text:
    FIRST NATIONAL BANK OF MANHATTAN, KANSAS, a corporation, and Mable Claire Kellams, Plaintiffs-Appellees, v. MODERN WOODMEN OF AMERICA, Defendant-Appellant.
    No. 73-1262.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Sept. 11, 1973.
    Decided Oct. 24, 1973.

      Lee Hornbaker, Junction City, Kan., for defendant-appellant.
    Richard D. Rogers, Manhattan, Kan., for plaintiffs-appellees.
    Before CLARK, Associate Justice, LEWIS, Chief Judge, and HILL, Circuit Judge.

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

   PER CURIAM:

The appellant, Modern Woodmen of America [Woodmen] issued its insurance policy on May 28, 1968, covering the life of Rupert Allen Kellams, a merchant residing in Manhattan, Kansas. Kellams died on April 4, 1970, and Woodmen denied liability on the policy, claiming that he had made certain misrepresentations in his “Statement to Medical Examiner” filed with the company. First National Bank of Manhattan, to whom the insurance policy was pledged to secure a loan made by the Small Business Administration and the Bank, together with Claire Kellams, the widow, appellees, filed this suit to collect some $18,500 alleged to be due on the policy. The suit was initially filed in the District Court of Riley County, Kansas, but was removed on petition of Woodmen to the United States District Court on diversity of citizenship. The thrust of Woodmen’s defense was that the issuance of the policy was procured by the fraudulent acts and misrepresentation of Kellams in that he had failed to list all of his hospitalizations in answer to Question 10 of the “Statement” which rendered the policy void. It tendered the amount of the premiums paid. The court found on May 11, 1972 on motions for summary judgment by each of the parties that it was true that Kellams had not listed all of the times that he was hospitalized but that this was immaterial since the statement as a whole contained sufficient information to inform Woodmen of all of his illnesses and place them on inquiry. It set the ease down for trial on the sole issue of whether Kellams knew that he had heart trouble and misrepresented this fact in answer to Questions 13, 14 and 19 of his “Statement.” After a trial before a jury the court found that there was no conflict in the evidence on this point and took the case from the jury and entered a judgment for appellees.

Woodmen raises two issues: The trial court erred (1) in overruling appellant’s motion for summary judgment and limiting the issues in the subsequent trial; and (2) in holding that the application of Kellams for the insurance “as a whole contained sufficient information to inform the defendant of Kellams’ previous serious illness so that the failure of Kellams to list each hospitalization is immaterial as a matter of law.” We have carefully reviewed the entire record and agree with the disposition made by the trial court and, therefore, affirm the judgment.

1. The rule as to summary judgment is well established; it should be entered where there is no genuine issue of material fact. Rule 56(c) Fed.R.Civ.P., Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232, 31 L.Ed.2d 569 (1972); Gragg v. Travelers Insurance Company, 459 F.2d 418 (10th Cir. 1972). Woodmen insists that Kellams did not answer truthfully Question 10 in the “Statement” in that he failed to state that he had been hospitalized more than the one time noted in his answer, that in fact he had been hospitalized several times at Memorial Hospital in Manhattan, Kansas, (one of which he set out in his answer) as well as two other hospitals, the Riley County Hospital and the- University of Kansas Medical Center at Kansas City, Kansas, in 1966. It concedes that Kellams’ answer was not a warranty but only a representation and that a mere false answer would not void the policy. But it insists that when knowingly made to a material question, it will void the policy. Kansas law, which is applicable here, provides that “where proof of alleged fraud becomes conclusive by un-contradicted evidence and written admissions showing falsehood, concealment and misrepresentations . . . [the] question of [the] existence of fraud becomes [a] matter of law instead of [an] issue of fact for jury.” New York Life Ins. Co. v. McCurdy, 106 F.2d 181, 187 (10th Cir. 1939). However at the time Woodmen moved for summary judgment and the order denying it was entered on May 11, 1972. Judge Templar, before whom the ease was pending, specifically held that “a question of fact [remains] as to whether ' Kellams knew he had heart trouble and therefore whether his answer to Questions 13, 14 and 19 on the Statement to Medical Examiner are misrepresentations.” He accordingly overruled Woodmen’s motion for summary judgment. The same situation existed on July 7, 1972, when Judge Templar affirmed his previous ruling. Thereafter because of illness Judge Templar was unable to sit, and Judge Theis took the case for trial. After hearing evidence, before a jury, he decided that there was no proof that Kellams knew of his heart trouble and that, therefore, there was no misrepresentation. He took the case from the jury and granted summary judgment for appellees. In this order, dated September 29, 1972, Judge Theis specifically stated that he was “in agreement” with Judge Templar in the latter’s action denying Woodmen’s earlier motion for summary judgment filed May 11, 1972 and Templar’s af-firmance thereof on July 7, 1972. We believe that the denial of these motions for summary judgment by Woodmen was correct. There being an issue of fact remaining at that time,' summary judgment was not appropriate. The fact that both of these judges came to the Federal bench after a long practice at the Kansas bar fortifies their conclusion that this procedure was in keeping with Kansas law.

2. This leads us to Woodmen’s alternative issue that the trial court erred in holding as a matter of law on May 11, 1972, that the application as submitted “as a whole contained sufficient information to inform the defendant of Kel-lams’ previous serious illness so that the failure of Kellams to list each hospitalization is immaterial as a matter of law.” We agree with the trial court that Woodmen had been furnished all of the essential information that it would have had if Kellams had listed all of his hospitalizations. Indeed, the answers on their face reveal that he had been hospitalized more than once for hernia operations. Moreover, if Woodmen had inquired at Memorial Hospital of Manhattan, as set out in answer to Question 10, it would have discovered all of the information it now claims so material. This it did not do, depending instead on Woodmen’s file which revealed the earlier 1967 policy issued by it to Kellams only one year after the University of Kansas Medical Center diagnosis in 1966, the application and “Statement” on the policy under attack here, a current routine commercial checkup and the appraisal of Paul Mcllvain, its Underwriter. Rather than directing that further inquiry be made, Mr. Mcllvain approved the application despite his knowledge that “the chief hazard [of diabetes] in later life is the development of arteriosclerosis.” Kellams was in his fifties, yet Mr. Mcllvain made no further inquiry into Kellams’ possible heart trouble, although he “had some idea” Kellams “might have some vascular problem.” Nor did he ask for the electrocardiogram which Kellams noted on his “Statement to Medical Examiner” nor request Dr. Evans’ findings nor cheek the record of hospitalizations which were available at the Memorial Hospital, which was noted in the answer to Question 10.

There is no claim here of conspiracy between Kellams and Dr. Evans, nor was there any concealment nor misrepresentation proven as was present in New York Life Ins. Co. v. McCurdy, supra. Dr. Evans was selected as the Examining Physician by Woodmen with full knowledge of the fact that he was Kel-lams’ physician. Dr. Evans actually wrote down on the “Statement” the answers that Kellams gave to all of the questions and then had Kellams sign the statement. He, of course, knew of all of the hospitals to which Kellams had been admitted. Indeed, he himself had secured the admissions on behalf of Kel-lams. Evans further testified that he knew of the findings of the University of Kansas Medical Center in September, 1966, signed by Dr. Brown, that he had a copy of them in his files but put no credence in them. It is these findings that Woodmen depends upon. They recite that Kellams was in 1966 suffering from generalized arteriosclerosis; cerebral thrombosis, suspected; arteriosclerosis of coronary arteries; right bundle branch block, incomplete; diabetes mel-litis; duodenal ulcer and emphysema, obstructive. However, Dr. Robert W. Brown, the diagnostician, wrote a letter to Dr. Evans at the time he made these findings in which letter he indicated, somewhat to the contrary, that the “pain, paresthesia and transient weakness” of Kellams’ right side resulted from diabetes mellitus; that the finding of “Grade II arteriosclerotic eye ground” was “consistent with the diabetes”; that he was “not certain” that the EKG showing of “short PR interval and an incomplete right bundle branch block .... represents any manifestation of arteriosclerotic heart disease”; that the active duodenal ulcer was consistent with Kellams’ history; that the brain scan, EEG and x-rays of the skull indicated a “diffuse vascular disease” which was thought to be “the result of his diabetes which is affecting the small arteries”; that he was “unable to say whether or not a transient ischemic episode was responsible for the right sided findings”, but he was inclined to think so although there was no objective evidence. Dr. Brown advised that Kellams should take Gelusil for his ulcer; that he should reduce his weight by following a “rigid diet and stop smoking.” Dr. Brown also told Dr. Evans that he had not gone over his findings with Kellams, indicating that perhaps Dr. Evans might do so. However, Dr. Evans testified that he did not give Kellams a copy of the Brown findings but did go over them with him. Dr. Evans had “doubts about” Dr. Brown’s diagnosis especially in view of Dr. Brown’s letter accompanying it which “threw doubts on the importance of their findings as to heart disease and certainly to any cardiovascular disease.” Dr. Evans also testified that as he reviewed the Brown findings with Kellams that he conveyed these doubts to Kellams and that he did not tell Kellams that he had a heart condition because he (Dr. Evans) did not “feel that he (Kellams) had a heart condition in 1969-1970.”

As we look at the “Statement to Medical Examiner,” its purpose was merely to develop leads for future investigation. As the trial judge found, it is not the number of hospitals Kellams had entered but the nature and substance of the diseases that he had suffered that bore upon his insurability. Kellams enumerated to the best of his knowledge in the “Statement” every disease that he had actually suffered and that were included in the University of Kansas Medical Center diagnosis by Dr. Brown save the heart disease. And as to it Kellams answered “Yes” to Question 11 which inquired as to “any x-ray, heart study, electro-cardiogram or other laboratory examination?”; and further stated that his father had died of arteriosclerosis. In addition Dr. Evans testified that he had not advised Kellams that he had heart disease. There are other indices that support the conclusion that Kellams did not know he had heart trouble. Woodmen’s salesman, Robert D. Graves, testified as to the condition of Kellams’ health, etc. And see the testimony of Mrs. Kellams on this. There was no hard evidence to the contrary as to Kel-lams’ actual knowledge of any heart condition.

In the light of these considerations, we have concluded that a literal interpretation should not be placed on the provisions of the policy. See Metropolitan Life Insurance Co. v. Brubaker, 78 Kan. 146, 150, 96 P. 62 (1908), and Farragher v. Knights and Ladies of Security, 98 Kan. 601, 159 P. 3 (1916). We must look at the four corners of the application and appended “Statement” of Kellams which in our view was made out in good faith and sufficiently informed Woodmen of his physical condition as Kellams, a layman, understood it. It is most significant that Dr. Evans, who was Woodmen’s medical examiner, recommended that Kellams be insured. Appellant could have readily obtained all the relevant information from him but it failed to do so. Upon these facts we can only conclude that appellant was sufficiently put on notice as to Kellams’ condition and, therefore, is chargeable with knowledge of facts which a prudent inquiry would have revealed. Major Oil Corporation v. Equitable Life Assurance Society of the United States, 457 F.2d 596 (10th Cir. 1972).

3. We have noticed with special care the action of Judge Theis in taking the case from the jury on the issue of Kellams’ knowledge of his heart condition. As we have noted the only direct evidence on this question is that of Dr. Evans. He said that he did not give Kellams a copy of the University of Kansas Medical Center diagnosis but on the contrary had told Kellams specifically that he did not have heart trouble. In addition Mrs. Kellams testified that Kellams took no medication for his heart; nor did the University of Kansas Medical Center nor any other hospital or physician prescribe any heart medication; and Mrs. Kellams further testified, and the medical report confirms, that his death was sudden and without warning. Moreover, both Mrs. Kellams and Mr. Graves, the salesman who sold Kellams his policy, swore that Kellams was enjoying good health at the time. Indeed, the latter emphasized that Kel-lams had gone with him on vacation camping trips into the mountains at high altitudes and that Kellams neither complained nor evidenced any heart trouble. In light of the fact that Woodmen brought forth no evidence on Kel-lams’ knowledge as to his heart condition — which burden was upon it — we conclude that Judge Theis correctly took the case from the jury, overruled Woodmen’s motion for summary judgment and sustained that of the appellees.

We believe that the effort of Woodmen to avoid payment of the policy is both too little and too late. It sensed the hazards of issuing the policy and increased the premium it charged Kellams above that of the regular premium by $57.80 semi-annually, an increase of over thirty percent. Having charged this additional premium to compensate for the additional risk it found present, it cannot now renege on its contract.

Affirmed.

      . “Statement to Medical Examiner.” Record on Appeal at 133:
      Q. “10. Have you ever been in a hospital, clinic, sanatorium or institution for observation, treatment . . observation?”
      A. “Yes”
      Q. “If ‘yes,’ give date and details.”
      A. “1964”
      Q. “Names of institutions?”
      A. “Memorial Hosp.”
      Q. “Addresses of institutions?”
      A. “Manhattan, Kansas.”
      Q. “Names of physicians?”
      A. “D. L. Evans, M. D.”
      “Detailed History of Illness and Date”
      A. “10.
      1941 — Had duodenal ulcer. One or two recurrences. At present no symptoms. Repair of inguinal hernia — 2 years ago.”

      . Record on Appeal at 76; “Statement to Medical Examiner,” supra, n. 1:
      Q. “13. Are you currently receiving treatment or medication?”
      A. “No”
      Q. “14. Have you now any disease or disorder?”
      A. “No”
      Q. “19. Heart trouble, palpitation, pain in the chest, angina pectoris, shortness of breath, high or low blood pressure, disorder of blood vessels?”
      A. “No”


source: Caselaw Access Project

author: SIMPSON, Circuit Judge:

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Justo Fernan MARTINEZ et al., Defendants-Appellants.
    No. 72-3133.
    United States Court of Appeals, Fifth Circuit.
    Oct. 12, 1973.

      Jack V. Eskenazi, Federal Public Defender, court-appointed, T. Sakowitz, Asst. Federal Public Defender, Miami, Fla., for Martinez and Huila.
    Max P. Engel, David B. Javits, Miami, Fla., for Soris.
    Robert W. Rust, U. S. Atty., J. Daniel Ennis, Bruce E. Wagner, Asst. U. S. Attys., Miami, Fla. for plaintiff-appellee.
    Before BELL, GOLDBERG and SIMPSON, Circuit Judges.
   SIMPSON, Circuit Judge:

We review on this appeal the judgments of conviction and sentence following jury verdicts of guilty of Justo Fernan Martinez, Oswaldo Huila, and Lorenzo Padilla-Soris. The charges arose from the importation into the United States of approximately 28 pounds of marijuana. We vacate or reverse the convictions of all three appellants, and remand for further proceedings in the district court.

The Facts

On August 16, 1972, agents of the United States Customs Service began surveillance of the normal docking berth on the Miami River of the M/V MONTEGO, which was due to arrive that evening from Turbo, Colombia. From vantage points approximately 100 yards away from the dock the agents observed the MONTEGO dock at approximately 9:00 P.M. that evening. The surveillance continued into the early morning hours of August 17th. Shortly after 1:00 A.M. the agents using binoculars observed someone leave the ship with a package under his arm. This person, identified later as the defendant-appellant Huila, walked alongside the ship toward the bow, where he placed the package on the wharf and returned to the ship. A short time later Huila came back and moved the package to a new location a few feet away and once more returned to the ship.

Two of the customs agents at this time moved to within a few yards of the position of the package and resumed their surveillance. About 25 minutes later the agents noticed the brakelights of an automobile near a warehouse immediately adjacent to the wharf. They saw a person who was identified later as the defendant-appellant Martinez, walk from the direction of the warehouse toward the place where Huila had last left the package. Martinez picked up the package and started back toward the parked automobile near the warehouse. The two customs agents watching from near the package then emerged and attempted to arrest Martinez, after identifying themselves by stating in English that they were United States Customs agents.

Martinez reacted by swinging the package in a wide arc in the direction of the agents. He either released the package or lost his grip on it and it sailed into the Miami River. Martinez was subdued after a short scuffle, whereupon one of the agents dove into the river and retrieved the package which Martinez had thrown.

While these events were taking place, another customs agent approached the car in which Martinez had ridden to the vicinity of the warehouse. A third man, later identified as the defendant-appellant Padilla-Soris, had remained in the automobile behind the wheel. The customs agent attempted to identify himself in English to Padilla-Soris. Padilla-Soris started the car at once and drove away. Still another agent, waiting in a government vehicle at the entrance to the dock area pursued Padilla. Speaking Spanish and using a loud speaker he identified himself as a customs agent. Padilla-Soris then stopped his vehicle at the side of the road and surrendered to the agent.

Martinez and Padilla-Soris were taken to customs headquarters for interrogation. At the same time the substance contained in the packages retrieved from the water was tested. It was determined that the substance was marijuana.

At the outset of the questioning, Martinez signed a waiver of his Miranda rights and proceeded to give a statement to the customs officials. In the course of his statement Martinez furnished the name of the man who had off-loaded the marijuana from the MONTEGO as Huila.

For reasons not entirely clear from the testimony Huila was not arrested at the same time that Martinez and Padilla-Soris were taken into custody, but some time later was arrested and taken to customs headquarters for interrogation. Whether Huila was arrested before or after he had been identified by Martinez as the person depositing the marijuana on the dock is not clear from the testimony.

The grand jury indicted Martinez, Huila, and Padilla-Soris charging: (i) Count I: conspiracy to import, (ii) Count II, actual importation of, and Count IV, possession with intent to distribute a Schedule I controlled substance, to wit the 28 pounds of marijuana. Additionally Count III charged Huila with distribution of marijuana and Count V charged Martinez with assaulting a federal officer.

The Trial

The trial occurred on September 21 and 22, 1972. Prior to the commencement of the trial, Martinez, through his attorney, tendered a plea of guilty to Count II of the indictment, which charged importation of the mari-. juana. The prosecution apparently had agreed in exchange to dismiss the remaining charges against Martinez. The trial judge, in compliance with Rule 11, F.R.Crim.P., questioned Martinez to determine whether his plea was knowingly and voluntarily entered. In the course of this inquiry, Martinez asserted that his waiver of his Miranda rights during post-arrest interrogation had been obtained in exchange for a promise by customs agents that “nothing would happen to [him].” This prompted the trial judge to refuse to accept Martinez’ plea of guilty, on the apparent ground that the plea might not have been voluntarily entered. Counsel for Martinez attempted to persuade the district judge that, independently of the coerced statement, the government possessed sufficient evidence upon which to convict him. Further, Martinez had admitted his guilt of the charge of importation. The judge however, persisted in refusing to accept Martinez’ plea under the circumstances.

In view of this ruling, counsel for Padilla-Soris at this juncture renewed his motion for severance, earlier denied with other pre-trial motions. He was anxious to have Martinez available to testify for Padilla-Soris, supporting his defense as Martinez had offered to do earlier. The availability of this testimony for Padilla-Soris depended upon Martinez’ pleading guilty and not being on trial when called to the stand. It appeared certain that Martinez would refuse to take the stand at a joint trial with Padilla-Soris and Huila. The court once more denied the motion for severance.

Martinez’ counsel, a member of the Public Defender’s staff, was court-appointed for both Martinez and Huila. He now moved for severance as to Huila, protesting that failure to accept Martinez’ tendered guilty plea would prejudice either Huila’s or Martinez’ rights to a fair trial if his clients were tried jointly. The court denied this motion and the trial proceeded against all three defendants.

As the government approached the close of its case, it became apparent that Martinez was given an incomplete and unacceptable statement of his Miranda rights by the Spanish speaking agent who interrogated him after arrest. It developed that this customs agent had told Martinez that the trial judge would be informed as to whether he waived his right to counsel at the interrogation. This left an obvious implication that his failure to waive right to counsel would be construed as unwillingness to cooperate to his detriment at trial. It was also shown that Martinez was told that the charge against him was smuggling marijuana, without mention of a possible charge of assaulting a federal officer. On the basis of these disclosures the trial judge ruled that the statement was inadmissible as coerced.

With the resolution of the problem of the coerced statement, Martinez’ counsel once more tendered Martinez’ plea of guilty to Count II of the indictment. The judge at this point appeared more favorably disposed toward acceptance of the plea and questioned the government as to its position. Government counsel stated that the offer to drop all charges against Martinez other than Count II in exchange for a plea of guilty to that count was rescinded, since the government had by then undertaken the burden of proving all of the counts. With the matter of the guilty plea thus disposed of, the court-appointed counsel for Martinez and Huila again moved that Hui-la’s trial be severed so Martinez’ exculpatory testimony could be available to Huila. Again the severance motion was denied and the government rested its ease in chief.

At this time, the court granted counsel’s motion on behalf of Padilla-Soris for judgment of acquittal as to Counts II and IV of the indictment. The court refused, however, to direct acquittal of Padilla of the conspiracy charge. The trial then proceeded with the presentation of evidence by the defendants.

The case was submitted to the jury and all defendants were found guilty as charged of the counts remaining for trial. Judgments of conviction and sentence ensued, followed by appeals by each defendant, asserting various grounds of error in the trial below, which we now consider.

Acceptance of Martinez’ Guilty Plea

Martinez raises a single point by his appeal: that error was committed by the trial judge when he refused to accept his tendered plea of guilty to Count II of the indictment against him. Consideration of this question must start with the well-established proposition that a “criminal defendant has [no] absolute right to have his guilty plea accepted by the court.” Lynch v. Overholser, 1962, 369 U.S. 705, 719, 82 S.Ct. 1063, 1072, 8 L.Ed.2d 211, 220. For example, a federal judge must refuse to accept a guilty plea where the requirements of Rule 11, F.R.Crim.P., cannot be met. It was for the very reason that the trial judge felt that the voluntariness standard of Rule 11 was not met that he refused to accept Martinez’ plea. But by a brief hearing outside the presence of the jury, the trial judge could have removed the barriers in the way of his finding that Martinez’ plea was voluntarily entered. Instead those barriers remained until the government had all but finished its presentation, and their eventual removal came too late for Martinez to enter his plea to Count II.

The decision to accept or reject a tendered guilty plea, once the requirements of Rule 11 have been satisfied, is committed to the “sound judicial discretion” of the trial judge, Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 498, 30 L.Ed.2d 427, 433. But the First Circuit requires that a trial judge “must seriously consider accepting a tendered plea [of guilty] . . . .” United States v. Bednarski, 1 Cir. 1971, 445 F.2d 364, 366. The District of Columbia Circuit goes a step further, and holds that a trial judge should not refuse to accept a guilty plea without “good reason.” McCoy v. United States, 1966, 124 U.S.App.D.C. 177, 363 F.2d 306, 307. Since we lack precedent within our own circuit, we will weigh our problem in the light of these standards. The question before us is whether, once the requirements of Rule 11 have been met, “good reason” for rejecting a guilty plea exists because of the possibility of later collateral attack on the judgment to be entered upon the plea.

One of the purposes underlying Rule 11 is to enable a trial judge to determine whether a defendant’s guilty plea is voluntary. McCarthy v. United States, 394 U.S. at 465, 89 S.Ct. at 1170, 22 L.Ed.2d at 424-425. A second function of Rule 11 is to expedite the disposition of post-conviction attacks upon judgments based on guilty pleas by providing a complete record of the basis upon which the plea was accepted. Id. But the rule is not designed to discourage the acceptance of guilty pleas merely because the trial judge is uneasy or apprehensive over possibility of a subsequent collateral attack. Indeed, Rule 11 recognizes the possibility of such attacks and as just pointed out is designed to facilitate their disposition by requiring the trial judge to make a complete record showing the knowing and voluntary nature of the plea and the factual basis for it.

The question of voluntariness under Rule 11 depends also upon inquiries to determine whether the plea is knowingly entered and whether there exists a factual basis for the plea. For example, it is not erroneous for a trial judge to find that a plea is knowingly and voluntarily entered even in the face of a defendant’s unwillingness or inability to admit guilt, where compelling reasons are present for the entering of a guilty plea, as long as there exists substantial evidence of the defendant’s guilt. At all events, the question whether a guilty plea is voluntarily entered is determined, not by whether there are external forces inducing a defendant to plead guilty — for such forces will invariably exist — but instead by a determination as to whether these forces are constitutionally acceptable. So long as the trial judge is convinced by the record before him that a guilty plea is not coerced, a further showing that the plea is knowingly entered and that there exists sufficient evidence of guilt will satisfy the requirements of Rule 11.

Against this background we view the action of the district court as contrary to both the spirit and the purpose of Rule 11. In the first place, it cannot be said that Martinez’ guilty plea was involuntary in the sense of Rule 11. As we have indicated, Martinez freely admitted his guilt of the charges of importing marijuana. Also as Martinez attorney repeatedly urged, the government had ample evidence, independent of the coerced confession, to convict Martinez of the importation charge. It cannot be said in the circumstances present that the existence of a possibly coerced, post-arrest statement rendered Martinez’ tendered guilty plea involuntary under Rule 11. We hold that the rejection of Martinez’ plea was not for “good reason,” and was reversible error. McCoy v. United States, supra.

We iterate that it would have been simple for the judge to remove the cloud resting, in his judgment, over the voluntariness issue. A short hearing out of the presence of the jury and before trial was underway would have demonstrated that Martinez’ post-arrest statement was inadmissible, exactly as was later determined. With this determination made, the acceptance of the guilty plea, if persisted in, could have followed. This procedure would have constituted “serious consideration” of acceptance of the guilty plea. United States v. Bednarski, supra.

Since we find that Martinez’ guilty plea should have been accepted we vacate the convictions as to him under the remaining counts, Counts I, IY and V, and remand for resentence under Count II only. The trial court should correct the record by setting aside the jury verdict as to Martinez and the judgment and sentences thereunder, followed by an adjudication of guilt under Count II upon the basis of the tendered plea of guilty, and not by reason of the jury’s verdict.

Severance

The district judge’s failure to accept Martinez’ guilty plea raised problems for his co-defendant, Huila. Martinez had told his attorney, who also represented Huila, that he was willing to testify as a witness for Huila if the court accepted his guilty.plea to Count II of the indictment. The government was agreeable at that time to that disposition of the charges against Martinez. When the court refused to accept Martinez’ plea, motions for severance on behalf of Huila and Padilla-Soris were summarily denied by the court. Counsel for Huila now urges on appeal that the denial of severance as to him was an abuse of discretion by the trial court.

Under Rule 14 of the Federal Rules of Criminal Procedure, it is established that the granting of a motion for a severance is a matter within the discretion of the trial judge. Opper v. United States, 1954, 348 U.S. 84, 75 S. Ct. 158, 99 L.Ed. 101; Smith v. United States, 5 Cir. 1967, 385 F.2d 34, 37. When an appellant challenges the refusal of a trial judge to grant a motion to sever, he shoulders the burden of making a clear showing that “prejudice resulting in the denial of a fair trial” flowed from the failure to grant the motion. United States v. Nakaladski, 5 Cir. 1973, 481 F.2d 289; United States v. Iacovetti, 5 Cir. 1972, 466 F.2d 1147, 1153; Smith v. United States, supra.

The question then is whether depriving one defendant of the opportunity to use the exculpatory testimony of a co-defendant amounts to “prejudice resulting in the denial of a fair trial.” Byrd v. Wainwright, 5 Cir. 1970, 428 F. 2d 1017, was a state habeas corpus case, governed by 14th Amendment Due Process considerations rather than by the corresponding relief from prejudicial joinder provisions of Rule 14, F.R.Crim. P. But the criteria are similar, and in Byrd this circuit was presented with the opportunity to consolidate and catalogue our prior rulings for the guidance of trial judges confronted with motions for severance based on a desire to offer exculpatory testimony of a co-defendant. Byrd set forth the following guidelines: (i) the movant should “show that the testimony would be exculpatory in effect”; we cautioned that such a showing would not require the equivalent of a statement under oath by the co-defendant whose testimony was sought, op. cit. at 1020; Smith v. United States, supra, at 38; (ii) the movant should show to the court’s satisfaction that the co-defendant will in fact testify; in this respect we cautioned that “the inquiry is not as to certainty whether the co-defendant will or will not testify but the likelihood;” op. cit. at 1022; Smith, supra, at 38; and (iii) we indicated that the trial judge might properly consider the exculpatory nature and the significance of the desired testimony to the movant’s defense, which “might be restated in terms of the extent of potential prejudice to the defendant if the defendant is tried without the opportunity to elicit the co-defendant’s testimony,” op. cit. at 1020; United States v. Echeles, 7 Cir. 1965, 352 F.2d 892, 897-898.

There appears to be little doubt that conditions (i) and (ii) above were satisfied in the present case. Counsel for Martinez and Huila made the following statement to the court as to Martinez’ planned testimony when he renewed the severance motion during the trial at the close of the government’s case in chief:

“ . . . the defendant Martinez, if he were severed from this trial, would testify on behalf of the defendant Huila and exculpate him from any involvement in the matters which Huila is charged with. But, under the circumstances, he cannot take the stand because he is a defendant and will only inculpate himself.”

The importance of Martinez’ exculpatory testimony to Huila’s defense is apparent. The crucial question as to Huila was whether he had knowledge, either of the plan to import the marijuana, or that the package which he took from the M/V MONTEGO and placed on the dock actually contained marijuana. Martinez was the only individual other than Huila himself in a position directly to rebut the government’s circumstantial evidence of Huila’s knowledge of these facts.

The Court of Appeals for the Fourth Circuit has held in a similar situation that the failure to sever was reversible error. See United States v. Shuford, 4 Cir. 1971, 454 F.2d 772, where two defendants were charged with conspiring to knowingly submit and knowingly submitting false documents to the government, in violation of Title 18 U.S.C. Sec. 371 and Sec. 1001. The defendant Shu-ford, before the trial began and again after the prosecution rested, moved that his co-defendant Jordan’s case be served so that he might have the benefit of Jordan’s testimony, which was expected to contradict the government’s evidence. In reversing the trial court’s refusal to grant a severance in this situation, the Fourth Circuit said:

“The reported decisions support the proposition that a severance is obligatory where one defendant’s case rests heavily on the exculpatory testimony of his co-defendant, willing to give such testimony but for the fear that by taking the stand in the joint trial he would jeopardize his own defense.” Id. at 776.

We think the conclusion reached by the Fourth Circuit was sound, and conclude that failure to grant the motion for severance resulted in prejudice to Huila’s rights. Rule 14, F.R.Crim.P. Further, the severance sought in this case would not have been overly burdensome from the standpoint of judicial economy, as the result at most would have been two relatively short, uncomplicated trials. The judgment against Hui-la is vacated with directions that he be afforded another trial where he will have the opportunity to call Martinez as a witness in his behalf.

We find it unnecessary to discuss at length an additional ground for reversal raised by Huila. Briefly, he contends that error was committed by the trial judge in denying him the right to call the customs agents as witnesses to elicit testimony regarding the basis of their identification of him as (i) independently made or (ii) made as a fruit of the suppressed post-arrest statement of Martinez. Counsel for Huila should be afforded an opportunity to present evidence in this regard to the court prior to his retrial.

Sufficiency of the Evidence as to Padilla-Soris

Appellant Padilla-Soris assigns as error the district court’s refusal to grant him a judgment of acquittal on the conspiracy charge, Count I, at the close of the government’s evidence. This was by then the only remaining charge against this defendant, the motion for judgment of acquittal being granted as to Counts II and IY. As this Court stated:

“In considering the motion for judgment of acquittal, F.R.Crim.P. 29(a), the District Judge must consider the evidence in the light most favorable to the Government, McFarland v. United States, 5 Cir. 1960, 273 F.2d 417; United States v. Carter, 6 Cir. 1963, 311 F.2d 934, together with all inferences which may reasonably be drawn from the facts, Cartwright v. United States, 10 Cir. 1964, 335 F.2d 919. The determining inquiry is whether there is substantial evidence upon which a jury might reasonably base a finding that the accused is guilty beyond a reasonable doubt.”

Blachly v. United States, 5 Cir. 1967, 380 F.2d 665, 675.

Our function on appeal is to consider the evidence in the light most favorable to the government, Glasser v. United States, 1942, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680, 704, and to decide in circumstantial evidence cases, as here, “whether reasonable minds could conclude that the evidence is inconsistent with the hypothesis of the accused’s innocence.” United States v. Warner, 5 Cir. 1971, 441 F.2d 821, 825.

The critical issue as to Padilla-Soris’ appeal is whether sufficient evidence was introduced to permit the jury to determine that Padilla-Soris had knowledge of the existence of a conspiracy. Knowledge of the existence of a conspiracy must usually appear from surrounding circumstances; it is seldom capable of direct proof. Proof of knowledge often rests upon “inferences drawn from relevant and competent circumstantial evidence . . . .” United States v. Warner, supra, at 830. Mere association, without more, however, does not suffice to demonstrate knowledge. Panci v. United States, 5 Cir. 1958, 256 F.2d 308, 312. These principles point the way to decision as we review the evidence produced by the government to show Padilla’s participation in a conspiracy to import marijuana into the United States.

It was shown first that Padilla-Soris drove Martinez to the dock area on the evening that the package of marijuana, off-loaded by Huila from the M/V MONTEGO, was retrieved by Martinez from its position of rest on the dock. Padilla-Soris immediately left the dockside area when he was approached and hailed by a customs agent. But the agent spoke a language unintelligible to the appellant. When Padilla-Soris was accosted a few moments later by a Spanish speaking agent he stopped the car he was driving and surrendered.

We do not discount the possibility that Padilla in fact knew of existence of a conspiracy to import marijuana, and that he drove Martinez to the dockside area in the early morning hours of August 17th in an effort to advance the objects of that conspiracy. Padilla-Soris may have met Martinez on a prior occasion, either independently or through a common acquaintance. It is also possible that Padilla-Soris became a member of the conspiracy earlier on the evening of August 16th, before driving Martinez to the dockside where Martinez took possession of the contraband. Any one of these possibilities may account for Padilla-Soris’ knowledge of and participation in a conspiracy to import marijuana into the United States. But possibilities, however numerous, do not supply proof; The circumstances proved must be susceptible of inferences upon which a jury may reasonably find guilt beyond a reasonable doubt. The government was unable in this ease to show that Padilla ever knew or met Martinez or Huila prior to the trip to the docks, or that he agreed with them or either of them to import marijuana into the United States. All we have is the evidence that Padilla drove Martinez to the docks, that he left the docks when approached by one customs agent, and that soon afterward he surrendered without resistance to another customs agent. No evidence of an incriminating nature was found on his person or in the car. Padilla-Soris’ explanation of the trip to the dock was that he first met Martinez that evening at the home of a woman acquaintance, and that at her request he drove Martinez to the docks in her automobile. This was not disproved. Martinez when called as a witness by Padilla-Soris, presumably as a corroborating witness, refused to testify on grounds of self-incrimination.

When Padilla-Soris’ participation in the conspiracy was allowed to go to the jury on the meager and insubstantial proof introduced in this case, it was an invitation to return a conviction based entirely on association. Mere association, standing alone, will not suffice to support a conviction for conspiracy. Panci v. United States, supra. The jury in this case was not presented with evidence from which reasonable minds could find guilt beyond a reasonable doubt. The question of Padilla-Soris’ guilt should not have been submitted to the jury. Rather, his motion for judgment of acquittal should have been granted. His judgment of conviction and resultant confinement sentence under Count I of the indictment are reversed, with directions to dismiss the indictment as to the defendant-appellant, Lorenzo A. Padilla-Soris

Conclusion

As to the appeal of Martinez, his convictions under Counts I, IV and V are vacated and set aside; upon remand his guilty plea to Count II is directed to be accepted and sentence imposed thereunder. As to the appeal of Huila, his convictions under Counts I, II, III, and IV are reversed and remanded for a new trial. Padilla-Soris’ conviction under Count I is reversed with directions to dismiss the indictment as to him.

Vacated and set aside in part and remanded with directions; reversed for new trial in part; and reversed with directions to dismiss in part.

      . The testimony was to the effect that the customs agent took four separate packages from the river, the implication being that the original package, possibly no more than a cardboard box, distintegrated in the water leaving the four individual packages retrieved by the agent from the water,

      . It was later ascertained that Padilla spoke only Spanish.

      . Miranda v. Arizona, 1966, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694.

      . In violation of: (i) Title 18 U.S.C. Sec. 371, (ii) Title 21 U.S.C. Sec. 952(a) and Title 18 U.S.C. Sec. 2, and (iii) Title 21 U.S.C. Sec. 841(a) and Title 18 U.S.C. Sec. 2.

      . In violation of Title 21 U.S.C. Sec. 841 (a)(1).

      . In violation of Title 18 U.S.C. Sec. 111.

      . In discussing his refusal to accept the guilty plea the trial judge stated:
      “I could not, based on what Martinez has told me make a finding which I have to find that he freely and voluntarily, without the waiver of any constitutional rights, pled guilty. That is a finding I have to make and I can’t do it on the basis of what he has told me.”
      Counsel for Martinez correctly points out to us that this is not a precise statement of the requirements under Rule 11, F.R.Crim.P., for acceptance of a guilty plea. The entry of a plea of guilty does indeed waive a number of constitutional rights, among them the right to trial by jury and the right to confront one’s accusers in open court. McCarthy v. United States, 1969, 394 U.S. 459, 466, 89 S.Ct. 1166, 1171, 22 L.Ed.2d 418, 425. Examination of the entire colloquy between Martinez’ counsel and the judge indicates, however, that the judge was fully aware of the requirements for acceptance of Martinez’ guilty plea and some of the problems posed by the existence of a possibly coerced statement. Later in the colloquy he stated:
      “That [the possibly coerced statement] would be a fine ground for a [collateral attack on the judgment under 28 U.S.C. Sec.] 2255 where he would say, ‘Because of that confession I went ahead and admitted I was guilty, because they could introduce it against me, and I was induced, by virtue of a confession which was wrongfully extracted from me.’ ”

      . Counsel asserted that as Huila’s attorney he would expect to call Martinez as a witness for Huila. But Martinez’ interests would best be served by staying off the witness stand. While the joint counsel for Martinez and Huila did not move for a severance in specific terms, we so treat it and think the trial judge should have done likewise on the basis of the language employed: “I feel that for the two of them to go to trial together, I would be in a possible position of conflict.” As an alternative, the attorney urged the court to appoint another counsel to represent one of the two defendants. This latter request was denied by the court.

      . Rule 11 requires as a prerequisite to acceptance of a guilty plea that the trial judge “first address . . . the defendant personally and determine . . . that the plea is made voluntarily with understanding of the nature of the charge and the consequences of the plea.” A further requirement for entering judgment based on a plea of guilty is that the trial judge determine to his satisfaction “that there is a factual basis for the plea.” See McCarthy v. United States, 1969, 894 U.S. 459, 89 S.Ct. 1166, 22 L.Ed.2d 418.

      . North Carolina v. Alford, 1970, 400 U.S. 25, 37-38, 91 S.Ct. 160, 167, 27 L.Ed.2d 162, 169. In McCarthy v. United States, supra, as already noted in the text, the Supreme Court held that guilty pleas were required under the Due Process clause of the Constitution to be knowing and voluntary. The Court in its discussion made it clear that the volun-tariness requirement of F.R.Crim.P. 11, is constitutional in origin and nature. As such, there can be no doubt that the voluntariness requirement applies alike to state and federal prosecutions. Oaks v. Wainwright, 5 Cir. 1971, 445 F.2d 1062, 1063; Wade v. Wainwright, 5 Cir. 1969, 420 F.2d 898, 900; Busby v. Holman, 5 Cir. 1966, 356 F.2d 75, 78. Since the voluntariness standard is constitutional in nature and origin, it is patent that a plea, constitutional if tendered in state court proceedings, would not be ruled unconstitutional in federal criminal prosecutions. Otherwise stated, the requirements for volun-tariness in federal proceedings cannot be less strict than federal habeas corpus standards applied to state prosecutions. We therefore have no hesitancy in citing, in the context of a federal prosecution, the rule for volun-tariness laid down in the review of state court proceedings. North Carolina v. Alford, supra. Cf. Boykin v. Alabama, 1969, 395 U.S. 238, 89 S.Ct. 1709, 23 L.Ed.2d 274.

      . In view of our setting aside Padilla-Soris’ conviction because of the insufficiency of the evidence as to him, it is not necessary to deal with his additional contention, that denial of his motion for severance was prejudicial to his defense, Rule 14, F.R.Crim.P., and hence an abuse of discretion on the part of the trial judge. His argument as to this question parallels that of Huila (except that he did have separate counsel) and the point was preserved for appellate review in a similar manner. Since this contention if we sustained it, as we doubtless would if necessary, would entitle him only to reversal for a new trial, the disposition of his conviction by reversing and directing dismissal of the indictment as to him renders discussion of his second point superfluous.


author: INGRAHAM, Circuit Judge: AINSWORTH, Circuit Judge PER CURIAM: AINSWORTH, Circuit Judge

text:
    David Pope HOOD, Plaintiff-Appellant, v. DUN & BRADSTREET, INC., Defendant-Appellee.
    No. 72-1233.
    United States Court of Appeals, Fifth Circuit.
    Sept. 14, 1973.
    Rehearing and Rehearing En Banc Denied Oct. 31, 1973.

      Rex T. Reeves, Merrell Collier, Atlanta, Ga., for plaintiff-appellant.
    Hugh M. Dorsey, Jr., W. Rhett Tanner, Atlanta, Ga., for defendant-appellee.
    Before GOLDBERG, AINSWORTH and INGRAHAM, Circuit Judges.
   INGRAHAM, Circuit Judge:

This is an action for libel predicated upon allegedly false and defamatory statements published in a credit report provided by defendant Dun & Bradstreet, Inc. The district court, 335 F. Supp. 170, granted defendant’s motion for summary judgment, holding that defendant was entitled to ' a conditional privilege under Georgia law and that there was an absence of actual malice on behalf of the defendant necessary to overcome a conditional privilege. Plaintiff appeals.

The issues on appeal are as follows: (1) whether the statements are libelous, and if so, whether they are libelous per se; (2) whether defendant is entitled to a conditional constitutional privilege under the First Amendment and New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964) ; (3) whether defendant is entitled to a conditional privilege under Georgia law; and (4) the necessary proof of damages.

The material facts of the case are undisputed. Plaintiff David Pope Hood is a building contractor conducting the principal business of the construction of gasoline filling stations in and around Atlanta, Georgia. He has been engaged in the construction business for approximately twenty-seven years and has maintained a good reputation in conducting his financial affairs and operating the business.

The defendant is a credit reporting agency which prepares and provides for its subscribers credit information regarding virtually any person or business organization. The credit information is provided to subscribers pursuant to a written contract which specifically states that any information furnished by the defendant is for the sole use of the subscriber.

On October 11, 1968, the defendant Dun & Bradstreet prepared a credit report on the plaintiff and distributed the report to eleven subscribers. Included in this report were four allegedly libelous statements which read as follows:

“(1) In interview of October 10 1968 Mrs. Hood referred all details to her husband who had been inavailable (sic) for comment to date.
“(2) As a matter of interest, David P. Hood has always declined financial information other than to say that sales are in excess of $100,000 and that net worth is in excess of $3,000. These two estimates were submitted in July 1967.
“(3) Public records reveal suit # 248479 filed June 10 1968, for $103, Whittock Dobbs Inc. v. subject. Also suit # 238558 filed Apr 3 1968, Wes-tron Corp vs. subject.
“(4) Although complete details are not available, working capital appears limited at times with some trade, slowness noted.”

Defendant acknowledges that the two law suits reportedly filed against plaintiff were actually filed against another individual named David Hood. Defendant does not dispute the falsity of the additional statements in the report.

Plaintiff filed suit in the District Court of the Northern District of Georgia, alleging that the published statements were false and defamatory, that such statements tended to harm him in his business, and that as a consequence of the statements he had in fact suffered injury. Both parties filed motion for summary judgment, and the district court granted defendant’s motion, holding that defendant was entitled to a conditional privilege under Georgia law, and that there was no showing of actual malice to overcome the privilege.

I. Libel or libel per se

Pursuant to Georgia law, an action for libel lies where a published statement is false and defamatory, “tending to injure the reputation of an individual, and exposing him to public hatred, contempt or ridicule.” Additionally, the definition of slander in Georgia has been incorporated into the definition of libel, and therefore false and defamatory statements made in regard to another in “his trade, office, or profession calculated to injure him therein” also constitutes an action for libel.

Georgia also acknowledges that in addition to libel per se, there is libel by innuendo. While plain and unambiguous words must be construed in the normal and ordinary meaning, ambiguous words may be clarified in meaning by “reference to the circumstances” and thereby constitute libel by innuendo.

In accordance with these principles, the district court properly resolved the issue whether the statements made by defendant were libelous, and if so, whether they were libelous per se. Essentially, the district court held that the first two statements were plain, unambiguous and harmless and therefore clearly did not constitute libel. Such statements simply do not injure the plaintiff’s reputation and do not expose him to public hatred, contempt or ridicule as required under Georgia law.

The additional two statements, however, were found by the district court to be ambiguous and therefore capable of being libelous by innuendo where the ambiguity is clarified by reference to the circumstances. Moreover, the district court declined to hold that the statements were libelous per se as they did not “impute to another conduct, characteristics or a condition incompatible with proper exercise of lawful business or trade.” Seaboard Warehouse Terminals, Inc. v. Dun & Bradstreet, Inc., 328 F.Supp. 291 (S.D.Fla., 1971). Consequently, a jury might conclude that the final two statements are libelous by innuendo. Hood v. Dun & Bradstreet, Inc., 335 F.Supp. 170 (N.D.Ga., 1971).

II. First Amendment Privilege

Defendant contends that the publication of a false credit report should be afforded a conditional constitutional privilege whereby Dun & Bradstreet would not be liable for such communication unless the plaintiff can prove that the publication was made with actual malice. Under New York Times v. Sullivan, supra, and more specifically Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971), defendant asserts that a credit report is constitutionally protected by the First Amendment guarantees of freedom of the press because it is a matter of “general or public interest.” In accordance with the Third and Tenth Circuits, the district court held that defendant was not entitled to such a privilege because the medium was not incompassed in the area of constitutional protection. Furthermore, the district court held that the freedom of discussion and debate on public issues does not apply where the communication pursuant to contractual terms is to be kept in strict confidence. We agree.

Whether or not a credit report is privileged as a matter of public interest must be answered in light of the constitutional guarantees of the First Amendment. In New York Times v. Sullivan, supra, the Supreme Court declared that pursuant to First Amendment freedoms a “public official” could not recover for libelous statements unless he could prove that the statements were made with “actual malice.” Actual malice was defined by the Court as “knowledge that [the statement] was false or reckless disregard of whether it was false or not.” Subsequent Supreme Court decisions expanded this rule to include “public figures” and matters of “general or public interest.” As stated previously, defendant contends that the credit report falls within the scope of matters of public or general interest and consequently is afforded the First Amendment protection of free speech.

We hold that matters of general and public interest do not include libelous and defamatory publications of such a commercial nature as credit reports. The concept of purely commercial speech as an area where First Amendment protection does not apply was originally articulated in Valentine v. Chrestensen, 316 U.S. 52, 62 S.Ct. 920, 86 L.Ed. 1262 (1942). In Valentine a city ordinance that banned the distribution of handbills soliciting a submarine tour was challenged as violative of First Amendment rights. The Supreme Court upheld the ordinance declaring that commercial speech was unprotected by the First Amendment. It is important to note that the transaction in Valentine was nothing more than the solicitation of a commercial venture. While the Valentine decision might have been subsequently weakened in some respects, the commercial speech doctrine was revitalized recently in Pittsburgh Press Co. v. Pittsburgh Com’n on Human Relations, 413 U.S. 376, 93 S.Ct. 2553, 37 L.Ed.2d 669. The Court in Pittsburgh Press upheld an ordinance that prohibited newspapers from referring to sex in employment headings in want ads. The Court distinguished New York Times, pointing out that the Court there was concerned with a publication that “communicated information, expressed opinion, recited grievances, protested claimed abuses and sought financial support on behalf of a movement whose existence and objectives are matters of the highest public interest and concern.” The Court found that the commercial advertisements were more in accordance with the principles of Valentine than with those of New York Times because the commercial advertisements did not express such social policies. Similarly, because this commercial credit report did not express social concerns and grievances of the type described above, we find that such a report coincides with the doctrine of commercial speech. On the facts of this case, the credit report was distributed pursuant to a written contract, whereby the report was to be maintained in strict confidence. It was distributed to an extremely limited readership of eleven subscribers for commercial purposes and clearly without regard to social concerns or grievances. The report referred to plaintiff only in regard to his business and his relationship with business associates in a commercial capacity. Consequently, we hold that such credit reports do not fall within the definition of matters of general or public interest.

III. Privilege under Georgia law

Defendant's second contention in regard to privilege is that credit reporting agencies should be afforded a conditional privilege based on Georgia law. To determine the validity of this contention it is necessary for us to examine case authority, statutory enactments and the underlying principles of the conditional privilege itself.

Initially, we point out that the great majority of jurisdictions, with the exception of Georgia and Idaho, confronting this issue has held that the credit reporting agency is entitled to a conditional privilege. Georgia presently has a statute that delineates the conditional privilege and provides as follows:

Privileged communications. The following are deemed privileged communications :
1. Statements made bona fide in the performance of a public duty.
2. Similar statements in the performance of a private duty; either legal or moral.
3. Statements made with the bona fide intent, on the part of the speaker, to protect his own interest in a matter where it is concerned.

Ga.Code Ann. § 105-709. If this court were to consider the statute in a vacuum, conceivably we could find that credit reports would fall within its provisions and, therefore, would be entitled to a conditional privilege. As early as 1886, however, the Supreme Court of Georgia was confronted with the issue of whether a credit reporting agency was entitled to a conditional immunity and held that it was not. In construing an identical statute, the Georgia Supreme Court reasoned in Johnson v. The Bradstreet Co., 77 Ga. 172 (1886), that a credit report concerning the plaintiff in that case was false and therefore immoral. Since immoral contracts were void, there was no duty, legal or moral, and consequently the credit reporting was not included within the provisions of the conditional privilege statute. Furthermore, in a subsequent decision the Georgia Supreme Court reiterated that there was no conditional privilege in regard to credit reporting in Georgia simply because “no sound argument can be advanced why they should be so considered.” Western Union Telegraph Co. v. Pritchett, 108 Ga. 411, 34 S.E. 216 (1899), see Southeast Bankcard Ass’n v. Woodruff, 124 Ga.App. 478, 184 S.E.2d 191 (1971).

Therefore, this court must determine whether there are compelling reasons why we should deviate from these early Georgia decisions. We recognize that federal courts are not immutably bound under Erie R. R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), to follow state court decisions where it appears that a state court considering the identical issue would not rely on such precedent. The federal court, like the state court, can consider all information and data that the highest court of the state could consider in determining whether to strictly adhere to a prior ruling.

The district court, in anticipation of what a state court might hold, reexamined the issue of conditional privilege in regard to credit reporting agencies and concluded that the agency was entitled to such a privilege. The court set forth principally two reasons why a state court would arrive at a conclusion different from that expressed in the early pronouncements of the Georgia Supreme Court. First, relying on Cochran v. Sears & Roebuck Co., 72 Ga.App. 458, 34 S.E.2d 296 (1945), a Georgia court of appeals decision, the district court declared that one should not be held liable for libelous statements where they are made without malice, are properly limited in scope, are limited in distribution, and are made pursuant to a private legal obligation such as a contract. But, see Southeast Bankcard Ass’n v. Woodruff, supra. Second, the court relied on the public interest in the availability of credit information in a commercialized society.

Although the district court’s reasoning is not totally without merit, we find there are other controlling reasons that would convince a state court to adhere to the early decisions of the Supreme Court of Georgia. The first reason relates to the underlying principle of the conditional privilege itself. The fundamental reason for allowing credit reporting agencies to claim the conditional privilege was first enunciated in 1914. The reason was predicated upon the idea that if no privilege existed, the reporting agencies would be driven out of business by the cost of defamation suits. Consequently, sources of credit information would be unavailable, credit would be difficult to obtain, and as a result the commercial growth of our nation would suffer. Since 1914 the courts have blindly applied the privilege to credit reporting agencies apparently without examining the fundamental reason for the conditional immunity. We find at least two reasons why a Georgia court would adhere to its earlier supreme court decisions.

First, this case demonstrates that in one of the states that has refused to grant the privilege, credit reporting agencies exist and are thriving on the credit reporting business. If the basic assumption underlying the rule was correct, presumably there would be no credit reporting agencies in Georgia or Idaho. Additionally, we find that Dun & Bradstreet is not the only credit reporting agency doing a thriving business in Georgia, but there are at least twenty others, one of which is Retail Credit Co., one of the largest such organizations in the United States. Moreover, an empirical study that was prepared comparing credit transactions in Boise, Idaho, where there is no privilege, with a city in its neighboring state, Spokane, Washington, where the privilege exists, also lends support to the' assertion that in those states where no conditional privilege is recognized, credit information is readily available and thus does not inhibit commercial credit transactions. Irresistible logic and the absence of empirical verification compel this court to conclude that the privilege should not be blindly applied to credit reporting agencies in this case.

A second reason for our decision is that in recent years there has been an apparent shift in emphasis from the protection of the credit reporting agency to the protection of the individual or business enterprise being investigated. The growth in consumer protection in regard to credit reporting is obvious from legislation such as the Fair Credit Reporting Act (FCRA). 15 U.S.C.A. §§ 1681-1681t (Supp.1971). Pursuant to the FCRA, the credit agency must disclose to the consumer the substance and sources of information upon its demand, id. § 1681d, the consumer has a right to correct and explain information contained in the report, id. § 1681i, and it may limit access to those who have a “legitimate business need.” Id. § 1681b(S)(E). Furthermore, the Act does not preclude an action at common law except where information that would give rise to a cause of action is obtained by the complainant pursuant to the provisions of the Act. Id. § 1681h(e). We feel, therefore, that based upon information and data such as empirical analysis and contemporary notions of consumer protection, the district court should have adhered to the early decisions of the Georgia Supreme Court and held that there was no conditional privilege afforded defendant under Georgia law.

IV. Damages

In an action for libel under Georgia law, the plaintiff must specifically allege, F.R.Civ.P. 9(g), and prove special damages where the defamatory statement is not libel per se. Mell v. Edge, 68 Ga.App. 314, 22 S.E.2d 738, 739 (1942). Special damages are those damages that “actually flowed from the act.” Ga.Code Ann. § 105-2006 (1935). More specifically, special damages are sustained where there is a “loss of money, or some other material temporal advantage capable of being assessed in monetary value.” Mell v. Edge, supra,; see C. McCormick, Damages, 419 (1935). The loss of employment, income or profits is categorized as special damages and is sufficient injury upon which to predicate an action for libel where the defamatory words are not libelous per se.

Plaintiff specifically alleges two grounds upon which he might prove special damages. First in Bradstreet Co. v. Oswald, 96 Ga. 396, 23 S.E. 423 (1894), the Georgia Supreme Court categorized as special damages the pecuniary expense incurred by the plaintiff in removing from customers’ minds the effect of false statements made in a credit report. Accordingly, plaintiff’s complaint specifically alleges that he suffered special damages of incurring pecuniary loss in terms of total hours expended in removing from the minds of certain business associates the harmful effect of the false statements. Plaintiff elaborated in his answers to defendant’s interrogatories, responding to the effect that it was necessary for him to contact several persons, including a bonding company, an insurance agent and a banker in order to procure letters of reference, and an accountant for true and correct financial information. Furthermore, plaintiff was required on two occasions to confer with representatives of Dun & Bradstreet, consult with his personal attorney, and to contact various persons associated with certain oil companies, for which he constructed gasoline filling stations, in order to convince them of his true credit standing and to urge that they again place his name on their lists of bid invitees from which it might have been removed.

Second, plaintiff asserts that the flow in his business has decreased without any specific reference to customers or construction projects. The requirement of special damages is also satisfied where “the plaintiff can, under the circumstances, only know that the flow of his business as a whole is diminished, and it would be impossible to point to any specific customers, or orders which have been lost . . . .” C. McCormick, Damages 422 (1935). Plaintiff contends that he knows he has suffered such a loss based upon information derived from plaintiff’s books kept in the ordinary course of business. Therefore, the alleged injury sustained is specifically plead by plaintiff and affords him at least the opportunity to prove to the jury that he has sustained special damages.

To justify remanding this case for trial, it was necessary for us to point out that there were allegations in the pleadings and answers to interrogatories to support plaintiff’s ability to prove special damages, a prerequisite to any recovery where the statement is not libelous per se. It would be premature, however, to further discuss plaintiff’s claims for damages. The measure of general damages that is presumed by law is limited only by the sole discretion of the jury absent bias or prejudice. Brown v. Autry, 78 Ga. 753, 3 S.E. 669 (1887). Malice, necessary to support an award of punitive damages, is inferred by law from the character of the defamation where there is an absence of lawful excuse or the absence of a privilege. Ga.Code Ann. §§ 105-2002, 105-2003 (1935); see Atlanta Journal Co. v. Doyal, 82 Ga.App. 321, 60 S.E.2d 802 (1950). Furthermore, where the plaintiff proves by satisfactory evidence that the “defendant has acted in bad faith, or has been stubbornly litigious, or where he has caused the plaintiff unnecessary trouble and expense,” the jury may award the expenses of litigation. Ga. Code Ann. § 20-1404 (1935); see Atlanta Journal Co. v. Doyle, supra.

Because there are sufficient facts indicating that plaintiff might have been able to prove special damages and thereby recover for injury incurred as a result of publication of the libelous and defamatory statements made in the credit report, we reverse and remand for trial.

AINSWORTH, Circuit Judge

(dissenting) :

Both plaintiff and defendant moved the court for summary judgment contending that there was no genuine issue of material fact and that judgment as a matter of law was required. The district judge, however, sustained defendant’s motion for summary judgment and held that the Dun & Bradstreet report was conditionally privileged on the basis of Ga.Code Ann. § 105-709, and that the uncontroverted evidence showed the credit statement which pertained to plaintiff was published without malice and was properly issued to eleven subscribers of defendant. The court found that the evidence was insufficient to raise a jury question.

I am in agreement with the reasons expressed by the district judge in his detailed order granting defendant’s motion for summary judgment. I also agree with the district court that the ancient Georgia cases of Johnson v. The Bradstreet Co., 77 Ga. 172 (1886) and Western Union Telegraph Co. v. Prit-chett, 108 Ga. 411, 34 S.E. 216 (1899), rendered 87 and 74 years ago, are based upon odd reasoning, are distinguishable on their facts, and should not be followed. We are not bound under Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), to give blind allegiance to these decisions. See Shelp v. National Surety Corporation, 5 Cir., 1964, 333 F.2d 431; Union Bank & Trust Co. of Mt. Holley, N. J. v. First Nat. Bank, 5 Cir., 1966, 362 F.2d 311. See also Peacock v. Retail Credit Company, 5 Cir., 1970, 429 F.2d 31.

The majority concedes that practically all of the states of this country afford a conditional privilege to credit reports published in limited fashion to subscribers. Only Georgia and Idaho are said to be to the contrary. I am unpersuaded by the majority opinion that the reasons which underlie the decisions of the many states which grant a conditional privilege to credit reports are insupportable or that contemporary notions no longer favor the privilege.

Since I believe the district court’s decision should be affirmed, I respectfully dissent.

ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC

Before GOLDBERG, AINSWORTH and INGRAHAM, Circuit Judges.

PER CURIAM:

The Petition for Rehearing is denied and no member of this panel nor Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 12) the Petition for Rehearing En Banc is denied.

AINSWORTH, Circuit Judge

(dissenting) :

I dissent from the denial of the petition for rehearing.

      . Dun & Bradstreet, Inc. v. Miller, 398 F.2d 218, 222 (5th Cir., 1968) ; Ga.Code Ann. § 105-701 (1935). The statute describes libel as “a false and malicious defamation of another, expressed in print, or writing, or pictures, or signs, tending to injure the reputation of an individual, and exposing him to public hatred, contempt, or ridicule. The publication of the libelous matter is essential to recovery.”

      . Hardy v. Williamson, 86 Ga. 551, 12 S.E. 874 (1891) ; Southland Publishing Co. v. Sewell, 111 Ga.App. 803, 143 S.E.2d 428 (1965).

      . Ga.Code Ann. § 105-702 (1935). The statute describes slander as “imputing to another a crime punishable by law; or, second, charging him with having some contagious disorder, or being guilty of some debasing act which may exclude him from society; or, third, in charges made against another in reference to his trade, office, or profession, calculated to injure him therein; or, fourth, any disparaging words productive of special damage flowing naturally therefrom. In the last case, the special damage is essential to support the action; in the first three, damage is inferred.”

      . Central of Georgia Ry. v. Sheftall, 118 Ga. 865, 45 S.E. 687 (1903).

      . Grove v. Dun & Bradstreet, Inc., 438 F.2d 433 (3rd Cir., 1971), cert den., 404 U.S. 898, 92 S.Ct. 204, 30 L.Ed.2d 175 (1971) . The Third Circuit in Grove distinguished New York Times basically upon three grounds. First, the court held that private credit reports were not the type of medium that is entitled to First Amendment protection. Second, the confidential nature of a credit report prevented it from being of such a public nature so as to claim First Amendment protection. Third, the court held that credit reporting was not “opinion, comment, or criticism,” but was of a factual nature. The Tenth Circuit in Kansas Elec. Supply Co. v. Dun & Bradstreet, Inc., 448 F.2d 647 (10th Cir., 1971), cert, den., 405 U.S. 1026, 92 S.Ct. 1289, 31 L.Ed.2d 486 (1972) , relied upon the rationale of the Third Circuit, holding that the credit standing of a business enterprise was not a matter of “real public interest” and that such a medium that simply provided credit information to a narrowly defined readership was not entitled to First Amendment protection. The Seventh Circuit in Oberman v. Dun & Bradstreet, Inc., 460 F.2d 1381 (7th Cir., 1972), also specifically relied on the reasoning set forth by the Third Circuit.

      . Kansas Elec. Supply Co. v. Dun & Bradstreet, Inc., 448 F.2d 647 (10th Cir., 1971), cert, den., 405 U.S. 1026, 92 S.Ct. 1289, 31 L.Ed.2d 486 (1972). See also Oberman v. Dun & Bradstreet, Inc., 460 F.2d 1381 (7th Cir., 1972).

      . Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1966).

      . Rosenbloom v. Metromedia, Inc., 403 U.S. 29, 91 S.Ct. 1811, 29 L.Ed.2d 296 (1971) ; Bon Air Hotel v. Time, Inc., 426 F.2d 858 (5th Cir., 1970).

      . See Cammarano v. United States, 358 U.S. 498, 513-515, 79 S.Ct. 524, 3 L.Ed.2d 462 (1959) (Douglas, J., concurring) ; Joseph Burstyn v. Wilson, 343 U.S. 495, 501, 72 S. Ct. 777, 96 L.Ed. 1098 (1952).

      . E. g. Johnson v. The Bradstreet Co., 77 Ga. 172 (1886).

      . E. g. Pacific Packing Co. v. Bradstreet Co., 25 Idaho 696, 139 P. 1007 (1914).

      . E. g. Altoona Clay Prods., Inc. v. Dun & Bradstreet, 367 F.2d 625 (3rd Cir., 1966) (Application of Pennsylvania law) ; H. E. Crawford Co. v. Dun & Bradstreet, 241 F.2d 387 (4th Cir., 1957) (Application of North Carolina law) ; Watwood v. Stone’s Mercantile Agency, Inc., 90 U.S.App.D.C. 156, 194 F.2d 160 (1952) ; Riley v. Dun & Bradstreet, 172 F.2d 303 (6th Cir., 1949) (Application of Tennessee law) ; Hooper-Holmes Bureau v. Bunn, 161 F.2d 102 (5th Cir., 1947) (Application of Florida law) ; Pomeroy v. Dun & Bradstreet, 146 F.Supp. 59 (D.Or., 1956) ; Stationer’s Corp. v. Dun & Bradstreet, 62 Cal.2d 412, 42 Cal.Rptr. 449, 398 P.2d 785 (1965) ; Melcher v. Beeler, 48 Colo. 233, 110 P. 181 (1919) ; Putnal v. Inman, 76 Fla. 553, 80 So. 316 (1918) ; Ideal Motor Co. v. Warfield, 211 Ky. 576, 277 S. W. 862 (1925) ; Retail Credit Co. v. Garraway, 240 Miss. 230, 126 So.2d 271 (1961) ; Mitchell v. Bradstreet Co., 116 Mo. 226, 22 S.W. 358 (1893) ; Restatement of Courts § 595 (1938) ; W. Prosser, Law of Torts 790 (4 Ed. 1970) ; Comment, Protecting the Subjects of Credit Reports, 80 Yale D.J. 1035 (1971).

      . Lester v. Aetna Ins. Co., 433 F.2d 884 (5th Cir., 1970) ; C. Wright, Law of Federal Courts, 239-40 (2d Ed. 1970).

      . C. Wright, Law of Federal Courts, 239-40 (2d Ed. 1970).

      . Smith, Conditional Privilege for Mercantile Agencies, 14 Colum.L.Rev. 187 (1914). Mr. Smith describes the reason for the conditional privilege as follows:
      “If such communications are not protected by the law from the danger of vexatious litigation in cases where they turn out to be incorrect in fact, the stability of men engaged in trade and commerce would be exposed to the greatest hazard, for no man would answer an inquiry as to the solvency of another. . . . [C]an it be desirable to impose conditions of immunity so stringent as to discourage the giving of information and thus diminish materially the probability that the desired information will be obtained by persons in need of it?”

      . Pacific Packing Co. v. Bradstreet Co., 25 Idaho 696, 139 P. 1007 (1914).

      . See Woodhouse v. Powles, 43 Wash. 617, 86 P. 1063 (1906) ; W. Prosser, Law of Torts, 790 n. 25 (4th Ed., 1970). Contra, Denney v. Northwestern Credit Ass’n, 55 Wash. 331, 104 P. 769 (1909) (dictum).

      . University of Idaho, Credit Practices of Retailers and Financers of Furniture and Home Appliances in Two Northwest Cities (1963) ; Comment, Protecting the Subjects of Credit Reports, 80 Yale L.J. 1035, 1051 (1971).

      . The provision reads as follows:
      “[N]o consumer may bring any action or proceeding in the nature of defamation, invasion of privacy or negligence with respect to the reporting of information against any consumer reporting agency . . . based on information disclosed pursuant [to the Act], except as to false information furnished with malice or willful intent to injure such consumer.”


author: J. JOSEPH SMITH, Circuit Judge:

text:
    Raye DINNERSTEIN, Executrix of the Estate of Howard Dinnerstein, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant.
    No. 3, Docket 72-2270.
    United States Court of Appeals, Second Circuit.
    Argued Sept. 21, 1973.
    Decided Oct. 16, 1973.

      Paul J. Falsey, New Haven, Conn. (Gold, Gold & Bernblum, Milton A. Bernblum, New Haven, Conn., of counsel), for plaintiff-appellee.
    Thomas F. Maxwell, Jr., Asst. U. S. Atty. (Stewart H. Jones, U. S. Atty., D. Conn., of counsel), for defendant-appellant.
    Before KAUFMAN, Chief Judge, and SMITH and MULLIGAN, Circuit Judges.
   J. JOSEPH SMITH, Circuit Judge:

This action arose out of the suicide of plaintiff’s husband while a patient at the Veterans Administration Hospital in West Haven, Connecticut. The only question on appeal is the validity of the district court’s finding that the hospital officials and staff were negligent in permitting Mr. Dinnerstein’s death. Both parties agree that under the Tort Claims Act, Connecticut law applies, and that under that law the proper standard of care is that standard which other hospitals in the area have and afford similar patients. The parties disagree, however, as to whether the evidence presented at trial — most notably the expert psychiatric testimony — sufficiently supports the court’s finding of negligence. Since we find the evidence to be sufficient, we affirm.

I.

For as long as six years' before his death on January 4, 1969, Howard Din-nerstein had suffered recurrent periods of depression serious enough to require voluntary psychiatric care. On January 31, 1968, he ran his car into a highway bridge abutment. Though little damage was done to the ear and none to himself, Dinnerstein told his wife that the “accident” had actually been a suicide attempt. The same day he was admitted —again voluntarily — -to the V.A. Hospital in West Haven; he remained there under observation until February 12. The hospital records indicate that at the time its staff doctors considered Dinner-stein a “suicide risk.” Though the records also indicate that Dinnerstein was gradually accorded greater freedom of movement — from complete restriction on January 31 to full privileges on February 2 — his release on February 12 was nevertheless “against medical advice.”

In the fall of 1968, business pressures apparently drove Dinnerstein back into his depression. Dr. Gottlieb, Dinner-stein’s new private psychiatrist, convinced him to admit himself to St. Raphael’s Hospital in New Haven on November 5, 1968. Dr. Gottlieb testified that his reasons for hospitalizing Din-nerstein in November included protecting him from possible suicide. On November 9, Dinnerstein’s condition took a turn for the worse: ’ He would not leave his bed nor do anything for himself. However, by November 14 he had improved enough to be granted walking privileges; and on November 28, he was again discharged.

But in December the cycle again turned downward, and Dinnerstein was treated by Dr. Gottlieb no less than seven times. As he was going steadily downhill, Dr. Gottlieb again recommended hospitalization. At the V.A. Hospital, the physician on duty, Dr. Tal-an, informed Dinnerstein that the individual therapy he was seeking was not available. Depressed further by this, Dinnerstein refused to admit himself. However, on the following day, January 3, 1969, he decided to accept the V.A. offer of group therapy. During the admission session, Dr. Clark of the V.A. staff diagnosed Dinnerstein’s condition as a “Depressive Reaction.” However, he later testified that he did not consider Dinnerstein to be suicidal.

Though Dr. Clark was aware of Din-nerstein’s prior history from both the V.A. records of his February hospitalization and from a telephone conversation between Dr. Talan and Dr. Gottlieb on January 2, he did not order any restrictions or special supervision for Din-nerstein in assigning him to a seventh-floor ward. Dr. Clark also discontinued a regime of anti-depressant drugs Din-nerstein had followed up to that time in order to obtain a more accurate reading of his psychological state.

The V.A. records indicate that on the evening of January 3, Dinnerstein complained to Dr. Clark that he had become even more depressed since arriving at the hospital because of the inadequacy of the group therapy program. However, despite these complaints, Dr. Clark issued no additional orders either to supervise Dinnerstein more closely or to give him anti-depressant medication. At approximately 3:00 p. m. on the following day, January 4, Dinnerstein walked to the lavatory on the seventh floor and leaped to his death from an unsecured window.

II.

The government’s first contention is that as a matter of Connecticut law, the district court’s finding of negligence cannot stand because no psychiatric expert testified that the appropriate standard of medical care was not satisfied. This argument misstates the law. Rather it is clear that expert medical testimony is necessary only to provide the trier of fact with the proper standard of medical care against which to measure the defendant’s actions. It is the trier of fact, and not the expert witness, who must then evaluate the evidence to determine whether or not that standard was actually met. Slimak v. Foster, 106 Conn. 366, 370-71, 138 A. 153, 155 (1927). Indeed, the trier of fact may even base a finding of negligence on the expert testimony of the defendant-doctor. Snyder v. Pantaleo, 143 Conn. 290, 294, 122 A.2d 21, 24 (1956); Allen v. Giuliano, 144 Conn. 573, 575, 135 A.2d 904, 906 (1957); Console v. Nickou, 156 Conn. 268, 274, 240 A.2d 895, 898 (1968) ; Levett v. Etkind, 158 Conn. 567, 575, 265 A.2d 70, 73 (1969).

Here there was clear testimony from three psychiatric experts — Dr. Gottlieb, Dr. Talan, and Dr. Rubenstein, a government witness — that the hospital should have restricted Dinnerstein if there was reason to believe he was suicidal. Indeed, this standard of care is so obvious that expert testimony seems hardly necessary.

Nevertheless, when one remembers the fact that unlike blood pressures or pulse rates, emotional states cannot be calibrated with precision, medical expertise again becomes relevant. That is, the question for expert guidance — but still for ultimate determination by the trier of fact — was whether it was reasonably foreseeable on the basis of Dinnerstein’s prior history that he would commit suicide. The government correctly notes that all of the expert witnesses, including Dr. Gottlieb, testified that they did not consider Dinnerstein to be suicidal on his admission to the hospital. However, despite this testimony on the narrow question of whether Dinnerstein exhibited suicidal tendencies on the day he was admitted, the trial court — relying primarily on the hospital’s own records and the conversations between Dr. Gott-lieb and Dr. Talan — nevertheless found:

[T]hat the Hospital knew or should have known of the real possibility of a suicide attempt, that it failed to take appropriate measures to guard Din-nerstein against that danger, that it was its duty to do so, and that, having failed to act with due care in the discharge of that duty, the United States is liable to the plaintiff for the losses caused thereby. .
At the least, for the first few days of Dinnerstein’s admission his movements should have been restricted so that he could be closely watched. As he was assigned to a ward on the seventh floor, measures should have been taken to see that he could not jump from a window. His own denial upon admission of suicidal ideation and even Dr. Gottlieb’s belief that he was not imminently suicidal, cannot excuse the complete absence of precautions to insure the safety of a patient with a suicidal gesture in his past, a long history of psychiatric treatment for recurrent and severe depression, previous hospitalization to protect against possible suicide. .

In our review of this finding, the government urges that we reconsider the evidence unrestrained by the “clearly erroneous” test of Rule 52(a). However, while we agree that a finding of negligence is reviewable as a matter of law, we cannot accept the government’s invitation to conduct a broad, almost de novo, inquiry into the basic facts of this case. As we have previously stated:

The standard of review to be applied to a district court’s finding of negligence is not the “clearly erroneous” standard . . . for a finding of negligence is reviewable as a matter of law. Nevertheless, the lower court finding “[will] ordinarily stand unless the [lower] court manifests an incorrect conception of the applicable law.” Cleary v. United States Lines Co., 411 F.2d 1009 (2 Cir. June 2, 1969), citing Radovich v. Cunard Steamship Co., 364 F.2d 149, 152 (2 Cir. 1966) and Esso Standard Oil S. A. v. S.S. Gasbras Sul., 387 F. 2d 573 (2 Cir.), cert, denied, 391 U.S. 914, 88 S.Ct. 1808, 20 L.Ed.2d 653 (1968).

Hendry v. United States, 418 F.2d 774, 784 (2d Cir. 1969).

Here there is no doubt that the trial court applied the proper legal standard: If Dinnerstein’s suicide was reasonably foreseeable, the hospital staff was clearly negligent in assigning him to an unsupervised and unrestricted room on the seventh floor.

We further hold that even without the benefit of the clearly erroneous rule, the finding that Dinnerstein’s suicide was sufficiently foreseeable to demand greater supervision is amply supported by the record. The hospital officials should certainly have been aware of

Dinnerstein’s prior hospitalization history contained in their own records. Similarly, Dr. Gottlieb, who testified that he considered Dinnerstein’s condition in late December to be the same or worse than it was in November when he was hospitalized partially to prevent a suicide attempt, informed Dr. Talan that Dinnerstein had exhibited “negativism and unpredictability” as recently as November 9th. This diagnosis certainly should have been made available to Dr. Clark, the admitting physician.

Moreover, Dr. Clark himself admitted that soon after his admission, Dinner-stein expressed dissatisfaction and further depression with the treatment he was receiving. Yet despite these complaints, Dr. Clark continued to deprive Dinnerstein of anti-depressant drugs he had been receiving, so as to evaluate his psychological condition.

From these facts, when combined with a six-year history of deepening depression, it was not at all unreasonable for the trial court to conclude that Dinner-stein should have been supervised more closely. This is not to suggest that every potential suicide must be locked in a padded cell. The law and modern psychiatry have now both come to the belated conclusion that an overly restrictive environment can be as destructive as an overly permissive one. But while we must accept some calculated risks in order to insure the patient’s legal rights and provide him with the most effective therapy, we must also admit that errors in judgment do occur and that when they do, medical authorities must assume their rightful share of the responsibility. Here, in short, we cannot say the trial court erred in concluding that the hospital staff was negligent in allowing Dinnerstein — an emotional unknown quantity — unrestricted movement on the seventh floor.

The judgment is affirmed.

      . The government has never disputed that Dinnerstein’s fall was a suicide.

      . The government cites Mamiye Bros. v. Barber Steamship Lines, Inc., 360 F.2d 774 (2d Cir. 1966), cert, denied, 385 U.S. 835, 87 S.Ct. 80, 17 L.Ed.2d 70 (1966), for the proposition that our review of this finding of negligence must also be free of the dearly erroneous rule in order to insure a uniformity of result among the several courts in this circuit. However, Mamiye Bros, applied only where contrary decisions rest “on exactly the same facts. . . .” Id. at 777.
      Baker v. United States, 226 F.Supp. 129 (S.D.Iowa 1964), aff’d 343 F.2d 222 (8th Cir. 1965), cited by the government, while strikingly similar to the case at bar does not satisfy this test. In Baker the patient, who had been referred to a V. A. hospital by a private physician who had noted suicidal tendencies, was also assigned to an open ward after a V. A. doctor concluded he was not a suicide risk. Three days later, Baker left his ward and jumped into a open well on the hospital grounds. The trial judge, noting that modern psychiatric theory requires some “calculated risks,” found no negligence, and the Eighth Circuit affirmed.
      Assuming, arguendo, that we must reconcile our result here with Baker, a case from another circuit which may or may not be correct, there is one important point of distinction between the two sets of facts. In Baker, there is no suggestion that hospital officials had any reason to believe the patient’s psychological condition was further deteriorating after his initial admission examination. Here, by contrast, it is undisputed that Dinnerstein told Dr. Clark that he was becoming even more depressed — apparently due to the lack of either individual therapy or anti-depressant medication, or both.
      Two other federal decisions finding no negligence in the suicides of government patients are similarly distinguishable by the fact that in both there was no evidence of recent suicide tendencies or attempts. See, White v. United States, 244 F.Supp. 127, 129-131 (E.D.Va.1965), aff’d, 359 F.2d 989 (4th Cir. 1966) (last suicidal “gesture” occurred fourteen years before actual suicide; the Fourth Circuit held that the finding of non-negligence, while “highly debatable,” was not reversible) ; Frederic v. United States, 246 F.Supp. 368, 371 (E.D.La.1965) (patient, hospitalized for non-psychiatric reasons, had never previously attempted nor threatened suicide).

      . See, e. g., Perr, Suicide Responsibility of Hospital and Psychiatrist, 9 Clev.-Mar. L.R. 427, 439-40 (1960).

      . See, generally, B. Ennis, Prisoners of Psychiatry (1972) ; T. Szasz, Law, Liberty and Psychiatry (1963) ; Note, Civil Commitment of the Mentally Ill: Theories and Procedures, 79 Harv.L.R. 1288 (1966). Cf. Jackson v. Indiana, 406 U.S. 715, 92 S.Ct. 1845, 32 L.Ed.2d 435 (1972) (due process standards applied to competency statutes).

      . See, Lucy Webb Hayes National Training School for Deaconesses and Missionaries v. Perotti, 136 U.S.App.D.C. 122, 419 F.2d 704, 707-708 (1969) (Bazelon, C. J.) :
      The mental hospital functions in this new model as a repair shop rather than as a human junkyard. Confinement and physical restraint are no longer the defining qualities of hospitalization. Since the emphasis is upon treatment, the atmosphere of the hospital should encourage recovery by allowing the patient to assume progressively greater and greater responsibility.
      Since confinement and restraint may deny the patient the sense of responsibility and self-control essential to his recovery, the argument runs, limitations upon his freedom of movement are appropriate only when necessary for the safety of the patient or others. And since the restraint required for absolute safety may be inconsistent with effective therapy, calculated risks must sometimes be taken.
      Real challenges and real responsibility for the patient imply the risk of real failures, however. Some patients will prove unready for responsibility, and may injure themselves or others. In a real sense these failures are the inevitable cost of any treatment program oriented toward returning patients to the community. But the law nevertheless must allocate at least the economic losses occasioned thereby.