author: FRIENDLY, Circuit Judge:

text:
    ASSOCIATED INDUSTRIES OF NEW YORK STATE, INC., Petitioner, v. The UNITED STATES DEPARTMENT OF LABOR et al., Respondents.
    No. 221, Docket 73-1978.
    United States Court of Appeals, Second Circuit.
    Argued Sept. 14, 1973.
    Decided Oct. 4, 1973.

      Charles E. Cooney, Jr., Syracuse, N. Y. (George R. Fearon, and Costello, Coo-ney & Fearon, Syracuse, N. Y., of counsel), for petitioner.
    Donald Etra, Dept. of Justice, Washington, D. C. (Irving Jaffe, Acting Asst. Atty. Gen., Michael A. Levin, and Marc Hillson, Dept. of Labor, of counsel), for respondents.
    John F. McElvenny, Philadelphia, Pa., for Pennsylvania Manufacturers’ Assn., amicus curiae.
    Leon L. Lemaire, Hartford, Conn., for Connecticut Business & Industry Assn., Inc., amicus curiae.
    Before LUMBARD, FRIENDLY and FEINBERG, Circuit Judges.
   FRIENDLY, Circuit Judge:

This petition to review so much of an order of the Department of Labor, 38 F.R. 10930, 10933 (1973), as set minimum numbers of lavatories in industrial establishments is an early illustration of the new tasks imposed on the federal courts of appeals by legislation enacted during the past decade which subjects to their review a wide variety of determinations, by agencies within the executive branch or newly created commissions, many of which are legislative in character and result from informal rulemaking. The difficulty of discharging the responsibilities Congress has created for us if? exacerbated by the absence of statutory harmony with respect to the nature and scope of review.

I. The Statutory Scheme

We are here concerned with the Occupational Safety and Health Act of 1970, 29 U.S.C. § 651 et seq., already yclept OSHA. Section 5 of the Act, 29 U.S.C. § 654, requires every employer engaged in a business affecting commerce to furnish each employee “employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm” and to “comply with occupational safety and health standards promulgated under this chapter.” The Secretary of Labor is given authority to promulgate such standards by a two-step process. For a two year period, the Secretary, without regard to the Administrative Procedure Act, could promulgate “any national consensus standard, and any established Federal standard, unless he determines that the promulgation of such a standard would not result in improved safety or health for specifically designated employees,” 29 U.S.C. § 655(a). “National consensus standard” was defined, 29 U.S.C. § 652(9), to mean a standard which

(1) has been adopted and promulgated by a nationally recognized standards-producing organization under procedures whereby it can be determined by the Secretary that persons interested and affected by the scope or provisions of the standard have reached substantial agreement on its adoption, (2) was formulated in a manner which afforded an opportunity for diverse views to be considered and (3) has been designated as such a standard by the Secretary, after consultation with other appropriate Federal agencies.

After the end of this stop-gap period, standards were to be promulgated, modified or revoked by a rulemaking procedure specified in 29 U.S.C. § 655(b). Petitioner does not dispute that, broadly speaking, this is to be “notice and comment” rulemaking of the sort provided in § 4 of the APA, now 5 U.S.C. § 553. The proposed standard is to be published in the Federal Register, and interested persons are to be given thirty days to submit written data or comments. During the same period any interested person may file written objections and request a public hearing thereon. Within another thirty days the Secretary shall publish in the Federal Register a notice specifying the standard to which objections have been filed and setting a hearing. Within sixty days after the period for filing comments or, if objection and request for hearing have been timely filed, within sixty days after the hearing, the Secretary shall take action. Any standard, accompanied by a statement of the reasons for it, shall be published in the Federal Register, 29 U.S.C. § 655(e). The Secretary has fleshed out this provision by a regulation, 29 C.F.R. § 1911.-18(b), as amended, 37 F.R. 8665 (1972):

Any rule or standard adopted under paragraph (a) of this section shall incorporate a concise general statement of its basis and purpose. The statement is not required to include specific and detailed findings and conclusions of the kind customarily associated with formal proceedings. However, the statement will show the significant issues which have been faced, and will articulate the rationale for their solution.

The judicial review provision, 29 U.S. C. § 655(f), is as follows:

Any person who may be adversely affected by a standard issued under this section may at any time prior to the sixtieth day after such standard is promulgated file a petition challenging the validity of such standard with the United States court of appeals for the circuit wherein such person resides or has his principal place of business, for a judicial review of such standard. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Secretary. The filing of such petition shall not, unless otherwise ordered by the court, operate as a stay of the standard. The determinations of the Secretary shall be conclusive if supported by substantial evidence in the record considered as a whole.

II. The Proceedings in the Department of Labor

In May 1971, the Secretary, acting under § 655(a), promulgated a general sanitation standard, avowedly as a national consensus standard, which included the subject of lavatories that is here at issue. 36 F.R. 10593, 10594. This standard, 29 C.F.R. § 1910.141, was based on a 1968 American National Standards Institute (ANSI) general sanitation standard and required thht in all places of employment whether industrial or nonindustrial

At least one lavatory * * * shall be provided for every 10 employees * * * or portion thereof, up to 100 persons; and over 100 persons one lavatory for each additional 15 persons or portion thereof.

Although petitioner now questions whether the ANSI standard met the statutory requirement for a national consensus standard, neither it nor, so far as appears, anyone else challenged this within the 60 days allowed by § 655(f).

On July 15, 1972, the Secretary issued, under § 655(b), a notice of rule-making, 37 F.R. 13996, which proposed a substantial revision of the standards previously adopted. With respect to lavatories it was proposed to reduce the requirements for “offices” in a manner not here material but to retain those previously provided for “all other”. Id. at 13998. The reason for the change was explained as follows:

Not all office workers need or do wash at the end-of the working day. The number of lavatories required in the present standard and ANSI Z4.1 is based more on industrial occupancies, where the load on washing facilities is likely to be heavier, and concentrated at specific periods of the working day.

Id. at 13996. Comments and requests for a hearing having been received, the Secretary published a notice of informal hearing, 37 F.R. 20571. Such a hearing, the bulk of which was devoted to proposals other than that here at issue, was held on November 8-10,1972.

Thereafter the Secretary promulgated, 38 F.R. 10930, 10933 (1973), a revision of 29 C.F.R. § 1910.141. This set up the following requirements for lavatories:

TABLE J-2
Number of Minimum number Type of employment employees of lavatories
Nonindustrial — office buildings, public buildings, and similar establishments.
1-15------ 1.
16-35----- 2.
36-60----- 3.
61-90----- 4.
91-125 — . 5.
Over 125 -- 1 additional fixture for each additional 45 employees.
Industrial — factories, warehouses, loft buildings, and similar establishments.
1-100----- 1 fixture for each 10 employees,
Over 100-- 1 fixture for each additional 15 employees.

No mention was made of the objections that had been proffered to the minima-proposed for industrial establishments or of the reasons for rejecting them.

This petition for review of the portion-of the standard concerning lavatories in industrial establishments followed. Another panel stayed enforcement of the standard pending argument of an expedited appeal; we continued the stay.

III. The Standard of Review

The respondents ask us to apply a standard of review less severe than the substantial evidence test. They point to what they consider an anomaly in subjecting notice and comment rulemaking, which has here produced a regulation essentially legislative in nature, to the-substantial evidence test, which under the APA, 5 U.S.C. § 706(2) (E), applies only to determinations resulting from adjudication,-5 U.S.C. If 554, and rules “required by statute to be determined on the record after opportunity for an agency hearing,” 5 U.S.C. § 553(c). It is argued in support of this that the final sentence of § 655(f) says only that the Secretary’s “determinations” must be supported by substantial evidence, not that the regulation as a whole must be so supported; respondents’ clear implication is that § 655(f) imposes the substantial evidence test only upon such findings of fact as the Secretary announces when promulgating a rule.

Admittedly, the closing sentence of subsection (f) does not speak with the clarity of e. g., § 11(c) of the Consumer Product Safety Act, 15 U.S.C. § 2060(c). Admittedly also, as will be discussed further in a moment, the meaning of the traditional substantial evidence test as applied to legislative-type decisions of policy is somewhat unclear. But there can be no question that the “determinations” to which § 655(f) applies the substantial evidence test, whatever precisely that may mean in the context, include the overall policy decision to promulgate a rule. The word “determinations” is used throughout § 655 to include policy choices as well as factual findings, and particularly to include promulgation of standards. Evidence of an intent to diverge from the substantial evidence test with respect to informal rulemaking can readily be found when a statute refers only generally to the judicial review section of the APA, as, e. g., § 105 of the Traffic and Motor Vehicle Safety Act of 1966, 15 U.S.C. § 1394. Cf. Automotive Parts and Accessories Ass’n v. Boyd, 132 U.S.App.D.C. 200, 407 F.2d 330 (1968). See also Boating Industry Ass’n v. Boyd, 409 F.2d 408, 411 (7 Cir. 1969) (same statute); Bunny Bear, Inc. v. Peterson, 473 F.2d 1002, 1005-1006 & n.3 (1 Cir. 1973) (construing the judicial review provision of the Flammable Fabrics Act of 1967, 15 U.S.C. § 1193(e)(3)). But see Chrysler Corp. v. Department of Transportation, 472 F.2d 659, 667-671 (6 Cir. 1972) (Traffic and Motor Vehicle Safety Act). It can also be found when the APA is read along with a statute, whether antedating or postdating it, which confers power to make rules otherwise than “on the record after opportunity for an agency hearing,” 5 U.S.C. § 553(c), as well as power of adjudication, and the substantial evidence test appears only in a section of the statute relating to review of adjudication. Such was the ease, or at least was thought to be the case, with the Natural Gas Act of 1938, 15 U.S.C. § 717 et seq., discussed, with rather different conclusions, in Superior Oil Co. v. FPC, 322 F.2d 601 (9 Cir. 1963), cert, denied, 377 U.S. 922, 84 S.Ct. 1219, 12 L.Ed.2d 215 (1964), and City of Chicago v. FPC, 147 U.S.App.D.C. 312, 458 F.2d 731, 738-745 (1971), cert denied, 405 U.S. 1074, 92 S.Ct. 1495, 31 L.Ed.2d 808 (1972). But see Mobil Oil Corp. v. FPC, 483 F.2d 1238, 1264 (D.C. Cir.1973). But there is a formidable obstacle to such a reading when, as here, substantial evidence language appears in a section relating expressly to the determination of standards after notice and comment rulemaking.

We need not debate whether what thus seems a rather plain meaning could be overcome by legislative history pointing to the contrary. For here the history, while peculiar in one respect hereafter noted, lends much more support to adhering to the natural meaning than to departing from it. The bill as passed by the Senate provided for the informal rulemaking procedures now in the Act but was silent on the scope of review, thus leaving the latter question to the APA, 116 Cong.Rec. 37633-34 (1970); the House amended this so as to require' a hearing on the record in accordance with 5 U.S.C. §§ 556 and 557, 116 Cong. Ree. 38725 (1970). As indicated, the Conference Committee adopted the Senate version with respect to rulemaking and the House version with respect to scope of judicial review. Explaining this, the House managers stated:

The “substantial evidence” test was the basis of court review in the House amendment; in the Senate bill, the more vigorous standards generally applicable to review of rules would have been applicable. * * * [T]he use of the “substantial evidence” test * * * [was] accepted by the conferees.

See The Job Safety and Health Act of 1970, BNA Operations Manual 129 (1971); 91st Cong., 2d Sess., 3 U.S.Code Cong. & Admin.News p. 5232 (1970).

Respondents argue that the conferees apparently assumed, however mistakenly, that the “standards generally applicable to review of rules” were “more vigorous” than the substantial evidence test, and that the conferees therefore must have been opting for what they deemed relatively weak review. Whatever the explanation of the House managers’ having said “more vigorous” rather than “less vigorous,” the intention to adopt the substantial evidence test for review as a tradeoff for the House’s abandoning its insistence on rulemaking on the record, which would automatically have invoked that test under 5 U.S.C. § 706(2) (E), is apparent. Indeed, in contrast to the argument here made by counsel, the Department of Labor itself seems to have recognized the applicability of the substantial evidence rule. In 29 C.F.R. § 1911.5(a)(2), as amended April 29, 1972, 37 F.R. 8664, 8665, it stated:

Section 6(b)(3) provides an opportunity for a hearing on objections to proposed rule making, and section 6(f) provides in connection with the judicial review of standards, that determinations of the Secretary shall be conclusive if supported by substantial evidence in the record as a whole. Although these sections are not read as requiring a rule making proceeding within the meaning of the last sentence of 5 U.S.C. 553(c) requiring the application of the formal requirements of 5 U.S.C. 556 and 557, they do suggest a Congressional expectation that the rule making would be on the basis of a record to which a substantial evi-denee test, where pertinent, may be applied in the event an informal hearing is held.

While we have felt constrained, to determine and sustain the applicability of the substantial evidence test, it may well be that the controversy is semantic in some degree, at least in the context of informal rulemaking, and that it- lacks the dispositional importance that respondents imply. In one of its first brushes with rulemaking, prior to the adoption of the APA, the Supreme Court said in National Broadcasting Co. v. United States, 319 U.S. 190, 224, 63 S.Ct. 997, 1013, 87 L.Ed. 1344 (1943), a case of notice and comment rulemaking:

Our duty is at an end when we find that the action of the Commission was based upon findings supported by evidence, and was made pursuant to authority granted by Congress.

In WBEN, Inc. v. United States, 396 F. 2d 601, 610-614 (2 Cir.), cert, denied, 393 U.S. 914, 89 S.Ct. 238, 21 L.Ed.2d 200 (1968), while we applied to F.C.C. rulemaking the “arbitrary and capricious” standard of 5 U.S.C. § 706(2) (A), it is hard to see in what respect we would have treated the question differently if we had been applying a “substantial evidence” test. The same can be said of Air Line Pilots Ass’n v. Quesada, 276 F.2d 892, 898 (2 Cir. 1960), cert, denied, 366 U.S. 962, 81 S. Ct. 1923, 6 L.Ed.2d 1254 (1961). Commentators have suggested that in the “class of cases in which the ground for challenging the agency action is the inadequacy of its evidentiary basis, it is difficult to imagine a decision having no substantial evidence to support it which is not ‘arbitrary’, or a decision struck down as arbitrary which is in fact supported by ‘substantial evidence’,” and that the true significance of the substantial evidence rule is in limiting the agency to the confines of the public record. Scalia and Goodman, supra, 20 U.C.L.A. Law Rev. at 935, n. 138. Judge MacKinnon’s opinion in City of Chicago v. FPC, supra, 458 F.2d at 741-745, to cite just one example, takes essentially this approach. While we still have a feeling that there may be cases where an adjudicative determination not supported by substantial evidence within the test of Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L. Ed. 456 (1951), would not be regarded as arbitrary or capricious, see Charlton v. United States, 412 F.2d 390, 398 (3 Cir. 1969) (Stahl, J., concurring), in the review of rules of general applicability made after notice and comment rulemak-ing, the two criteria do tend to converge.

IV. The Effect of the Prior Consensus Standard

An additional point must be considered before we reach the merits. Both petitioner and respondents devote a great deal of time to the questions whether the 1971 consensus standard-— which was no less severe with regard to industrial buildings than the 1973 standard- — was properly adopted and if not, whether it can be attacked at this late date. In its own terms, this debate started by petitioner is inapposite, since the 1973 regulations and not those of 1971 are here at issue. However, at one point respondents seem to seek to support the 1973 standards on the basis that the 1971 regulations were promulgated without objection and have been in effect for two years. This argument presumably would be that the 60-day time limitation of 29 U.S.C. § 655(f) would bar petitioner from challenging the same standard that has governed its members since May 1971. Indeed, two later passages of respondents’ brief, appearing in surprisingly unrelated contexts, hint with increasing boldness at some argument that petitioner cannot at this date attack the regulation; in the second passage, the argument takes a somewhat new form, more or less to the effect that the apparent noncompliance of some of petitioner’s members with the 1971 standard affects their right to attack those now adopted.

If in fact respondents mean to suggest any affirmative argument in defense of the 1973 regulations based on the promulgation without objection of consensus standards two years ago and on their having been in effect in the interim, such an argument must be rejected. Congress imposed a 60-day limitation on attacks that were relevant to a particular set of standards. Petitioner’s failure to attack the 1971 national consensus standard within 60 days does not preclude it from making a timely attack on a standard adopted by the Department as a matter of judgment after rulemaking proceedings under § 655(b). Similarly, we know of no principle that would warrant a denial of review because, as one gathers, many of petitioner’s members did not comply with the 1971 standard in regard to the number of lavatories in industrial establishments. The Secretary had his remedy for this, 29 U.S.C. § 659; the record is silent how far he availed himself of it.

Y. The Merits

In its regulation previously quoted, 29 C.F.R. § 1911.5, the Department properly recognized “a Congressional expectation that the rule making would be on the basis of a record to which a substantial evidence test, where pertinent, may be applied in the event an informal hearing is held.” This seems to imply a recognition of some responsibility on the part of the Department to explain and support the proposals it is advancing, at least when these have been opposed on substantial grounds. That burden was not here discharged.

The notice of rulemaking, 37 F.R. 13996, contained no affirmative justification for the proposal here at issue. While this was understandable since the requirements for industrial buildings were the same as in the previous national consensus standard, comments received before the hearing made the Department aware that petitioner and others challenged the propriety of the requirement on various grounds. Petitioner pointed out that New York required only half as many lavoratories for industrial employment and said that this had not resulted -“in any evidence of adverse physiological effects or employee complaints.” Eastman Kodak Co., a member of petitioner, proposed a more generally worded “performance” standard, with an addition to cover “those situations where exposures to specific materials indicate the need for special attention to on-the-job wash facilities.” KCL Corporation, a converter of flexible packaging materials, made even more pointedly what would seem prima facie to be this valid criticism against a uniform across-the-board requirement. In an elaborate submission Spencer Foods, Inc. attacked the numerical table for various sanitary facilities as being by far the strictest standard in existence, unsupported by health needs, economically onerous, and insufficiently discriminating among different types of employment. . Several parties suggested some kind of grandfather clause for existing facilities.

In light of all this — and there was more — it would have been eminently desirable for the Department to present at the outset of the hearing some justification for selecting what apparently is the highest numerical requirement in any state code and for applying this, with regard to existing buildings as well as new construction, not only to foundries and paint factories but to factories making precision equipment or pharmaceuticals. If there are grounds for rejecting such distinctions, e. g., as being difficult to state or enforce, the Department could have explained this. The Department neither proffered a witness at the outset nor put on any witness to oppose the objectors, at least two of whom (Kodak and AT&T) testified along the lines of the comments already cited. In fact we cannot find affirmative testimony by any witness, nor affirmative statements in the written submission of any party, in support of the stringent numerical requirements which the Department had proposed and to which several industries objected.

Respondents’ brief makes much of a statement by Dr. Lorin Kerr of the American Public Health Association, “We are not talking about aesthetics; we’re talking about protecting people’s lives . . . we’re talking on the basis of experience that in the absence of this, we just know, as health officers, we’re going to be confronted with outbreaks of illness which can be prevented.” Examination of the transcript shows that this had nothing like the force the brief attempts to give to it. Dr. Kerr had earlier stated that the Association’s comments “will be confined specifically to the uses of non-potable water.” The quoted remark was made in interrupting an exceedingly bland statement of a representative of the AFL-CIO that the number of toilets and sinks was a proper subject of regulation under OSHA and that he had no objection to the proposed numbers but was “not really terribly excited about that issue.” Dr. Kerr was far more aroused then the labor representative and accordingly was advocating some numerical requirement; but he said nothing to support the precise figures proposed. The brief’s statement that the labor representative “had no objection to the proposed lavatory requirements” likewise eonveys a false impression. All that can be read into the statement is that labor thought the requirement was sufficiently tough, not that it felt that nothing less would do or, if so, why. The other comments alleged by the brief to support the regulation are similarly taken but of context. The only legitimate reliance is on (1) the codes of five states, Arkansas, Michigan, New Hampshire, New Jersey, and Tennessee, of which the Department could take official notice but to which petitioner opposes twelve, Alabama, Connecticut, Illinois, Indiana, Massachusetts, Minnesota, New York, Oklahoma, Oregon, Pennsylvania, Virginia and Wisconsin, and (2) the code of the ANSI, the Building Officials and Code Administrators (BOCA) Basic Plumbing Code and the National Plumbing Code. The record sheds no light on the nature or interests of the latter organizations and the names of at least the last two convey the impression that they may have been formulating desirable standards for new construction rather than necessary changes in existing buildings. The endorsements of these codes by some industry officials were in support of the proposed relaxation of requirements for office buildings and not, as respondents’ brief would lead one to believe, affirmative approval of the provisions for industrial buildings.

We are far from saying that the Department is not free to impose the advanced standards of some states simply because these are outnumbered. As said in Senate Report No. 91-1282, 91st Cong., 2d Sess., p. 4, U.S.Code Cong. & Admin.News, p. 5180, “the efforts of the more vigorous states are inevitably undermined by the shortsightedness of others,” and one of the great functions now served by the Commerce Clause is to enable Congress to prevent this. The point is rather that when the Department imposes a standard considerably more stringent than that which apparently has been found satisfactory by many states with a long history of protection to industrial workers, and particularly when it does so over explicit objections grounded on that history, then it has an obligation to produce some evidence justifying its action. We can find none in the record here. We simply do not know whether the five states deliberately rejected what the twelve had found adequate and, if so, why, or whether they routinely adopted the ANSI standards without inquiring whether, at least for many industries, something less would do.

Quite apart from the lack of evidence to support the standards and their consequent arbitrary and capricious nature, we must remand the ease because of the Department’s failure to live up to its own regulation, 29 C.F.R. § 1911.18(b), requiring, in language that goes beyond the letter but fulfills the spirit of 5 U.S.C. § 553(c) and 29 U.S.C. § 655(e), that any standard shall be accompanied by a statement which “will show the significant issues which have been faced, and will articulate the rationale for their solution.” All that the Department said was, 38 F.R. 10932:

12. Proposed § 1910.141(d) (2) (i) would have required lavatories to be provided in accordance with proposed table J-l. As with toilet facilities, many comments took issue with the numbers used in the proposed table. Several commentators pointed out that while the proposal was suitable for factory and industrial workplaces, it was too restrictive with respect to office buildings and similar establishments, where there is less of a need for washing facilities. These comments have merit, and the minimum lavatory requirements are changed accordingly.

Apart from what we deem a considerable overstatement in the third sentence, this wholly failed to “articulate the rationale” for the solution the Department had adopted. As Judge McGowan said in Automotive Parts & Accessories Ass’n v. Boyd, 132 U.S.App.D.C. 200, 208, 407 F.2d 330, 338 (1968), in reference to the requirement of 5 U.S.C. § 553(c) of “a concise general statement” of the basis of rules adopted after informal rulemaking:

These adjectives must be accommodated to the realities of judicial scrutiny, which do not contemplate that the court itself will, by a laborious examination of the record, formulate in the first instance the significant issues faced by the agency and articulate the rationale of their resolution. We do not expect the agency to discuss every item of fact or opinion included in the submissions made to it in informal rule making. We do expect that, if the judicial review which Congress has thought it important to provide is to be meaningful, the “concise general statement of * * * basis and purpose” mandated by Section 4 will enable us to see what major issues of policy were ventilated by the informal proceedings and why the agency reacted to them as it did.

While emphasizing that the judicial task in the review of informal rulemaking differed from that in the review of adjudication or rulemaking on the record, he added:

This exercise need be no less searching and strict in its weighing of whether the agency has performed in accordance with the Congressional purposes, but, because it is addressed to different materials, it inevitably varies from the adjudicatory model. The paramount objective is to see whether the agency, given an essentially legislative task to perform, has carried it out in a manner calculated to negate the dangers of arbitrariness and irrationality in the formulation of rules for general application in the future.

Although the court sustained the standard at issue in Automotive Parts, it did so on the basis of evidence and explanation far more convincing than here.

We must confess we are not so sanguine as was Judge McGowan whether judicial review of legislative standards resulting from informal rule-making will ultimately prove to be feasible. Courts may well end up doing much less than Congress intended or, a more likely and graver threat in these days of judicial activism, much more than Congress had wished. Despite our dissatisfaction with the Department’s performance here, if we were free to make the choice of policy much could be said for the wisdom of Mr. Justice Brandéis in Pacific States Box & Basket Co. v. White, 296 U.S. 176, 186, 56 S.Ct. 159, 163, 80 L.Ed. 138 (1935), that “where the regulation is within the scope of authority legally delegated, the presumption of the existence of facts justifying its specific exercise attaches alike to statutes, to municipal ordinances, and to orders of administrative bodies.” But it is plain that this was not the policy choice that Congress made in enacting OSHA and many other regulatory statutes of the last decade. With the agencies and the courts in a new form of uneasy partnership, compare Scripps-Howard Radio, Inc. v. FCC, 316 U.S. 4, 15, 62 S.Ct. 875, 86 L.Ed. 1229 (1942), the former must take reasonable steps to enable the latter to carry out the task that Congress has imposed upon them. See Hamilton, supra, 2 Recommendations and Reports of the Administrative Conference of the United States at 891-894; 60 Calif.L.Rev. at 1333-36. The provisions of 29 C.F.R. §§ 1911.5(a)(2) and 1911.18(b) were commendable steps by the Department in that direction. Unhappily the performance here did not meet the promise. When Congress has required us to review standards established by the Department — as we see it, under the substantial evidence test — we must insist on something more than an ipse dixit, now sought to be supported by references by counsel, compare Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168-169, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962); NLRB v. Metropolitan Life Ins. Co., 380 U.S. 438, 443-444, 85 S.Ct. 1061, 13 L.Ed.2d 951 (1965), to the codes of a small minority of the states without the slightest explanation why these are to be preferred over the majority. In a case where a proposed standard under OSHA has been opposed on grounds as substantial as those presented here, the Department has the burden of offering some reasoned explanation. As Mr. Justice White said in Burlington Truck Lines, Inc. v. United States, supra, 371 U.S. at 174, 83 S.Ct. 239, 249, although, to be sure, in the context of a licensing order, the agency “must act with a discriminating awareness of the consequences of its action. It has not done so here.”

The portion of 29 C.F.R. § 1910.-141(d) (2) relating to the number of lavatories required for industrial employment is vacated, and the cause is remanded to the Department of Labor for further proceedings consistent with this opinion.

      . See Friendly, Federal Jurisdiction: A General View 34-35 and note 108 (1973). One should now add the Consumer Product Safety Act of 1972, 15 U.S.C. §§ 2051-2081, see for a full discussion, Scalia and Goodman, Procedural Aspects of the Consumer Product Safety Act, 20 U.C.L.A. Law Rev. 899 (1973), the Motor Vehicle Information and Cost Savings Act of 1972, 15 U.S.C. §§ 1901-1991, the Federal Water Pollution Control Act Amendments of 1972, 33 U.S.C. §§ 1251-1376, and the Noise Control Act of 1972, 42 U.S.C. §§ 4901 — 4918 (exclusive jurisdiction to review standards and regulations in the District of Columbia Circuit), to name a few.

      . As has been well said in a highly informative study, “The procedural provisions of these statutes are almost unbelievably chaotic.” Hamilton, Procedures for the Adoption of Rules of General Applicability: The Need for Procedural Innovation in Administrative Rulemaking, 2 Recommendations and Reports of the 'Administrative Conference of the United States 834, 873 (1973), reprinted from 60 Calif.L.Rev. 1276, 1315 (1972). One would almost think there had been a conscious effort never to use the same phraseology twice.

      . Notably the extent to which non-potable water could be used for cleaning, bathing or laundering.

      . The consumer product safety rule shall not be affirmed unless the Commission’s findings under section 2058(c) of this title are supported by substantial evidence on the record taken as a whole. section 9(c) in turn, 15 U.S.C. § 2058(e), specifically requires findings on a broad range of matters, many of them intensely legislative in kind, including “that the promulgation of the rule is in the public interest.” 15 U.S.C. § 2058(c) (2) (B).

      . For example, the first step in promulgation of a standard is that the Secretary “determines” that the standard “should” be promulgated, 29 U.S.C. § 655(b)(1). Similarly § 655(e), requiring inter alia a statement of reasons for promulgation of any standard, is titled “Statement of reasons for Secretary’s determinations” (emphasis supplied).

      . The bills also differed concerning the time and place for seeking review. Here the Senate version was adopted.

      . Respondents hint, by a “sic” in their brief, that “vigorous” may have meant “rigorous”; it does not appear to matter.

      . The Court had earlier held in a different context that “evidence” meant “substantial evidence,” Washington, V. & M. Coach Co. v. NLRB, 301 U.S. 142, 146-147, 57 S.Ct. 648, 81 L.Ed. 965 (1937).

      . E. g., NLRB v. Nevada Consolidated Copper Corp., 316 U.S. 105, 62 S.Ct. 960, 86 L. Ed. 1305 (1942), one of the decisions replication of which the Taft-Hartley Act aimed to preclude, see Universal Camera Corp. v. NLRB, supra, 340 U.S. at 484-486, 71 S.Ct. 456 & n.22.

      . A variant of the contention, at which respondents hinted at oral argument, is that petitioner is barred by principles of res judi-cata from attacking the 1973 standards. The short answer to any res judicata claim would be that administrative action operates as res judicata only “[w]hen an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate,” United States v. Utah Construction & Mining Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642 (1966). As Professor Davis has stated, -2 Administrative' Law Treatise § 18.08 at 597 (1958) :
      Only what is adjudicated can be res judica-ta. Administrative action other than adjudication cannot be res judicata. Even if an exercise of the rule-making power depends on a finding of facts, neither the rule nor the finding is regarded as res ju-dicata.
      He adds in a footnote:
      The best reason for this is that res judica-ta affects the named parties to a proceeding and in rule making there are normally no named parties. It is when the action is deemed legislative and the parties are named that many of the difficulties arise.
      Although there may be cases where line-drawing may be harder than Professor Davis’ language would indicate, this is not one of them. No one was a party to the establishment of the consensus standard, and there was no hearing. Apart from this, the only fact that could have been established was that the ANSI standard met the requirements of 29 U.S.O. § 652(9) for a “national consensus standard,” an issue of no relevance to review of the standard set under § 655(b).

      . The New York Industrial Code provides generally for a sliding scale ranging from 1 wash basin for 1 to 20 employees to 8 for 151 to 175 and thereafter one for each 30. Where lead, arsenic or other such poisonous, infectious or irritating substances or dusts are present, or where food products are manufactured or handled, one wash basin must be provided for every ten employees.

      . It said:
      We fully agree with the logic that the type of employment helps to determine the load to be expected on washing facilities. We believe it wrong to classify all industries (from foundries to pharmaceutical manufacturers) together in this respect.
      We recommend that industries be classified and that the broad range of need for washing facilities within industry be recognized by a more detailed breakdown.
      Respondents’ brief somehow manages — more accurately, does not manage — to convert this criticism, in the various forms in which it was made, into an advocacy of the proposal.

      . The briefs of petitioner and respondents show that, in addition to New York, see n.ll supra, such distinctions are made in Massachusetts, Michigan, New Hampshire, Pennsylvania, Virginia and Wisconsin. There may well be more since the briefs do not cite rules from anything like all the states.

      . A supplemental brief received from petitioner too late for inclusion in the slip version of this opinion adds five states to the five already listed as having imposed standards as strict as those promulgated by the Department of Labor — Alaska, Georgia, Idaho, Kansas and Montana — but counters these by increasing by fifteen the previous list of twelve on the other side — adding California, Florida, Hawaii, Louisiana, Maine, Mississippi, Missouri, Nebraska, North Carolina, Rhode Island, South Carolina, Texas, Utah, Vermont and West Virginia. The brief also suggests Tennessee should be classified with the latter group rather than the former, which would bring the score to 28 to 9, rather than the 12 to 5 mentioned in text.


source: Caselaw Access Project

author: HEANEY, Circuit Judge. ROSS, Circuit Judge STEPHENSON, Circuit Judge

license: Public Domain

text:
    In the Matter of DIVERSIFIED BROKERS COMPANY, INC., Bankrupt. UNITED STATES of America, Appellant, v. John A. NOONEY, Trustee, Estate of Diversified Brokers Company, Inc., Appellee.
    No. 73-1264.
    United States Court of Appeals, Eighth Circuit.
    Submitted Oct. 16, 1973.
    Decided Nov. 13, 1973.
    Rehearing and Rehearing En Banc Denied Dec. 21, 1973.
    Donald H. Olson, Atty., Tax Div., Dept. of Justice, Washington, D. C., for appellant.
    Stuart Symington, Jr., St. Louis, Mo., for appellee.
    Before HEANEY, ROSS and STEPHENSON, Circuit Judges.
   HEANEY, Circuit Judge.

The United States Government appeals from the District Court’s denial of its claim for unpaid income taxes against the bankrupt, Diversified Brokers Company, Inc.

Diversified was incorporated under the laws of Missouri as a general business corporation in November of 1965. Its shareholders and directors were Donald Smallwood, his wife Betty and Roy Lay. The officers were Donald Smallwood, Roy Lay and Harold F. Co-nell. The corporation actively operated until February of 1969, when it was placed in receivership for violations of the Securities Exchange Act of 1934. The corporation was adjudicated bankrupt on April 22, 1969. Thereafter, the officers were convicted for securities and mail fraud and are currently serving their respective sentences — Small-wood, thirty-five years; Lay, twenty years; Conell, five years.

The principal source of the corporation’s revenue was cash received from lenders in exchange for short term promissory notes issued by the corporation. The notes bore interest ranging from twenty-five to one hundred percent per annum. Numerous representatives, recruited by the corporation’s officers, solicited the loans for a commission on the gross amount of the loans they solicited. For the most part, the representatives themselves were lenders to the corporation. The promise of high rates of interest, as well as reliance on false and misleading representations as to the nature of the corporation’s business, ******induced approximately 4,000 prospective lenders to loan in excess of seven million dollars to the corporation. Many of these lenders were, in the words of Chief Judge Matthes:

* * * those persons most likely to succumb to [the] misrepresentations —clergy and active members of religious organizations, elderly persons investing life savings in the venture, laborers, and generally those elements of society unsophisticated in the ways and means of financial enterprise. * * *

United States v. Smallwood, 443 F.2d 535, 537 (8th Cir.), cert, denied, 404 U. S. 853, 92 S.Ct. 95, 30 L.Ed.2d 93 (1971).

Before the maturity date of each note, the noteholder was contacted by the corporation or its representative and advised that the note was about to mature. The noteholder was given a statement of his account. He was advised that he had an option of redeeming the note (i. e., receiving the principal amount and accrued interest), or accepting a new note either for the face amount of the old note, plus the accrued interest, or simply for the face amount of the old note and receiving the accrued interest in cash. Exercise of the option was left completely to the noteholder. Prior to the receivership, noteholders were always paid when they chose to redeem their notes or collect their accrued interest. Over three million dollars was paid to the noteholders during the corporation’s existence. Approximately one-third of this represented payments of principal while the other two-thirds was attributable to accrued interest.

The corporation, in fact, was not engaged in any highly profitable business. Indeed, its proceeds, other than from these loans, were very meager — less that fifty thousand dollars for each of the three fiscal years beginning with September 30, 1965. Rather, the corporation was engaged in a Ponzi-type scheme, see, Cunningham v. Brown, 265 U.S. 1, 44 S.Ct. 424, 68 L.Ed. 873 (1924), under which the corporation was obtaining more loans to pay off previous loans; and all the while, the officers were illegally diverting a substantial portion of the corporation’s proceeds to their own uses.

As a result of the repayments and diversions, there was only 1.5 million dollars in corporate bank accounts when it was placed in receivership. The receiver and trustee for the estate of the bankrupt gathered an additional 1.5 million dollars by recovering various assets which the officers acquired with the funds they diverted from the corporation. Noteholders, however, have filed nearly 2,900 claims against the bankrupt totaling 12.3 million dollars of which 4.4 million dollars represents principal due them. In addition, the United States Government filed a claim of 1.9 million dollars against the bankrupt for unpaid income taxes and interest for the tax years 1965-1968. This is the claim at issue here.

The trustee objected to allowance of the government’s claim. Hearings were held by the Referee in Bankruptcy; he denied the claim; and his denial was affirmed by the United States District Court for the Eastern District of Missouri, 355 F.Supp. 76, 358 F.Supp. 889.

The Referee held that the taxpayer corporation did not realize taxable income on the loans received by it. He took note of the broad interpretation which Section 61(a) of the Internal Revenue Code of 1954 has been given by the Supreme Court, and proceeded with the understanding that the controlling factor in classifying the receipt of money as “income” is whether an “economic benefit” accrued to the taxpayer by the receipt of the money. He further observed that loans are not “income” as they carry with them a “consensual recognition * * * of an obligation to repay.” See, James v. United States, 366 U.S. 213, 219, 81 S.Ct. 1052, 1055, 6 L.Ed.2d 246 (1961). He found that in the instant case, the transactions were bona fide loans as between the corporation and the lenders. The Referee stressed that the record indicated that both the bankrupt and the lenders considered the monies received to be loans and subject to repayment. He noted that the bankrupt: (a) honored all requests for repayment, (b) made substantial payments, and (c) had a considerable bank balance at the time of receivership. He also emphasized that the corporation was but a conduit for the officers’ fraud and itself received no benefit from the receipt of the monies. Finally, he concluded that it would be “unthinkable” to tax the bankrupt on its receipt of these funds and thereby substantially impair the innocent lenders ability to recover on their loans.

The District Court affirmed the Referee’s decision and adopted his opinion. It stated:

1. All loans were repaid when requested of the Bankrupt with interest.

2. Both the Bankrupt and the lender considered these as loans.

3. Sufficient cash was kept by the corporation to repay the loans as requested.

4. There was no intent by the Bankrupt’s officers to convert the money until it was actually taken from the corporation for their own personal use.

5. The tax award to the Government is due by the individual officers to the extent that money was taken and embezzled by those officers.

On this appeal, the government maintains that the principles of James v. United States, supra, are controlling and that they dictate a reversal. It argues that because throughout the operation of the fraudulent scheme the bankrupt could not have possibly repaid all the monies received by it in the form of loans, the bankrupt could not and did not intend to repay the loans and, therefore, there was no “consensual recognition * * * of an obligation to repay” on the bankrupt’s part and the receipts were “income” to the bankrupt. See, James v. United States, supra, at 219, 81 S.Ct., at 1055. See also, United States v. Rochelle, 384 F.2d 748 (5th Cir. 1967), cert, denied, 390 U.S. 946, 88 S.Ct. 1032, 19 L.Ed.2d 1135 (1968). It urges that the history of repayments by the bankrupt does not support the “loan” characterization, but rather supports the view that the repayments were made to keep the plan afloat. The government finally argues that the corporation cannot be separated from its principals and that benefit to the principals must be construed as benefit to the corporation.

We do not agree that James is controlling here. In James, union officials were convicted for willfully attempting to evade income taxes. They embezzled funds from the union and from an insurance company with whom the union did business and failed to report the embezzled funds as taxable income. The Supreme Court, in a six-three decision with no opinion commanding a majority, held that the embezzled funds constituted taxable income to the officials because they had acquired the funds without an express or implied obligation to repay them and because they derived readily realizable economic benefits from them. James v. United States, supra. Here, the record supports the Referee’s findings: that there was an express agreement to repay the loans with interest; that many payments on principal and interest were made; and that the proceeds of the loans were used for the benefit of the individual officers and not the corporation.

We recognize that the taxpayer was unable to repay all of the loans with interest because of the pyramiding nature of the scheme and the officers’ embezzle-ments. We also realize that some of the payments on principal and interest were made to keep the scheme afloat. But we are unwilling to disregard the Referee’s factual findings and hold, as a matter of law, that these factual circumstances operated to convert the loans into taxable income at the corporate level.

In our view, James and more recent decisions of the Second and Fifth Cir cuits require that Smallwood, Lay and Conell recognize the sums embezzled by them from the corporation as taxable income. The decisions do not require that the corporation include all sums loaned to it as taxable income.

The government’s arguments for extending James have a certain sophistic appeal, but we cannot accept them. As a practical matter, no taxable income was realized by anyone until Smallwood, Lay and Conell diverted funds to themselves. At that point, the funds embezzled became taxable income to them. Until then, the funds in the hands of the corporation were nothing more than loans and were treated as such by the corporation and the lenders.

We fully understand the government’s underlying reason for wanting to extend the rationale of James to this case and others like it. Its chances of gaining additional tax revenues at the expense of defrauded lenders would be substantially increased. We are unwilling to make this extension. Congress can make it if it wishes, but James does not require that we make the extension and we see no valid reason for doing so here. Affirmed.

ROSS, Circuit Judge

(concurring).

I concur in the result reached by Judge Heaney and in the reasoning he uses to reach that result. I am not convinced, however, that the financial transactions between the bankrupt corporation and the “investors” were actually loans. In my opinion, the funds secured from these individuals were obtained as part of a fraudulent scheme and the principal officers of the bankrupt corporation knew that the “loans” would not be repaid in full, with interest. Under a strict interpretation of James v. United States, 366 U.S. 213, 81 S.Ct. 1052, 6 L.Ed.2d 246 (1961), the money obtained from these “investors” could be considered income to the bankrupt corporation.

James v. United States, supra, was decided by a divided court with five separate opinions. It involved a situation in which an individual embezzled money from his employer and did not report it as income for the purpose of taxation. He was charged in a criminal indictment with willfully attempting to evade income taxes and was convicted. The question of whether the Government should be entitled to its taxes on the embezzled funds even if it meant the victim would not recover was not a direct issue in the case and was not discussed in the majority opinion. However, Justice Black emphasized in his dissent:

[Sjubjecting the embezzled funds to a tax would amount to allowing the United States “a preferential claim for part of the dishonest gain, to the direct loss and detriment of those to Whom it ought to be restored.” Id. at 227, 81 S.Ct. at 1060 (citation omitted).

Perhaps the Supreme Court will reexamine its holding in James v. United States, supra, and refine it in the light of the facts of this case. If it really intended to hold that the Government should be able to assert its claim (for taxes) to the money which has been wrongfully taken from the victims of a fraud, in preference to the claims of the victims, it should have the opportunity to do so in a case which squarely presents the issue. This is such a case.

STEPHENSON, Circuit Judge

(dissenting) .

It is my view that James v. United States, 366 U.S. 213, 81 S.Ct. 1052, 6 L. Ed.2d 246 (1961), is controlling in this case. The funds obtained by the bankrupt through the fraudulent scheme perpetrated by its officers constituted taxable income to the corporation.

The Referee in Bankruptcy found:

Unquestionably, as these facts show, the bankrupt was the borrower in a Ponzi-scheme, [footnote omitted] by which money was borrowed by it, from unsuspecting lenders, upon false representations as to its business activity and upon false representations as to its ability to repay the borrowed monies plus interest at the promised rates.

It is abundantly clear that the corporation obtained funds under false pretenses from innocent victims. Under James, this was taxable income. To treat the funds as loans to the corporation and income only to the officers when the funds were diverted to their personal use is to ignore the well-established law that knowledge, intent and acts of corporate officers acting within the scope of their authority are imputable to the corporation. The funds diverted to the private use of the corporate officers may well be regarded as income to them, but first it was income to the corporation. Burger v. United States, 262 F.2d 946, 956 (8th Cir. 1959). The mere fact that the bankrupt corporation realized no real economic benefit from the loans does not alter its tax liability. Moline Properties v. Commissioner, 319 U.S. 436, 63 S.Ct. 1132, 87 L.Ed. 1499 (1943); National Carbide Corp. v. Commissioner, 336 U.S. 422, 69 S.Ct. 726, 93 L.Ed. 779 (1949).

The issue of whether the government’s tax claim should have priority over rights of the victims to recoup their losses is not before us. Admittedly, the results may be harsh. If such is the case, the remedy lies with Congress.

      . Included in the misleading and false representations were:
      * * * [Statements that each investment was assigned to a specific “project” identified by number, that the business projects engaged in consisted of buying and reselling government surplus and distressed merchandise at huge profits, when, in fact, the amount of Diversified’s business in distressed merchandise was infinitesimal compared to the total sum received from investors. * * *
      United States v. Smallwood, 443 F.2d 535, 536-537 (8th Cir.), cert, denied, 404 U.S. 853, 93 S.Ct. 95, 30 L.Ed.2d 93 (1971).

      . * * * Instead of using the funds so obtained to purchase surplus merchandise for resale, large sums were wrongfully and unlawfully diverted to purchase personal property consisting of jewelry, objects of art, luxury automobiles and expensive yachts which were taken possession of in large part by * * * Smallwood and Lay. * * *

        Id., 443 F.2d at 537 (Footnote omitted.)

      . Tlie corporation did not file income tax returns for the years at issue. The alleged income tax deficiencies were based on the bank deposits of the bankrupt during each of the tax years. The government claimed that the receipts manifested by these deposits constituted gross taxable income. This, in turn, was reduced in the computation by payments to noteholders of both principal and interest which were treated by the government as ordinary and necessary expenses of keeping the fraudulent scheme afloat. See, Moore v. United States, 412 F.2d 974, 977 (5th Cir. 1969).

      . The Second and Fifth Circuits have held in cases where transactions were formally cast as “loans” but where either an intent to repay was lacking, United States v. Rosenthal, 470 F.2d 837 (2nd Cir. 1972) ; United States v. Rosenthal, 454 F.2d 1252 (2nd Cir.), cert, denied, 406 U.S. 931, 92 S.Ct. 1801, 32 L.Ed.2d 134 (1972) ; United States v. Rochelle, 384 F.2d 748 (5th Cir. 1967), cert, denied, 390 U.S. 946, 88 S.Ct. 1032, 19 L.Ed.2d 1135 (1968), or a consensual agreement between the lender and the swindler-borrower was absent, Moore v. United States, supra, that the money received was taxable income to the swindling borrower. In all of these cases but one, the Courts were concerned solely with the individual wrongdoer and found that he had derived economic benefit from the funds obtained. In the second Rosenthal decision, the Court affirmed the conviction of Rosenthal for both corporate income tax evasion, in his role as principal officer and sole owner of the corporation, and for individual income tax evasion. It did not discuss its reasons for so holding.


author: TIMBERS, Circuit Judge: IRVING R. KAUFMAN, Chief Judge LUMBARD, Circuit Judge

text:
    UNITED STATES of America, Appellee, v. Charles BAKER, Appellant.
    No. 188, Docket 73-1598.
    United States Court of Appeals, Second Circuit.
    Argued Oct. 16, 1973.
    Decided Nov. 7, 1973.
    Irving R. Kaufman, Chief Judge, filed concurring opinion; Lumbard, Circuit Judge, filed opinion dissenting in part.
    Michael A. Young, New York City (Robert Kasanof, The Legal Aid Society, New York City, on the brief), for appellant.
    George E. Wilson, Aipt. U. S. Atty., New York City (Paul J. Curran, U. S. Atty., and John W. Nields, Jr., Asst. U.S. Atty., New York City, on the brief), for appellee.
    Before KAUFMAN, Chief Judge, and LUMBARD and TIMBERS, Circuit Judges.
   TIMBERS, Circuit Judge:

Appellant Charles Baker appeals from a judgment of conviction entered April 13, 1973 after a jury trial in the Southern District of New York, Inzer B. Wyatt, District Judge, finding him guilty on two counts of failure to keep his local board advised of his mailing address and of his home address, in violation of Section 12(a) of the Military Selective Service Act of 1967, 50 U.S.C. App. § 462(a) (1970), and 32 C.F.R. §§ 1641.3 and 1641.7 (1972). He was sentenced, under 18 U.S.C. § 4208(a)(2) (1970), to concurrent one year terms of imprisonment on each count. He has been enlarged on bail pending appeal. We affirm.

Of the various claims of error raised on appeal, the only one that warrants brief mention is appellant’s claim that the district judge abused his discretion “by imposing sentence pursuant to a uniform sentencing policy which the judge followed in all selective service violation eases and by refusing to consider appellant’s case individually.”

In the first place, the statement in appellant’s brief that “[t]he judge stressed that he had not considered ‘Mr. Baker’s case individually’ in reaching this sentencing determination” represents an unfortunate lifting of four words out of context. Judge Wyatt previously had stated, “Well, I am going to disregard the past record of the defendant . . . . ” Then, immediately after the judge’s sentence containing the four words quoted in appellant’s brief— “It is not Mr. Baker’s case individually” —Judge Wyatt said, “As I say, I haven’t considered the prior convictions.” Aside from reflecting the fact that the judge had considered appellant’s pre-sentence report which of course was concerned with “Mr. Baker’s case individually”, Judge Wyatt’s remarks, read in context, indicate only that he was not holding appellant’s criminal record against him in imposing sentence in the instant ease.

We turn next to the other part of appellant’s claim — that the sentence here imposed was “pursuant to a uniform sentencing policy which the judge followed in all selective service violation cases.” Here again, read in context, Judge Wyatt’s sentencing remarks may be briefly summarized as follows: he was troubled by the “disparities in sentence depending on what particular judge has the responsibility of sentencing”; he noted that some judges “uniformly [place] Selective Service law violators on probation”, while in many parts of the country federal judges impose the maximum five year sentence; he indicated that he felt he could not discharge his responsibility with a clear conscience unless he imposed a prison term, which in most of his cases had been for a period of two years; in one case, however, he “gave probation or suspended sentence rather than prison”; in the instant case he stated that “I am going to change my practice and I am going to impose a one-year sentence. I am also going to make the defendant eligible for parole at such time as the Board of Parole may determine”; and he rejected the plea of appellant's counsel that the instant violations were merely “technical”, thus meriting probation.

We reaffirm our disapproval of statements by a trial judge reflecting a fixed sentencing policy based on the category of crime rather than on the individualized record of the defendant. This applies to statements reflecting a policy of never incarcerating, as well as to a policy of always imprisoning.

Our careful examination of the record in the instant case, however, satisfies us that the sentence here imposed was not the product of a rigid sentencing policy in all selective service cases and that it was not imposed without regard to appellant’s case individually.

We have considered appellant’s other claims of error and find them without merit.

Affirmed.

IRVING R. KAUFMAN, Chief Judge

(concurring):

My dissenting brother has taken this opportunity to express at some length his condemnation of uniform or mechanical sentencing policies, while noting with approval the goal of individualized sentencing. Were it not for the facts of this ease, I would not hesitate to join in Judge Lumbard’s opinion for there can be no dispute with his statement of elementary principles which are to govern every sentence. But, his exposition of the philosophical underpinnings of sentencing policy must not obscure the requisite analysis of the facts before us. Thus, for the reasons stated in the opinion of my brother Timbers, I am of the view that Judge Wyatt did not, in fact, follow a uniform sentencing policy for selective service cases, nor did he fail to consider Baker’s violation in the context of the particular circumstances in which it was committed. Accordingly, I join Judge Timbers in affirming the judgment of conviction.

LUMBARD, Circuit Judge

(dissenting in part):

While I agree that the conviction should be affirmed, I would remand the case for resentencing of the defendant. Unlike the majority, I believe that the record shows that Judge Wyatt did say that he was sentencing the defendant according to his uniform sentencing policy for selective service cases. Therefore, I dissent because I believe that any policy of sentencing which condemns a defendant to a year in jail for a certain offense and fails to consider the peculiar circumstances of his ease constitutes an abuse of discretion.

Judge Wyatt stated that he was troubled by the disparity among judges in sentencing selective service violators. Some district judges, he said, uniformly place such violators on probation, while others routinely impose the maximum sentence of five years. He further said that he had “habitually” given two-year sentences in these cases, although in one case out of six total cases he had given probation or a suspended sentence. He was troubled, but he felt that fairness to those men who did serve in the armed forces and who may have been killed or wounded required that he give some prison term. He concluded by saying:

It is not Mr. Baker’s case individually. As I say, I haven’t considered the prior convictions. On the other hand, it may be with the passage of time and further reflection a two-year sentence is too severe, and I am going to change my practice and I am going to impose a one-year sentence. I am also going to make the defendant eligible for parole at such time as the Board of Parole may determine.

Thus this record clearly shows that Judge Wyatt told Baker that he was being sentenced in accordance with a new uniform policy which the Judge had decided to follow. The Judge’s disregard of appellant’s prior criminal convictions, while possibly favorable to appellant, demonstrates that he was ignoring the appellant’s particular situation, since he did not indicate any response to counsel’s argument that Baker’s life had changed from the time of those convictions. I believe that the failure to individualize Baker’s sentence compels us to vacate the sentence imposed and remand for resentencing.

As any uniform sentencing policy is an abuse of discretion, there can be no doubt of our power to remand for the kind of consideration which it is the duty of the district judge to give in imposing sentence. We have previously required that a district court reconsider its sentence when it appeared that the court may have considered improper factors. McGee v. United States, 462 F.2d 243 (2d Cir. 1972). If, as appears, Judge Wyatt sentenced Baker in accordance with a uniform policy, he failed to exercise fully his discretion when he sentenced Baker by category of crime rather than by Baker’s particular situation. In such a case, we have the power to review sentences for the failure of the district court to exercise its discretion. See United States v. Brown, 470 F.2d 285 (2d Cir. 1972); United States v. Wilson, 450 F.2d 495 (4th Cir. 1971) ; Briscoe v. United States, 129 U.S.App. D.C. 146, 391 F.2d 984 (1968).

Other courts of appeals have rejected the notion of uniform sentences, and have vacated sentences imposed pursuant to such a policy. Woosley v. United States, 478 F.2d 139, 143-145 (8th Cir. 1973) (en banc); United States v. Daniels, 446 F.2d 967, 971-972 (6th Cir. 1971); United States v. McCoy, 139 U. S.App.D.C. 60, 429 F.2d 739, 743 (1970). In Woosley, the trial judge’s only explanation of a sentence of five years imprisonment for refusing induction was that “ [i]t has been my policy, and I don’t intend to change it at this point . ” 478 F.2d at 140. A majority of the Eighth Circuit held that such a “mechanical” sentence could not stand. The majority in Woosley were surely correct when they said:

The rule against review of sentences is founded primarily upon the premises that a trial judge, who has the best opportunity to observe the defendant and evaluate his character, will exercise his discretion in imposing sentence .... On that assumption, we ordinarily defer to the trial court’s judgment. However, where as here, the district court has not exercised discretion in imposing sentence, there is no reason for us to defer to the trial court’s judgment. In reviewing such a sentence, we would not be usurping the discretion vested in trial judges; rather we would be according the defendant the judicial discretion to which he is entitled.

Id. at 144.

There is a sound basis for the requirement that the district judge individualize the defendant’s sentence. The functions of criminal punishment are generally said to be specific deterrence, incapacitation, rehabilitation, general deterrence, education, and retribution. W. LaFave & A. Scott, Criminal Law § 5 (1972). Sentencing by type of crime alone would take account of only the last three purposes and would ignore the problems and capabilities of the particular defendant. The needs to deter, incapacitate, and rehabilitate a particular defendant require that sentences be individualized. Although our system of sentencing as presently administered has many deficiencies, see generally M. Frankel, supra note 1, no one questions the desirability of individualizing sentences. “ [Sentencing functions best when the judge demonstrates an understanding of individualized treatment, which means that the sentence must take into account the offender’s needs.” Advisory Council of Judges of the National Probation and Parole Association, Guides for Sentencing 4-5 (1957) (emphasis original).

In order to further the goal of individualized treatment, the President’s Commission on Law Enforcement and the Administration of Justice recommended elimination of mandatory prison terms for crimes. President’s Commission on Law Enforcement and Administration of Justice, The Challenge of Crime in a Free Society 142-43 (1967). The American Bar Association has also urged the elimination of mandatory sentences and has recommended that the sentencing court be provided with a wide range of alternative dispositions. American Bar Association Project on Minimum Standards for Criminal Justice, Standards Relating to Sentencing Alternatives and Procedures § 2.1, at 48-56 (Approved Draft, 1968). Congress in 1970 responded to these suggestions with the enactment of the Controlled Substances Act, 21 U.S.C. §§ 801-904, which, with one exception, eliminated the mandatory prison terms for narcotics violations that the Narcotics Control Act of 1956, ch. 629, 70 Stat. 567, imposed. See also Bradley v. United States, 410 U.S. 605, 93 S.Ct. 1151, 35 L.Ed.2d 528 (1973). The sound policies behind the elimination of mandatory prison terms would be thwarted if any district judge were to impose uniform sentences for certain crimes.

No single judge, or even a group of judges, should be permitted to impose uniform sentences for certain crimes. The decision of whether mandatory sentences are necessary for certain crimes is for Congress alone to decide. Congress in 50 U.S.C.App. § 462 has given the district courts discretion to impose terms of imprisonment up to five years and fines up to $10,000 for selective service violations, and the district courts must exercise that discretion. See United States v. Daniels, supra, 446 F.2d at 971-972.

It follows that we should vacate the sentence imposed and remand for resen-tencing upon appropriate consideration of the presentence report.

      . Other recent cases in this Court involving appeals from selective service convictions before Judge Wyatt bear this out. See, e. g., United States v. Cohen, 485 F.2d 230 (2 Cir. 1973) (sentence of two months in prison, followed by two years of unsupervised probation) ; United States v. Williams, 486 F.2d 983, 984 n. 1 (2 Cir. 1973), slip op. 233, 234 n. 1 (October 31, 1973) (sentence of six months in prison, followed by two years probation) .

      . Other judges have been troubled by the disparity in sentencing selective service violators. See M. Frankel, Criminal Sentences: Law Without Order 23 (1973) ; Solomon, Sentences in Selective Service and Income Tax Oases, 52 F.R.D. 481 (1970).

      . The Supreme Court in Williams v. New York, 337 U.S. 241, 247, 69 S.Ct. 1079, 1083, 93 L.Ed. 1337 (1949), said: “The belief no longer prevails that every offense in a like legal category calls for an identical punishment without regard to the past life and habits of a particular offender.”

      . A minimum prison term of 10 years (or 20 years for prior offenders) must be imposed upon those convicted of engaging in a continuing criminal enterprise that violates the Controlled Substances Act. A continuing criminal enterprise is defined as one undertaken by five or more persons that engages in a continuing series of violations and one in which the defendant is an organizer and derives substantial income from its activities. 21 Ü.S.C. § 848.


author: ALDRICH, Senior Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Anthony G. FORGIONE, Defendant, Appellant.
    No. 73-1202.
    United States Court of Appeals, First Circuit.
    Submitted Oct. 29, 1973.
    Decided Nov. 5, 1973.
    Certiorari Denied March 18, 1974.
    See 94 S.Ct. 1561.

      Walter J. Hurley, Boston, Mass., on brief, for defendant, appellant.
    James N. Gabriel, U. S. Atty., and Lawrence P. Cohen, Asst. U. S. Atty., on brief, for appellee.
    Before COFFIN, Chief Judge, ALD-RICH and McENTEE, Circuit Judges.
   ALDRICH, Senior Circuit Judge.

This is an appeal by a government meat inspector convicted of accepting gifts from a person, firm or corporation engaged in commerce, in violation of 21 U.S.C. § 622. Defendant received gifts of meat products from the hands of employees of a firm whose products he was assigned to inspect. There was no proof that the employees themselves were engaged in commerce. In United States v. Seuss, 1 Cir., 1973, 474 F.2d 385, cert, denied, 412 U.S. 928, 93 S.Ct. 2751, 37 L.Ed.2d 155, we upheld, after extensive analysis, the validity of section 622, and its applicability to a substantially identical fact situation. We would have affirmed the present conviction without opinion on the government’s motion for summary affirmance pursuant to Local Rule 12, except that we feel obliged to comment.

In Seuss we stated that employees of a firm engaged in commerce were included in the statutory term “person [s] . engaged in commerce” in section 622. Defendant argues that this language in Seuss should not govern because his offenses were less extensive than those of Seuss. It is true that defendant was acquitted on some counts of his indictment (alleged gifts of money, as distinguished from meat products), but to argue that the statutory interpretation in Seuss is here inapplicable because Seuss was “a more flagrant and serious offender,” and was also convicted of conspiracy, is an inexcusable attempt to confuse differences in the number of offenses with differences in the qualitative acts and circumstances of each offense. Examination of the Seuss opinion refutes any thought that these purported distinctions are of conceivable moment. As a final irrelevancy, defendant refers to the fact that in Seuss evidence was given indicating that Seuss had violated federal sampling procedures, whereas here the government failed to show defendant “rendered a quid pro quo by way of lessening his diligence.” Such a showing was relevant to Seuss’ conspiracy offense. In this prosecution there is no such issue.

Equally unsupportable is defendant’s position on a question asked of a government witness.

“Q. Mr. Scalesse, on what facts did you rely in making these payments of money to Inspector Forgione from August 28, 1968 to and including October 15, 1968 ?”

When defendant’s objection had been overruled, the witness answered,

“A. So that we wouldn’t be held up or slowed up in any production. That is the reason we made these payments and those are the facts.”

Review of thirty pages of bench conferences preceding the framing of this question discloses that the defense agreed that it was relevant whether “any facts existed which entitled this defendant to the $100 a week,” but stated that it would object to questions calling for the witness’ “state of mind,” or his “reasons” for making the payments. The objection to “reasons,” as best we can discover, was that they might reflect the witness’ “state of mind” rather than “facts.” When, following this discussion, the question was asked in terms of facts, defendant objected, but did not explain. Now he argues that the question was “clearly erroneous for the reason that the question called for facts not within the witness’ knowledge.”

Nothing could be clearer than that the question did not “call” for facts of which witness lacked personal knowledge. True, it was broad enough to permit them. This is an objection to form, which could have been cured, if made. It is elementary that it is now too late. See, e. g., 5A Moore’s Federal Practice § 46.02, at 1904 (1971); Roberts v. United States, 3 Cir., 1963, 316 F.2d 489, at 497; Reck v. Pacific-Atlantic S. S. Co., 2 Cir., 1950, 180 F.2d 866, 870; cf. New York, N. H. & H. R. Co. v. Zermani, 1 Cir., 1952, 200 F.2d 240, 245, cert, denied, 345 U.S. 917, 73 S.Ct. 729, 97 L.Ed. 1351.

Parenthetically, whatever possible defect there might have been in this question, we would find it difficult to see what is left of defendant’s objection after the court, by unobjected-to questions at the close of the examination, brought out the basic fact that there was no reason for the alleged payments other than the facts that defendant was an inspector and had requested them. But, however that may be, defendant faces a more serious difficulty. He was acquitted on all the counts on which the question bore. He thus finds himself compelled to argue that the answer to a question which proved to have no direct consequences somehow carried the day in an area to which it did not relate. Even to state this contention would seem to answer it. We find unpersuasive defendant’s suggestion that the jury’s view of the entire case may have been colored by this one answer.

Unsupportable, too, is defendant’s objection to the fact that a government witness’ explanation of his conduct involved a reference to criminal acts (if established) other than those for which defendant was on trial. Again, it is elementary that evidence of other criminal acts, inadmissible to prove the defendant’s bad character, is admissible when of independent relevancy. We are not taken by defendant’s plea that the correctness of United States v. Jones, 7 Cir., 1971, 438 F.2d 461, is an open question in this circuit. See United States v. Plante, 1 Cir., 1973, 472 F.2d 829, at 831, cert, denied, 411 U.S. 950, 93 S.Ct. 1932, 36 L.Ed.2d 411; Dirring v. United States, 1 Cir., 1964, 328 F.2d 512, 514-515, cert, denied, 377 U.S. 1003, 84 S.Ct. 1939, 12 L.Ed.2d 1052.

We see no need to devote space to demonstrate the lack of merit in defendant’s complaint that the “jury may have been confused whether a government witness used certain papers as past recollection recorded or present recollection refreshed,” and that the court abused its discretion in permitting leading questions. As to the former we can best quote Professor Wigmore, Evidence (3d ed. 1970) § 755, that such distinctions tend to become “vain quibbles, having no relation to probative value.” The witness evidenced no more confusion than any lay witness might. We see no error, and no possible prejudice if there were one. As to the latter, the questions, if leading at all, were routinely within the court’s discretion.

We recognize, we hope fully, the right, indeed the duty, of counsel to resolve all issues of any possible doubt in favor of his client, and to be a vigorous, sometimes even abrasive advocate. See discussion in In re Samuel A. Bithoney, 1 Cir., 1973, 486 F.2d 319. In the case of appointed, as distinguished from, as here, retained counsel, we have recognized the heightened dilemma of being caught between an unreasoning client and counsel’s own good judgment. See Belbin v. Picard, 1 Cir., 1972, 454 F.2d 202, at 204. But there must be a limit. In re Samuel A. Bithoney, ante; United States v. Plante, ante, 472 F.2d at 833; cf. Anders v. California, 1967, 386 U.S. 738, at 744, 87 S.Ct. 1396, 18 L.Ed.2d 493. The empty contentions made in the present case go far beyond that limit. We publish this opinion not because of any contribution it makes to the law, but so that the bar may be in no doubt as to our views.

The judgment of the District Court is affirmed, and, pursuant to Local Rule 17, it is ordered that defendant’s bail be terminated forthwith.


author: PER CURIAM: OAKES, Circuit Judge

text:
    UNITED STATES of America, Appellee, v. Thomas Lee RUDD, Appellant.
    No. 1095, Docket 73-1665.
    United States Court of Appeals, Second Circuit.
    Argued Aug. 17, 1973.
    Decided Sept. 26, 1973.
    Oakes, Circuit Judge, filed dissenting opinion.
    Michael N. Pollet, New York City (Steven Delibert, and Karpatkin, Ohren-stein & Karpatkin, New York City, on the brief), for appellant.
    George E. Wilson, Asst. U. S. Atty., New York City (Paul J. Curran, U. S. Atty., New York City, on the brief), for appellee.
    Before MULLIGAN, OAKES and TIMBERS, Circuit Judges.
   PER CURIAM:

Appellant Thomas Lee Rudd appeals from a judgment of conviction entered April 6, 1973 after a bench trial in the Southern District of New York, Lloyd F. MacMahon, District Judge, for refusal to report for an armed forces physical examination, in violation of Section 12(a) of the Military Selective Service Act of 1967, 50 U.S.C. App. § 462(a) (1970), and 32 C.F.R. § 1628.16 (1972). He was sentenced as a young adult offender, 18 U.S.C. §§ 4209 and 5010(d) (1970), with imposition of sentence suspended and appellant placed on probation for two years conditioned upon his performing two years of alternative service.

Appellant’s essential claim on appeal is that, although he was classified 1-A by his local board at the time of the order to report for a physical examination, he was entitled to a 1-0 (conscientious objector) classification; that he would have obtained such classification if he had not been misled by his local board; that as a 1-0 he could have waived a physical; and therefore he was immune from prosecution for refusal to report for a physical. We disagree.

The short answer to appellant’s claim is that, assuming arguendo that the local board’s 1-A classification was invalid, it did not excuse him from reporting for a physical examination. As the Supreme Court said in McKart v. United States, 395 U.S. 185 (1969):

“. . . a registrant is under a duty to comply with the order to report for a physical examination and may be criminally prosecuted for failure to comply. If the Government deems it important enough to the smooth functioning of the System to have unfit registrants weeded out at the earliest possible moment, it can enforce the duty to report for pre-in-duction examinations by criminal sanctions.” Id. at 201. (footnotes omitted).
* * *
“An invalid classification would not be a defense today to a prosecution for failure to report for a pre-induction examination.” Id. at 203. (emphasis added).

We so held upon essentially similar facts on August 15, 1973 in affirming from the bench a conviction for refusal to report for a physical examination despite an alleged invalid 1-A classification. United States v. Lawrence, 481 F.2d 1397 (2 Cir. 1973). See also United States v. Shriver, 473 F.2d 436, 437 (3 Cir. 1973); United States v. Heywood, 469 F.2d 602 (9 Cir. 1972), distinguishing United States v. Hayden, 445 F.2d 1365 (9 Cir. 1971); United States v. Dombrouski, 445 F.2d 1289, 1296 (8 Cir. 1971); United States v. Zmuda, 423 F.2d 757 (3 Cir.), cert, denied, 398 U.S. 960 (1970); United States v. Moriarty, 319 F.Supp. 117, 121 (W.D.Mo.1970). And while we recognize the force of Judge Feinberg’s characteristically perceptive dissent in United States v. McGee, 426 F.2d 691, 705 (2 Cir. 1970), aff'd on other grounds, 402 U.S. 479 (1971), it serves here to emphasize that the controlling law of this Circuit is to the contrary.

Moreover, we do not believe that appellant was in any way misled by the local board. He was sophisticated and intelligent. His objection to the special form for conscientious objectors did not preclude him from stating his views. His letters to the local board are indicative of his attitude. The record fully supports Judge MacMahon’s finding in this respect:

“He was not misled. On the contrary, as I have said, he was just being cute. He knew full well, and was fully informed from some other source, as his letter reveals that he could claim conscientious objector.”

Affirmed.

OAKES, Circuit Judge

(dissenting):

The majority says that “we do not believe that appellant was in any way misled by the local board.” I believe the opposite to be the case. While a student with a l-S(C) classification, he wrote on July 27, 1969, and again on August 6, 1969, requesting that he be sent a copy of SSS Form No. 150, the special form for conscientious objectors. He did not send in this form because it asked for objections to the military based on “religious training and belief,” and this was before Welsh v. United States, 398 U.S. 333, 90 S.Ct. 1792, 26 L.Ed.2d 308 (1970), decided that one could properly be classified a conscientious objector despite not having a religious basis for his convictions. He was reclassified 1-A by his local board on May 12, 1970. One month after Welsh, which was decided on June 15, appellant wrote his local board informing them of his social, moral and political objections to service, pointing out that he was unable “to honestly complete” the SSS form, ■and asking for a new form now that he could state his “ethical objections to the military.” Despite Welsh, the local board on August 4 mailed him an unchanged SSS Form No. 150, containing the “religious training and belief” language. He wrote the board on September 2, 1970, pointing out that the form had not been revised and that he therefore “still [could not] complete it” and went on to ask how he could claim “my CO status on moral and ethical grounds using the present SSS Form 150.” While Judge MacMahon found, as the majority says, that he was “just being cute in this respect,” that finding was not on the basis of any testimony but on the basis of the letter itself. To me it is equally susceptible to the interpretation that he was sincerely and conscientiously trying to find out how to claim his conscientious objector status under Welsh on ethical grounds. It was at this point without further reply that he was ordered on October 14, 1970, to report for a physical on November 4. Subsequently, on November 18, he was ordered to report for induction on December 9. The Government, it is to be noted, consented to the dismissal of the count of the indictment which charged him for failure to report for induction, presumably because the local board had failed to advise him how to apply for conscientious objector status under Welsh. Just such conduct on the part of the board has been held to be misleading in, e. g., United States v. Timmins, 464 F.2d 385 (9th Cir. 1972) (board’s conduct a defense to prosecution for refusal to submit to induction).

The precise question here then is whether appellant’s conviction for failing to report for a physical can stand even though his conviction for refusing induction could not. In McKart v. United States, 395 U.S. 185, 201-203, 89 S.Ct. 1657, 23 L.Ed.2d 194 (1969), a case involving neither a claim of conscientious objection nor misleading board conduct, there is dictum that suggests that failure to report for a physical is a crime separable from failure to report for induction and that misclassification is not a defense to the failure to report for a physical. In Judge Feinberg’s dissent in United States v. McGee, 426 F.2d 691, 704-705 (2d Cir. 1970), aff’d on other grounds, 402 U.S. 479, 91 S.Ct. 1565, 29 L.Ed.2d 47 (1971), he suggests quite persuasively to me that the McKart dictum should not be extended to cases involving wrongful failure to consider a conscientious objector classification. These cases arte sui generis, Judge Fein-berg reasons, because failure of a conscientious objector to show up for a physical is treated within the Selective Service System as if the conscientious objector had passed the physical. 426 F.2d at 704. Therefore the notice to a 1-0 (conscientious object) registrant to report for a physical is really a benefit to him and not a “duty required of him” under 50 U.S.C. App. § 462(a). Id.

It is true that there are cases which have applied the McKart dictum in circumstances implicitly rejecting Judge Feinberg’s distinction. E. g., United States v. Zmuda, 423 F.2d 757, 759 (3rd Cir.), cert, denied, 398 U.S. 960, 90 S.Ct. 2176, 26 L.Ed.2d 545 (1970). On the other hand, this circuit has never passed upon the question and the affirmance from the bench to which the majority refers, and in which the author of this dissenting opinion concurred. United States v. Lawrence, 481 F.2d 1397 (2d Cir. 1973), did not involve any claim whatsoever of 1-0 classification. In the Ninth Circuit opposing panels have split on the precise question here presented. United States v. Hayden, 445 F.2d 1365 (9th Cir. 1971). Contra, United States v. Heywood, 469 F.2d 602 (9th Cir. 1972).

Since it would seem to me that where the would-be CO registrant has been sufficiently misled by the board as to prevent his being prosecuted for failure to report for induction, United States v. Timmins, swpra, as the Government by its consent to dismissal of the induction count here conceded, it should equally be prevented from prosecution for failure to report for a physical. In order words, in this, the first ease in this circuit clearly presenting the question, discussed by Judge Feinberg in his dissent in United States v. McGee, supra, I would adopt his analysis.

Accordingly, I would reverse the judgment below.

      . In McQ-ee, the majority read the record as indicating that the board had in fact passed on the defendant’s application for conscientious objector status, 426 F.2d at 698-699, whereas Judge Feinberg concluded that the defendant’s application had not been considered, id. at 702-703. In this case the Government does not, nor could it, contend that defendant Rudd’s claim was ever considered by the board. The majority here asserts that Rudd’s “objection to the special form for conscientious objectors did not preclude him from stating his views”; this assertion proves too much, because it is clear from the record that Rudd did, to the best of his ability, state his views in correspondence with the board, and those views never received any consideration by the board. It cannot be doubted that Rudd “met his obligation to seek assistance of the board, and the local board failed to correct an important mis-impression of appellant, of which it was made fully aware.” United States v. Sanders, 470 F.2d 937, 938 (9th Cir. 1972).


text:
    UNITED STATES of America, Appellee, v. James Edward EDSON, Defendant-Appellant.
    No. 73-1323.
    United States Court of Appeals, First Circuit.
    Argued Oct. 16, 1973.
    Decided Oct. 23, 1973.

      Joseph F. Flynn, Rockland, Mass., for defendant-appellant.
    Henry H. Hammond, Asst. U. S. Atty., with whom James N. Gabriel, U. S. Atty., was on brief, for appellee.
    Before ALDRICH and CAMPBELL, Circuit Judges.
   ALDRICH, Senior Circuit Judge.

Defendant appeals from an order of the district court setting bail pending trial. The facts are somewhat unusual. On March 1, 1972 defendant was convicted upon a plea of guilty of possessing heroin with the intent to distribute, in violation of 21 U.S.C. § 841(a)(1). Following indictment, defendant had been incarcerated because of his inability to supply bail set by the court in the amount of $25,000 with surety. On his plea he was sentenced to eight years imprisonment with the additional parole term provided by 21 U.S.C. § 841(b)(1)(A), with credit for time served. On September 24, 1973 the judgment of conviction was vacated because the sentencing judge had failed to comply with F.R.Crim.P. II. ******Defendant was then brought before a magistrate for a determination of bail.

At this time defendant had served twenty-five months, and, taking into account good time credits, would have been eligible for parole in seven months. We are informed that because of his good prison record he had been granted three “furloughs” and would have been allowed to attend classes at a local university which had accepted him for the current semester.

The magistrate recommended that bail be set again at $25,000 with surety. This recommendation was “adopted and approved” the same day by the district court without evidentiary or other hearing. There is no contradiction of defendant’s claim that he is unable to comply. Defendant is twenty-four years old and unemployed and has no demonstrated resources, nor have his parents. The undisputed effect of this order is that defendant not only remains incarcerated, but, ironically, unlike the situation when he stood convicted, he is no longer entitled to furloughs or to attend school.

Passing the diminished strength that we are disposed to accord to district court findings that merely adopt, without even opportunity for a hearing, the report of a magistrate, the defendant has a considerable burden on appeal. However, in view of the substantial errors contained in the magistrate’s memorandum, we proposed under the special circumstances of this case to exercise the authority vested in us by virtue of the Bail Reform Act, 18 U.S.C. § 3147(b), and order our own bail conditions.

The magistrate’s finding commences, after reciting the procedural history, with a statement that he proposed to disregard the fact that two jail officers had supplied letters expressing their opinion that defendant was sufficiently rehabilitated to resume the responsibilities of living in a free society. He considered the previous sentence to have been awarded not for rehabilitation, but for “punishment . . . not yet complete.” Defendant argues from this last that the magistrate was disregarding the presumption of innocence which was fully restored by the setting aside of his conviction. We agree, except that so far as bail is concerned the presumption is not that, but, as to an untried defendant, a “presumption in favor of releasability.” United States v. Leathers, 1969, 134 U.S.App.D.C. 38, 412 F.2d 169, 171. We add that, rather than being “of no consequence,” the opinions of the jail officials had a direct bearing upon defendant’s “character and mental condition,” as to which the magistrate was specifically directed to inquire. 18 U.S.C. § 3146(b).

Next, the magistrate drew the conclusion that following another trial the defendant would receive “no less a sentence.” He omitted, however, any consideration of the fact that against such a sentence defendant would receive substantial credit for time already served, making the situation quite different from what it was when bail was originally set.

The magistrate then pointed to the fact that the defendant had received two sentences in the state court for similar offenses, but which had been suspended, with probation, very possibly on the ground that defendant was already serving a federal sentence. He opined that to release defendant under these circumstances would be “a slap in the face of the state court.” We have no reason to suppose that the state court would be affronted or would expect the magistrate to do other than his duty. In any event, this court holds no possible obligation to the state court at the expense of defendant’s federal rights. It should be unthinkable that a magistrate would disregard the clear command of Congress because of its indirect effect upon the feelings of judges of another court.

The seriousness of the crime of distributing narcotics may have distracted the magistrate’s attention from the priorities established by Congress by the Bail Reform Act. Until a defendant has been convicted, the nature of the offense, as well as the evidence of guilt, is to be considered only in terms of the likelihood of his making himself unavailable for trial. Determination of what is needed “reasonably [to] assure” defendant’s appearance, not considerations of state comity, controls the setting of bail under the Bail Reform Act.

This defendant, as a practical matter, may well face less than one year in jail. If he were to default, even on personal recognizance, he faces an additional federal sentence. What might seem even more pressing, while conviction of the original offense would not be a violation of his state probation, defaulting even federal bail presumably would be such. Hence defendant would face, in addition, a reactivation of his state sentences. As against this, no affirmative reason has been offered why defendant is likely to flee the state where all his past and present connections appear to be.

Under these circumstances we cannot feel that the government, quite apart from the commendation defendant has earned during his present incarceration, has met the burden now imposed on it by the Bail Reform Act of showing that defendant would violate any bail order that we presently impose. The order setting bail at $25,000 with surety is vacated. The case is remanded forthwith to the district court with instructions to set bail at $5,000 without surety, and to release the defendant in the custody of his mother, who has indicated a willingness to assume such.

      . Uncomfortable as it may be for the U. S. Attorney, particularly in the case of a judge who persists over the years in not observing this rule, we place some burden upon him, at least to call the court’s attention at the time to the oversight (not the judge from whom the present appeal is taken.)

      . Under F.R..A.P. 9(a) the district court should have stated its “reasons.” We do not remand in this instance to ascertain whether it agreed in the magistrate’s reasoning because of our decision to consider the matter de novo.