFIN, Chief Judge.

An employee of Caribtow, a Puerto Rican corporation, was killed while engaged in trying to move a crawler crane from a barge to a dock in Santurce, Puerto Rico. After investigation, the Secretary of Labor, acting pursuant to the Occupational Safety and Health Act of 1970, 29 U.S.C. §§ 651-678 (the Act), issued a citation and notice of a proposed fine of $700 to the corporation for a serious violation of its duty to furnish its employees with a safe place to work, in failing to provide a ramp or other safe method for moving the crane from barge to dock. 29 U.S.C. § 654(a)(1). Caribtow, denying Congressional power to legislate concerning occupational safety in Puerto Rico, refused to post a statutory notice, 29 U.S.C. § 658(b), informing its employees of the citation, and of their right to participate as parties. The Administrative Law Judge, holding that Caribtow had by such breach forfeited its status as a party, dismissed its Notice of Contest and affirmed the citation and proposed penalty. The Occupational Safety and Health Review Commission affirmed and this petition for review followed.

The sole defense of Caribtow is that the Act cannot apply to Puerto Rico. The argument is not that the Act in terms does not apply, for the legislation could not be more specific: in its purpose — “to assure so far as possible every working man and woman in the Nation safe and healthful working conditions and to preserve our human resources”, 29 U.S.C. § 651(b); in its geographical coverage — “This Act shall apply to employment in the Commonwealth of Puerto Rico”; and in the functional coverage of “commerce” as being commerce “among the several states”, 29 U.S.C. § 652(3), Puerto Rico being specifically included for purposes of the statute as a “state”, 29 U.S.C. § 652(7). Nor is there any suggestion that the Secretary of Labor or the Commission failed to follow properly the procedures and standards of the Act. The argument is simply that, subsequent to the advent of Commonwealth status, Congress lacks power unilaterally to make new statutes applicable to Puerto Rico.

The present political status of Puerto Rico stems from Public Law 600, enacted by the Congress of the United States in 1950 “in the nature of a compact”, and approved by the people of Puerto Rico in referendum in 1951. Pursuant to this law the people of Puerto Rico adopted a Constitution in 1952 and the Congress of the United States approved that Constitution and repealed part of the old Organic Act (the Jones Act of 1917). The remainder of the Organic Act was renamed the Puerto Rican Federal Relations Act, 48 U.S.C. § 731b et seq. Section 9 of the Puerto Rican Federal Relations Act, 48 U.S.C. § 734, provides in relevant part that: “The statutory laws of the United States not locally inapplicable, except as hereinbefore or hereinafter provided, shall have the same force and effect in Puerto Rico as in the United States. . . ." Carib-tow does not allege that the Occupational Safety and Health Act is “locally inapplicable” in the sense meant in § 734. Indeed, it would be difficult to conceive of the fostering of the safety of workers as being other than supportive of the cultural and legal heritage of Puerto Rico.

Section 9 of the Puerto Rican Federal Relations Act provides unquestionably that federal legislation requires no prior consent of Puerto Rico. Nothing in the language or in the legislative history can realistically support any other conclusion. Furthermore, the provision was, in identical terms, part of the Organic Acts; and under those Acts no such prior consent was ever required. The fact that the Commonwealth now possesses its own Constitution, and is governed with the consent of its inhabitants, does not establish that it is now so independent of the federal government that it may ignore or nullify national legislation and exert powers in this regard that are denied to the states, each of which also possesses a constitution and a republican form of government. What is determinative here is that application of the Occupational Safety and Health Act to Puerto Rico is fully consistent with the “compact”.

As this court said in Moreno Rios v. United States, 256 F.2d 68, 71 (1st Cir. 1958):

“Under the terms of the ‘compact’ to which the people of Puerto Rico have manifested assent, there remains in the Puerto Rico Federal Relations Act the important provision: ‘The statutory laws of the United States not locally inapplicable . . . shall have the same force and effect in Puerto Rico as in the United States . . .’.48 U.S.C. 734. Since the terms of the Narcotic Drug Import and Export Act would affect Puerto Rico in the same manner as they do the States of the Union, and since the problem dealt with is a general one, certainly not ‘locally inapplicable’ to Puerto Rico, it is clear that Congress has the power to apply the Act to Puerto Rico ”

Caribtow attempts to distinguish this and other cases by pointing out that they all dealt with laws enacted prior to 1952 and thus only established that laws in effect in Puerto Rico before the compact remained so afterward. But, passing the practical difficulty of distinguishing an “amendment” from a “new law”, there are a number of reasons why the distinction proposed is of no substance. First, as we have noted, the legislative history of Section 9, and its prior existence in the Organic Acts of 1900 and 1917, militate against such an interpretation; and the language of its exceptions clause, “except as hereinbefore or hereinafter provided”, also indicates that Section 9 is fully prospective. Secondly, no reason has been advanced why finding applicability to Puerto Rico of post-1952 legislation would do violence to the underlying reasoning of the cases dealing with pre-1952 legislation, nor can we think of any. Finally, to limit the cases in the way suggested by Caribtow, in the light of the clear language of Section 9, on which they were grounded, cannot be contemplated where no authority or persuasive reasoning or policy can be found to support such a result.*

Caribtow seeks to draw from a few congressional enactments that have specifically exempted Puerto Rico from coverage, or have made coverage optional with the Puerto Rican legislature, the general principle that Congress lacks power to do otherwise. This argument conveniently overlooks the fact that many more acts of Congress have been passed since 1952 either without such an exemption or with specific provisions making them applicable to the Commonwealth. The fact that certain laws exclude Puerto Rico from the scope of their operation indicates no more than that Congress thought them “locally inapplicable” or otherwise inappropriate for the Commonwealth. And provision that a federal program operate in a jurisdiction only with the consent of that jurisdiction is not unique in Puerto Rico. The Occupational Safety and Health Act is one of those pieces of legislation which the Congress can make and has made applicable to the Commonwealth explicitly, and with no provision for prior local consent. That it has done and may again do otherwise with other legislation is beside the point.

One final point deserves some discussion. 48 U.S.C. § 751, part of the Puerto Rican Federal Relations Act, provides that the Interstate Commerce Act and the Safety Appliance Act shall not apply to Puerto Rico. Caribtow argues that this provision means that all enactments dealing with interstate commerce cannot apply to the Commonwealth, and that, since the Occupational Safety and Health Act is phrased primarily in terms of interstate commerce, the ban contained in § 751 extends to it. But § 751 does not in terms or by any reasonable implication mean any more than what it clearly says: that two particular laws shall not operate in Puerto Rico.

We conclude, therefore, that the Occupational Safety and Health Act of 1970 applies to Puerto Rico, and that the Secretary of Labor and the Occupational Safety and Health Review Commission acted well within their authority.

The order of the Commission is affirmed.

      . In its request for admission of facts, which was not contested by Caribtow, the Secretary of Labor alleged that Caribtow buys machinery and supplies from outside of Puerto Rico and sells construction materials and supplies to buyers located outside of the Commonwealth and that Caribtow is thus an “employer” within the meaning of the Act.

      . It should be added that the Commonwealth itself, through its Department of Labor, pursuant to 29 U.S.C. § 667(b), has submitted a notice of intent to submit a j)lan under which it would retain authority over working conditions subject to federal standards and has received several federal grants to help in developing such a plan, now in the review stage.

      . Referring to the bill which became Public Law 600, the Secretary of the Interior, in a letter to the Chairman of the Senate Committee on Interior and Insular Affairs, characterized the basic effects of Public Law 600 in this way:
      “Those sections of the Organic Act of Puerto Rico pertaining to the political, social, and economic relationship of the United States and Puerto Rico concerning such matters as the applicability of United States laws . . . would remain in force and effect and . . . would be referred to as the Puerto Rican Federal Relations Act. The sections of the organic act which section 5 of the bill would repeal are the provisions concerned primarily with the organization of the local executive, legislative, and judicial branches of the government of Puerto Rico and other matters of purely local concern.” U.S.Code Congressional Service p. 2685 (1950).

      . See Puerto Rico v. The Shell Co., 302 U.S. 253, 58 S.Ct. 167, 82 L.Ed. 235 (1937).

      . Accord, United States v. Dejesus, 289 F.2d 37 (2d Cir. 1961) ; Rodriguez Salgado v. United States, 277 F.2d 653 (1st Cir. 1960) ; Sanchez v. United States, 256 F.2d 73 (1st Cir. 1958) ; United States v. Carrion, 140 F.Supp. 226 (D.P.R.1956) ; Mitchell v. Rubio, 139 F.Supp. 379 (D.P.R.1956) ; United States v. Mejias, 131 F.Supp. 957 (D.P.R. 1955) ; Cosentino v. I. L. A., 126 F.Supp. 420 (D.P.R.1954) ; Arbona v. Kenton, 126 F.Supp. 366 (S.D.N.Y.1954) ; Carrion v. Gonzalez, 125 F.Supp. 819 (D.P.R.1954) ; see also Davis v. Trigo Bros. Packing Corp., 266 F.2d 174 (1st Cir. 1959) ; Detres v. Lions Building Corp., 234 F.2d 596 (7th Cir. 1956) ; In re Lummus Co. & Commonwealth Oil Refining Co., 195 F.Supp. 47 (S.D.N.Y. 1961) ; Mora v. Mejias, 115 F.Supp. 610 (D.P.R.1953) ; cf. Waterman S.S. Corp. v. Rodriguez, 290 F.2d 175 (1st Cir. 1961).

      . In a very recent case the District Court for the District of Puerto Rico has found the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. § 401 et seq., applicable to Puerto Rico. Hodgson v. Union de Empleados de los Supermercados Pueblo, 371 F.Supp. 56 (D.P.R. Jan. 30, 1974).

      . Shortly after the Puerto Rican Federal Relations Act came into being, Chief Judge Magruder made the following relevant observation :
      “Thus it is apparently recognized in the compact that Congress has reserved the power, without future amendment of the Puerto Rican Federal Relations Act, to enact general legislation applicable to Puerto Rico as well as to the rest of the United States. There seems to be no implied moral commitment that the Congress will extend to Puerto Rico the provisions of such general legislation only after consultation and manifestation of consent by the people of Puerto Rico..... In enacting such legislation it would no more be necessary to obtain the consent of Puerto Rico than it would be to obtain the consent of the State of New York.” Magruder, the Commonwealth Status of Puerto Rico, 15 U.Pitt.L.Rev. 1, 17 (1953).

      . Section 4774 of the Narcotic Control Act of 1956 provided that its application to Puerto Rico was conditioned upon consent by the Legislative Assembly of the Commonwealth of Puerto Rico. See also Report of the United States — Puerto Rico Commission on the Status of Puerto Rico (1966) at 41, n. 31. And 48 U.S.C. § 751 excludes from operation in Puerto Rico the Interstate Commerce Act and the Safety Appliance Act. On the other hand, many more acts of Congress have been applied to Puerto Rico without any requirement of approval by the Legislative Assembly. See the Comprehensive Drug Abuse Prevention and Control Act of 1970, 21 U.S.C. § 802; the Rehabilitation Act of 1973, 29 U.S.C. § 780(b) ; Labor Management Reporting and Disclosure Act of 1959, 29 U.S.C. § 402(b) ; Public Works and Economic Development Act of 1965, 42 U.S.C. § 3216; Public Broadcasting Act of 1967, 47 U.S.C. § 397; Consumer Product Safety Act (1972), 15 U.S.C. § 2052(10) ; Coal Mine Health and Safety Act of 1969, 30 U.S.C. § 721(a) ; Federal Insecticide, Fungicide and Rodenticide Act of 1972, 7 U. S.C. § 136; Economic Opportunity Act of 1964, 42 U.S.C. § 2949. See also Report of United States — Puerto Rico Commission, supra at 42.

      . See for example the optional nature of state participation in the categorical assistance programs under the Social Security Act.

      . The question whether, under the “compact”, the Congress has power to enact legislation dealing with purely local Puerto Rican matters where it could not do so as to a state is not in issue here, since the application of the Occupational Safety and Health Act in this case was consistent with application of the Act to a state. Compare Hodgson v. Union de Empleados de los Supermercados Pueblo, 371 F.Supp. 56 (D.P.R. Jan. 30, 1974) ; Liquilux Gas Services of Ponce, Inc. v. Tropical Gas Co., 303 F.Supp. 414 (D.P.R.1969). See, Magruder, The Commonwealth Status of Puerto Rico, supra, 17-18.

      . Although this court said in Buscaglia v. Ballester, 162 F.2d 805 (1st Cir.), cert. denied, 332 U.S. 816, 68 S.Ct. 154, 92 L.Ed. 393 (1947) that the Interstate Commerce Clause does not apply to Puerto Rico, we have no occasion here to reconsider that opinion in the light of intervening events. Under either that clause, or the Territorial Clause, Art. IV, § 3, cl. 2, see Puerto Rico v. The Shell Co., 302 U.S. 253, 58 S.Ct. 167, 82 L.Ed. 235 (1937), it is clear that Congress has the power to apply the Occupational Safety and Health Act to Puerto Rico.
      It has also been suggested that the “compact” itself is a source of power for the application to Puerto Rico of federal legislation which is consistent with the compact. See Hodgson v. Union de Empleados de los Supermercados Pueblo, supra.


author: PER CURIAM.

text:
    Genevieve AYDT, as Trustee for the heirs of Michael G. Maas, Plaintiff, v. UNION WIRE ROPE COMPANY, a division of Armco Steel Corporation, and Armco Steel Corporation, Defendant and Third Party Plaintiff-Appellant, v. SPANCRETE MIDWEST CO., Third Party Defendant-Appellee.
    No. 73-1750.
    United States Court of Appeals, Eighth Circuit.
    Submitted March 15, 1974.
    Decided March 26, 1974.

      Cousineau, McGuire, Shaughnessy & Anderson, Minneapolis, Minn., for appellant.
    Mahoney, Dougherty & Mahoney, Minneapolis, Minn., for appellee.
    Before VAN OOSTERHOUT, Senior Circuit Judge, and LAY and ROSS, Circuit Judges.
   PER CURIAM.

This is an appeal from the grant of a summary judgment dismissing a third party complaint in a wrongful death action in the District of Minnesota. Michael Maas, the decedent, was accidentally killed while working at a construction site in Minnesota. Plaintiff Genevieve Aydt brought a wrongful death action against Union Wire Rope Co., the manufacturer of an allegedly defective cable which caused Maas’ fatal accident. Union Wire then brought a third-party action against Spancrete Midwest Co., decedent’s employer, for indemnity or contribution. Union Wire alleged that Spancrete caused or contributed to the accident through negligence and carelessness.

Spancrete moved to dismiss the third-party complaint, claiming that Union Wire’s third-party action was barred by virtue of Minn.Stat. § 176.061, subd. 10. The district court granted the motion and Union Wire now appeals.

A recent decision of the Minnesota Supreme Court is dispositive of this case. In Carlson v. Smogard, Minn., 215 N.W.2d 615 (1974), the Minnesota court held that § 176.061, subd. 10 is an unconstitutional violation of the due process clause of the United States Constitution and art. 1, § 8 of the Minnesota Constitution. The rationale of the court’s decision is that § 176.061, subd. 10 abrogates the third-party tortfeasor’s common law right of action without providing a reasonable substitute and, in addition, furthers no legitimate legislative objective. The Minnesota Supreme Court declared the statute unconstitutional because it knew “of no other way to correct this otherwise ‘unrightable wrong.’ ”

The grant of the motion for summary judgment is reversed and the case remanded for further proceedings.

      . The wrongful death action has not yet been tried or otherwise terminated.

      . Minn.Stat. § 176.061, subd. 10 reads as follows:

        Mmployer not liable to third party. If an action as provided in this chapter prosecuted by the employee, the employer, or both jointly against the third person, results in judgment against such third person, or settlement by such third person, the employer shall have no liability to reimburse or hold such third person harmless on such judgments or settlements in absence of a written agreement to do so executed prior to the injury.


author: GODBOLD, Circuit Judge:

text:
    Samuel KAUFMAN, As Trustee in Bankruptcy of A-OK Motor Lines, Inc., Plaintiff-Appellee, v. The FIRST NATIONAL BANK OF OPP, ALABAMA, Defendant-Appellant.
    No. 73-1857.
    United States Court of Appeals, Fifth Circuit.
    May 10, 1974.
    Rehearing Denied Aug. 8, 1974.

      Frank J. Mizell, Jr., Montgomery, Ala., for defendant-appellant.
    Samuel Kaufman, L. Wayne Collier, Montgomery, Ala., for plaintiff-appellee.
    Before GODBOLD, SIMPSON and INGRAHAM, Circuit Judges.
   GODBOLD, Circuit Judge:

Within four months of the bankruptcy of A-OK Motor Lines, Inc., the Bank, in order to reduce a debt due it by A-OK, set off against the debt funds on deposit in two A-OK accounts, known respectively as the “A-OK COD account” and the “A-OK escrow account.” ******The bank claims the benefit of § 68 of the Bankruptcy Act, 11 U.S.C. § 108, which in certain circumstances permits setoff of mutual debts between the estate of a bankrupt and a creditor.

The crux of the controversy is whether the COD and escrow accounts were of such character that the bank was entitled to make the setoff. The District Court found deposits in the accounts were trust funds not subject to setoff. We affirm, but remand for consideration by the District Court of a limited issue discussed infra.

In a nonbankruptcy context, the right of a bank to a lien against money deposited with it and the right to set off a deposit against the depositor’s indebtedness to the bank are part of the law merchant. 5A Michie, Banks & Banking, § 114 p. 300. The courts have had considerable difficulty in this area with both concepts and terminology. The right to make a setoff requires determining the character of the deposit and the bank’s knowledge or notice of its character. The legal status of the depositor — individual, trustee, public officer, etc. — may be relevant as evidence of the character of the deposit or notice to the bank or both. Necessarily, concepts from the law of trusts may be applicable. The banking law of general versus special deposits is to be considered as well. The right of the bank to mingle with its assets general deposits but not special deposits may be fed into the analysis. The application of these several legal concepts, and the special jargon of each, has produced a body of law not entirely consistent and certainly without the corners neatly fitting together.

The right of the bank exists only where with respect to both debt and deposit the bank and the depositor are in debtor-creditor relationship, and there must be mutuality of demands. Id. § 115c, p. 309. The debts must be between the same parties and in the same “right” or capacity, so that, for example, the bank (having notice of the character of the deposit) cannot set off against a depositor’s individual debt a deposit made by him in his capacity as a public officer or as executor or administrator. Id. at p. 310.

From the trust law approach, it is clear that the right to set off does not extend to funds held in trust by the depositor and (with notice to the bank of their character) received on deposit. In re Goodson Steel Corp., 488 F.2d 776 (CA5, 1974) (bankruptcy case); Restatement of Trusts, Second § 324i.

From the special deposit approach, stated broadly, funds deposited for a special purpose known to the bank, or under special agreement, cannot be set off by the bank. 5A Michie, Banks & Banking, § 129, p. 352 A deposit is special rather than general when there is specific direction, or agreement express or implied, that it be special or where there are circumstances sufficient to create a trust by operation of law. 5B Michie, Banks & Banking, § 328, pp. 263, 266-267. The consequence of a deposit’s being special in the sense that it cannot be subject to setoff is at times described in trust terms. “ [W] here the deposit is made for a special purpose, known to the bank — as, for example, to be paid to creditors — the money is held as a trust fund and hence the bank is without lawful right to appropriate the deposit to its own use as a set-off.” 4 Collier, Bankruptcy, § 68.16, pp. 925-26.

However, if a trustee deposits trust funds in his name as such, the deposit is general and a debtor-creditor relationship is created. The bank does not become a trustee of the funds, and it may mingle the funds with its general assets. V Scott, Trusts § 527, p. 3671. The bank is not bound to supervise the use or application which the fiduciary depositor makes of the trust funds, and, therefore, it is not liable for misapplication merely because the funds are identified as trust monies. This must be distinguished from the situation in which the bank, with notice that a deposit is of trust funds, seeks to set them off against individual indebtedness of the depositor to it. The bank, with an interest in the transaction, is then seeking to profit from a misapplication of trust funds, which it will not be permitted to do. IV Scott, Trusts (3d ed.) § 324.3-4, pp. 2525-33; Y id. § 527, p. 3674.

Thus it is seen that the general-special deposit approach does not quite fit with the trust approach, and neither of these approaches fits with the analysis that focuses on whether funds are subject to mingling. As pointed out above, a deposit of trust funds may be “general” yet setoff may be barred by lack of “mutuality of debts.”

We turn to the facts concerning the two accounts in question. There is little dispute concerning the nature of the COD account. In January 1970 a hearing was held before the Alabama Public Service Commission (APSC) in response to complaints that A-OK was not properly handling funds that had been collected from consignees of COD shipments and were the property of consignors. Both Bank and carrier were represented by counsel at the hearing. The Bank was then pledgee of all of A-OK’s stock. Following the hearing the APSC entered an order pointing out that pending the closing of a prospective sale of the company, the Bank was supervising its operations, and that respective counsel for the Bank and A-OK had represented to the Commission that COD consignees were remitting by checks payable directly to the shippers and that funds collected for COD shipments would not be deposited in A-OK’s bank account. The Commission then ordered that the case be continued,

with the understanding that operations . . . will be supervised until further notice to this Commission by the First National Bank of Opp, Alabama, and upon the assurance that no Collect-On-Delivery monies are now being deposited to the general bank account of Respondent .... (emphasis added)

The next day, January 20, 1970, the COD account was opened, and under the Bank’s own supervision COD collections, and only COD collections, were deposited therein until February 9, 1970. It is obvious that this arrangement was a means of setting aside COD funds that were collected by A-OK rather than remitted directly to the consignors by consignees, and of assuring compliance with the Commission’s understanding that such collections were not placed in AOK’s general bank account.

On February 9 the Bank notified the APSC that it had sold all the stock of A-OK, that the purchasers had taken over control and management, that as of that date A-OK was depositing COD funds in an account for payment to the proper parties, and that the Bank would no longer exercise supervisory control. After February 9 some of the COD collections, but not all, were deposited in the COD account.

In May an SBA-guaranteed loan, discussed below, was closed and $35,000 of the proceeds deposited in the COD account. This amount represented the best guess of the company, after examination of the records, of the total claimed by COD shippers. With respect to funds on deposit in this account the Bank mounts a two-pronged argument: that their setoff was proper at all times, and, alternatively, if their setoff was ever improper, it became proper again on February 9 when the Bank gave notice to APSC that it would no longer supervise A-OK’s operations.

We agree with the District Court that funds from this account could not be set off. COD collections were collected by A-OK on behalf of its shipper-customers. The custom and practice in the business is that they be segregated from general funds of the collecting carrier. The Bank arranged to set aside COD collections not for its benefit but for the protection of the class of persons whose complaints had jeopardized A-OK’s capacity to continue to operate. The Bank operated under that arrangement while it was supervisor and notified the APSC of the viability of the arrangement when it stopped supervising. The Bank could not later appropriate COD funds to its benefit in derogation of the rights of those whom the account was set up to protect.

The Bank’s alternative theory that the status changed on February 9 misconceives the function of the bank as depository. The unusual service performed by the Bank as a temporary supervisor of the business operations of an ailing creditor heavily indebted to it neither annuls nor limits its responsibilities as a banking institution, placed upon it by operation of law. Once the Bank had knowledge of the nature of the account, and of the funds being deposited therein, it could not shuck off its responsibilities (and give itself access to the funds) by, in its phrase, “disavowing] ownership and supervision [of AOK].”

The status of the escrow account is in somewhat more dispute. But the issue is factual. In May 1970 A-OK closed a $350,000 loan made by the Bank and 90% guaranteed by the Small Business Administration. From the proceeds $150,000 was used to pay off an existing loan from the Bank (also referred to as an SBA loan). From the remaining $200,000 some $95,000 was deposited in the newly created escrow account. These were the only funds ever deposited in it. All agree that $35,000 of the amount deposited was set aside to be paid to the Internal Revenue Service and for no other purpose and subsequently was disbursed for that purpose. There was testimony that one of the stipulations of the SBA’s commitment to guarantee 90% of the loan was that a special escrow account be set up to take care of determined debts, such as the one to Internal Revenue, and certain other debts that could not be determined, chiefly to interline carriers. It was explained in testimony that approximately three-fourths of A-OK’s business came from other carriers and that the majority of them had ceased doing business with A-OK. The president of AOK testified that once the escrow account was established he was able, using it as a basis, to persuade many carriers to resume doing business with A-OK. Funds could be disbursed from the account only upon the joint signatures of an officer of A-OK and an officer of the Bank. President Cole of A-OK understood that the Bank had to approve every disbursement, and he testified that to his knowledge the escrow account was never used for any purpose other than those for which it was established under the requirements of the SBA.

There was testimony that the escrow account was a mere convenience to AOK and not required by SBA as a condition of its loan guaranty, but the choice between the differing versions was for the District Judge as fact finder. Regarding the present facts “with an interested eye” to the law of the state in which the ease arose, see In re A. M. Townson & Co., 283 F.2d 449, 452 (CA3, 1960), we perceive adequate evidence to support the conclusion that these funds were not subject to setoff. In the Alabama case of First National Bank v. Prickett, supra, the bank made a loan to its customer who placed it on deposit under an agreement with the bank president that it would be used for the special purpose of paying a check made by the customer to Slaughter, from whom the customer was buying certain equipment. Without the president’s knowledge, the bank honored a check the customer previously had given to a third party (the president having told the third party that he would attempt to collect it for him), and deposited the proceeds to the third party’s account. On learning what had occurred, the president directed that the deposit to the third party’s account be cancelled and Slaughter’s check honored. The third party sued and won a judgment. The Alabama Court of Appeals, reversed, holding that the deposit for a specific purpose was special and remained the property of the depositor or of the beneficiary, Slaughter, until the terms of the deposit had been complied with, and that no part of the funds could be diverted or applied by the bank for a different use or purpose. If the bank cannot divert special deposit funds to another, it is obvious that it cannot divert them for its own financial benefit. See also Central National Bank v. Connecticut Mutual Life Ins. Co., 104 U.S. 54, 26 L.Ed. 693 (1881).

The District Court correctly held that the Trustee had standing to bring this plenary action. The Trustee represents creditors of the estate and is empowered to avoid transfers voidable under federal or state law by a creditor holding a provable claim. 4A Collier, Bankruptcy, § 70.90. Caplin v. Marine Midland Grace Trust Co., 406 U.S. 416, 92 S.Ct. 1678, 32 L.Ed.2d 195 (1972), concerned the effort of a Chapter X trustee to pursue on behalf of debenture holders a claim against an indenture trustee for the company in reorganization for failure of the indenture trustee to perform its obligations under the indenture. It is not authority that the trustee in this case lacks power under § 70 to pursue on behalf of creditors the two bank accounts set off within four months of bankruptcy.

We must also reject the argument that there was no unlawful preference because the funds transferred to the general account of A-OK were “available” to the company until it went out of business. The transfers instantly reduced A-OK’s indebtedness to the Bank in the form of overdrafts by the total of the transfers. The fact that the Bank permitted the general account to continue in use, accepting other deposits therein and honoring checks drawn thereon, cannot change the fact that at the moment of transfer the Bank bettered its general account position by the amount of the transfers and at the expense of those for whom the funds were held in trust.

The District Court did not err in granting interest to the Trustee.

One issue requires further consideration by the District Court. There is some evidence tending to show that after September 11 a number of COD claims were paid out of the general account into which the COD account balance had been transferred. While we intimate no view on the merits, the Bank points out that if it is required to turn over the amount that was in the COD account on the basis that it was held in trust for a certain class of creditors, then it is entitled to consideration of a credit against that amount to the extent that the trust funds thus improperly transferred into the general account, or other funds subsequently advanced by the Bank to the general account, were used to pay members of the class of beneficiaries of the trust. See also 11 U.S.C. § 96(a)(8), (c). The District Court is the proper forum for exploration of this problem.

Affirmed in part and remanded for further proceedings not inconsistent with this opinion. Costs are taxed against the Bank.

      . The Bank, with knowledge of A-OK’s insolvency, transferred to A-OK’s general bank account (called the “A-OK regular account”) balances totalling $46,197.34 in the COD and escrow accounts. At the date of transfer the general account was overdrawn by more than $153,000.

      . Some of the difficulty comes from the fact that a particular concept may be in one instance a causative factor requiring a conclusion that setoff is not available (as where funds are the subject of a preexisting and known trust), while in another instance it may be a mere description of the status of the funds after it has been determined under other legal principles that setoff is unavailable.

      . If the bank is a creditor of the depositor individually, as in the case where he is liable on a note held by the bank or where he has overdrawn his individual account with the bank, it cannot set off against the indebtedness a deposit standing in his name as trustee or otherwise in such form as to indicate the fiduciary character of the deposit. In such a case the bank clearly has notice of the existence of a trust and that it has no right to make the setoff.
      IV Scott, Trusts (3d ed.) § 324.4, p. 2533-34 (footnotes omitted).

      . In Alabama it is said that a special-purpose deposit creates no debtor-creditor relationship and the bank acquires no title to the funds. First National Bank v. Prickett, 19 Ala.App. 204, 95 So. 920 (1923).

      . In this and the preceding authority, and in the cases they cite, the term “trust” is used as a label rather than as a causative factor. See note 2 supra.

      . Does a depositor actually ever think in terms of whether under internal bookkeeping procedures the bank will segregate or mingle the funds? More likely his concern is that the money will be devoted to its special purpose or that its character as trust assets will be protected, and how the bank keeps its books or sets up its balance sheet is of no moment to Mm. In Stonebraker v. First National Bank, 76 F.2d 389 (CA5, 1935), this court declined to give priority to a depositor (of a bank that became insolvent in 1932) where the deposit had been received pursuant to a special agreement, on the ground that the bank, in violation of the agreement it had made, had failed to segregate the funds. Perhaps the case can be explained on the ground of judicial reluctance to give preferred status to one depositor over other and general depositors, in the wake of the bank failures of the Great Depression. Or perhaps it is an inexplicable anachronism.

      . Note also that a deposit which is special by Collier’s definition of a deposit for a special purpose, such as to be paid to creditors, cannot be set off, while Professor Scott dwells at length on the fact that, at least for purposes of priority on insolvency of the bank, a general deposit for a special purpose creates only a debtor-creditor relationship. V Scott, Trusts, § 530, p. 3680 et seq.

      . Concurrently the Interstate Commerce Commission was investigating the same or similar complaints.

      . Also there was testimony that what was required by the APSC was requested by the ICC and that A-OK “tacitly agreed” with ICC.

      . The trustee makes no claim that the Bank is in any wise responsible for A-OK’s deposits of COD funds in other accounts.

      . The Bank argues that it agreed with AOK to permit money to be transferred from the COD account to the general account. This contention founders on the factual findings, amply supported, that there was no such agreement, and on the conclusion of law that even if there were it could not deprive the deposits of their trust character.

      . As noted above, when the Bank told the APSC that it was terminating supervision it included a statement that COD collections were then being placed in an account for payment to the proper parties. There was testimony from the new operators of the company that at least twice the APSC sent examiners to A-OK to see if its January order was being complied with.

      . Compare Ribaudo v. Citizens National Bank, 261 F.2d 929 (CA5, 1958) in which we wrote:
      The special payroll account was special in name only. It was not a trust [account] or similar immobilized aeocnmt. Segregation under [the “special payroll account”] label was for the Bankrupt’s convenience only ....

        Id. at 933 (emphasis added).

      . Since the present case arises under the Bankruptcy Act, federal law is applicable. We regard state law as a useful tool but not binding on us.

      . The account was overdrawn from January until the SBA loan was closed. The overdraft status ended but only for a couple of months, and by the time the transfers were made overdrafts were $153,000 plus.