author: GODBOLD, Circuit Judge:

text:
    Marion MURTAGH and William Joseph Powell, Plaintiffs-Appellants, v. UNIVERSITY COMPUTING COMPANY, a Texas corporation, et al., Defendants-Appellees.
    No. 72-2893.
    United States Court of Appeals, Fifth Circuit.
    March 6, 1974.
    Rehearing, Denied April 3, 1974.

      Louis P. Bickel, Richard L. Jackson, Dallas, Tex., for plaintiffs-appellants.
    Harold Hoffman, David R. Snodgrass, Dallas, Tex., for defendants-appellees.
    Before AINSWORTH, GODBOLD and CLARK, Circuit Judges.
   GODBOLD, Circuit Judge:

Appellants Murtagh and Powell, subjects of the United Kingdom, sued University Computing Co. (UCC), a Texas corporation, for damages arising from their sale to UCC of two computer companies for UCC common stock and cash. Appellants charged they suffered these damages because of the following alleged acts or omissions by UCC. (1) UCC in violation of antifraud provisions of federal securities laws and the Texas Business and Commerce Code made material misrepresentations that the UCC stock to be paid appellants could be freely sold in the over-the-counter market or through a stock exchange at any time after such shares were delivered, and failed to disclose the consequences which could result from UCC’s failure to register the stock in accordance with federal securities laws. (2) UCC breached a written contract (the Stock Purchase Agreement dated June 30, 1967), wherein UCC agreed to exchange UCC common stock and cash for all the stock in appellants’ two computer companies by delivering stock to appellants which could not be freely sold immediately after delivery in the over-the-counter market or through a stock exchange. (3) UCC wrongfully converted appellants’ property by placing restrictive legends upon the UCC stock delivered to them and by advising third parties that the UCC stock owned by appellants could be sold only subject to restrictions imposed by the federal securities laws.

At trial the court, pursuant to Fed.R. Civ.P. 49(a), submitted to the jury a series of written questions, which we set out in the margin together with the jury’s answers, with the exception of questions not essentially related to the points we discuss below. By its answers the jury found all the elements necessary for appellants to recover on their claims that UCC had made actionable misrepresentations and omissions and had wrongfully converted stock owned by them. But by its answers to questions 20-22 the jury also made findings material to the creation and effect of a settlement agreement between the parties. The trial judge, relying upon the answers, entered judgment for UCC. Only Murtagh and Powell appeal. We affirm the judgment of the District Court.

The parties present a multitude of points and counterpoints for our disposition, but once the dust settles it becomes clear that the dispositive points are the findings concerning the settlement agreement and its legal effect. As to these points appellants have raised essentially three different groups of contentions.

1. They attack the sufficiency of the evidence and the adequacy of the jury’s findings to establish a settlement agreement having the effect of barring recovery. Appellants correctly posit that the creation of a settlement agreement, as does the creation of any enforceable contract, requires a meeting of the minds of the contracting parties on the subject matter of the agreement. See Missouri, K. & T. Ry. Co. v. Texas, 275 S.W. 673 (Tex.Civ.App.1925, writ ref’d) and Mutual Fire & Auto. Ins. Co. v. Green, 235 S.W.2d 739 (Tex.Civ.App. 1950, n. w. h.). Here, appellants contend, the evidence does not show that the parties’ minds ever met as to what their respective claims and controversies were and as to what each would do or give up in satisfaction of those claims and controversies. The court instructed the jury on question 21 that “agreed” meant a meeting of the minds. The appellants did not object to this instruction. UCC’s General Counsel Eldon Vaughan testified that he and Powell (who Murtagh concedes had authority to bind her to any agreement made with UCC) orally agreed on March 9, 1970 that if UCC would register appellants’ stock and accelerate the remaining payments of stock and cash due them, appellants would release UCC from any liability and not initiate litigation against UCC. Powell denied that such an oral agreement had been made. The jury by its answer to question 21 found that the parties did agree to so settle “all claims and controversies,” and there is adequate evidentiary support for this finding.

The existence of an antecedent bona fide dispute between the parties concerning the subject matter of a subsequent settlement agreement is sufficient legal consideration for creation of an enforceable agreement. See El Paso County Water Imp. Dist. No. 1 v. City of El Paso, 243 F.2d 927, 933 (CA5), cert, denied, 355 U.S. 820, 78 S.Ct. 26, 2 L.Ed.2d 36 (1957), and 12 Tex.Jur.2d, Compromise and Settlement §§ 5 and 6, pp. 290-92 (1960). The party claiming that a settlement agreement has been created has the burden of exhibiting that a bona fide dispute existed as to the subject matter. See, e. g., Bergman Produce Co. v. Brown, 156 S.W. 1102 (Tex.Civ.App.1913, n. w. h.). The jury found appellants had established all elements requisite to their recovery from UCC for material misrepresentations and omissions and for conversion of their stock. But by its answer to question 20 the jury expressly found only that a bona fide dispute existed “as to the rights and obligations of the parties under the amended Stock Purchase Agreement.” Hence, appellants contend, the answer to question 20 effectively establishes consideration for creation of a settlement agreement barring only their breach of contract cause of action. UCC, they say, failed to carry its burden to establish an essential element for the creation of a settlement agreement adequate to bar recovery under the separate fraud and conversion claims. Even if we adopt appellants’ restrictive reading of question 20 as applying to only a cause of action for breach of contract, the appellants gain no ground. Rule 49(a) provides that if

the court omits any issue of fact raised by the pleadings or by the evidence, each party waives his right to a trial by jury of the issue so omitted unless before the jury retires he demands its submission to the jury. As to an issue omitted without such demand the court may make a finding; or, if it fails to do so, it shall be deemed to have made a finding in accord with the judgment on the special verdict.

UCC’s responsive pleadings and the evidence at trial clearly raised an issue of whether there was a settlement agreement created to bar all of appellants’ claims against UCC, and neither party raised an objection to the adequacy of question 20 to test for the existence of factual elements essential to creation of a settlement covering all of appellants’ claims. Therefore, even if we were to conclude that necessary factual findings are missing in the jury’s answer to question 20, we would deem that the District Court in accord with its entry of judgment for UCC made findings that antecedent bona fide disputes existed between the parties as to whether UCC committed fraud and conversion. And such deemed findings would not be clearly erroneous on this record. See Fed.R. of Civ.P. 49(a) and 52(a); Williams v. Aetna Casualty & Surety Co., 239 F.2d 250, 252-253 (CA5 1956).

2. Appellants’ second group of contentions concerning the settlement agreement constitute an argument that, even if a settlement agreement was created, it cannot bar their recovery for UCC’s violations of the anti-fraud provisions of federal securities laws because such a settlement would be void as against public policy. The federal securities laws do not compel persons harmed by acts violating provisions of the laws to seek their remedies only through litigation. See Wilko v. Swan, 346 U.S. 427, 438, 74 S.Ct. 182, 98 L.Ed. 168, 177 (1953) and Moran v. Paine, Webber, Jackson & Curtis, 389 F.2d 242, 245-246 (CA3 1968). Notwithstanding .the provisions of the securities laws expressly voiding any private agreement waiving compliance with provisions of the laws, settlements of claims arising from acts which are violations of the securities laws are not void as a matter of law, at least where such settlement agreements do not themselves continue the precise conduct which violates the laws. See Cohen v. Tenney Corp., 318 F.Supp. 280, 283-285 (S.D.N.Y.1970) and cf. Pearlstein v. Scudder & German, 429 F.2d 1136 (CA2 1970), cert, denied, 401 U.S. 1013, 91 S.Ct. 1250, 28 L.Ed.2d 550 (1971). But judicial hostility toward waivers of statutory rights requires that the right to private suit extended by the securities laws for alleged violations be scrupulously preserved against unintentional or involuntary relinquishment. See Cohen v. Tenney Corp., supra. Courts can scrutinize the settlement agreement to determine whether the waiver of private rights accomplished thereby is intentional. Appellants rely upon Childs v. RIC Group, Inc., 331 F.Supp. 1078, 1083 (N.D.Ga. 1970), aff’d, 447 F.2d 1407 (CA5 1971), for the proposition that to support a finding of intentional waiver by settlement of a right granted private parties by the securities laws it must be specifically found that the particular statutory right was actually known. And, since no express factual finding of their actual knowledge of rights under the securities laws was made here, appellants say the settlement cannot bar their recovery for the securities fraud which the jury found.

This argument too must be rejected because of the operation of Rule 49(a). There was no request to the court that it submit a question to the jury requiring a finding of whether appellants had intentionally and knowingly waived the rights granted them by the securities laws. It then was proper for the court to rule upon that question, and we must deem that the court consistent with its judgment for UCC found that appellants intentionally and knowingly waived their statutory rights under the securities acts. We are unable to say that such a finding is clearly erroneous, Williams v. Aetna Casualty & Surety Co., supra, 239 F.2d at 252-253, since the record reveals that prior to the time Powell orally agreed to settle he had retained American counsel and had been advised to sue UCC. Indeed Powell brought to the settlement meeting and showed to UCC General Counsel Vaughan prior to their oral agreement, a draft letter from Powell’s American counsel threatening suit if a settlement were not reached.

3. Finally appellants challenge the operation of the settlement agreement to bar their claims by arguing that even if such an agreement was made at Powell’s March 9 meeting with Vaughan, it subsequently was repudiated by UCC, or was repudiated by appellants and then rescinded by UCC’s acceptance of appellants’ repudiation and suspension of its performance. The settlement agreement found in question 21 expressly recounts affirmative duties required of only UCC. Question 21 does not refer to a duty on appellants to execute a release agreement, although it does specify that the settlement agreement was “in full and complete satisfaction of all claims and controversies between the parties.” Appellants, therefore, make a two-prong contention, the first of which is that if there was a settlement agreement UCC repudiated it by in effect conditioning its performance of an already agreed upon matter on the acceptance of an additional term [a written release] not found by the jury (in answer to question 21) to be part of their agreement. This theory — whether considered as expressing a condition not bargained for by UCC, or if bargained for prematurely asserted because any release was only required contemporaneously with full performance by UCC— was not properly presented at trial. It was not the subject of an interrogatory, nor did appellants request that it be. It was not covered in jury instructions, and appellants made no objection on such ground. Nor did appellants argue the theory to the jury. It surfaced for the first time in motion for new trial. Again, appellants run head on into Rule 49(a), which requires us to deem that consistent with its judgment for UCC the trial court found that UCC’s demand for the release was neither unjustified nor untimely.

The second prong to appellants’ after-trial theory is that if Powell’s telegram was a repudiation UCC “accepted” the repudiation and suspended its performance. For two reasons this lacks merit. The court instructed without objection that there was no further obligation on defendant to perform after receipt of the April 18 telegram. Also, after receipt of the telegram UCC proceeded at its expense to complete the necessary SEC registration to permit appellants to sell their stock, and after the registration was effective appellants took advantage of it by selling. Subsequently UCC delivered the remaining stock and cash. Thus appellants’ complaint is that times of delivery of the additional stock and cash were not accelerated as agreed and in the interim the market price of UCC stock declined.

In the end, this case reduces itself to matters that can be simply stated. The jury found that UCC had wronged the appellants, but found also, contrary to appellants’ version, that the matters between UCC and appellants were the subject of a settlement agreement. It found that UCC was ready, willing and able to perform until it received Powell’s telegram of April 18 and would have performed but for that telegram. The after-trial claim that even if there was a settlement it was negated by UCC’s subsequent action in calling for a written release must fail because Rule 49(a) forecloses it and, in any event, the claim wholly lacks evidentiary support. And, as we have noted, after receipt of the telegram, UCC performed a substantial part of what it had undertaken by the settlement agreement to do, although under the instructions to the jury further performance was not required of it.

Affirmed.

      . Computer Services (Birmingham, England) Ltd. and Computer Bureau (Shannon, Ireland) Ltd.

      . Appellants pleaded violations of § 17(a) of the Securities Act of 1933 [15 U.S.C.A. § 77q(a) (1971)], § 10(b) of the Securities Exchange Act of 1934 [15 U.S.C.A. § 78j(b) (1971)] and of SEC Rule 10b-5 [17 C.F.R. § 240, 10b-5 (1972)].

      . Section 27.01 Vernon’s Tex.Bus. and Comm. Code Ann. (1968).

      . It is not disputed that the stock UCC issued appellants as partial consideration for selling their companies was unregistered. See 15 U.S.C.A. § 77e (1971). UCC contends, however, that the stock was issued in a “private placement” transaction which was exempted from the registration provisions of the securities laws, see 15 U.S.C.A. § 77d (1971), and that the legends were necessary and proper to establish and preserve this exemption. Our disposition of the appeal makes it unnecessary for us to rule on UCC’s contentions and to decide whether such legends could, as a matter of law, constitute acts of conversion.

        . UCC contends that letters to such third .parties as a matter of law, could not constitute conversion. Again, our disposition of the case allows us to pretermit adjudication of this contention.

      . “SPECIAL ISSUE NO. 1
      Do you find from a preponderance of the evidence that, in connection with" the negotiations leading up to the execution of the Stock Purchase Agreement dated June 30, 1967, the officers or agents of University Computing Company acting as such represented to Marion Murtagh and William Joseph Powell that the shares of the common stock of University Computing Company which were to be delivered to them pursuant to such Agreement could be freely sold in the over-the-counter market or through a stock exchange at any time after such shares were delivered ?
      Answer ‘They did’ or ‘They did not.’
      ANSWER: They Did
      If you have answered Special Issue No. 1 ‘They did,’ answer Special Issue No. 2; otherwise, you need not answer same.
      “SPECIAL ISSUE NO. 2
      Do you find from a preponderance of the evidence that the representation mentioned in Special Issue No. 1 was false?
      Answer ‘It was false’ or ‘It was not false.’
      ANSWER: It Was False
      If you have answered Special Issue No. 2 ‘It was false’, answer Special Issue No. 3; otherwise, you need not answer same.

        “SPECIAL ISSUE NO. 3
      Do you find from a preponderance of the evidence that the officers and agents of University Computing Company making the representation mentioned in Special Issue No. 1 either knew that such representation was false or did not know whether it was true or false?
      Answer ‘Yes’ or ‘No’
      ANSWER: Yes
      If you have answered Special Issue No. 3 ‘Yes’, answer Special Issue No. 4; otherwise, you need not answer same.
      “SPECIAL ISSUE NO. 4
      Do you find from a preponderance of the evidence that such representation was of a material fact?
      Answer ‘Yes’ or ‘No’
      ANSWER: Yes
      If you have answered Special Issue No. 4 ‘Yes’ answer-Special Issue No. 5; otherwise, you need not answer same.
      “SPECIAL ISSUE NO. 5
      Do you find from a preponderance of the evidence that Marion Murtagh and William Joseph Powell relied upon such representation in connection with the purchase of the common stock of University Computing Company?
      Answer ‘They did’ or ‘They did not’
      ANSWER: They Did
      If you have answered Special Issue No. 5 ‘They did,’ answer Special Issue No. 6; otherwise, you need not answer same.
      “SPECIAL ISSUE NO. 6
      Do you find from a preponderance of the evidence that, as a result of the securities not being freely saleable in the over-the-counter market or on a stock exchange, Marion Mur-tagh and William Joseph Powell sustained monetary loss?
      Answer ‘They did’ or ‘They did not’
      ANSWER: They Did
      “SPECIAL ISSUE NO. 7
      Do you find from a preponderance of the evidence that officers and agents of University Computing Company acting as such failed to state to Marion Murtagh and William Joseph Powell the consequences which could result from the failure of University Computing Company to register under the Securities Act of 1933 the sale of the shares of common stock of University Computing Company to be delivered to them pursuant to the Stock Purchase Agreement dated June 30, 1967, as amended by Agreement dated July 18, 1968?
      Answer ‘They failed to do so’ or ‘They did not fail to do so’
      ANSWER: They Failed To Do So
      If you have answered Special Issue No. 7 ‘They failed to do so’, answer Special Issue No. 8; otherwise, you need not answer same.
      “SPECIAL ISSUE NO. 8
      Do you find from a preponderance of the evidence that the omission to make the statement mentioned in Special Issue No. 7 was an omission to state a material fact necessary in the light of the circumstances under which made, to make the facts stated not misleading?
      Answer ‘It was’ or ‘It was not’
      ANSWER: It Was
      If you have answered Special Issue No. 8 ‘It was,’ answer Special Issue No. 9; otherwise, you need not answer same.
      “SPECIAL ISSUE NO. 9
      Do you find from a preponderance of the evidence that Marion Murtagh and William Joseph Powell would not have purchased shares of the common stock of University Computing Company but for the omission to state a material fact as heretofore found by you in reply to Special Issues Nos. 7 and 8?
      Answer ‘They would’ or ‘They would not’
      ANSWER: They Would Not
      If you have answered Special Issue No. 9 ‘They would not’, answer Special Issue No. 10; otherwise, you need not answer same.
      “SPECIAL ISSUE NO. 10
      Do you find from a preponderance of the evidence that, as a result of the omission to state a material fact as heretofore found by you in reply to Special Issues Nos. 7 and 8, Marion Murtagh and William Joseph Powell sustained monetary loss?
      Answer ‘They did’ or ‘They did not’
      ANSWER: They Did
      “SPECIAL ISSUE NO. 11
      Do you find from a preponderance of the evidence that the acts and conduct of University Computing Company in the following particulars under all the facts and circumstances before you amounted to a ‘conversion’ of any of the shares of Marion Murtagh and William J. Powell that they had received or had a right to receive :
      A. The act and conduct of University Computing Company in the placing of a ‘Legend’ or language indicating some character of restriction upon any shares in fact delivered to them after December 31, 1968?
      Answer ‘It did’ or ‘It did not’
      ANSWER: It Did
      B. The act and conduct of University Computing Company in causing the letters in evidence before you to be directed to Barclays Bank DCO Nassau?
      Answer ‘It did’ or ‘It did not’
      ANSWER: It Did
      C. The act and conduct of University Computing Company in causing the letters in evidence before you to be directed to First National City Bank (Ciiannel Islands) Ltd.?
      Answer Tt did’ or Tt did not’
      ANSWER: It Did
      If you have answered any of the above and foregoing Special Issues 11 A, 11 B, or 11 C Tt did’ then answer the following Special Issues :
      “SPECIAL ISSUE NO. 12
      Do you find from a preponderance of the evidence that such conduct was a conversion of:
      A. The 21,000 shares Marion Murtagh received in late December 1967 and January 1968?
      Answer Tt was’ or Tt was not’
      ANSWER: Tt Was
      B. The 5,379 shares received by Marion Murtagh that were due to her December 31, 1968?
      Answer Tt was’ or Tt was not’
      ANSWER: It Was
      C. The 473 shares received by Marion Mur-tagh in late February 1970 as the result of an earlier stock dividend?
      Answer Tt was’ or Tt was not’
      ANSWER: It Was
      D. The 6600 shares due to be received by Marion Murtagh December 31, 1969?
      Answer Tt was’ or Tt was not’
      ANSAVER: It Was
      “SPECIAL ISSUE ÑO. 13
      Do you find from a preponderance of the evidence that such conduct was a conversion of
      A. The 7,000 shares William J. Powell received in late December 1967?
      Answer Tt was’ or Tt was not’
      ANSWER: It Was
      B. The 6,100 shares AA’illiam J. Powell purchased in the open market?
      Answer Tt was’ or Tt was not’
      ANSWER: It Was
      C. The 5,379 shares received by William J. Powell that were due to him December 31, 1968?
      Answer Tt was’ or Tt was not’
      ANSWER: It AVas
      D. The 6,600 shares due to be received by William J. Powell in December 31, 1969?
      Answer Tt was’ or Tt was not’
      ANSAVER: It Was
      E. The 145 shares received by William J. Powell in late February 1970 as the result of an earlier stock dividend?
      Answer Tt was’ or Tt was not’
      ANSAVER: It AVas
      “SPECIAL ISSUE NO. 20
      Do you find from a preponderance of the evidence that in March, 1970, there was a bona fide dispute between Plaintiffs and UCC as to the rights and obligations of the parties under the amended Stock Purchase Agreement of June 30, 1967, and with respect to the UCC stock delivered thereunder?
      Answer ‘Yes’ or ‘No’.
      ANSAVER: Yes.
      If you have answered the foregoing Special Issue ‘Yes’, then answer the following Special Issue. Otherwise you need not answer same.
      “SPECIAL ISSUE NO. 21
      “Do you find from a preponderance of the evidence that in March, 1970, it was agreed, in substance, between Eldon Vaughan, acting for UCC, and Powell that in full and complete satisfaction of all claims and controversies between the parties UCC would register the Plaintiffs’ UCC stock with the SEC and accelerate the remaining payments of UCC shares and cash to become due under the amended Stock Purchase Agreement of June 30, 1967?
      Answer ‘Yes’ or ‘No’.
      ANSAVER: Yes.
      By the term ‘agreed’ is meant a meeting of the minds.
      If you have answered the foregoing Special Issue ‘Yes’, then answer the following Special Issue. Otherwise you need not answer same.
      “SPECIAL ISSUE NO. 22
      Do you find from a preponderance of the evidence that UCC was ready, willing and able to register the Plaintiffs’ UCC stock with the SEC and to accelerate delivery of the remaining payments of UCC shares and cash to become due under the amended Stock Purchase Agreement of June 30, 1967, and would have done so, but for receiving the telegram from Powell on or about April 18, 1970?
      Answer ‘Yes’ or ‘No’
      ANSAVER: Yes
      You are instructed in this connection that UCC was not required to continue performance of its agreement, if any you have found in answer to Special Issue No. 22 above after receiving the telegram from Powell on or about April 18, 1970.”

      . Many would be properly raised only if UCC had taken a cross-appeal from the jury findings adverse to it.

      . There are reasons for reading question 20 more expansively. AVhile appellants have characterized their suit as an action for one sum of damages for each of three separate types of injurious conduct by UCC — fraud, conversion, and breach of contract — close reading of the charge and special questions reveals that the District Court never separated the case so neatly into three parts. The fraud and conversion causes are separately identifiable, but the District Court did not ask the jury to consider also an independent breach of contract claim. Rather, considerations of what the Stock Purchase Agreement called for pervade and provide the matrix for the fraud and conversion claims which the jury was required to consider. And, by question 21, the court required the jury to find whether UCC and appellants “agreed” to settle “all claims and controversies between the parties,” not just a breach of contract claim.

      . § 14 of the Securities Act of 1933 [15 U.S. C.A. § 77n (1971)] provides:
      “Any condition, stipulation or provision binding any person acquiring any security to waive compliance with any provision of this subchapter or of the rules and regulations of the Commission shall be void.”
      § 29(a) of the Securities and Exchange Act of 1934 [15 U.S.C.A. § 78 cc(a) (1971)] provides:
      “Any condition, stipulation, or provision binding any person to waive compliance with any provision of this chapter or of any rule or regulation thereunder, or of any rule of an exchange required thereby shall be void.”

      . Additionally, the evidence does not support in the slightest degree a claim that the telegram of April 18, sent by Powell to UCC, had any relation to UCC’s letter of March 19 sending the release to be executed. The telegram said: “Your terms for agreement with Powell and Murtagh are not accepted.” This language, the testimony of UCC, Powell and Murtagh, and the exhibits, reflect with total clarity that the telegraph was a statement by Powell of his position that he had not entered into a settlement agreement at all on March 9, a position that the jury rejected. Beginning March 9 UOO took many necessary steps toward completion of matters required of it by the March 9 agreement. At their end, Murtagh understood Powell to tell her by telephone that an agreement had been reached on March 9, and based on that conversation she sent a letter to UCC, with a copy to Powell, acknowledging her understanding and stating her intent to move forward with the agreement. Powell received his copy of her letter, called her, and told her she has misunderstood him because he had merely told her what UCC had offered and not that he had agreed to accept the offer. Then he dispatched the telegram. Upon receipt of it, Vaughan called Powell, and according to Vaughan’s testimony, not controverted by Powell, Powell made no objection to the release but said the settlement was no longer acceptable because Murtagh was disturbed about the registration statement under which their shares would be registered and the way the company was being managed. There is no substantial evidence relating the April 18 telegram to the request for a release.

      . See Restatement of Contracts § 417; Hill v. Schultz, 248 S.W.2d 535 (Tex.Civ.App. 1952); American Textile Mach. Co. v. United States, 220 F.2d 584 (CA6 1955).


source: Caselaw Access Project

author: LEWIS R. MORGAN, Circuit Judge:

license: Public Domain

text:
    B & H WAREHOUSE, INC., Plaintiff-Appellant, v. ATLAS VAN LINES, INC., Defendant-Appellee.
    No. 72-3555.
    United States Court of Appeals, Fifth Circuit.
    March 6, 1974.

      Daniel H. Benson, Lubbock, Tex., W. D. Benson, Jr., Kingsland, Tex., for plaintiff-appellant.
    James K. Presnal, Austin, Tex., Herbert Burstein, New York City,, for defendant-appellee.
    Before TUTTLE, DYER and MORGAN, Circuit Judges.
   LEWIS R. MORGAN, Circuit Judge:

This case involves plaintiff-shareholder’s claim that the defendant corporation converted plaintiff’s shares by restricting plaintiff’s right to sell or transfer them. The restriction provides that before alienating the shares, plaintiff must offer them to the corporation at book value, which, plaintiff alleges, is significantly less than the true market value of the shares. Plaintiff seeks damages of $60,000, which is alleged to be the difference between the price which plaintiff could receive in the open market absent the restriction, and the book value of the shares. In the alternative, plaintiff seeks a declaratory judgment that the restriction is invalid as applied to it. At trial, the district court' sustained the position of the defendant, holding that an amendment to the corporate charter enacted after plaintiff acquired its shares restricted its right to alienate the stock, and did not constitute a conversion. We reverse.

I

Defendant-appellee Atlas Van Lines, Inc. (Atlas) is a Delaware corporation engaged in the interstate transportation of household goods throughout the continental United States. It was incorporated May 19, 1948. Included in its charter was the following paragraph:

“FOURTEENTH. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this restriction.”

Plaintiff-appellant B&H Warehouse, Inc. (B&H), a Texas corporation, acquired 30 shares of Class A common stock in Atlas in 1949. At that time, there were no restrictions on the sale of the stock.

On August 1, 1950, a voting trust certificate was issued to B & H in exchange for these 30 shares of stock. At that time, the stock certificates were transferred to Atlas, which has retained possession of them. The trust agreement restricted B&H from alienating the stock without first giving Atlas the option to buy the stock at book value, which is $10,000 for the 30 shares, or $333.33 per share. The voting trust expired on November 30, 1961, and has never been renewed.

In 1966, the Atlas charter was amended to provide that the Class A common stock could not be sold until the shares had first been offered in writing to the corporation at a price equal to the book value of the shares, plus $100.00 per share for good will.

In 1967, the Delaware corporation law was amended by the addition of Section 202(b), which limits the power of corporations to restrict alienability of their stock.

In 1970, Atlas again amended its charter. It now provides that before selling shares of Class A common stock, a shareholder must offer the shares to the corporation for the book value of $333.33 per share. B&H voted against this amendment to the charter. It is conceded that both the 1966 and the 1970 amendments were properly adopted according to the Atlas charter and the existing Delaware law.

II

In its complaint, B & H sought to recover $60,000 in damages from Atlas for conversion of its stock. In the alternative, B & H sought a declaratory judgment that the restrictions placed on the stock by Atlas are ineffective against B & H. The district court held that the restriction contained in the voting trust agreement was ineffective to bind B & H because the trust agreement expired in 1961, and the restriction could not outlive the trust agreement. The court also held that § 202(b) invalidated the 1970 amendment with respect to B & H because B & H was not a party to an agreement and did not vote in favor of the restriction.

The court held, however, that the 1966 amendment was valid and binding on the B & H and did not constitute a conversion. The court found that prior to the 1967 enactment of § 202(b), Delaware law did not contain the requirement that the shareholder must have indicated its approval of the restriction before being bound by it. It held further, that § 202(b) should not be interpreted to have retroactive effect, that is, to affect amendments adopted before its effective date. In addition, the court held that the amendment was permitted by the Delaware Corporation Law and Paragraph 14 of the Atlas charter. Therefore, the court entered judgment for the defendants.

Ill

The district court was correct in holding that the restriction on alienation contained in the voting trust agreement expired when the trust itself expired. We can find no basis for holding that restrictions which are agreed to as part of a voting trust with a definite expiration date outlive the trust. Such a holding would be, in effect, an amendment of the trust agreement.

In addition, the district court was correct in holding that the 1970 amendment to the charter is not binding on B & H. Because B & H neither entered an agreement containing the restriction nor voted in favor of the restriction, it is protected from the effect of the restriction by § 202(b).

We cannot, however, uphold the district court’s determination that B & H is bound by the 1966 charter amendment. Although courts in many cases have upheld restrictions similar to the one contained in the 1966 amendment, each of those cases has important distinguishing features.

It should be noted first that the validity of any restriction is to be determined according to the law of the state of incorporation — in this case, Delaware. Palmer v. Chamberlin, 191 F.2d 532 (5 Cir. 1951). See, Restatement (Second) of Conflicts § 303 (1971). In spite of both parties’ valiant attempts to find a case in point in Delaware law, we are left without any solid precedent for our decision. Nevertheless, we have determined that, were this question presented to the courts of Delaware for decision, they would hold the restriction invalid.

To support the restriction, defendants rely primarily on Lawson v. Household Finance Corporation, 17 Del.Ch. 343, 152 A. 723 (1930). Lawson was the transferee of 100 shares of Class B common stock. He brought a bill in the Court of Chancery seeking to compel the defendant Delaware corporation to transfer the shares of its books from the transferor to the plaintiff. This the defendant refused to do, basing its refusal on certain provisions of its certificate of incorporation, as amended, and its bylaws. Those provisions, to the extent they are relevant here, required a person who wished to transfer his stock to notify the corporation of his intention. The transferor and the corporation would then each appoint an appraiser, and those two appraisers would appoint a third. The three appraisers were then to “determine their [the share’s] value as at the time of such appraisal and shall forthwith give written notice of their determination to both parties. In determining the value good will shall not be considered.” 152 A. at 725. The board of directors of the corporation would then have 20 days to purchase the shares for the price set by the appraisers.

Existing Delaware corporation law authorized corporations to make by-laws relating to the transfer of their stock, and also provided that a corporation and its directors shall have all the powers granted by its certificate of incorporation “so far as the same are necessary or convenient to the attainment of the objects set forth in such charter or certificate of incorporation.” Rev.Code of 1915, Ch. 65, § 3, quoted at 152 A. 726. Noting that the defendant corporation was in the small loan business and required competent, honest and trustworthy employees, the court held that the corporation’s practice of providing employees with an interest in the business was a valid means of effectuating its purposes, and the right of first refusal outlined in the certificate of incorporation was a reasonable way of furthering the scheme of employee ownership.

The court, after holding the restriction contained in the by-law valid under the corporation law of Delaware, went on to hold that the restriction was also valid as part of the contract between the corporation and its shareholders. The shareholders could be held to have agreed to the restriction when they acquired the stock, since the restriction was not only included in the articles of incorporation, but was also printed on the back of the stock certificates. In short, the court upheld the restriction, both as a by-law and as a contract.

Lawson is important, but it is not directly in point for two reasons. First, the restriction on stock transfer was included in the original articles of incorporation of the Household Finance Corporation, in addition to being printed on all the stock certificates. Thus, the Delaware court was obviously justified in upholding the restriction on a contract theory, in addition to sustaining its validity as a by-law. In this case, the restriction was added to the by-laws after the plaintiff acquired its shares of stock. While it may be that the plaintiff impliedly agreed to this kind of restriction because of the fourteenth paragraph of the articles of incorporation (see section IV, infra), no such restriction was included when the plaintiff acquired the shares. A second difference is that the corporation in Lawson could exercise its right to buy only at the appraised value of the shares. Although “good will” was specifically excluded from consideration by the appraisers, their determination of the “value” of the stock would certainly bear some relationship to market price. This is not to imply that it is never possible for a corporation to reserve a right of first refusal at a price less than the market price. See, e. g., Doss v. Yingling, 95 Ind.App. 494, 172 N.E. 801 (1930) ; Allen v. Bilt-more Tissue Corp., 2 N.Y.2d 534, 161 N.Y.S.2d 418, 141 N.E.2d 812 (1957). Nevertheless, the Lawson court clearly indicated that its upholding of the restriction was based on a holding that the restriction was reasonably related to the purposes of the corporation, and the price at which the stock is to be offered clearly relates to the reasonableness of the restriction.

The significance of Lawson is that it states the applicable Delaware law on one aspect of the area of restrictions on stock transfer, and it is the leading case in a line of precedent which has been followed in many jurisdictions in this country. Martin v. Graybar Electric Co., 285 F.2d 619 (7th Cir. 1961); Palmer v. Chamberlin, supra; Vannucei v. Pedrini, 217 Cal. 138, 17 P.2d 706 (1932); Doss v. Yingling, supra; New England Trust Company v. Abbott, 162 Mass. 148, 38 N.E. 432 (1894) ; Bau-mohl v. Goldstein, 95 N.J.Eq. 597, 124 A. 118 (Ct. of Ch. 1924); Allen v. Biltmore Tissue Corp., supra; Nicholson v. Franklin Brewing Co., 82 Ohio St. 94, 91 N.E. 991 (1910); 12 Fletcher CycCorp (Perm. Ed.) § 5461.3. It should be noted that several of these cases, while specifically holding that the challenged restriction was invalid as a by-law, usually because unauthorized by the state’s corporation statute, upheld the restriction as a contract by the shareholders among themselves, or between the corporation and its shareholders. See, e. g., Palmer v. Chamberlin, swpra; Nicholson v. Franklin Brewing Co., supra. It is because the restriction in this case was adopted after, and not before, plaintiff acquired its shares of stock, that this line of cases is of limited usefulness in determining the validity of the challenged restriction.

IV

Another line of cases involves restrictions and other disabilities attached to stock after the shareholder challenging the disability acquired his shares. Fortunately, there is a long line of Delaware cases dealing with whether, and under what conditions, these later restrictions may be applied to someone who acquired his shares before the restriction or disability was imposed.

The wellspring of this line of Delaware eases is Peters v. United States Mortgage Co., 13 Del.Ch. 11, 114 A. 598 (1921)., The certificate of incorporation of the defendant corporation defined the authorized capital of the corporation, provided that the preferred stock would receive cumulative dividends of 7 per cent per year, that the common stock could receive from the surplus (after the preferred stock had been paid) dividends of 7 per cent per year, and that the remaining surplus would be divided in certain proportions between the surplus account and the preferred and common stockholders. The directors proposed an amendment to the certificate that would deprive the preferred stock of any opportunity to share in the apportionment of surplus and net profits, change the common stock from par to no-par stock, and leave the distribution of surplus in the discretion of the directors.

The court noted:

A corporation, in the sale and issuance of its stock, assumes a contractual relation to the shareholder. For the terms of the contract, the rights of the stockholder and the duties of the corporation, reference is to be made to the appropriate provisions of the certificate of incorporation and the law of the sovereign conferring the corporate franchise. Unless there be some provision in either the law or the corporate certificate reserving the power to do so, there can be no alteration in the terms of the contract under which the shareholder, as such, possesses his rights, without his consent. If, however, the right to change or alter the stockholder’s contract be reserved in proper way, then no shareholder can complain against a proposed change therein, for the very plain reason that one of the terms by which he holds his contract is that the same may be altered.
* * *
The only question, therefore, in this case is whether there is power reserved in the defendant company to make the change in question. . [emphasis added].

The court held that the corporation had properly reserved the power to amend in two ways. First, there was an explicit provision in the articles of incorporation allowing amendments, and second, the General Corporation Law, which is implicitly included in the charter of every Delaware corporation, allowed amendments. Therefore, the court held, the amendments were proper.

The very broad language in Peters seems to support the position of the defendants in this case. If the only question is whether the corporation reserved the power to amend its certificate of incorporation and by-laws, the answer is easy: it did so in the fourteenth paragraph of its certificate, quoted above.

In addition, the Delaware corporation law, 8 Del.C. § 242, allows a corporation to amend its certificate of incorporation by “changing the number, par value, designations, preferences, or relative, participating, optional, or other special rights of the shares, or the quali-fieations, limitations or restrictions of such rights . . or by making “any other change or alteration in its certificate of incorporation that may be desired. As the court in Peters stated, “There is impliedly written into every corporate charter in [Delaware], as a constituent part thereof, every pertinent provision of [the Delaware] Constitution and statutes.” 114 A. at 600. Thus, just as in Peters, the automatic inclusion of the Delaware corporation law in the Atlas certificate of incorporation, if taken literally, gives Atlas the power to include the challenged restriction, or any other provision, in an amendment.

Later Delaware cases, however, make the inquiry more complex. Only two years after Peters, the Chancellor decided the case of Morris v. American Public Utilities Co., 14 Del.Ch. 136, 122 A. 696 (1923). Morris concerned substantial changes in the relation of various categories of shareholders and the relation of the shareholders to the corporation itself. In its statement of facts of the case, the court stated:

The parties by their stipulation agree that the rights of the complainants as preferred stockholders are changed by the amendment in the following respects:
(a) Their stock is made junior to two new classes of preferred stock created by the amendment so far as all privileges and rights are concerned.
(b) Accumulated dividends to the amount of 24 per cent are cancelled.
(c) The redemption figure of $105 per share and the amount of all accumulated dividends accrued thereon, as provided in the original certificate, was changed, so that thereafter such stock could be redeemed by the corporation at $100 per share, with cumulative dividends only from the date of the adoption of the amendment.
(d) The right of the preferred stock to vote was taken away from said preferred stock and was thereafter vested only in the common stock of the corporation.

Although purporting to follow the holding of Peters, the Chancellor actually went further than a mere mechanical test to determine whether the changes were authorized by the certificate of incorporation. With respect to provision (b), supra, the Chancellor said, “After careful consideration, I am persuaded that the attempt to destroy the right of an objecting preferred stockholder to accrued and unpaid dividends cannot be sustained.” Id. 122 A. at 701. “To hold otherwise would be to say that other people might take from a man his vested property right against his will and appropriate it to others.” Id. at 704. The court distinguished Peters “because it dealt, not with dividends past due, but with the right to dividends in the future.” Id. at 703. Nevertheless, it should be noted that although the court invalidated provision (b) on the grounds that it deprived shareholders of a “vested property right,” the court upheld the provision (c), which reduced the redemption figure of the stock from $105, plus all accumulated dividends, down to $100, plus cumulative dividends only from the date of the adoption of the amendment. To justify this result, the court stated only that “the law under which the company was incorporated authorizes a change of this kind.” The only reasonable way to reconcile the court’s treatment of provision (b) on one hand, and its treatment of provision (c) and its citation of the Peters case, on the other, is to conclude that the explicitness of the reservation of the right to amend is crucial. The specificity of the right to amend must be considered along with the nature of the interest being affected by the subsequent amendment. The more significant the interest being infringed upon, the more explicitly the right to affect it must be stated, if it is to affect previously issued stock.

Morris was followed with respect to its holding on the impossibility of destroying rights to accrued dividends in Keller v. Wilson & Co., 21 Del.Ch. 391, 190 A. 115 (1936), but courts outside Delaware have suggested that the subsequent decision of Federal United Corp. v. Havender, 24 Del.Ch. 318, 11 A.2d 331 (1940) may have overruled Keller. Hot-tenstein v. York Ice Machinery Corp., 136 F.2d 944 (3rd Cir. 1943); Bove v. Community Hotel Corp., 105 R.I. 36, 249 A.2d 89 (1969). In particular, the court in Bove has suggested that the test is not whether the rights being vitiated are “vested,” but whether the change effectuated by the amendment is one authorized by the legislature.

In Maddock v. Vorclone Corp., 17 Del. Ch. 39, 147 A. 255 (1929), the court considered a proposed amendment to the defendant’s certificate of incorporation which would take from the common stockholders the right to vote cumulatively at meetings for the election of directors. Noting that the corporation had the power to amend the certificate, both because of the general power to amend given corporations in Section 26 of the General Corporation Laws, and because of a reservation of the right in the certificate itself, the court stated:

The only question then which the pending bill presents is whether or not the proposed amendment is one which lies outside the scope of section 26 of the act. ... Id. 147 A. at 255.

The court answered in the negative, and refused to enjoin the amendment.

Finally, in Gottlieb v. Heyden Chemical Corporation, 32 Del.Ch. 231, 83 A.2d 595 (Ct. of Ch. 1951), rev’d on other grounds, 33 Del.Ch. 283, 92 A.2d 594 (S.Ct.1952), the Chancellor held that shareholders’ pre-emptive rights may be removed by amendment after acquisition of the stock because such an amendment is authorized by Section 26 of the corporation law (now 8 Del.C. § 242). The only question, the court said, is whether § 26 authorizes the change.

Thus, the Delaware courts, while following the general rule that any amendment is permissible if it is authorized by the articles of incorporation (and, by implication, the corporation law), have at times vacillated from that position and read into the unrestricted constitutional provisions certain limitations. Exceptions are unusual, but as the Morris case demonstrates, they do exist.

V.

The Lawson line' of cases demonstrates that if the restriction being contested had been included in the original articles of incorporation, or had been a part of the by-laws when B & H acquired its stock, there would be no question that the restriction would be valid. Alternatively, if B & H had specifically agreed to the possibility that its shares might at some future time be encune bered with such a restriction, we would have no trouble in upholding the restriction.

But neither situation confronts us here. In this case, all the plaintiff agreed to was the very general right to amend which is included in virtually every corporate charter and in the Delaware corporation law. What we must decide is whether these provisions provided plaintiff with sufficient notice that it can be held to have assented to such a change.

The case that comes closest to this one factually is Tu-Vu Drive-In Corp. v. Ashkins, 61 Cal.2d 283, 38 Cal.Rptr. 348, 391 P.2d 828 (1964). “This case presents the issue of whether a corporation may enforce a bylaw restricting alienation of stock against a nonconsent-ing stockholder who acquired his stock prior to the enactment of the bylaw.” 38 Cal.Rptr. at 349, 391 P.2d at 829. That restriction provided the corporation with a right of first refusal, just as the restriction in the case at bar does. The difference, however, was that the right could be exercised only at the price at which the shares had been offered to the proposed transferee. In upholding the by-law, the California court held that the restriction was reasonably related to a valid corporate purpose, and that this purpose should be vindicated, even at the expense of the shareholder’s right to choose a buyer for his stock. “In the light of the legitimate interests to be furnished by the bylaw, Ashkins’ asserted right becomes ‘innocuous and insubstantial.’ [citation omitted]. The bylaw merely proscribes Ashkins’ choice of transferees while insuring to her the price and terms equal to those offered by the outsider.” Id. 38 Cal.Rptr. at 350, 391 P.2d at 830. Ashkins was followed in Groves v. Prickett, 420 F.2d 1119 (9 Cir. 1970).

In the case at bar, however, we have a situation in which the price and terms of the right of first refusal are very different from what B & H could receive on the open market. Evidence was presented which tended to show that while the market price of the stock was $50,000 to $70,000, the book value at which B & H would have to offer the stock to the corporation was only $13,000. Thus, this by-law inflicts a more substantial disability upon the shareholder than did the by-law in the Ashkins case.

A case reaching a result contrary to Ashkins is Sandor Petroleum Corporation v. Williams, 321 S.W.2d 614 (Tex. Civ.App.1959). In Sandor, the corporation had cancelled unrestricted stock certificates and issued in their place certificates containing a restriction similar to the one being considered here. The Texas court held, “Such a restriction on previously unrestricted stock would unreasonably restrain and prohibit its [the stock’s] sale and transfer and could result in depriving the owner of the full value of his stock.” 321 S.W.2d at 618. It must be remembered, of course, that in Sandor, the court was dealing with a situation in which the original stock certificates had been cancelled, and the opinion also depended on an interpretation of the Texas corporation statute for its result.

VI

Of course, cases from other jurisdictions are helpful only as sources of ideas, since our task in this case is to determine the validity of the restrictions under Delaware law. After a careful consideration of all of the factors in this area of the law, we conclude that the courts of Delaware would rule that the restriction is invalid. Although the restriction would have been valid had it been in effect when B .& H obtained its stock, to add it afterwards contravenes two important policy considerations prevalent in the law of Delaware. The first is the rule that restraints on alienation are disfavored generally. Lawson v. Household Finance Corp., supra. We interpret this rule of law to mean that whenever there is ambiguity or uncertainty, the restraint ought not to be enforced. The second is that restrictions on alienation are to be allowed only so long as they reasonably relate to a valid corporate purpose. There is a valid purpose involved in this case. That is, Atlas is organized as a cooperative association of transport companies, that and the restriction was obviously intended to retain control of Atlas among its associated moving companies. Nevertheless, we find that the restraint being challenged is too restrictive to be sustained by reference to this purpose. The interest of Atlas in restricting ownership to associated movers could have been accomplished, at least with respect to those obtaining stock before the amendment took effect, by providing that the corporation would have its right of first refusal based on the market price of the shares. We would then have a situation like the one in Tu-Vu, in which only the choice of buyer and not the amount of money to be received for the stock would have been restricted. Such a mechanism would have been much more closely related to the valid corporate purpose. But in forcing shareholders to offer their shares to the corporation at book value, Atlas has imposed a' restriction significantly broader than necessary to effectuate its purpose. When this occurs, it cannot be said that the general grant of the power to amend contained in the fourteenth paragraph of the articles of incorporation suffices to validate the amendment. B & H can be held to have assented only to amendments reasonably related to a valid corporate purpose, not to any- and all amendments which a majority of shareholders agree upon, regardless of their content. We are unwilling to hold that B & H consented to being bound by the contested restrictions because of the very vague language of the fourteenth paragraph.

The district court based its judgment for the defendants not only on the validity of the restriction contained in the 1966 amendment, but also on the doctrine of laches. In view of the lack of demonstrated prejudice to the defendants from the timing of plaintiff’s suit, we must reverse on that question also.

Reversed and remanded.

      . 348 F.Supp. 517 (N.D.Tex.1972).

      . 8 Del.C. § 202(b) provides:
      A restriction on the transfer or registration of transfer of securities of a corporation may be imposed either by the certificate of incorporation or by the by-laws or by an agreement among any number of security holders or among such holders and the corporation. No restriction so imposed shall be binding with respect to securities issued prior to the adoption of the restriction unless the holders of the securities are parties to an agreement or voted in favor of the restriction.

      . 8 Del.C. § 242(a) provides:
      (a) Any corporation of this State existing prior to the tenth day of March, 1899, whether created by special act or general law, or any corporation created under the provisions of this chapter, may, from time to time, when and as desired, amend its certificate of incorporation by—
      (1) Addition to its corporate powers and purposes, or diminution thereof, or both; or
      (2) Substitution of other powers and purposes, in whole or in part, for those prescribed by its certificate of incorporation; or
      (3) Increasing or decreasing its authorized capital stock or reclassifying the same, by changing the number, par value, designations, preferences, or relative, participating, optional, or other special rights of the shares, or the qualifications, limitations or restrictions of such rights, or by changing shares with par value into shares without par value, or shares without par value into shares with par value either with or without increasing or deceasing the number of shares; or
      (4) Changing its corporate title; or
      (5) Making any other change or alteration in its certificate of incorporation that may be desired.
      Any or all such changes or alterations may be effected by one certificate of amendment.
      Every certifícate of incorporation as so amended, changed or altered, shall contain only such provisions as it would be lawful and proper to insert in an original cer: tificate of incorporation made at the time of making such amendment.


author: PER CURIAM:

text:
    Dr. Joseph GILBERT, Plaintiff-Appellant, v. Donald JOHNSON and Dr. Marc J. Musser, Defendants-Appellees.
    No. 73-2471.
    United States Court of Appeals, Fifth Circuit.
    March 6, 1974.
    Rehearing Denied April 12, 1974.

      Sam F. Lowe, Jr., Atlanta, Ga., for plaintiff-appellant.
    John W. Stokes, Jr., U. S. Atty., Beverly B. Bates, Asst. U. S. Atty., Atlanta, Ga., for defendants-appellees.
    Before WISDOM, AINSWORTH and GEE, Circuit Judges.
   PER CURIAM:

This is an appeal from the district court’s denial of motion of plaintiff, Dr. Gilbert, pursuant to Rule 70, Fed.R.Civ. P., to enforce a final judgment against the named defendants, officials of the Veterans Administration and against the United States.

The order and judgment rendered in Dr. Gilbert’s favor held that he had been unlawfully dismissed from his position with the Veterans Administration Hospital in Atlanta because he was not afforded a statutorily required hearing.

Defendants appealed, but the order and judgment became final on the defendants’ voluntary dismissal of their appeal.

When Dr. Gilbert’s motion to enforce judgment was denied in May 1973, he had received no letter of charges against him; defendants had not paid the money judgment, had not held the statutory hearing ordered by the court, and had withheld $9,999.99, the amount of salary due for the first quarter of 1973. However, the Veterans Administration had begun an investigation against Dr. Gilbert in September 1972 and in early 1973 undertook a second investigation.

Dr. Gilbert alleged the above facts in his motion to enforce judgment. Among other things, he sought to have the named defendants held in contempt for failure to comply with the original judgment, to add the VA attorney as a party defendant, to enjoin further investigation, to pay his salary from June 30, 1972, and to have the money judgment paid with interest as ordered. He likewise sought an injunction against VA interference with his duty as Associate Chief of Staff.

There is no merit to the Government’s contention that we do not have jurisdiction of the order denying plaintiff relief. Denial of plaintiff’s motion which was made after the principal action and sought to have respondents held in civil contempt, is a final decision ap-pealable under 28 U.S.C. § 1291. See Penfield Co. of California v. Securities & Exchange Commission, 330 U.S. 585, 591, 67 S.Ct. 918, 921, 91 L.Ed. 1117 (1947), rehearing denied, 331 U.S. 865, 67 S.Ct. 1301, 91 L.Ed. 1870; Union Tool Co. v. Wilson, 259 U.S. 107, 112, 42 S.Ct. 427, 429, 66 L.Ed. 848 (1922); California Artificial Stone Paving Co. v. Molitor, 113 U.S. 609, 618, 5 S.Ct. 618, 622, 28 L.Ed. 1106 (1885).

The plaintiff proceeded properly in this case against defendants under Rule 70, Fed.R.Civ.P. See Lufkin v. United States, D.C.N.H., 1958, 168 F.Supp. 451, 455, in which the court held that “[rjelief may be had against the United States under Rule 70, which provides for the execution of specific acts.”

The stated position of the Veterans Administration is unsatisfactory as to why it has failed to pay the money judgment rendered against it in June 1972, failed to immediately hold a hearing, withheld Dr. Gilbert’s salary, and why it has made numerous attempts to order Dr. Gilbert to confine his professional activities to menial tasks totally unrelated to his highly specialized field of ear-dio-thoracic surgery. On their face they appear to be in violation of the district court’s June 16, 1972 order.

We, therefore, require that the district court re-examine the question of failure to satisfy its order and judgment of June 16, 1972 and to apply appropriate sanctions for failure to obey the court’s order.

The denial of plaintiff’s motion by the district court was, therefore, erroneous and it is necessary that we remand this matter for further proceedings with directions that the court:

1. hold a hearing on plaintiff’s motion forthwith and see to it that the order and judgment of June 16, 1972 are fully complied with;
2. require payment of the money judgment in full with interest, without deduction for retirement or income taxes;
3. inquire into Dr. Gilbert’s reinstatement and the reason why he allegedly has been given menial tasks not commensurate with his specialty, despite the court’s order to reinstate him to “all the salary and other rights and privileges pertaining to the classification and status he held prior to separation” ;
4. issue such further orders as may be required in the premises.

Vacated and remanded.

      . The order and judgment dated June 16, 1972 in pertinent part follow:
      [I]t is ordered and decreed that the plaintiff be and he is hereby reinstated with the Veterans Administration with the right to receive, until the effective date of a decision by a Board convened by the Veterans Administration in accordance with this order, all the salary and other rights and privileges pertaining to the classification and status lie held prior to separation, with the proviso that the defendants are not required, at this time, to permit plaintiff to actually perform the duties of Associate Chief of Staff at the Atlanta Veterans Administration Hospital; and
      It is further ordered that the plaintiff have judgment against the United States in the amount of Forty-Seven Thousand Two Hundred Eighty-Seven Dollars and Eighty-Two Cents ($47,287.82) together with interest according to law and costs of this action; and
      It is further ordered that the matter is remanded to the Veterans Administration for further consideration not inconsistent with these findings and conclusions.

      . 38 U.S.C. § 4110(a) provides in pertinent part:
      The Chief Medical Director, under regulations xxreseribed by the Administrator shall from time to time appoint boards to be known as disciplinary boards, each such board to consist of not less than three nor more than five employees, senior in grade, of the Department of Medicine and Surgery, to determine, upon notice and fair hearing, charges of inaptitude, inefficiency, or misconduct of any person employed in a position provided in paragraph (1) of section 4104 of this title [physicians, dentists, and nurses].

      . Pursuant to request for information by this Court, we are now informed that the hearing which the district court required has now been held and the matter awaits decision by the VA.

      . See also New York Telephone Co. v. Communications Workers of America, 2 Cir., 1971, 445 F.2d 39, 44-45; Vincent v. Local 294, International Bro. of Teamsters, etc., 2 Cir., 1970, 424 F.2d 124, 127-128; Stringfellow v. Haines, 2 Cir., 1962, 309 F.2d 910, 911; Parker v. United States, 1 Cir., 1946, 153 F.2d 66, 69; International Silver Co. v. Oneida Community, 2 Cir., 1938, 93 F.2d 437, 441; Cramer v. Lamb, 5 Cir., 1931, 48 F.2d 537, 538, aff’d 285 U.S. 217, 220, 221, 52 S.Ct. 315, 316, 317, 76 L.Ed. 715 (1932) ; Waterman Co. v. Standard Drug Co., 6 Cir., 1913, 202 F. 167; 9 Moore, Federal Practice (2d ed. 1973) ¶ 110.13 [4] at 168.

      . The court also held :
      “If final authority is needed in support of the proposition that coercive relief may be obtained against a governmental department, we quote from Marbury v. Madison, 1803, 2 Cranch 137, 166 [Reprint 5 U.S. 87, 105], 2 L.Ed. 60. In attempting to determine whether mandamus lay against the Secretary of State, the court stated:
      “ ‘ * * * where the heads of departments are the political or confidential agents of the executive, merely to execute the will of the president, or rather to act in cases in which the executive possesses a constitutional or legal discretion, nothing can be more perfectly clear, than that their acts are only politically examinable. But where a specific duty is assigned by law, and individual rights depend upon the performance of that duty, it seems equally clear, that the individual who considers himself injured, has a right to resort to the laws of his country for a remedy.’ ” (Emphasis added.)

      . If appropriate, this includes the right to apply the sanctions of contempt even though Government officials are involved. See Sawyer v. Dollar, 1951, 89 U.S.App.D.C. 58, 190 F.2d 623, 634.

      . Though the general rule is that interest may not be awarded against the United States, we have concluded that it is proper here, as the district judge held. See National Home for Disabled Volunteer Soldiers v. Parrish, 229 U.S. 494, 33 S.Ct. 944, 57 L.Ed. 1296 (1913). National Home was merged with the Veterans’ Bureau into the Veterans Administration in 1930. (See 38 U.S.C.A. 29, “Brief History of Legislation Pertaining to Veterans’ Benefits.”) See also 31 U.S.C. § 227 requiring payment of interest in judgments against the United States under certain circumstances.

      . The district court’s original order and judgment made no provison for deduction of retirement or income taxes and that judgment is now final. It is inappropriate to make such deductions though plaintiff should have the opportunity to make appropriate contribution to his retirement.


author: COLEMAN, Circuit Judge:

text:
    Belle Few THOMPSON, et al., etc., Plaintiffs-Appellants, v. Max SHEPPARD, Jr., et al., etc., Defendants-Appellees.
    No. 73-2519.
    United States Court of Appeals, Fifth Circuit.
    March 8, 1974.

      C. B. King, Herbert E. Phipps, Albany, Ga., Jack Greenberg, Charles S. Ralston, New York City, for plaintiff s-appellants.
    Jesse W. Walters, M. Baker Wyche, III, Albany, Ga., for defendants-appel-lees.
    Before COLEMAN, AINSWORTH and GEE, Circuit Judges.
   COLEMAN, Circuit Judge:

This is an action brought pursuant to 42 U.S.C., § 1983 on behalf of black and female citizens of Dougherty County, Georgia, to enforce their right to serve on grand and petit juries in the courts of that county.

A preliminary injunction at the outset of the proceedings resulted in the compilation of a new jury list, drawn by chance from county voter lists. After a hearing, the District Court approved this list. Plaintiffs are not satisfied and brought this appeal. We affirm the judgment of the District Court.

According to the 1970 Census, Dough-erty County then had 48,444 inhabitants over twenty-one years of age.

By percentages, this age group divides statistically into the following characteristics :

White, male and female, over 21 years of age 69.29%
Blacks, male and female, over 21 years of age 30.23%
Black males 12.73%
Black females 17.49%
White males 35.49%
White females 35.19%

There were 29,204 voters, as determined at the previous general election.

After the District Court prohibited the further use of the existing jury list and directed the compilation of a new one which would pass constitutional muster, a new jury list was compiled by a computer process which automatically selected every fourth name on the voter list, a total of 7,308 individuals (3,507 males and 3,801 females). Seventy five per cent of the names so selected were of white persons and 25% were of black persons, a variation of 5% from the actual racial population proportions of the county.

These 7,308 individuals were sent a racially neutral questionnaire. Of this total, 1,240 were returned by the post office, addressee unknown, while 1,489 addressees simply failed to return the questionnaire at all. 1,078 females claimed the exemption allowed them upon request by Georgia law, 195 individuals claimed an occupational exemption, 224 claimed the over age exemption, 228 cited physical disability, 24 were unable to read or write, 102 were students away at college, and 9 were dead. The record fails to reveal the race of these various groups.

This left a master jury pool of 2,721 names, selected solely by objective methods, with no subjective considerations entering the picture. Of these 2,721, 37.9% were women, which would appear to settle their presence in substantial numbers and we devote no further discussion to that aspect of the case.

Racially, the master jury pool turned out to be composed of 2199 whites (80.-8%) and 522 blacks (19.2%).

This results in the following comparisons: Total black population over age twenty-one, 30.23%; percentage of blacks on the jury list, 19.2%. Thus the jury list fell 11% short of proportionate population representation. The record is silent as to how much of this disparity was due to exemptions claimed, inability to deliver the questionnaires, and failure to return them. In any event, the names randomly selected by the computer were within 5% of racially proportionate to the population and there is not a hint that any name was thereafter rejected for any subjective reason.

Plaintiffs rely on Broadway v. Culpep-per, 5 Cir., 1971, 439 F.2d 1253 as authority for the proposition that the above method of compiling the jury lists failed to produce the required fairly representative cross section of the inhabitants of the county and argue that supplemental methods should have been used to produce a jury list in which the percentage of black jurors would more nearly approach the actual percentage of those over twenty-one years of age residing in the county.

We must first point out that Broadway was not a case in which the jury list had been drawn at random by computer from the voter list, although the Court took pains to praise that procedure [Footnote 19, 439 F.2d at 1259]. Moreover, the Broadway Court was careful to emphasize that “Obviously nothing is to be gained by poking around in old 1966, 1967, 1969 ashes. What is desired — what Georgia law and the Federal Constitution demand — is a valid jury list”. The case was remanded for further proceedings on a fresh, rather than a stale, record. The District Court was told, however, that in formulating a new jury list the jury commissioners should use “effective means to assure the return of the questionnaires properly filled out and signed and a suitable follow up procedure for actual delivery of those returned as undeliverable”. Finally, the Court expressly declined to define what is required to constitute a fairly representative cross section of the community vis-a-vis comparison with demographic percentages.

We turn for guidance to the decisions of the Supreme Court of the United States. We look first to Turner v. Fouche, 396 U.S. 346, 90 S.Ct. 532, 24 L.Ed.2d 567 (1970). This was a Georgia case, originating in Taliaferro County, where 60% of the inhabitants were black. The jury list was not drawn at random. The commissioners pared the voters list of 2,152 down to 608. These names were listed in alphabetical order and every other name (304) was carried forward to a new list, 191 white and 113 black. Further refinements resulted in a grand jury of 17 whites and 6 blacks. 171 Negroes had been eliminated from the list as unintelligent or not upright. The Supreme Court held that Negroes composed only 37% of the 304 member list from which the grand jury was drawn, that this contrasted “sharply with the representation that their percentage (60%) of the general Taliaferro County population would have led them to obtain in a random selection (emphasis ours)”.

The Supreme Court then added, “In the absence of a countervailing explanation by the appellees, we cannot say that the underrepresentation reflected in these figures is so insubstantial as to warrant no corrective action by a federal court charged with the responsibility of enforcing constitutional guarantees”.

It must be remembered that the Supreme Court, 396 U.S. at 360, singled out the use of subjective judgment rather than objective criteria as one of the causes of the impermissible disparity.

In short, there was subjective selection of jurors, there was no drawing at random from the whole body of voters, and 60% of the population wound up with only 25% of the grand jurors.

Obviously, the case now before us is not such a case as Turner v. Fouche.

Carter v. Jury Commission of Greene County, 396 U.S. 320, 90 S.Ct. 518, 24 L.Ed.2d 549, was decided the same day as Turner v. Fouche. In Greene the jurors were not selected at random from the whole body of eligibles. Although 65% of the population was black, only 32% of those on the jury roll were black. The discriminatory character of the jury lists was conceded but the Court declined to order the appointment of Negro commissioners, saying, “The appellants are no more entitled to proportional representation by race on the jury commission than on any particular grand or petit jury”.

Mr. Justice Douglas dissented in part because he thought the selection of black jury commissioners should be compelled, but wrote:

“We have often said that no jury need represent proportionally a cross-section of the community. See Swain v. Alabama, 380 U.S. 202, 208-209, [85 S.Ct. 824, 829-830, 13 L.Ed.2d 759]; Cassell v. Texas, 339 U.S. 282, 286-287 [70 S.Ct. 629, 631-632, 94 L. Ed. 839]. Jury selection is largely by chance; and no matter what the race of the defendant, he bears the risk that no racial component, presumably favorable to him, will appear on the jury that tries him. The law only requires that the panel not be purposely unrepresentative. See Whitus v. Georgia, 385 U.S. 545, 550 [87 S.Ct. 643, 646, 17 L.Ed.2d 599]. Those finally chosen may have no minority representation as a result of the operation of chance, challenges for cause, and peremptory challenges.”

This remands us to Swain v. Alabama, 380 U.S. 202, 85 S.Ct. 824, 13 L.Ed.2d 759 (1965), which declared, “Neither the jury roll nor the venire need be a perfect mirror of the community or accurately reflect the proportionate strength of every identifiable group * * *

We cannot say that purposeful discrimination based on race alone is satisfactorily proved by showing that an identifiable group in a community is underrepresented by as much as 10%”.

This followed a declaration that “a defendant in a criminal case is not constitutionally entitled to demand a proportionate number of his race on the jury which tries him nor on the venire or jury roll from which petit jurors are drawn”, 380 U.S. at 208.

We conclude that a jury list drawn objectively, mechanically, and at random from the entire voting list of a county' is entitled to the presumption that it is drawn from a source which is a fairly representative cross-section of the inhabitants of that jurisdiction. The presumption, of course, is rebut-table but the challenger must carry the burden of showing that the product of such a procedure is, in fact, constitutionally defective. In addition to the authorities already discussed, see Camp v. United States, 5 Cir., 1969, 413 F.2d 419; Wright v. Smith, 5 Cir., 1973, 474 F.2d 349.

More specifically, in the case now under review we hold that the plaintiffs failed to carry the burden of showing that the Dougherty County jury list was not drawn from a source which was fairly representative of the inhabitants and that they accordingly failed to establish constitutional deficiency on account of racial discrimination in the selection of the jury. As was pointed out in Broadway v. Culpepper, supra, the time is at hand for the selection of a new jury list. As in Broadway, we remind the defendant-appellees that they should prosecute a more effective follow-up on those whose questionnaires are not delivered and on those who fail to return their questionnaires. A County which has embarked upon a wholly objective method of compiling its jury list, substantially utilizing the same procedure used for the compilation of jury lists in the federal court system, will no doubt comply with these details. If they do not, plaintiffs-appellants, in the exercise of their usual diligence, have the right effectively to question it.

The jury commission, composed of whites, blacks, and women, selected the grand jury list according to the method which the Supreme Court declined to condemn in Turner v. Fouche, swpra, and we see no reason to hold it fatally defective.

The judgment of the District Court is Affirmed.


author: THORNBERRY, Circuit Judge.

text:
    CLARK ADVERTISING AGENCY, INC., Plaintiff-Appellee, v. James TICE, Defendant, American Hot Rod Association, Defendant-Appellant.
    No. 73-1244.
    United States Court of Appeals, Fifth Circuit.
    March 8, 1974.

      Hugh Russell, Robert R. Sanders, Amarillo, Tex., Bernard L. Balkin, Kansas City, Mo., for defendant-appellant.
    Jerry F. Lyons, Amarillo, Tex., for plaintiff-appellee.
    Before THORNBERRY, GODBOLD and CLARK, Circuit Judges.
   THORNBERRY, Circuit Judge.

In this diversity action, Clark Advertising Agency sued the American Hot Rod Association (A.H.R.A.) and its president, James Tice, for payment under a contract for advertising and promotional services. Defendant Tice’s motion for a directed verdict was granted, but the jury returned a verdict against A.H.R.A. for both contractual services and attorney’s fees. A.H.R.A. attacks the admission of evidence as to contract terms negotiated between Clark and A. H.R.A. officers other than Tice, the form of the jury instructions, the denial of its request to make an opening argument, and the award of attorney’s fees. We affirm the district court on. all four issues.

Under a previous written contract, Clark supplied advertising services for the Winter Nationals Race in Phoenix, Arizona, in February, 1971. The total cost under that contract was $12,729.76. During negotiations for the oral contract that forms the basis of this suit, which provided for services in connection with a race to be held in West Palm Beach, Florida, it was initially agreed that the cost would be approximately the same. Tice had refused to sign a written contract submitted by Clark because its terms deviated from those of the prior contract, for example by providing for a $50 per day promotional fee. When Clark presented a total bill of $18,102.10 under the present contract, A.H.R.A. refused payment, and this suit ensued.

There is no dispute that the initial talks held between Tice and Clark, had established in a general way that the expenditures under the oral contract would approximate those under the prior written contract. All discussions as to any increase in fees and costs were held between Clark and either Jerry Ballah, the Vice President of A.H.R.A. and the man primarily in charge of arrangements for the West Palm Beach race, or Bob Har-kins, the Comptroller of A.H.R.A. A.H. R.A. contends that evidence of additional contract terms negotiated between Clark and either Ballah or Harkins should have been excluded, since they had no authority to contract for the organization.

Whether or not either of these officers actually had express or implied authority to bind A.H.R.A., we hold that there is ample evidence to find that they had apparent authority to do so and also that A.H.R.A. is estopped to deny their authority. Apparent authority exists whenever a principal manifests to a third person that an officer or agent may act in its behalf, and the third person in good faith believes that the authority exists. When that third person reasonably relies upon that apparent authority to his detriment, the principal is estopped to deny the authority. Restatement (Second) of Agency § 8 (1958); H. Henn, Law of Corporations, § 226 (2d ed. 1970). Tice testified that he did not know all the terms of the “loose verbal agreement,” since he ceased to be personally involved and left the negotiations to Ballah and Harkins. Similarly, after the race Tice left it to Harkins to negotiate with Mr. Clark for a settlement of his services in Florida. By leaving the detailed negotiation work to Ballah and Harkins, Tice created the appearance that they had authority to conduct those negotiations, on which authority Clark relied in carrying out his part of the contract. A.H.R.A. cannot now be heard to say that it is not bound by the contract terms worked out between Clark, Ballah and Harkins. Evidence of those terms was properly admitted.

A.H.R.A. next contends that it was error to instruct the jury that Clark should recover for “reasonable-and necessary” charges, since this language is usually used in reference to recovery on an implied contract, whereas the plaintiff’s theory here was that of an express contract. Thus, A.H.R.A. contends that the only proper award could be for sums authorized by the express terms of the contract. However, A.H.R.A. failed to make a timely objection under Fed.R. Civ.P. 51. By the express terms of that Rule, “[n]o party may assign as error the giving or the failure to give an instruction unless he objects thereto before the jury retires to consider its verdict . . . .” This prohibition is not hard and fast, however. We will recognize error “so fundamental as to result in a miscarriage of justice” in the absence of a timely objection, but that power is only exercised in the most exceptional cases. Delancey v. Motichek Towing Service, Inc., 5 Cir. 1970, 427 F.2d 897. Since there are no exceptional circumstances here, we hold that A. H.R.A. has waived any errors in the form of the jury instructions.

A.H.R.A. next contends that the district court’s refusal to allow an opening argument to the jury constitutes reversible error, citing Aladdin Oil Burner Corp. v. Morton, 1936, 117 N.J.L. 260, 187 A. 350; Conner v. Flaska, 1927, 32 N.M. 162, 252 P. 1001, and Stolpher v. Bowen Motor Coaches, Tex. Civ.App.1945, 190 S.W.2d 376. These cases do not support the contention, since they deal with the denial of the right to make an argument to the jury after the presentation of evidence has been closed, not with the refusal to allow an opening argument. More fundamentally, we feel this is strictly a matter of the conduct of the trial, best left to the discretion of the district court, and governed by federal rather than state rules. The only federal authority in point, United States v. 5 Cases, Etc., 2 Cir. 1950, 179 F.2d 519, accords with our view that the grant or denial of the privilege rests within the sound discretion of the district court. We find no abuse here, particularly in view of the fact that A.H.R.A. did make a full closing argument.

Finally, A.H.R.A. contends that there should have been no award of attorney’s fees. Although the Texas statute provides for attorney’s fees in certain enumerated instances, it has been held that there can be no award of attorney’s fees in a suit on a service contract where the charges are not primarily for personal services performed by the contractor or his employees. In Radio KOKE v. Tie-mann, Tex.Civ.App.1964, 378 S.W.2d 952, attorney’s fees were denied in an action to recover the cost of moving household goods. The court acknowledged that some personal services were involved, but observed that the contribution of machinery and equipment employed in the moving was in great disproportion to the amount of labor and personal services involved. Since the charges here were primarily for media expenses, traveling and living expenses, A.H.R.A. contends that this is not a service contract and will not support an award of attorney’s fees.

This argument fails to take into account the 1971 amendment to Article 2226, which deleted the requirement that the claim be for personal services rendered by the claimant himself. Instead, Article 2226 now provides for an award of attorney’s fees in a suit by “[a]ny person, corporation, partnership, or other legal entity having a valid claim . for services rendered” or any of the several other enumerated types of claims. The amendment apparently changes the result of Tenneco Oil Co. v. Padre Drilling Co., Tex.1970, 453 S.W.2d 814, where the court held that a corporation could not have a claim for personal services, since it could not render services personally but could only do so through its employees. We think the Texas legislature, in amending the statute to delete the requirement that the services need be “personal,” was adopting the broad meaning of “services” first spelled out by the Texas Supreme Court in Van Zandt v. Fort Worth Press, Tex. 1962, 359 S.W.2d 893, and reaffirmed in Tenneco. In Van Zandt, the court distinguished the two terms as follows:

Webster’s Third New Internationa] Dictionary gives a general definition of “service” as “action or use that furthers some end or purpose: conduct or performance that assists or benefits someone or something: deeds useful or instrumental toward some object.” The same source defines “personal services” thusly: “economic service involving the either intellectual or manual personal labor of the server rather than a salable product of his skill (physicians, architects, and garbage collectors equally sell personal services).” In construing the state’s Unemployment Compensation Act the Supreme Court of Utah had occasion in Creameries of America v. Industrial Commission, 98 Utah 571, 102 P.2d 300, 304, to differentiate “services” and “personal services”. The court said:
“In ordinary usage the term ‘services’ has a rather broad and general meaning. It includes generally any act performed for the benefit of another under some arrangement or agreement whereby such act was to have been performed. The general definition of ‘service’ as given in Webster’s New International Dictionary is ‘performance of labor for the benefit of another’; ‘Act or instance of helping, or benefiting’. The term ‘personal service’ indicates that the ‘act’ done for the benefit of another is done personally by a particular individual.”

359 S.W.2d at 895.

There is no doubt that, in changing “personal services” to “services,” the legislature was broadening the coverage of the statute. Thus, despite the oft-repeated assertion that the statute is penal and should be construed narrowly, Van Zandt v. Fort Worth Press, supra; W. G. Tufts and Son v. Herider Farms, Inc., Tex.Civ.App.1972, 485 S.W.2d 300, we hold that it is broad enough to cover actions on contracts for the sort of advertising and promotional services provided here, even though many of those services were not provided by Clark personally but rather by the various advertising and broadcast media retained by him. These services were certainly actions that furthered the end or purpose of promoting the West Palm Beach race, benefiting A.H.R.A. They clearly fall within the broad and general definition of “services” as propounded by the Texas Supreme Court.

As an independent reason for denying attorney’s fees here, A.H.R.A. cites Eisenbeck v. Buttgen, Tex.Civ.App.1970, 450 S.W.2d 696, where the court denied recovery of attorney’s fees in a suit on a “special contract.” It defined “special contract” as “one with peculiar provisions or stipulations not found in the ordinary contract relating to the same subject matter and such provisions are such as, if omitted from the ordinary contract, the law will never supply.” Since the contract here contained “specialized personnel containing terms,” such as the $50 per day promotional fee, A.H.R.A. contends it was a special contract, and that attorney’s fees were not authorized by the statute.

There is considerable doubt about the scope of the special contracts doctrine. By defining a special contract as one with provisions that would not be implied if omitted, the doctrine appears to preclude recovery on any express contract. Indeed, our court has once held that attorney’s fees are not recoverable under Article 2226 on a contract claim. Todd Shipyards Corp. v. Jasper Electric Services Co., 5 Cir. 1969, 414 F.2d 8. At the same time, however, the Texas courts have often allowed attorney’s fees in contract actions. E.g., Page v. Superior Stone Products, Inc., Tex.Civ.App. 1967, 412 S.W.2d 660; Shirey v. Albright, Tex.Civ.App.1966, 404 S.W.2d 152; Lander v. Boykin, Tex.Civ.App. 1961, 351 S.W.2d 594.

Any doubt that attorney’s fees are available in contract actions which may have existed at the time! of the Todd Shipyards decision was authoritatively dispelled by the Texas Supreme Court the next year in Tenneco Oil Co. v. Padre Drilling Co., Tex.1970, 453 S.W.2d 814, when it stated that

We are not to be understood as holding that claims for personal services rendered and labor done cannot be founded upon contract. A contract for purely personal services or for labor only will support an award of an attorney’s fee.

Id. at 820. This holding was reaffirmed in Tacker v. Phillips, Tex.1971, 473 S.W. 2d 1. There is no doubt that attorney’s fees may be recovered in a proper contract action.

There still remains the question whether this contract was a “special contract.” We hold that it is not within the meaning of that term as used in any of the cases cited by A.H.R.A. In both Mauldin v. Sullivan, Tex.Civ. App.1972, 484 S.W.2d 157, and Langdeau v. Bouknight, 1961, 162 Tex. 42, 344 S.W.2d 435, plaintiff sued on a sworn account, but the courts decided that the claim was actually based on a special contract and denied attorney’s fees. The term “special contract” was used in those cases merely to differentiate the contractual nature of the claim from a sworn account claim, since the courts were denying attorney’s fees only because the plaintiffs had sued under the wrong theory. The term was not used as a means of differentiating one sort of contractual claim from another, as A.H.R.A. would have us apply it here. The Texas Supreme Court emphasized the limited meaning ascribed to the term in this context.

The Court of Civil Appeals correctly held that under the heading “sworn account” a recovery of attorney’s fees could not be had in a suit “resting upon special contracts”. Recovery of attorney’s fees under some of the other classifications set out in Art. 2226 might be had under a contract between the parties covering such situation, but not under the part dealing with “sworn accounts.” In Meaders v. Biskamp, supra, 159 Tex. 79, 316 S.W.2d 75, as in this case, the plaintiff relied for recovery of attorney’s fees upon the “sworn account” provision. What we there said, “it [sworn account] does not mean transaction between parties resting upon special contract” was not a holding that recovery of attorney’s fees under any other provision of Art. 2226 may not rest upon a contract basis. It was simply a holding that a recovery under the “sworn account” provision cannot be had upon a special contract.

Id. at 441.

In Eisenback v. Buttgen, Tex.Civ.App. 1970, 450 S.W.2d 696, the plaintiff was attempting to recover on a contract providing for payment of a percentage of gross earnings of a business, over and above the salary stipulated in the contract. The court denied attorney’s fees under the special contracts doctrine, but only because it felt that the sort of recovery being sought was not covered by the provision of the statute in issue.

It is quite obvious from a reading of appellee’s petition that he did not sue to recover payment for services rendered within Art. 2226, V.A.C.S., but brought his action solely to recover for breach of a contract concerning payment of a percentage of gross earnings of a business. Appellee makes no contention concerning payment of adequate salary or wages for the services he performed. It is undisputed that such salary or wages have been fully paid.

Id. at 702. Thus, the court found it to be a “special contract” to the extent it provided for payments on a percentage of gross earnings of a business, an item not mentioned in Article 2226. By contrast, Clark’s contract covers only payments for services, an item which is specifically covered by the statute. Thus, we hold that this was not a “special contract,” and that the district court’s award of attorney’s fees was proper.

Clark submits that its attorney’s fees should be awarded for the taking of this appeal and for the collection of the judgment. In construing a different statutory provision for attorney’s fees, the Texas Supreme Court has indicated that attorney’s fees on appeal should be covered by such statutes.

The statute provides for recovery of reasonable attorney fees which the insured must pay to his attorney because of the necessity of pursuing legal action to collect the loss covered by the policy. The purpose of the statute would be defeated if only the fees incurred in the trial court were recoverable and the fees incurred during the appeal remained the expense of the policyholder. No such distinction or limitation may be found in Article 3.62. When it imposes liability on the company for ‘reasonable attorney fees for the prosecution and collection of such loss,’ it includes all fees incurred for that purpose.

International Security Life Insurance Co. v. Spray, Tex.1971, 468 S.W.2d 347, 349. Article 2226 is similar to Article 3.62, Y.A.T.S. Insurance Code in that it has no distinction or limitation indicating that only fees for trial work are covered. Attorney’s fees for appellate work can be conditionally granted by Texas trial courts under Article 2226. Yellow Freight System, Inc. v. Hydraulic Products Co., Tex.Civ.App.1972, 482 S.W.2d 659. We hold that attorney’s fees for participating in this appeal are authorized under Article 2226, and we remand to the district court for a determination of the proper amount, as we did in United States ex rel. Caldwell Foundry and Machine Co. v. Texas Construction Co., 5 Cir. 1955, 237 F.2d 705.

We find Clark’s claim for attorney’s fees expended in collecting the judgment to be premature. There will be time enough to face this issue once the judgment is final and an attempt to collect it is made. If any attorney’s fees are in fact incurred in the attempt, the question whether Article 2226 covers them will then be ripe for adjudication.

The judgment of the district court is affirmed and the case is remanded for a determination of a proper award for attorney’s fees for this appeal.

      . Vernon’s Ann.Civ.Stat. art. 2226
      Any person, corporation, partnership, or other legal entity having a valid claim against a person or corporation for services rendered, labor done, material furnished, over charges on freight or express, lost or damaged freight or express, or stock killed or injured or suits founded upon a sworn account or accounts, may present the same to such persons or corporation or to any duly authorized agent thereof; and if, at the expiration of 30 days thereafter, the claim has not been paid or satisfied, and he should finally obtain judgment for any amount thereof as presented for payment to such persons or corporation, he may, if represented by an attorney, also recover, in addition to his claim and costs, a reasonable amount as attorney’s fees. The amount prescribed in the current State Bar Minimum Fee Schedule shall be prima facie evidence of reasonable attorney’s fees. The court, in non-jury cases, may take judicial knowledge of such schedule and of the contents of the case file in determining the amount of attorney’s fees without the- necessity of hearing further evidence.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Bradford L. GARDNER, Defendant-Appellant.
    No. 73-2683.
    United States Court of Appeals, Fifth Circuit.
    March 8, 1974.
    D. Russell Stahl, Tampa, Fla (Court-appointed), Champ Lyons, Jr., Montgomery, Ala., for defendant-appellant.
    John L. Briggs, U. S. Atty., Jacksonville, Fla., Claude H. Tison, Jr., Oscar Blasingame, Asst. U. S. Attys., Tampa, Fla., for plaintiff-appellee.
    Before BELL, DYER and CLARK, Circuit Judges.
   PER CURIAM:

Bradford L. Gardner was convicted of six counts of mail fraud under 18 U.S.C. § 1341 connected with alleged improper use of a Master Charge Credit Card, and of one count of using a fictitious name to carry out such fraud, under 18 U.S.C. § 1342. We withheld our opinion pending the outcome of United States v. Maze, - U.S. -, 94 S.Ct. 645, 38 L. Ed.2d 603 [1974]. This decision on facts which were substantially identical to the instant case held that the credit card misuse scheme established by the evidence was too remote from the associated mailings to permit prosecution under Section 1341. This abrogates the precedent of our prior opinion to the contrary, United States v. Thomas, 429 F.2d 407 (5th Cir. 1970), and requires that the present convictions be

Reversed.