author: HASTIE, Circuit Judge.

text:
    LOCAL 1477 UNITED TRANSPORTATION UNION and Lodge 666 United Transportation Union, Plaintiffs-Appellees, v. George P. BAKER et al., Defendants-Appellants.
    No. 72-1478.
    United States Court of Appeals, Sixth Circuit.
    Argued Nov. 27, 1972.
    Decided June 21, 1973.

      Patrick E. Hackett, Detroit, Mich., for def endants-appellants.
    Ernest Goodman, Detroit, Mich., for plaintiffs-appellees; Goodman, Eden, Millender, Goodman & Bedrosian, Ernest Goodman, Detroit, Mich., on brief.
    Before PHILLIPS, Chief Judge, WEICK, Circuit Judge, and HASTIE, Senior Circuit Judge.

       The Honorable William H. Hastie, Senior Circuit Judge of the United States Court of Appeals for the Third Circuit, sitting by designation.

   HASTIE, Circuit Judge.

The trustees of Penn Central Transportation Co., a common carrier by railroad, have taken this appeal from an order of the District Court for the Eastern District of Michigan, Southern Division, that permanently enjoined the railroad from disciplining employees who elect to absent themselves from work frequently without justifying reason, so long as they shall work at least one day a month and there are sufficient employees available on a reserve or part-time list to fill all work assignments. The district court prefaced its injunction with a jurisdictional finding that the matter in controversy was justicia-ble as a “major dispute” within the in-tendment of the Railway Labor Act, 45 U.S.C. ch. 8. The correctness of that jurisdictional finding and the judicial action to which it led are disputed on this appeal.

The rights and obligations of the railroad and its employees who are involved in this case are controlled by a collective bargaining agreement between the railroad and the plaintiff unions and by mutually recognized “Railroad Rules for Conducting Transportation”. Section 61 of Article 26 of the firemen’s labor contract and Rule 26 of the trainmen’s contract both specify that employees “may have 30 days layoff on receipt of permission from proper official without written leave of absence”. General Rule T of the Rules for Conducting Transportation requires that “[ejmployees must report for duty at the required time” and that “[n]o employee will be allowed to absent himself from duty without proper authority . . ..” There is also a general provision that the “service demands the faithful . . . discharge of duty”.

Employees are classified as “regular” or “extra”. For a regular employee the railroad guarantees employment on a scheduled shift for a five day work week. Employees on the “extra” list are guaranteed the opportunity to work four out of every seven working days. General Rule 8 provides that “[rjegular men will be permitted to lay off when extra men are available”. Section 35 of the firemen’s contract provides that “extra” employees who lay off when they are called shall be moved to the bottom of the list of available “extras”.

The district court gave the parties a full hearing at which it appeared that over the years numbers of men, regular and extra, had absented themselves without justifying reason with such frequency that they put in only a small fraction of the normal work time guaranteed them. It also appeared that for years the railroad tolerated this, though from time to time it had complained to the union of improper and excessive “marking off” (notifying a supervisor that the employee does not choose to work). However, in recent years, the issue has become sharply drawn, with the employer insisting that the contract and rules contemplate and require work with some degree of regularity subject to absence with permission and for good cause, while the union contends that an employee has the right of lay off at will without penalty, so long as he shall work at least one day in thirty and an “extra” is available to take his place. This suit was filed when the railroad threatened to discipline particular employees who were said to have absented themselves very frequently without justification.

The answer to the jurisdictional question in this case depends upon the application of a recognized distinction that governs the administration of the Railway Labor Act. Under that Act, the courts have classified disputes as either “major” or “minor”. In the leading case of Elgin J. & E. Ry. v. Burley, 1945, 325 U.S. 711, 723, 65 S.Ct. 1282, 1290, 89 L.Ed. 1886, the Supreme Court described major disputes as those “over the formation of collective agreements or efforts to secure them. They arise where there is no agreement or where it is sought to change the terms of one ..” The Court then contrasted those minor disputes “in which no effort is made to bring about a formal change in terms or create a new [agreement, but rather the] dispute relates either to the meaning or proper application of a particular provision with reference to a specific situation or to an omitted case”. Recognizing that distinction, this court has said: “A ‘major dispute’, as that phrase is known in the parlance of the Railway Labor Act, results when there is a disagreement in the bargaining process for a new contract. A ‘minor’ dispute is a controversy over the meaning of an existing collective bargaining agreement in a particular fact situation.” Brotherhood of Railway Trainmen v. New York Central R. R., 6th Cir. 1957, 246 P.2d 114, 118, cert. denied, 355 U.S. 877, 78 S.Ct. 140, 2 L.Ed. 2d 107.

If a dispute is minor and the parties are unable to resolve it through negotiation or prescribed grievance procedures, the National Railroad Adjustment Board then has primary and exclusive jurisdiction under section 3 of the Railway Labor Act, 45 U.S.C. § 153, to interpret the agreement of the parties and make an appropriate award. Order of Rail Conductors v. Pitney, 1945, 326 U.S. 561, 66 S.Ct. 322, 90 L.Ed. 318; Slocum v. Delaware L. & W. R. Co., 1950, 339 U.S. 239, 70 S.Ct. 577, 94 L.Ed. 795; Brotherhood of R.R. Trainmen v. Chicago River and Indiana R. Co., 1957, 353 U.S. 30, 77 S.Ct. 635, 1 L.Ed.2d 622; and to the same effect see very recent decisions of courts of appeals in Baker v. United Transportation Union, AFL-CIO, 3d Cir. 1971, 455 F.2d 149, 154; Brotherhood of Locomotive Firemen and Enginemen v. Southern Pacific Company, 5th Cir. 1971, 447 F.2d 1127, 1132; United Transportation Union v. Burlington Northern, Inc., 8th Cir. 1972, 458 F.2d 354, 356. Thus generally stated, these concepts are settled law with which no party to this appeal takes issue.

However, difficulty arises when, as in this case, one party views the controversy as a dispute over the proper interpretation of the existing contract and agreed rules, while the other charges its adversary with an attempt to impose unilaterally a new requirement that changes the existing agreement. Confronted by such opposing characterization of particular disputes, the courts of appeals have consistently ruled that if the disputed action of one of the parties can “arguably” be justified by the existing agreement or, in somewhat different statement, if the contention that the labor contract sanctions the disputed action is not “obviously insubstantial”, the controversy is within the exclusive province of the National Railroad Adjustment Board. Railway Express Agency v. Brotherhood of Railway, Airline and Steamship Clerks, 5th Cir. 1971, 459 F.2d 226, 231, cert. denied 409 U.S. 892, 93 S.Ct. 115, 34 L.Ed.2d 149 (“arguable”); Switchmen’s Union v. Southern Pacific Co., 9th Cir. 1968, 398 F.2d 443, 447 (“arguably predicated on the terms of the agreement”); Airline Stewards Assn. v. Caribbean Atlantic Airlines, Inc., 1st Cir. 1969, 412 F.2d 289, 291 (not “obviously insubstantial”); Southern Ry. Co. v. Brotherhood of Locomotive Firemen and Enginemen, 1967, 127 U.S.App.D.C. 371, 384 F.2d 323, 327 (not “obviously insubstantial”). In our view, the concept expressed in these formulations is sound. We apply it to this case.

In their briefs and orally the opposing parties have argued at length the meaning, interrelation and proper interpretation of the provisions of their labor contracts and related rules, from which we have quoted early in this opinion. The unions argue that the provision relating the privilege of lay off to the availability of extra men implies an absolute right of lay off so long as a qualified extra employee is available as a replacement. The railroad contends that the work time it agrees to provide is inferentially the normal work week and that the rules requiring “faithful discharge of duty” and prohibiting absence from duty “without proper authority” authorize it to discipline employees who “mark off” with great frequency without justifying excuse. The parties also argue the historic facts concerning the extensiveness of marking off over the years and the railroad’s acquiescence or objection in particular cases.

Without elaboration of these arguments, we think it clear that this controversy presents a minor dispute. The formal documents, which both parties view as controlling, do not unambiguously answer the presently disputed question. The competing inferences which the parties draw from the documents and from past practice thereunder are “arguable” and cannot fairly be characterized as clearly unreasonable or “obviously insubstantial”. This then is the very type of dispute that lies within the special competence of the National Railroad Adjustment Board and was intended by Congress to be decided, in first instance at least, by that special tribunal rather than by a court.

It follows that in this case the district. court has exceeded its jurisdiction by undertaking to interpret a labor contract and related rules, the impact of which upon the matter in dispute is unclear, and then permanently enjoining the railroad from taking any disciplinary action inconsistent with the court’s interpretation of the controlling agreements.

The judgment is reversed.

      . This holding is fully consistent with our recent decision in United Transportation Union, Local 63E v. Penn Central Co., 6th Cir. 1971, 443 F.2d 131, 136, cert. denied 404 U.S. 938, 92 S.Ct. 271, 30 L.Ed.2d 251, where we ruled that an entirely different type of controversy over a unilateral change of working conditions was not “a mere dispute over contract interpretation”. In that case we approved a temporary injunction to maintain the status quo pending resort to the Mediation Board.


source: Caselaw Access Project

author: WALLACE, Circuit Judge:

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Gordon Edward CROXTON, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Claude TREMBLAY, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Raul GARCIA, Defendant-Appellant.
    Nos. 73-1304 to 73-1306.
    United States Court of Appeals, Ninth Circuit.
    Argued May 29, 1973.
    Decided June 7, 1973.

      Gilbert Veliz, Jr., Asst. Federal Public Defender (argued), Tucson, Ariz., for appellant (Croxton).
    Leon Thikoll (argued), of Thikoll & Johnson, Tucson, Ariz., for appellant (Tremblay).
    James L. Robinson, Jr. (argued), Tucson, Ariz., for appellant (Garcia).
    Ann Brown, Asst. U. S. Atty. (argued), William C. Smitherman, U. S. Atty., James E. Mueller, Asst. U. S. Atty., Tucson, Ariz., for the United States.
    Before BARNES and WALLACE, Circuit Judges, and BYRNE, Sr., District Judge.

       Honorable William M. Byrne, Sr., United States District Judge, Los Angeles, California, sitting by designation.

   WALLACE, Circuit Judge:

Croxton, Tremblay, and Garcia were convicted of conspiracy to import marijuana in violation of 21 U.S.C. § 963. Their appeal questions whether a conspiracy agreement was finally formed and whether they were entrapped. We affirm.

The three were in Arizona making plans to fly 800 pounds of marijuana into the United States; Tremblay had access to this amount near his home in Mazatlan, Mexico. They travelled to Phoenix and attempted to hire a pilot, but were unsuccessful because the pilot could not qualify to fly the plane desired.

Arriving in Tucson, Tremblay contacted Lynne Zongker, discussed his lack of success and requested assistance, Unfortunately for Tremblay, Zongker was a government informer and made arrangements for him to meet a proposed pilot, Warren Parthen, a United States Customs Agent. The scheme was discussed further and plans made. Trem-blay wanted to check out a landing strip near Blythe, California so Parthen flew them there. Tremblay paid to have Parthen certified for the aircraft and also paid for the flight.

Only one problem remained — whether the runway to be used in Mazatlan was adequate. All agreed that Tremblay and Parthen would take a commercial flight to examine the runway. Shortly after airline tickets were purchased, the three were arrested.

I. Sufficiency of Evidence.

Tremblay and Croxton claim the conspiracy agreement was not complete —that it was still in the negotiation stage and would not have been finalized until the landing strip in Mexico had been approved.

Obviously, the marijuana transaction need not be completed as the gist of the offense is the agreement to accomplish an unlawful purpose. Black v. United States, 252 F.2d 93, 94 (9th Cir. 1958); Ong Way Jong v. United States, 245 F.2d 392, 394 n. 2 (9th Cir. 1957). The question raised here is whether the evidence of a conspiracy is sufficient if the parties have not finalized the specific means or plan for transporting the marijuana into the United States. To hold that the evidence in this case was insufficient would produce a doctrine tending to absurd results. These same defendants, having examined and approved the Mazatlan runway, could still claim that their conspiracy was incomplete because they had not filed a flight plan with the appropriate authorities.

The trial judge correctly instructed the jurors that the government must prove beyond a reasonable doubt that the defendants conspired to commit an offense against the United States. He further instructed them there need not have been a formal or express agreement or a statement of the scheme or the means to effect it. Given these, and other, proper instructions on the law of conspiracy, the jury could find these defendants guilty of an agreement to import marijuana into the United States. It was not essential to the crime charged that the conspirators had agreed upon the specifics of the method proposed. See Williamson v. United States, 207 U.S. 425, 446-449, 28 S.Ct. 163, 52 L.Ed. 278 (1908). See also Pierce v. United States, 252 U.S. 239, 244, 40 S.Ct. 205, 64 L.Ed. 542 (1920); United States v. Root, 366 F.2d 377, 382-383 (9th Cir. 1966), cert. denied, 386 U.S. 912, 87 S. Ct. 861, 17 L.Ed.2d 784 (1967); Eaker v. United States, 76 F.2d 267, 269 (10th Cir. 1935). Conspiracy “does not require ‘mission accomplished’, only ‘mission attempted’. An overt act by the conspirators in an effort to accomplish the mission satisfies the requirement of the statute.” United States v. Root, 366 F.2d 377, 383 (9th Cir. 1966), cert. denied, 386 U.S. 912, 87 S.Ct. 861, 17 L.Ed.2d 784 (1967).

II. Entrapment.

All three appellants assert error involving entrapment or related theories. Croxton did not effectively raise the defense. Further, he failed to admit doing the acts charged — a condition precedent to raising the defense. United States v. Mehciz, 437 F.2d 145, 149 (9th Cir.), cert. denied, 402 U.S. 974, 91 S.Ct. 1663, 29 L.Ed.2d 139 (1971).

Garcia raised the entrapment issue by his motion for a “directed verdict” at the end of the government’s case. However, subsequent to its denial, he testified in his own behalf. In doing so, and in the absence of plain error, he waived any right to challenge the denial of his motion for judgment of acquittal. See United States v. Lewis, 426 F.2d 266 (9th Cir. 1970); Viramontes-Medina v. United States, 411 F.2d 981 (9th Cir. 1969); Benchwick v. United States, 297 F.2d 330 (9th Cir. 1961). There was no plain error. He did not renew his motion at the close of the case and he raised no other question on appeal.

As to Tremblay, neither he nor any other appellant submitted an entrapment instruction or objected to the one given. In the absence of plain error, no party may first object to an instruction upon appeal. Fed.R.Crim.P. 30, 52(b). We have reviewed the evidence and the court’s entrapment instruction and find no error, plain or otherwise. This properly instructed jury could and did reject appellants’ defense.

The appellants argue that they were not given the benefit of United States v. Russell, 459 F.2d 671 (9th Cir. 1972) and Greene v. United States, 454 F.2d 783 (9th Cir. 1971). They assert that without the government’s unconscionable, active participation in supplying an airplane, the venture could not succeed. Russell and Greene represented a departure from the traditional defense of entrapment. Unfortunately for appellants, the United States Supreme Court reversed Russell, 411 U.S. 423, 93 S.Ct. 1637, 36 L.Ed.2d 366 (1973), reaffirming that the defense was only available to the “unwary innocent” and not the “unwary criminal.” See Sherman v. United States, 356 U.S. 369, 372, 78 S.Ct. 819, 2 L.Ed.2d 848 (1958). “It is only when the government’s deception actually implants the criminal design in the mind of the defendant that the defense of entrapment comes into play.” United States v. Russell, 411 U.S. 423, 436, 93 S.Ct. 1637 at 1645, 36 L.Ed.2d 366 (1973).

They contend, however, that this case is distinguishable from Russell because only Parthen could secure a plane legally, there was no on-going business and Russell was not a conspiracy case. We are not persuaded. Parthen did not implant the criminal design in their minds and therefore this “relatively limited defense” is not available. United States v. Russell, 411 U.S. at 435, 93 S.Ct. 1637 (1973).

Affirmed.


author: HAYS, Circuit Judge: OAKES, Circuit Judge

text:
    MORNINGSIDE RENEWAL COUNCIL, INC. and Riverside Democrats, Inc., Petitioners, v. UNITED STATES ATOMIC ENERGY COMMISSION and United States of America, Respondents, Trustees of Columbia University in the City of New York, Intervenor.
    No. 524, Docket 72-2093.
    United States Court of Appeals, Second Circuit.
    Argued March 12, 1973.
    Decided July 5, 1973.

      John G. Lipsett, New York City, for petitioners.
    John Cho, Washington, D.C., (Martin R. Hoffmann, Gen. Counsel, Jerome Nelson, Sol., U.S. Atomic Energy Comm., Washington, D.C., Kent Frizzell, Asst. Atty. Gen., Edmund B. Clark and Peter R. Steenland, Attys., U.S. Dept, of Justice, Washington, D.C., on the brief), for respondents.
    Edward A. Groobert, Washington, D. C. (John W. Wheeler, Thacher, Proffit & Wood, New York City, Bennett Bos-key, Volpe, Boskey & Lyons, Washington, D.C., on the brief), for intervenor.
    Before HAYS, MULLIGAN and OAKES, Circuit Judges.
   HAYS, Circuit Judge:

I. Introduction

This action seeks review of an order of the Atomic Energy Commission authorizing the Commission’s Director of Regulation to issue a license to the Trustees of Columbia University to operate a Triga Mark II nuclear reactor located at 120th Street and Amsterdam Avenue in New York City. The reactor in question, which has already been built, will be used for the training of nuclear engineering students and for research and it can also be used to produce isotopes for medical research. It was constructed in a building on the Columbia campus following a 1963 Commission proceeding authorizing its construction. The petitioners herein did not participate in that proceeding and no appeal was taken from the Commission’s decision.

The order at issue in this appeal consists of a decision of the Atomic Safety and Licensing Appeal Board dated May 18, 1972, 2 CCH Atomic Energy Law Rep. ff 11,595, and an order of the same Board, dated July 28, 1972, denying a petition for reconsideration. The decision and order reversed a prior Initial Decision of the Atomic Safety and Licensing Board which denied authorization to operate the reactor. The parties to the proceeding before the Commission were two proponents of the operating license, Columbia, the applicant for the license, and the Regulatory Staff of the Commission, and three opponents of the license, the two petitioners herein, Morningside Renewal Council, Inc. and Riverside Democrats, Inc., and an individual intervenor who is not involved in this appeal. The members of the Appeal Board whose decision is being challenged are Dr. John H. Buck, a nuclear physicist, Dr. Lawrence R. Quarles, the Dean of the School of Engineering and Applied Science of the University of Virginia, and Algie A. Wells, an attorney.

This action presents us with several issues for review: First, whether the record before the Appeal Board, acting for the Commission, contains sufficient evidence to support its major findings that (1) the operation of the reactor will not be inimical to public health and safety, and (2) the issuance of the license does not constitute a “major federal action significantly affecting the quality of the human environment” requiring a detailed environmental statement to be issued under section 102(c) of the National Environmental Policy Act of 1969. Second, whether the Appeal Board erred in failing to implement certain rulings of the Licensing Board before it passed upon the application for authorization, whether the Appeal Board was justified in conducting additional evidentiary hearings in this proceeding and whether those hearings should have been held in New York City rather than in Washington, D.C. Finding substantial evidence in the record to support the Appeal Board’s conclusions and noting no error in its procedural determinations, we reject the contentions of the petitioners, deny their petition for review and uphold the decision and order of the Appeal Board.

II. The Factual Background

In 1963, Columbia sought and received a permit to construct the research reactor involved in this proceeding. The University acted pursuant to the provisions of the Atomic Energy Act, 42 U.S.C. § 2011 et seq., which provides for a two-stage procedure for the licensing of nuclear reactors. Under the Act, applications for construction permits shall be granted “if the application is otherwise acceptable to the Commission,” whereas licenses to operate the reactors shall be issued by the Commission

“[ujpon finding that the facility authorized has been constructed and will operate in conformity with the application as amended and in conformity with the provisions of this chapter and of the rules and regulations of the Commission, and in the absence of any good cause being shown to the Commission why the granting of a license would not be in accordance with the provisions of this chapter . . .

42 U.S.C. § 2235.

In dealing with licenses for reactors to be used for research and development and for medical therapy,

“[t]he Commission is directed to impose only such minimum amount of regulation of the licensee as the Commission finds will permit the Commission to fulfill its obligations under this chapter to promote the common defense and security and to protect the health and safety of the public and will permit the conduct of widespread and diverse research and development.”

42 U.S.C. § 2134(c).

The permit to build the Triga reactor was issued to Columbia after a full safety review by the Commission’s Regulatory Staff and after a Federal Register notice had been published announcing the opportunity for a public hearing on the issue. No one sought such a hearing and no appeal was taken from the Commission’s decision. The reactor was then constructed in a building on the Columbia campus.

In February of 1967, Columbia University applied for a license to operate the research reactor. One year later, the Commission’s Regulatory Staff issued a Safety Evaluation which concluded that the reactor unit could be operated safely. The Commission thereupon announced its intention to issue the operating license and published a Federal Register notice inviting petitions to intervene from those whose interests might be affected by the issuance of the license. Applications were received from petitioners and one other person.

After the passage of more than one year (a period which included a delay requested by Columbia) the Commission issued a further Federal Register notice providing for a hearing before the Licensing Board and admitting petitioners as parties to the proceedings. The hearing was designed with particular emphasis on the issue of whether there was reasonable assurance that the reactor could be operated without endangering the public health and safety.

At the hearings, conducted in New York City in November, 1969 and July, 1970, testimony was presented by over twenty witnesses and resulted in more than 1,500 pages of transcript. On April 6, 1971, the Licensing Board issued its Initial Decision denying Columbia an operating license. Although the Board specifically found that in normal use the reactor could be operated safely without endangering the health and safety of the public and that the issuance of the license would not be inimical to the common defense and security, it concluded that it could not authorize the issuance of the license because of the absence of “applicable substantive criteria of the Commission and of convincing objective standards of the Regulatory Staff” dealing with the type of hypothetical accidents which are postulated for the purpose of determining the safety of particular reactors. In addition to this lack of standards, the Licensing Board noted that there were certain discrepancies in the experimental data submitted to it to be used for assessing the effects of the hypothetical accidents. The Board concluded that it had to “decline answering the question of whether the health and safety of the public would be endangered upon the occurrence of a postulated accident” because it considered it “inappropriate to enforce an answer derived from the narrow confines of a single proceeding and its own personal views about the degree to which the health and safety of the public ought to be protected against accident consequences.” Suggesting the need for further experimentation as well as objective “accident” criteria relating to the danger to public health and safety, the Licensing Board denied the authorization to issue the operating license.

All of the parties involved filed exceptions to the Board’s Initial Decision. The proceedings then went before the Atomic Safety and Licensing Appeal Board to which the Commission has delegated all of its adjudicatory authority. In June of 1971, following a review of the record, the Appeal Board determined that clarification of the record was necessary in certain areas before it could properly decide the issue. Therefore, it ordered that an opportunity for oral argument be afforded and that additional hearings be held before the Appeal Board directed particularly to three areas: the explanation of the discrepancies in some of the experimental data used to predict the release of radioactive fission products under postulated accident conditions; the criteria to be used to evaluate the predicted effects of the postulated accidents; and an additional explanation from Columbia of its security plans and procedures for preventing unauthorized access to the reactor area.

In May of 1972, after two days of hearings at which twelve technical experts testified, the Appeal Board issued its decision authorizing the issuance of the operating license. Its findings included the following: That when considered in light of the additional experimental data and clarifying information submitted to the Board, the release fission data were “reasonably consistent”; that the accidents hypothesized by the petitioners herein were not credible (thus affirming the Licensing Board’s rejection of those hypotheses); that for the purposes of analysis it would adopt the Regulatory Staff’s hypothetical accident situation which was more severe than any accident which had occurred during all previous experience with this type of reactor; that regulations as to postulated accidents for research reactors, which the Licensing Board had thought necessary, were not essential because even under the postulated conditions, any release of radioactive fission products would not exceed the guidelines for allowable releases of radioactivity for normal operations; and that therefore there was no danger to the public health and safety from the operation of the reactor. The Appeal Board did, however, impose additional security requirements upon Columbia as a condition of its obtaining the license.

On the basis of the entire record, the Appeal Board concluded that “issuance of the operating license will not be inimical to the health and safety of the public.” After analyzing the potential environmental effect of the reactor, the Board determined that its operation “will not have a significant impact on the environment and, for that reason an environmental statement under the National Environmental Policy Act is not required.” On July 28, 1972, the Board denied the petitioners’ request for reconsideration of its decision.

III. The Substantive Claims

We deny the petition to review and we uphold the decision and order of the Commission’s Appeal Board. We have examined the Appeal Board record and decision as well as the Licensing Board’s Initial Decision and we find no grounds upon which to base reversal of the final order at issue herein. It is clear from the extensive and thorough record that the Appeal Board carefully considered all aspects of the issues involved in the granting of an operating license for this particular reactor. Since the challenged findings are supported by substantial evidence in the record, it is not within the competence of this court to overrule the Board’s determination. See Scenic Hudson Preservation Conference v. Federal Power Comm’n, 453 F.2d 463, 468 (2d Cir. 1971), cert. denied, 407 U.S. 926, 92 S.Ct. 2453, 32 L.Ed.2d 813 (1972).

The Board’s decision that an environmental impact statement pursuant to the National Environmental Policy Act of 1969 was not necessary was based upon its threshold finding that the licensing involved in this case was not a “major federal action significantly affecting the quality of the human environment.” This finding too was supported by substantial evidence in the record and the Board’s decision was clearly not arbitrary and capricious. On this issue, the agency has the authority to make its own threshold determination. See Hanly v. Kleindienst, 471 F.2d 823 (2d Cir. 1972); Hanly v. Mitchell, 460 F.2d 640, 644 (2d Cir.), cert. denied sub nom. Hanly v. Kleindienst, 409 U.S. 990, 93 S.Ct. 313, 34 L.Ed.2d 256 (1972). Moreover, in this instance, there was a reviewable environmental record made with the participation of the public so that the finding that no NEPA statement was necessary was made by the Board with full knowledge of all of the environmental questions raised by the petitioners. Here the underlying issue was “safety” and the inquiry into that area was detailed and entirely adequate.

IV. The Procedural Claims

Petitioners contend that rule-making rather than adjudicatory proceedings should have been conducted in this case. However, that decision is one for the agency to make for that is where the expertise which is necessary to make such a determination lies. See SEC v. Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947); N.L.R.B. v. A.P.W. Products Co., 316 F.2d 899, 905-906 (2d Cir. 1963). Absence of general regulations and objective criteria regarding postulated accident situations, which the Licensing Board thought necessary before granting authorization to issue the license, presents no bar to the issuance of the license in this case since the Board’s decision is amply supported by a full record. Just as an agency may reverse its hearing examiner, the Appeal Board, acting as the Commission itself in this case, may reverse the Licensing Board, especially on questions of policy and discretion.

The Appeal Board’s actions were well within its powers when it conducted limited evidentiary hearings and ordered them held in Washington, D. C. As the Board said:

“Holding of a proceeding of this type is clearly within the Appeal Board’s jurisdiction. The Administrative Procedure Act, which is specifically made applicable to proceedings of this type by Section 181 of the Atomic Energy Act of 1954, as amended, 42 U.S.C. § 2231, contemplates that when an initial decision is subject to review within an agency, the reviewing body may ‘restrict its decisions to questions of law, or to the question of whether the findings are supported by substantial evidence or the weight of evidence . [or] it may make entirely new findings either upon the record or upon new evidence which it takes.’ The authority vested in the Appeal Board includes the entire authority and review functions which would otherwise be exercised by the Commission in a given case. It follows that the Appeal Board has the Commission’s authority, as contemplated under the Administrative Procedure Act, to take evidence incident to its appellate review .” (Footnote omitted.)

10 C.F.R. § 2.703(b) states that the time and place of hearing will be fixed “with due regard for the convenience of the parties or their representatives, the nature of the proceeding, and the public interest.” This is obviously a guideline to the agency’s discretionary authority. The Appeal Board did not abuse its discretion in determining that Washington, D.C., was the appropriate place to hold the additional hearings, especially in light of the fact that petitioner’s only witness was from Pittsburgh, Pennsylvania and several of the witnesses representing the Commission’s Regulatory Staff were from the Washington, D.C., area. Other witnesses were from Pennsylvania and California while only two were from New York.

Petition denied.

OAKES, Circuit Judge

(dissenting):

I respectfully dissent.

While there may have been an overreaction on the part of some to the threats from this “little” reactor, there are two points which seem to me to require reversal — -the absence of AEC safety standards relating to teaching or research reactors and the absence of an Environmental Impact Statement (EIS) under NEPA.

Regarding safety standards, the AEC Safety and Licensing Board itself denied a license because it would not answer questions about the reactor’s possible effect on public health and safety absent applicable substantive criteria and convincing objective standards concerning evaluation of possible nuclear accidents. 2 CCH Atom.En.L.Rep. ¶ 11,595 (May 18, 1972). One must certainly agree with the Safety Licensing Board that the “fission products release fraction under postulated accident conditions for such a standard product as a Triga reactor ought to be a matter of proven determination and unquestionable validity.” Moreover, apparently the regulatory staff of AEC has shifted the basis of its safety evaulation of accident conditions from one Triga case to another. The Appeal Board did not really disagree with the need for standard regulations — in fact it strongly recommended adoption of them — but went ahead and granted a license here anyway. While the petitioners’ postulated accidents seem quite remote to me, it may be that there is some other postulated accident that should be taken into account that was not in evidence in this proceeding, and a rule-making procedure would seem to be the preferable way to develop this. Through a rule-making procedure the Commission may “educate itself,” cf. Lewis-Mota v. Secretary of Labor, 469 F.2d 478, 482 (2d Cir. 1972); Texaco, Inc. v. FPC, 412 F.2d 740, 744 (3rd Cir. 1969), and formulate all of the necessary standards and requirements based upon appropriate scientific data, and that would make it easier for everyone to know the Commission’s regulations on an issue of substantial importance; apparently Triga and other teaching reactors are widely used and may be even more widely used in the future. Courts, I believe, have the power to remand for rule-making proceedings in cases of this type, where the agency obviously should have formulated a generalized policy but has failed to do so. Cf. Bell Aerospace Co. Division of Textron, Inc. v. NLRB, 475 F.2d 485, 494-496 (2d Cir. 1973) (Friendly, C. J.) (change in Labor Board’s “managerial employees” exception to coverage of National Labor Relations Act made through adjudication remanded to Board for rule-making proceeding).

A rule-making proceeding here is particularly appropriate for another reason —it might serve as a measure of protection against the agency’s own interests influencing its disposition of this particular case. I have already mentioned the Commission’s variable “standards” for licensing Triga reactors.

I continue to express concern that the AEC is charged with the dual duty of passing on licenses on the one hand but promoting the use of atomic power on the other. The AEC also has an interest in seeing this reactor licensed to promote its Nuclear Education Training Program; to this end it has entered into an agreement with Columbia to provide post-license funds for the operation of the reactor and to waive charges for Commission-owned special nuclear material involved in its operation. My concern is so much the greater where, as here, the independent Safety and Licensing Board has denied the license, but was overruled by the three-member Appeal Board, consisting of two AEC staff members. Moreover,, the safety tests relied upon by the Appeal Board here were conducted by the most interested party, the manufacturer of the reactor, following an exchange of correspondence between “Ralph” (Mr. Peters of Gulf Oil) and “Pete” (Dr. Peter A. Morris, Director of the AEC Division of Reactor Licensing) in which Gulf advised the Commission that “We hope to have you or members of your staff participate fully in these experiments so that they will be deemed to have been done ‘under the auspices of the Regulatory Staff.’ ” Following this Dr. Morris advised Gulf that he would attend the tests “as an observer.” In holding that the FPC could not adopt as its own an EIS drawn up by a state agency-applicant for a power license this court said in Greene County Planning Board v. FPC, 455 F.2d 412, 420 (2d Cir.), cert. denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90 (1972): “The danger of this procedure [the one followed by the FPC], and [¿is] obvious shortcoming, is the potential, if not likelihood, that the applicant’s statement will be based upon self-serving assumptions.” (Emphasis supplied.) While Greene County dealt with the requirements of NEPA I cannot believe that the AEC should be held to any lesser standard in its safety licensing procedures. The Commission should not be permitted to abdicate its responsibility for ensuring public safety to a party with a large financial stake in the outcome of the tests it is conducting. One good way to insure it does not do so is to require it to draw up safety standards generally applicable to all teaching reactors, not just to the one in this particular case.

With regard to the necessity for the preparation and filing of an EIS under NEPA, 42 U.S.C. §§ 4321-4347 (1970), the threshold question is whether, or to what extent, the agency’s own determination that a given agency action is not a “major Federal action significantly affecting the quality of the human environment,” 42 U.S.C. § 4332(2) (C), is binding upon us. This court has previously held in Hanly v. Kleindienst, 471 F.2d 823, 829 (2d Cir. 1972), that “the appropriate criterion ... is the ‘arbitrary, capricious’ standard established by the Administrative Procedure Act, since the meaning of the term ‘significantly’ as used in § 102(2) (C) of “NEPA can be isolated as a question of law.” The two relevant factors for consideration, Hanly v. Kleindienst went on to say, 471 F.2d at 830-831, were: “(1) the extent to which the action will cause adverse environmental effects in excess of those created by existing uses in the area affected by it, and (2) the absolute quantitative adverse environmental effects of the action itself, including the cumulative harm that results from its contribution to existing adverse conditions or uses in the affected area.” I do not think that it would be inconsistent with, or stretching, this language to say that the true first test is the extent to which the action has the potential of causing .adverse environmental effects. Cf. Scientists Institute v. AEC, 481 F.2d 1079 (D.C.Cir., 1973) (NEPA requires EIS for AEC’s breeder reactor program even though program is presently only in research and development stage in part because of potential future environmental effects of program). For Hanly articulated a threshold test, and if its questions are answered in the negative then an EIS, through which the full scope of the potential environmental effects of a “major Federal action” are actually brought out, would, not be required. If the potential is substantial then the impact statement must be forthcoming; NEPA speaks of making an initial determination “as to whether the proposal would have a significant effect,” not whether it “does have” such an effect.

By upholding the AEC’s determination that there would not be any such significant potential effect here, the majority apparently adopts the “rational basis” standard of review rejected by the Hanly court. See 471 F.2d at 829. The effect of the majority’s decision is to give the agencies a loophole big enough to make NEPA meaningless, or in Judge Skelly Wright’s words a “paper tiger.” See Calvert Cliffs’ Coordinating Committee, Inc. v. AEC, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1114 (1971). The potential effect of a nuclear accident on the environment of New York City would be pretty substantial, if not catastrophic, and even though the Safety and Licensing Board and the Appeal Board did not accept the petitioners’ postulated accidents, they each considered safety standards that involved hypothetical “accidents.” The fact that the former found there were no generalized standards and that the latter found that under the regulatory staff’s postulated accident situation “the health and safety of the public will not be endangered” do not take away from the proposition that in the event of an accident the damage would be great. The fact that the Appeal Board in its decision did “not consider it desirable to use the standards of 10 CFR Part 20 for evaluating the effects of a postulated accident in a research reactor” even while it “strongly recommend [ed] that specific standards for the evaluation of an accident situation in a research reactor should be formulated” in and of itself indicates to me that there is here involved a sufficient “potential” of environmental effect to •require an impact statement.

Moreover, ten pages of the Appeal Board decision is devoted to answering the testimony of appellant’s expert, a Dr. Sternglass, relative to infant mortality rates in the vicinity of Triga reactors at Penn State College, the University of Illinois and in San Diego where the Gulf-General Atomic Corporation has its plant. It may be that Dr. Sternglass’s determinations do not have any “valid scientific foundation,” as the Appeal Board held. (I suppose that many thought that Rachel Carson’s thoughts and fears expressed in Silent Spring had none either.) But does that mean that there is not a potential environmental effect that at least bears examination through the preparation of an EIS? I should suppose that even though this is a “little” research reactor its potential environmental impact is at least as significant as that of a federal jail, Hanly v. Kleindienst, supra, or the abandonment of a 1.8 mile stretch of railroad, City of New York v. United States, 337 F.Supp. 150, 158-160 (E.D.N.Y.1972) (three-judge court). See generally Developments in Environmental Law, 3 E.L.R. 50001, 50005 (1973). The finding here by the Commission that no impact statement is required in my view was arbitrary and capricious.

Were an impact statement to be required the AEC could not argue that the Appeal Board’s decision amounted to one. This is so because (A) the Board relied quite heavily on data furnished by the manufacturer contrary to the requirements of Greene County Planning Board v. FPC, supra, and because (B) there has not been consultation with other concerned federal agencies such as EPA or HEW, as required by 42 U.S.C. § 4332(C).

Because I think that the AEC did not meet the requirements of its own Act in reversing the Safety and Licensing Board and because I think enough potential environmental effect was demonstrated to require the preparation of an EIS, I dissent.

      . Petitioners’ expert postulated three hypothetical accidents: (1) sabotage, causing the loss of shielding water plus rupturing of one of several fuel elements; (2) any circumstance causing a fuel element to reach 1000° centigrade, followed by a rupture of the fuel elements in air; (3) an aircraft accident.
      Even through sabotage at Columbia University is not exactly an unheard-of-event, there was substantial evidence that the juxtaposition of so many relatively sophisticated operations would apparently be required to make the sabotage effective that the “Mission Impossible” team would be required to effectuate it. There is some evidence to indicate that 1000° centigrade cannot be attained in a Triga. While I cannot agree with the AEC view that it is a one in 10 billion chance that aii airplane would accidentally strike the Columbia Triga, because I don’t think such an event is susceptible to meaningful mathematical computation, there is some evidence, however, that it would take a vertically dropping plane penetrating four feet of earth, two feet of reinforced concrete and a steel beam crane at a specific time when fission product accumulation was high to create a possibility of serious radioactive release.

      . See Developments in Environmental Law, 3 E.L.R. 50001, 50008 (1973):
      . for the most part the agencies which must do the “full good faith” balancing of economic and social costs against environmental costs are generally structured to be advocates for economic expansion. As long as agencies are left to do the balancing, and as long as they have a dual mandate of environmental protection and economic development in their particular field— for example, power growth for the FPC, nuclear development for the AEC, or flood containment for the Army Corps of Engineers — is not the environment bound to come out on the short end?
      (Emphasis original.)


text:
    In the Matter of PITTSBURGH-DUQUESNE DEVELOPMENT CO., a limited partnership. Appeal of PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant.
    No. 72-1768.
    United States Court of Appeals, Third Circuit.
    Argued May 17, 1973.
    Decided June 29, 1973.

      William T. Coleman, Jr., Carl H. Han-zelik, Dilworth, Paxson, Kalish, Levy & Coleman, Philadelphia, Pa., Stanley G. Makoroff, Morris, Safier & Makoroff, Pittsburgh, Pa., for appellant.
    Stanley V. Ostrow, Elliott W. Finkel, Kaplan, Finkel, Lefkowitz, Roth & Os-trow, Pittsburgh, Pa., for trustee.
    Before HASTIE, VAN DUSEN and ROSENN, Circuit Judges.
   HASTIE, Circuit Judge.

This controversy arose in a proceeding under Chapter XII of the Bankruptcy Act, 11 U.S.C. § 801 et seq., instituted by Pittsburgh-Duquesne Development Co., a limited partnership for an arrangement of its real property. This appeal has been taken by Prudential Insurance Co., a mortgagee of an improved parcel of the debtor’s property, from an order of the reorganization court that denied its “Petition for Restitution of Liened Rents”.

The debtor had two parcels of income-producing real property, both in Pennsylvania : “Cricklewood”, a large residential apartment building upon which Prudential held a multi-million dollar first mortgage, and the “Geyer Building”, in which Prudential had no interest. The Cricklewood mortgage provided that in the event of default, all leases and rents would stand assigned to Prudential and that Prudential would have the right to take possession, collect rents and apply them to the mortgage debt, taxes and operational expenses.

On May 29, 1969, with the Prudential mortgage in default, the debtor initiated this proceeding for a Chapter XII real property arrangement. The district court promptly entered an order that prohibited enforcement of any lien upon the debtor’s real property. On August 14, 1969, the court appointed a trustee to conduct the debtor’s business and manage its property. The trustee was expressly authorized “to collect and receive all rents” and “to pay . all debts, obligations, charges and taxes incurred in the operation of the said business and the preservation and maintenance of the said property”.

The trustee collected the Cricklewood rents and out of the fund thus generated paid the current expenses of the Crieklewood operation other than real property taxes. Although the trustee permitted Crieklewood taxes to accrue during his administration and to remain unpaid in the amount of $124,368.05, it has been stipulated that, without receiving the court’s particular approval, he diverted $83,333.48 of Crieklewood rental income to expenses incurred in the operation of the Geyer Building.

Early in 1971, Prudential petitioned the reorganization court to permit it to foreclose its Crieklewood first mortgage. This petition alleged and the trustee admitted that there was no equity in Crieklewood above Prudential’s first mortgage claim of more than $4,600,000. Accordingly, the court granted the petition and on May 3, 1971 Prudential foreclosed. At the sheriff’s foreclosure sale Prudential bid the exact amount of unpaid real property taxes, charges and costs, to which in law its first mortgage was subordinated. This included about $120,000 of real property taxes that had accrued during the trustee’s management of the property. There was no other bid and Prudential became the purchaser. Thus, to protect its security, in which the trustee had admitted there was no equity above the mortgage, Prudential had to pay all overdue real property taxes, including those which had accrued and remained unpaid while the trustee was collecting rents and diverting the proceeds to expenses unrelated to Crickle-wood.

It is the theory of the present “Petition for Restitution of Liened Rents” that the legal effect of the mortgage was to give Prudential a security interest in all rents collected after the mortgagor defaulted; that the rents collected by the trustee were impressed with that security interest; that the reorganization court’s order authorizing the trustee to pay taxes out of rents empowered him to dispose of this security in a manner that would respect this interest; and that, absent any judicial direction that included some provision for substituted security, the trustee could not lawfully make any disposition of the rent that would deprive the mortgagee of the benefit of the security bargained for. Accordingly, Prudential is asking that the reorganization court require the trustee to reimburse Prudential now for the amount it has paid for taxes that the trustee should have paid out of the rents, or that the court impose an equitable lien in favor of Prudential upon the rental income of the Geyer Building.

In our view the above outlined reasoning is sound. Prudential’s duly granted lien upon Crieklewood rents that issued after mortgage default persisted in equity during the Chapter XII reorganization, though at the outset the reorganization court could and did properly restrain it from enforcing that lien pending an effort to achieve an arrangement. Bindseil v. Liberty Trust Co., 3d Cir. 1917, 248 F. 112; Mortgage Loan Co. v. Livingston, 8th Cir. 1930, 45 F.2d 28. From a different approach, taxes that accrue on property while a trustee in bankruptcy or reorganization is utilizing that property in the conduct of a business are an expense of administration and a first priority debt under Section 64(a) of the Bankruptcy Act, 11 U.S.C. § 104(a). In this case the judicial authorization to pay real property taxes as they became due during the period of the trustee’s economic use of Crieklewood comports with a statutory mandate to accord first priority to these obligations. Cf. Northumberland County v. Philadelphia & Reading C. & I. Co., 3d Cir. 1942, 131 F.2d 562. In these circumstances, payment of current Crieklewood taxes out of rental income of that property would have respected both the equitable interest of Prudential in those rents and the prescribed priority of claims in bankruptcy. To divert those rents to the Geyer Building operation was to deprive Prudential of its lawful security without serving any public interest, or for that matter any private interest to which Prudential’s security could equitably be subordinated. The interest of the debtor’s general creditors in whatever benefit might accrue to them from successful operation of the Geyer Building did not justify depriving Prudential of its security interest in Cricklewood rents. Bindseil v. Liberty Trust Co., supra.

Separately, the trustee urges that some concept of laches should be applied to defeat Prudential’s present claim because, during the eighteen month period that elapsed between the beginning of the trustee’s management of Crieklewood and the filing of Prudential’s petition for leave to foreclose, Prudential did not take affirmative action to prevent the diversion of Crieklewood rents to pay Geyer Building expenses. We have pointed out that the court had enjoined all secured creditors from acting to enforce their liens. Moreover, nothing happened during or as a result of the trustee’s diversion of Cricklewood rents that would make the presently requested restitution unfair to any interested party, if the trustee’s action was incorrect. Indeed, only the trustee appears to be complaining that the filing of Prudential’s petition has been unduly delayed. We see no reason to treat this request for restitution differently from a similar petition that might have been filed more promptly. Accord, Associated Co. v. Greenhut, 3d Cir. 1933, 66 F.2d 428.

Finally, the district court deemed its decision warranted by a stipulation that had been filed by Prudential in connection with its petition for leave to foreclose its mortgage. During the course of argument on that petition the court had inquired of counsel for Prudential whether “the foreclosure will also entail a deficiency judgment”. After a brief colloquy counsel replied that “we would not be entitled to a deficiency judgment”. The court then asked counsel to stipulate to that effect. Accordingly, counsel stipulated in writing as follows:

“It is hereby stipulated and agreed by the Prudential Insurance Company of America, Mortgagee of the captioned Debtor, that in event of foreclosure upon its Mortgage, it will not Petition for a Deficiency Judgment, for the collection of its debt against any other property of the Debtor including the leasehold interest of the Debtor in the property known as the Geyer Property, and leased by Debtor from Urban Redevelopment Authority, adjoining the mortgaged property.”

A deficiency judgment is an imposition of • personal liability upon a mortgagor for an unpaid balance of a secured obligation after foreclosure of the mortgage has failed to yield the full amount of the underlying debt. Thus, a proceeding for a deficiency judgment is an attempt to recover something more than and distinct from the security provided by the debtor.

In this ease the basic question is whether the rents that issued from the mortgaged property were in equity part of the agreed security. If they were, as we now hold, the secured creditor’s present effort to recover them, whether directly or through the recognition and enforcement of a lien on the property in which they have been invested, is part of an appropriate effort to vindicate its own right of property. It is not an effort to enforce liability for debt beyond the agreed security, for which an approriate legal remedy would be a deficiency judgment. Accord, Mortgage Guarantee Co. v. Sampsell, 1942, 51 Cal.App.2d 180, 124 P.2d 353. By the same token, in legal contemplation Prudential is not attempting to satisfy its claim out of the debtor’s beneficial interest in the Geyer Building, an undertaking that it stipulated to forego. Rather, it is seeking to follow and retrieve the Crieklewood rents which in equity remained its security and did not become the debtor’s property when they were inapproriately diverted to pay costs of the Geyer Building.

The judgment will be reversed.

      . We find no merit in a motion by the trustee to dismiss this appeal for want of jurisdiction. Section 416 of Chapter XII, 11 U.S.C. § 816, provides generally that “the jurisdiction of appellate courts shall be the same as in a bankruptcy proceeding”. Section 24(a) of the Bankruptcy Act, 11 U.S.C. § 47(a), invests the courts of appeals “with appellate jurisdiction from the several courts of bankruptcy in their respective jurisdictions in proceedings in bankruptcy, either interlocutory or final . . . .” See our discussion in In re Imperial “400” National, Inc., 3d Cir. 1968, 391 F.2d 163, 167-168.


author: BRIGHT, Circuit Judge.

text:
    James E. KLAPMEIER, Jack Dekker, Zaven Dadekian, and Dave Wilbourn, Plaintiffs-Appellees, v. TELECHECK INTERNATIONAL, INC., a Delaware Corporation, Harry M. Flagg, and George L. T. Kerr, Defendants-Appellants.
    No. 72-1219.
    United States Court of Appeals, Eighth Circuit.
    Submitted Feb. 12, 1973.
    Decided June 26, 1973.

      Richard S. Weiner, Los Angeles, Cal., for Telecheck.
    Peter Dorsey, Minneapolis, Minn., for Flagg.
    Richard B. Solum, Minneapolis, Minn., for Kerr.
    S. W. Rider, Jr., Minneapolis, Minn., for plaintiffs-appellees.
    Before MATTHES, Chief Judge, BRIGHT, Circuit Judge, and TALBOT SMITH, Senior District Judge.

       Eastern District of Michigan, sitting by designation.

   BRIGHT, Circuit Judge.

The stockholders of Boatel, Inc. (Boa-tel) agreed to exchange all of the capital stock of their corporation, which was engaged in the manufacture of pontoon boats, houseboats, dairy equipment, and snowmobiles in the community of Mora, Minnesota, for stock of Telecheck, Inc. (Telecheck), a Hawaiian-based corporation. James E. Klapmeier, plaintiff-ap-pellee, the president and principal stockholder of Boatel, for himself and the other Boatel stockholders, negotiated with defendant-appellant, Harry M. Flagg, Klapmeier’s friend and fraternity brother of his earlier college days at MIT. On May 10, 1969, the parties executed an agreement having the effect of merging Boatel into Telecheck. Thereafter, the old school ties proved too fragile to withstand business disagreements. In February of 1970, Telecheck fired Klapmeier, who at that time was the chief executive officer of its Leisure Time division (formerly Boatel). Klap-meier later that year responded with a suit for eight million dollars against Telecheck, Flagg, and other directors of Telecheck, alleging common law fraud and violations of the Federal Securities laws. Other minority stockholders of Boatel, who had been fraternity associates and friends of Klapmeier and Flagg at MIT, joined as plaintiffs. Telecheck counterclaimed, seeking damages in excess of five million dollars for breach of express warranty, for misrepresentations of the value of Boatel’s assets and for common law and securities fraud allegedly committed by Klapmeier and other Boatel stockholders.

Following a three-week trial, a jury awarded appellees $857,632 against Tele-cheek, its president, Flagg, and its secretary-director-lawyer, George L. T. Kerr. The action against the other directors was dismissed by order of the court as to some and by the verdict of the jury as to others. Following unsuccessful post-trial motions for judgment n. o. v. or for a new trial, Telecheck, Flagg, and Kerr prosecute this appeal. After a careful review of a most extensive record, we reject the appeal on all grounds except that we hold the award of damages excessive as not supported by substantial evidence. We reverse and remand for a new trial on damages.

Appellants raise the following issues:

(1) That the damages were excessive.

(2) That the exchange of stock was exempt from registration under the Securities Act of 1933, and that therefore the trial court erred in submitting to the jury the question of Telecheck’s failure to register.

(3) That the trial court erred in permitting oral testimony to be introduced which varied from the provisions of the written agreement of merger.

(4) That the appellant Telecheck sustained prejudice in attempting to recover upon its counterclaim by instructions that required that Telecheck establish elements of common law fraud as a prerequisite to recovery based on violations of the federal securities laws.

(5) That the appellant Teleeheck should be granted a new trial on its counterclaim because the jury returned a verdict which did not indicate any decision on the counterclaim.

Appellant Kerr separately contends (a) that the trial court erred in denying him judgment of dismissal n. o. v. since the jury verdict against him lacked any evidentiary support or (b) that he should have a new trial because of error in instructions relating to the personal liability of a “controlling person” of a corporation.

We consider these issues against the backdrop of relevant facts developed at trial. Boatel, a small company with annual sales under one million dollars, exhibited fair success in its business until 1967, when it experienced heavy financial losses incident to its performance of a contract to construct landing craft for the United States Navy. That year, on sales of 1.9 million dollars (non-Navy sales, 1.4 million dollars; Navy, $500,000) it experienced a loss of $72,000, and in the following nine months of 1968, on combined Navy and non-Navy sales of 2.2 million dollars, Boatel incurred a loss of about $400,000. As a result of these financial difficulties, Boatel’s creditors sought to declare Boatel a bankrupt in the spring of 1968. Boatel, in response to the creditors’ petition, obtained permission from the bankruptcy court to attempt to reorganize under Chapter XI of the Bankruptcy Act, thus holding the creditors’ petition for involuntary bankruptcy in abeyance, while Boatel remained in possession of its assets.

In April of 1968, Flagg wrote Klap-meier a friendly letter offering advice, having learned of these financial difficulties from appellee Dave Wilbourn, á minority stockholder in Boatel. Klap-meier and Flagg exchanged correspondence. The correspondence flowered into visits to Minnesota by Telecheek personnel, a meeting between Klapmeier, Flagg, and others in Minnesota in November of 1968, and another meeting in Honolulu in mid-December of the same year. During these meetings, Klapmeier and Flagg engaged in negotiations looking toward Telecheck’s acquisition of Boatel by merger. Further negotiations took place in Minneapolis, Minnesota, in January of 1969, culminating in the execution of an agreement on January 11, in which Boatel’s stockholders granted Telecheck an option until the summer of 1969 to acquire all of Boatel’s stock. The option provided that Telecheck could acquire all. of the shares of Boatel for a consideration of not less than $1,000,000 worth of Telecheck stock, provided Boa-tel had completed its Chapter XI proceedings by March 7, 1969. The consideration decreased to not less than $600,000 worth of stock if Telecheck exercised its right under the option agreement to terminate the Chapter XI bankruptcy by settling with Boatel’s creditors after March 7,1969.

Boatel’s plan of reorganization submitted to the referee in bankruptcy in the Chapter XI proceeding called for paying general creditors 20 percent of their claims on a deferred basis. In late January of 1969, following the execution of the option agreement, the referee rejected this plan. Boatel’s financial situation then became extremely precarious. Telecheck advanced it $100,000 by way of a loan to enable it to continue its operations. Teleeheck then advanced about $250,000 to the bankruptcy court on March 14, 1969, under an approved plan by which Boatel’s creditors would receive an immediate payment of 20 percent of their claims.

On May 10, 1969, the parties signed an agreement under which Boatel’s stockholders agreed to transfer all 5,200 outstanding shares (about 61 percent owned by Klapmeier and about four percent by other appellees) to Boatel in exchange for a minimum of $1,000,000 worth of Telecheck stock, subject to certain provisions. The agreement provided for immediate delivery of 18,000 shares of Telecheck stock to the Boatel stockholders. This was lettered stock to be held for two years as an investment. The balance of stock called for under the agreement would be delivered in 1971. The total number of shares which Telecheck was obligated to deliver above a guaranteed minimum depended on the future profits of Boatel. If earnings reach certain specified levels in 1969, 1970, and 1971, Boatel’s stockholders would receive additional shares, not to exceed a total of 165,000 shares of Telecheck stock. The agreement also specified that Boatel’s stockholders would receive shares of Telecheck having a fair market value of no less than $1,000,000 in the aggregate, valued at the close of Telecheck’s fiscal year ending May 31, 1971.

Following the close of the 1969 fiscal period, the consolidated statement of Telecheck’s operations showed $50,000 of ordinary profits from the Boatel division, as well as $350,000 in “extraordinary” gains, which gains represented no more than the decrease in Boatel’s liabilities caused by the 20 percent settlement of the claims of Boatel’s creditors.

Telecheck’s assumption of Boatel’s operations proved financially disastrous. It advanced over $285,000, including the $250,000 deposited initially with the bankruptcy court, to extricate Boatel from the Chapter XI bankruptcy proceedings. Following the exercise of the option, it advanced Boatel, as a division of Telecheck, over two million dollars as operating capital. At the end of the fiscal year 1970 (May 31, 1970), the Boatel operations showed earnings losses of nearly $700,000. Telecheek stock, which had been listed on the Honolulu Stock Exchange at a high of $21 per share in March of 1969, sold at nearly $6 at the institution of this suit in May of 1970, and was near $2 during trial. In May of 1971, at the termination of the two-year “lettered” period, Telecheck shares were listed at $5.50-$5.75 per share.

Klapmeier and the other appellees alleged as the basis of their suit that Telecheck made the following statements, which constituted actionable misrepresentations, in order to induce Klapmeier and others to transfer all of Boatel’s shares to Telecheck:

(1) That Telecheck falsely stated that Klapmeier and others of Boatel would be given employment contracts and named to a Telecheck policy committee.

(2) That Teleeheck falsely stated that it possessed the ability to provide management techniques and computer controls to enable Boatel to operate profitably and effectively.

(3) That Telecheck falsely represented its operating subsidiaries as profitable operations, and that it possessed adequate financial resources to enable Boa-tel to become a leading producer of boats and snowmobiles.

(4) That Telecheek misrepresented the profit potential and the financial status of its previously acquired corporation, Pacific Submersibles, Inc. (PSI), an underwater research firm, by using fraudulent accounting techniques which it did not disclose to Klapmeier.

This charge needs some additional explanation. Telecheck had acquired 40 percent of the stock of PSI in mid-1968, along with the voting rights to the other 60 percent. Although Telecheck thus acquired actual control of PSI, it did not include an operating statement of PSI or PSI assets and liabilities in its (Tele-check’s) consolidated balance sheets and operating statements. It declined to do so on the basis that Telecheck actually owned less than a majorityof PSI stock. Telecheck then arranged transfers to it of PSI assets. These assets were carried at low value on PSI’s books, but were transferred to Telecheck at greatly enhanced values. These transfers were shown by bookkeeping entries. No actual cash exchanged hands. In this way Telecheek fictitiously increased its own asset picture. Through intercorporate transactions with PSI, Telecheck also showed a greater profit by making substantial charges against PSI for management fees. The appellees introduced testimony indicating that since Tele-check actually controlled PSI, proper accounting practices dictated that these in-tercorporate transactions be deemed in-tracorporate, and disregarded on Tele-check’s books.

The evidence showed PSI to be an insolvent company. But Telecheck, through its president, Flagg, did not disclose the true financial picture of PSI, but painted PSI as a prosperous subsidiary possessing great profit potential.

Telecheck in turn contended that Klapmeier had overstated Boatel’s net worth and profit capabilities, and that these misrepresentations had led Tele-cheek into an improvident acquisition of Boatel which caused Telecheck to experience a financial disaster.

We now examine the questions on this appeal.

I.

DAMAGES

As has been mentioned, the appellees owned approximately 65 percent of Boa-tel. The court instructed the jury to award damages, if any, to appellees based upon the market value of their Boatel stock as of January 11, 1969, (the date of the option agreement) plus interest at six percent per year, minus what appellees had received from Tele-check.

Appellees introduced testimony from Robert Zicarelli, an expert in the analysis of investments, who valued Boatel at $1,250,000 as of January 11, 1969. However, this evaluation was predicated upon certain assumed factors, such as the accuracy of Boatel’s financial statements and its successful completion of Chapter XI proceedings. But according to Zicarelli’s testimony, his $1,250,000 valuation for Boatel would be reduced by the amount which was necessary to remove Boatel from the Chapter XI proceedings. The evidence showed this figure as $285,553. Based on this evidence, appellees’ damages for their 65 percent interest could amount to no more than $626,890.55. This sum does not take into account any inaccuracy in Boatel’s financial statements, some amount which appears to be conceded by appellees.

Appellees also presented testimony of one Snellen Johnson, who stated he had proposed the formation of a new company for the marketing of recreational equipment such as boats and snowmobiles, with a public sale of shares of stock to finance the undertaking. While the formation of this conglomerate was in its planning stage, he offered Boatel “3 million dollars worth of the stock in our company.” However, this public offering never materialized. Because his statement of value was based on pure speculation, the evidence lacks any probative effect. See, e. g., United States v. Smith, 355 F.2d 807, 811 (5th Cir. 1966); Liflans Corporation v. United States, 390 F.2d 965, 969, 182 Ct.Cl. 825 (1968).

Boatel stock, prior to the bankruptcy proceedings, had sold for $100 per share in a few private sales between Klap-meier or members of his family and Klapmeier’s friends. This valuation would not justify any amount in excess of $338,000.

Fair market value, of course, represents the price at which a willing seller and a willing buyer will trade, both having a reasonable knowledge of the facts. Hamm v. Commissioner of Internal Revenue, 325 F.2d 934, 937 (8th Cir. 1963); Dempsey v. Stauffer, 312 F.2d 360, 365 (3d Cir. 1962); Goldstein v. Commissioner of Internal Revenue, 298 F.2d 562, 567 (9th Cir. 1962). Another criterion of market value is the actual sales price. See Boise National Leasing, Inc. v. United States, 389 F.2d 633, 638 (9th Cir. 1968); Wolff v. Commonwealth of Puerto Rico, 341 F.2d 945, 947 (1st Cir. 1965); Douglas Hotel Co. v. Commissioner of Internal Revenue, 190 F.2d 766, 772 (8th Cir.), cert. denied, 342 U.S. 893, 72 S.Ct. 200, 96 L.Ed. 669 (1951). Here, the actual sales price of Boatel on January 11, 1969, could be measured by the guarantee which was written into the option agreement, totalling not more than one million dollars worth of stock, nor less than $600,000 worth of stock, the final figure dependent upon the results of the Chapter XI proceeding. Measured by the maximum guarantee possible, the appellees, as owners of 65 percent of the stock, would be entitled to no more than $650,000, plus interest, with that figure reduced by the value of about 13,000 shares of Telecheck stock delivered to them on May 10, 1969. At that time Telecheek shares were listed as selling in the $16.75 range. This stock was subject to a two-year holding period, and as lettered stock its value would be reduced from 15 percent to 50 percent, according to testimony proffered by expert witness Zicarelli. At the expiration of this two-year period, when these shares became fully marketable, the Hawaiian Exchange listed their value near $6 per share. This testimony provided a wide range within which the jury could compute the value of these shares received from Telecheck. Based on the actual sales price less credit for part of the price already received, appellees’ damages do not closely approach the jury award of $857,632.

Only the testimony of Klapmeier, as an owner, offering an opinion of three to four million dollars as the value of Boatel, supports the jury’s award. Although Klapmeier, as an owner of the property in question, may properly testify to its value, see United States v. 3698.63 Acres of Land, etc., North Dakota, 416 F.2d 65, 67 (8th Cir. 1969); Berkshire Mutual Insurance Co. v. Moffett, 378 F.2d 1007, 1011 (5th Cir. 1967); see also Righter v. United States, 439 F.2d 1204, 1210, 194 Ct.Cl. 400 (1971), we do not believe his testimony here has sufficient probative force to permit us to sustain the verdict.

In estimating the value of Boatel as of January 11, 1969, Klapmeier assumed that Boatel would successfully emerge from its Chapter XI proceeding by compromising creditors at 20 percent of their claims on a deferred basis. This estimate thus ignored 80 percent of actual creditors’ claims against the company and rested upon circumstances not yet in existence. Moreover, according to Klapmeier’s subsequent testimony, he relied on other business transactions for comparison. Some of these other transactions apparently were corporate mergers, and not ordinary sales. As to others, no attempt was made by appellees to show whether these transactions involved similar businesses which were subject to Chapter XI or other bankruptcy proceeding, as was the case with Boatel. With this background of testimony, we must conclude that Klapmeier’s testimony, since resting at least in part on speculative factors, cannot itself support the award. Cf. 3698.63 Acres, supra, 416 F.2d at 68.

Appellees argue that a Telecheek internal memorandum supports the jury award by showing that Telecheek valued Boatel at between $2,637,000 and $2,475,000. We have reviewed this exhibit and find no-such estimate of market value contained therein, but merely a statement converting the terms of the option agreement into cash value based on an assumed $15 per share value of Telecheck stock, and assuming high or medium profit levels for future operations of Boatel as a subsidiary of Tele-check.

We conclude that no substantial evidence supports the jury award in this case.

II.

REGISTRATION

The parties concede that Telecheck did not register its stock prior to the signing of the agreement between the parties in accordance with the requirement of § 5 of the Securities Act of 1933, 15 U.S.C. § 77e. However, appellants vigorously press the argument that the trial court erred when it declined to rule the transfer of Telecheck stock to be an exempt private offering of securities under § 4(1) of the Securities Act of 1933, 15, U.S.C. § 77d(2). Both sides agree that Securities and Exchange Commission v. Ralston Purina Co., 346 U.S. 119, 73 S.Ct. 981, 97 L.Ed. 1494 (1953), is the controlling authority. In the Ralston Purina case, a corporation sold nearly $2,000,000 worth of its stock to employees without registering the sale. The Court held these transactions to be nonexempt, stating:

Exemption from the registration requirements of the Securities Act is the question. The design of the statute is to protect investors by promoting full disclosure of information thought necessary to informed investment decisions. The natural way to interpret the private offering exemption is in light of the statutory purpose. Since exempt transactions are those as to which “there is no practical need for [the bill’s] application,” the applicability of § 4(1) should turn on whether the particular class of persons affected needs the protection of the Act. An offering to those who are shown to be able to fend for themselves is a transaction “not involving any public offering.” [346 U.S. at 124-125, 73 S.Ct. at 984 (brackets in original; footnote omitted).]

The Court added:

The focus of inquiry should be on the need of the offerees for the protections afforded by registration. The employees here were not shown to have access to the kind of information which registration would disclose. [346 U.S. at 127, 73 S.Ct. at 985.]

We think it doubtful that the registration provisions apply to the instant transaction, for the record undisputedly discloses a stock-for-stock exchange for investment purposes between Telecheck and only seven stockholder-owners of Boatel, who permitted Klapmeier to negotiate the merger agreement. Klap-meier received all published financial statements of Telecheck, plus the opportunity to explore fully the operations of Telecheek and its subsidiaries during his four-day Hawaiian visit in December, 1968. Under these circumstances, we find it most difficult to characterize the offering as one other than nonpublic. See Woodward v. Wright, 266 F.2d 108, 115 (10th Cir. 1959). See generally, 1 L. Loss, Securities Regulations 653-696 (2d Ed. 1961).

A dispute in testimony developed as to whether Klapmeier, on his visit to Hawaii in December, 1968, had reviewed an SEC Form 10, which contained detailed financial information concerning Telecheck’s operations, and which was being prepared for submission to the SEC. This form apparently disclosed the true financial status of PSI and its financial transactions with Telecheck. While the appellees concede that during the Hawaiian visit Klapmeier spent a great deal of time with Telecheck personnel, closely examined the operations of the corporation, and received all the published financial statements of Telecheek, the appellees nevertheless argue that the factual dispute over whether Klapmeier received the Form 10 information makes the question of registration one for the jury. In making this contention, appellees would make the exemption rest on the fact of knowledge by the offeree rather than the offeree’s access to information and his need for protection. Ralston Purina speaks both in terms of the exemption turning “on the knowledge of the offerees,” Ralston Purina, supra 346 U.S. at 126, 73 S.Ct. at 985, as well as “access to the kind of information which registration would disclose.” Id. at 127, 73 S.Ct. at 985. The issue is not free from difficulty.

We need not, however, finally resolve this question here. Appellants argue that if the transfer of Telecheek stock need not have been registered, the jury verdict cannot stand, since the jury may have based its verdict exclusively upon Telecheck’s failure to register. However, the very evidence in this case from which a jury might infer that registration was required to protect the appel-lees, also tends to establish Telecheck’s violation of § 12(2) of the Securities Act of 1933, 15 U.S.C. § 771(2), and SEC Rule 10b-5, 17 C.F.R. 240.10b-5. If the jury found that Telecheck failed to disclose pertinent information concerning PSI, such a finding would not only establish Telecheck’s liability for failure to register its stock, but would also establish Telecheek’s liability for misrepresentation of its financial status. Thus, we see no prejudice to appellants in this case by the submission of the registration issue, and see no need for a new trial.

III.

INSTRUCTION ON COMMON LAW FRAUD

We next examine Telecheek’s contention that it was prejudiced in its counterclaim because the trial court erroneously indicated that scienter and reliance, both elements of common law fraud, also were elements of causes of action under § 12(2) of the Securities Act of 1933, 15 U.S.C. § 771(2), and Rule 10b-5,17 C.F.R. § 240.10b-5.

The court properly instructed the jury on the applicable securities statutes and Rule 10b-5, followed with an instruction on common law fraud, and then interjected the following:

Insofar as I have read to you sections of the Securities Act which are referred to as the Regulation 240.-10b-5, and 771(2) — in general, those same requirements apply. The Securities Act, insofar as those provisions are concerned, irrespective of registration, are to some extent a restatement, or an embodiment of the common law principles of fraud, and I’ve given you the six elements, now, that comprise the fraud, and I’ve stated it to you in different ways. And if you find that either of the parties, either side, or any of the parties have established each of these elements by a preponderance of the evidence, then you should return a verdict for them. If, on the other hand, you find that either party has failed so to establish in any one or more of these six elements, then you must find that there was no fraud.

The effect of this statement, according to appellants’ argument, engrafted the elements of common law fraud, the subject of the above instruction, onto the previous instruction of the court relating to the claims of misrepresentation arising under the securities laws.

However, following the instruction of the jury, the court gave counsel for both sides an opportunity to object. In response, appellants’ counsel requested a modification of the instruction on damages, and also expressed concern over the clarity of the court’s instruction on appellants’ counterclaim. The court thereafter corrected its instructions as to those matters. But the appellants gave the trial court no opportunity to correct the questioned instruction as appellants were bound to do to preserve error under Rule 51, Fed.R. Civ.P., notwithstanding that the trial court denied appellants’ requested instruction covering generally the same subject matter. Fulton v. Chicago, Rock Island and Pacific Railroad Co., 481 F.2d 326 (8th Cir. 1973).

Moreover, here, the court’s comments on this aspect of the case served to bolster appellants’ own defense against the appellees’ claims for violations of the securities laws by engrafting conditions on recovery not encompassed within the relevant statutes. The instruction “cut both ways.” Appellants not having made specific objection, and having received a benefit from this instruction, will not now be heard to complain.

IV.

VERDICT FORMS

The jury returned a verdict form on the appellees’ suit. Although furnished appropriate forms for such a verdict, it failed to return a verdict either for or against the counterclaimant Telecheck. Appellant Teleeheck argues that “[t]he jury instructions given by the trial court confused the jury so much that they were unaware that they were to decide two cases: the plaintiffs’ claim and TCI’s counterclaim.”

The trial judge did not receive the verdict as he was outside Minnesota fulfilling other commitments. He arranged for Circuit Judge Heaney, who resides at Duluth, Minnesota, where this case was tried, to receive the verdict and to reread the instructions if necessary. Judge Heaney polled the jury on receipt of the verdict but did not inquire regarding the counterclaim. Neither counsel for appellants nor counsel for appellees were present to assist the court.

The jury had been given four verdict forms: one for the appellees on their claims, one for the appellants on the ap-pellees’ claims, one favoring the appellants on their counterclaim, and one favoring the appellees on the appellants’ counterclaim. The court advised the jury that:

Forms of verdict have been prepared for your convenience, and I’m going to read them to you, and whichever one is used will — I should say one, or ones, I think — is used will be signed by your foreman, or forelady and dated.

The jury returned only one form, that favoring the appellees.

In an unpublished post-trial memorandum opinion denying appellants a new trial, the district court determined that a reasonable inference could be drawn that the jury’s use of one verdict form constituted an adverse finding against appellants on all other issues. The trial court also ruled that the appellants waived any objection to the form of the verdict which the jury returned (1) by failing to object to instructions relating to the verdict forms, and (2) by failing to be present in the courtroom at the return of the verdict so as to move for resubmission of their counterclaim. We agree with the trial court’s disposition of this issue and we adopt his reasons as stated in his memorandum opinion.

V.

OTHER MATTERS

Liability of appellant Kerr rested upon the “controlling person” provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.

After a careful review of the record, we are satisfied that the status of Kerr as a controlling person raised a question for the jury. The jury could infer that the principal business of Telecheck was that of acquiring other businesses in order to inflate the market price of its stock. Kerr served on the board of directors and executive committee of Telecheck and was its secretary. In addition, he served as secretary of PSI and had participated in its acquisition. He participated in the merger of Teleeheck and Boatel. An acceptable implication from the evidence is that Kerr exercised some influence over the corporate acquisitions of Telecheck. In Myzel v. Fields, 386 F.2d 718 (8th Cir. 1967), cert. denied, 390 U.S. 951, 88 S. Ct. 1043, 19 L.Ed.2d 1143 (1968), in discussing the liability of a controlling person under 15 U.S.C. § 78t, we said:

The statute is remedial and is to be construed liberally. It has been interpreted as requiring only some indirect means of discipline or influence short of actual direction to hold a “controlling person” liable. [Id. at 738.]

On this record we cannot say that as a matter of law Kerr was not shown to be a controlling person of Telecheck. Further, the question of “good faith” properly rested with the jury.

We find no merit to appellants’ claim that the trial court, in violation of the parol evidence rule, permitted Klapmeier to testify to certain promises made to him by Flagg which were in conflict with the terms of the agreement between the parties. Appellees brought this action, not for breach of contract, but for common law and statutory fraud and misrepresentation. Evidence is admissible to establish that a contract was induced by fraud, even when that evidence contradicts the terms of a written contract. See Watkins v. Lorenz, 264 Minn. 471, 119 N.W.2d 482, 488 (1963); Rosenquist v. Baker, 227 Minn. 217, 35 N.W.2d 346, 349 (1948).

Accordingly, while we affirm on the issue of liability, we remand for a new trial on the issue of damages. We allow appellants 25 percent of their costs on appeal.

      . 1964 — profit of $10,000 on sales of $600,000. 1965— loss of $9,000 on sales of $600,000. 1966— profit of $14,000 on sales of $800,000.

      . Klapmeier testified of his understanding that Boatel’s stockholders under the agreement were entitled to a minimum of 120.000 shares and a maximum of 165.000 shares.

      . The crucial question and answer as put to Klapmeier reads as follows:
      Q. As owner of that amount of stock of Boatel, and as president of the company in that time as of January 11, 1969, did you have an opinion as to the fair market value of Boatel, assuming that there’d be an eventual approval of a reorganization plan to eliminate the creditors along the lines pending at that time?
      sj! * * ❖ H:
      Q. My question, was did you have an opinion at that time?
      A. Yes, sir.
      Q. “Would you state what your opinion was?
      A. X felt that the whole company would be worth from three to four million dollars * * *.

      . This section exempts from registration “transactions by an issuer not involving any public offering.”

      . We find the cases cited by appellant to be inappropriate. See, e. g., Albergo v. Reading Company, 372 F.2d 83 (3d Cir. 1966), cert. denied, 386 U.S. 983, 87 S.Ct. 1284, 18 L.Ed.2d 232 (1967); Fatovic v. Nederlandsch-Ameridaansche Stoomvaart, 275 F.2d 188 (2d Cir. 1960); Berg v. Union State Bank, 186 Minn. 529, 243 N.W. 696 (1932); Gamradt v. DuBois, 176 Minn. 312, 223 N.W. 296 (1929). These cases hold that when two causes of action are presented to a jury in the form of a general verdict, and only one cause is supported by the evidence, a new trial must be ordered. This is to insure that the jury properly performs its function as the factfinder. Here, however, the proof of one cause in question, if accepted by the jury, establishes the existence of the alternative claim which was properly submitted to the jury,

      . Section 20 of the 1934 Act reads in part: Every person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom, such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. [15 U.S.C. § 78t(a).]

        See also 15 U.S.C. § 77o.