source: Caselaw Access Project

author: ALFRED T. GOODWIN, Circuit Judge: WALLACE, Circuit Judge

license: Public Domain

text:
    UNITED STATES of America, Appellee, v. James Robert PELTIER, Appellant.
    No. 73-2509.
    United States Court of Appeals, Ninth Circuit.
    May 9, 1974.
    Certiorari Granted Nov. 11, 1974.
    See 95 S.Ct. 302.

      Sandor W. Shapery (appeared), La Jolla, Cal., for appellant.
    Thomas M. Coffin, Asst. U. S. Atty. (appeared), Harry D. Steward, U. S. Atty., San Diego, Cal., for appellee.
    Before CHAMBERS, MERRILL, KOELSCH, BROWNING, DUNIWAY, ELY, HUFSTEDLER, WRIGHT, TRASK, CHOY, GOODWIN, WALLACE and SNEED, Circuit Judges.
   ALFRED T. GOODWIN, Circuit Judge:

James Robert Peltier’s appeal has been taken en banc so the full court can consider whether the rule announced by the Supreme Court in Almeida-Sanchez v. United States, 413 U.S. 266, 93 S.Ct. 2535, 37 L.Ed.2d 596 (1973), rev’g, 452 F.2d 459 (9th Cir. 1971), should be applied to similar cases pending on appeal on the date the Supreme Court’s decision was announced. We hold that it should, reverse Peltier’s conviction, and remand the matter to the district court.

Peltier was convicted of possessing marijuana, with intent to distribute, in violation of 21 U.S.C, § 841(a)(1). The evidence was discovered during a search conducted on February 28, 1973, by border-patrol agents on roving patrol on Highway 395 near Temecula, California.

On June 21, 1973, the Supreme Court, in its opinion reversing this court’s Al-meida-Sanchez opinion, held that border-patrol agents on roving patrol cannot stop and search automobiles pursuant to 8 U.S.C. § 1357(a) and 8 C.F.R. § 287.1 without probable cause or warrant.

The search in question here was of the same type as that condemned in Al-meida-Sanchez. There, the search was conducted 25 miles north of the Mexican border, on a California east-west highway that lies at all points at least 20 miles north of the border. 413 U.S. at 267-268, 273. Here, the search was conducted approximately 70 air miles north of the Mexican border and well to the north of the San Diego metropolitan area. The government concedes that the evidence must be suppressed if the rule announced in Almeida-Sanchez applies to this case.

Until Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965), the Supreme Court traditionally-applied new constitutional criminal-procedure standards retroactively in all cases. 381 U.S. at 628. See generally Had-dad, “Retroactivity Should Be Rethought”: A Call for the End of the Linkletter Doctrine, 60 J.Crim.L., C. & P.S. 417, 425-26 (1969); Mishkin, The High Court, the Great Writ, and the Due Process of Time and Law, 79 Harv. L.Rev. 56, 56-57 (1965). In Linkletter the Court was required to decide whether Mapp v. Ohio, 367 U.S. 643, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961), which overruled Wolf v. Colorado, 338 U.S. 25, 69 S.Ct. 1359, 93 L.Ed. 1782 (1949), should be given retroactive effect. After reviewing the history and theory of the -problem of retroactivity, the Court concluded that the Constitution neither prohibits nor requires that the Court’s decisions be applied retroactively. In each case the Court must determine whether retroactive or prospective application is appropriate. Linkletter v. Walker, 381 U.S. at 629.

In Linkletter’s successors the Court devised a three-point test to determine whether or not to apply a new constitutional doctrine retroactively. The test looked to (a) the purpose to be served by the new standards, (b) the extent of reliance by law-enforcement officials on the old standards, and (c) the effect on the administration of justice of a retroactive application of the new standards. See Stovall v. Denno, 388 U.S. 293, 297, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967).

However, for the doctrine of retroac-tivity to be relevant at all, the Court must have articulated a new doctrine.

“An issue of the ‘retroactivity’ of a decision of this Court is not even presented unless the decision in question marks a sharp break in the web of the law. The issue is presented only when the decision overrules clear past precedent * * * or disrupts a practice long accepted and widely relied upon * * Milton v. Wainwright, 407 U.S. 371, 381-382, n. 2, 92 S.Ct. 2174, 2180, 33 L.Ed.2d 1 (1972) (dissenting opinion of Mr. Justice Stewart) (citations omitted).

See also Gosa v. Mayden, 413 U.S. 665, 672-673, 93 S.Ct. 2926, 37 L.Ed.2d 873 (1973); Michigan v. Payne, 412 U.S. 47, 50-51, 93 S.Ct. 1966, 36 L.Ed.2d 736 (1973); Chevron Oil Co. v. Huson, 404, U.S. 97, 106, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971); Williams v. United States, 401 U.S. 646, 659, 91 S.Ct. 1148, 28 L.Ed.2d 388 (1971).

Linkletter itself fits into the first category — decisions overruling “clear past precedent” — since it involved the retro-activity of Mapp v. Ohio, supra, which overruled Wolf v. Colorado, supra. See also Williams v. United States, supra, involving the retroactivity of Chimel v. California, 395 U.S. 752, 89 S.Ct. 2034, 23 L.Ed.2d 685 (1969), which reversed United States v. Rabinowitz, 339 U.S. 56, 70 S.Ct. 430, 94 L.Ed. 653 (1950), and Harris v. United States, 331 U.S. 145, 67 S.Ct. 1098, 91 L.Ed. 1399 (1947); Fuller v. Alaska, 393 U.S. 80, 89 S.Ct. 61, 21 L.Ed.2d 212 (1968) (per curiam), involving the retroactivity of Lee v. Florida, 392 U.S. 378, 88 S.Ct. 2096, 20 L.Ed.2d 1166 (1968), which overruled Schwartz v. Texas, 344 U.S. 199, 73 S.Ct. 232, 97 L.Ed. 231 (1952); Desist v. United States, 394 U.S. 244, 89 S.Ct. 1030, 22 L.Ed.2d 248 (1969), involving the retroactivity of Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967), which specifically rejected Goldman v. United States, 316 U.S. 129, 62 S.Ct. 993, 86 L.Ed. 1322 (1942), and Olmstead v. United States, 277 U.S. 438, 48 S.Ct. 564, 72 L.Ed. 944 (1928); Tehan v. Shott, 382 U.S. 406, 86 S.Ct. 459, 15 L.Ed.2d 453 (1966), involving the retroactivity of Griffin v. California, 380 U.S. 609, 85 S.Ct. 1229, 14 L.Ed.2d 106 (1965), which overruled Twining v. New Jersey, 211 U.S. 78, 29 S.Ct. 14, 53 L.Ed. 97 (1908).

Representative of cases within the second category — decisions disrupting “a practice long accepted and widely relied upon” — is Johnson v. New Jersey, 384 U.S. 719, 86 S.Ct. 1772, 16 L.Ed.2d 882 (1966), which held that Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), and Escobedo v. Illinois, 378 U.S. 478, 84 S.Ct. 1758, 12 L.Ed.2d 977 (1964), would not apply retroactively. The Court in Johnson observed that prior to Miranda and Escobedo it had expressly declined to condemn an entire process of in-custody interrogation solely because police had failed to warn accused persons of their rights or had failed to grant them access to outside assistance, and that law-enforcement agencies had relied upon the Court’s acquiescence. 384 U.S. at 731. See also Gosa v. Mayden, supra, involving the retroactivity of O’Callahan v. Parker, 395 U.S. 258, 89 S.Ct. 1683, 23 L.Ed.2d 291 (1969); Adams v. Illinois, 405 U.S. 278, 92 S.Ct. 916, 31 L.Ed.2d 202 (1972), involving the retroactivity of Coleman v. Alabama, 399 U.S. 1, 90 S.Ct. 1999, 26 L.Ed.2d 387 (1970); Halliday v. United States, 394 U.S. 831, 89 S.Ct. 1498, 23 L.Ed.2d 16 (1969) (per curiam), involving the retroactivity of McCarthy v. United States, 394 U.S. 459, 89 S.Ct. 1166, 22 L.Ed.2d 418 (1969); Stovall v. Denno, supra, involving the retroactivity of United States v. Wade, 388 U.S. 218, 87 S.Ct. 1926, 18 L.Ed.2d 1149 (1967), and Gilbert v. California, 388 U.S. 263, 87 S.Ct. 1951, 18 L.Ed.2d 1178 (1967).

, Almeida-Sanchez, by contrast, neither overruled past precedent of the Supreme Court nor disrupted long-accepted practice. Mr. Justice Stewart’s opinion for the Court, after reviewing the Court’s automobile-search decisions and its administrative-inspection decisions, concluded that neither line of authority “provide[s] any support for the constitutionality of the stop and search in the present case * * 413 U.S. at 272. Clearly, then, Almeida-Sanchez overruled no earlier Supreme Court precedent; rather, it reaffirmed well-established Fourth Amendment standards dating back to Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652 (1914), and Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1925).

Nor did Almeida-Sanchez disturb a long-accepted and relied-upon practice. Although the government claims that it has relied upon judicial approval of roving searches prior to June 21, 1973, it has cited only one of our opinions, prior to our overruled decision in Almeida-Sanchez, holding that government agents on roving patrol can stop and search automobiles without either probable cause or warrant. United States v. Miranda, 426 F.2d 283 (9th Cir. 1970).

All of our other pre-Almeida-Sanchez decisions upholding roving-patrol searches away from the border involved stops that were predicated upon: (a) probable cause to believe that the automobile stopped was carrying illegal aliens or contraband, see e. g., United States v. Ardle, 435 F.2d 861 (9th Cir. 1970), cert. denied, 402 U.S. 947, 91 S.Ct. 1638, 29 L.Ed.2d 116 (1971); cf. United States v. Kandlis, 432 F.2d 132 (9th Cir. 1970); or (b) a reasonable certainty that any contraband which might be found in or on the vehicle at the time of the search was aboard the vehicle at the time it entered the United States, see, e. g., Alexander v. United States, 362 F.2d 379 (9th Cir.), cert. denied, 385 U.S. 977, 87 S.Ct. 519, 17 L.Ed.2d 439 (1966); or (c) a reasonable certainty that the vehicle searched contained either goods which have just been smuggled or a person who has just crossed the border illegally. See, e. g., United States v. Weil, 432 F.2d 1320, 1323 (9th Cir. 1970), cert. denied, 401 U.S. 947, 91 S.Ct. 933, 28 L.Ed.2d 230 (1971). See generally Note, In Search of the Border: Federal Customs and Immigration Officers, 5 N.Y.U.J. Int’l L. & Politics 93 (1972). Moreover, our line of decisions, and that of the Court of Appeals for the Tenth Circuit (see, e. g., Roa-Rodriguez v. United States, 410 F.2d 1206 (10th Cir. 1969)), permitting roving searches by the border patrol, enjoyed only brief acceptance and failed its first test before the Supreme Court.

The government fares no better in its alternate claim that it was relying not only on prior judicial approval of roving searches but also upon the literal command of Congress and a regulation authorizing such searches. Section 287(a)(3) of the Immigration and Nationality Act, 8 U.S.C. § 1357(a)(3), provides for warrantless searches of automobiles and other conveyances “within a reasonable distance from any external boundary of the United States * * This section, enacted in 1952, revised in a manner not relevant here a statute enacted in 1946. Act of Aug. 7, 1946, ch. 768, 60 Stat. 865. Soon after the 1952 revision, the Attorney General promulgated regulations, one of which defined “reasonable distance” as “within 100 air miles from any external boundary of the United States * * *.” 8 C.F.R. § 287.1(a)(2).

This statute and regulation must, however, be read in light of the Fourth Amendment; and when so understood, they merely delegate authority to be exercised by border-patrol agents in accordance with constitutional limitations. Without the statutory authorization conferred by § 287(a)(3), border-patrol agents would not have legal power to search private vehicles for aliens under any circumstances. Under the statute, they are permitted to conduct certain warrantless searches. But, unless the search qualifies as a border search, the statute should not be read, as this court has read it, to dispense with the requirement of probable cause as well as the requirement of a warrant.

When the Supreme Court reversed us in Almeida-Sanchez, it did not declare the statute unconstitutional; it merely read the Fourth Amendment require-ment of probable cause into the right of border-patrol agents to conduct war-rantless searches which were not the functional equivalents of border searches. Other sections of the same act had earlier been subjected to similar judicial constructions to avoid conflicts with constitutional standards. See United States v. Almeida-Sanchez, 452 F.2d 459, 465-467 (9th Cir. 1971) (dissenting opinion of Browning J.), rev’d, 413 U.S. 266, 93 S.Ct. 2535, 37 L.Ed.2d 596 (1973). Judicial interpretation of a statute and departmental regulation to eliminate conflict with the Fourth Amendment hardly qualifies as the kind of “new” constitutional rule sufficient to deny an appellant the fruits of his appeal.

Peltier is not claiming the benefit of any decision overruling or enlarging “then-applicable constitutional norms,” Williams v. United States, 401 U.S. at 654; rather, he seeks the application of principles enunciated by Chief Justice Taft in 1925 in Carroll and consistently adhered to by the Supreme Court thereafter. This is a case not so much of the retroactivity of Almeida-Sanchez as of the continued vitality of Carroll and its successors. The Supreme Court in Al-meida-Sanchez was not announcing a new legal doctrine, but correcting an aberration. Peltier is entitled to the benefit of the rule announced in Almeida-Sanchez, not because of retroactivity but because of Fourth Amendment principles never deviated from by the Supreme Court.

A Supreme Court decision overruling state or circuit court decisions does not necessarily mark a departure from prior decisions of the Supreme Court. Robinson v. Neil, 409 U.S. 505, 93 S.Ct. 876, 35 L.Ed.2d 29 (1973). The Supreme Court faced the question whether Waller v. Florida, 397 U.S. 387, 90 S.Ct. 1184, 25 L.Ed.2d 435 (1970), which barred du- ' plicate prosecutions when a single act violated both state and municipal laws, was fully retroactive. The Court concluded :

“* * * [T]his Court had not earlier had occasion to squarely pass on the issue. But its decision in Waller cannot be said to have marked a departure from past decisions of this Court. Therefore, while Waller-type cases may involve a form of practical prejudice to the State over and above the refusal to permit the trial which the Constitution bars, the justifiability of the State’s reliance on lower court decisions supporting the dual sovereignty analogy was a good deal more dubious than the justification for reliance which has been given weight in our Linkletter [v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601] line of cases * * *.
“We hold, therefore, that our decision in Waller v. Florida [397 U.S. 387, 90 S.Ct. 1184, 25 L.Ed.2d 435 (1970)], is to be accorded full retroactive effect * * * ” Robinson v. Neil, 409 U.S. at 510-511.

The conclusion which we have reached here may or may not be consistent with the result in the other circuits that have before them the application of Almeida-Sanchez to searches conducted prior to June 21, 1973. The Fifth Circuit recently held that Almeida-Sanchez is not to be given retrospective effect. United States v. Miller, 492 F.2d 37 (5th Cir., 1974). However, its opinion does not mention three other cases in which the circuit applied Almeida-Sanchez retroactively without discussion. See United States v. Speed, 489 F.2d 478 (5th Cir. 1973); United States v. McKim, 487 F.2d 305 (5th Cir. 1973); United States v. Byrd, 483 F.2d 1196 (5th Cir. 1973). The Tenth Circuit also has applied AlmeidaSanchez to pending cases in which the search occurred prior to the decision in Almeida-Sanchez. See United States v. King, 485 F.2d 353, 359 (10th Cir. 1973); United States v. Maddox, 485 F.2d 361, 363 (10th Cir. 1973).

The judgment of conviction is reversed, and the matter remanded to the district court with instructions to suppress the evidence seized in the search of Peltier’s automobile.

Circuit Judges CHAMBERS, MERRILL, BROWNING, DUNIWAY, ELY and HUFSTEDLER concur in this majority opinion.

WALLACE, Circuit Judge

(dissenting) :

I respectfully dissent.

The majority does not attempt to justify retroactivity based upon the tests of Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965), and Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967). Rather it asserts that before the question of retroactivity even becomes relevant, we must decide whether the Court in Almei-da-Sanchez v. United States, 413 U.S. 266, 93 S.Ct. 2535, 37 L.Ed.2d 596 (1973), articulated a “new” constitutional rule. In order to be new, the majority contends, the constitutional rule must overrule “clear past precedent” or disrupt “a practice long accepted and widely relied upon.” This threshold test comes from a footnote in Justice Stewart’s dissent in Milton v. Wainwright, 407 U.S. 371, 381-382 n. 2, 92 S.Ct. 2174, 2180, 33 L.Ed.2d 1 (1972). As we noted in United States v. Bowen, 500 F.2d 960, 975 n. 1 (9th Cir. 1974), it is unclear whether this abridged test should be applied in all cases. But even applying the test adopted by the majority, I disagree that the Almeida-Sanchez pronouncement is not new and, therefore, I believe the Stovall test is relevant.

The majority contends that the appropriate interpretation of the Supreme Court’s holding in Almeida-Sanchez demonstrates that the rule is not new and dictates retroactivity. But the majority, falling into the same error as the majority did in Part I of United States v. Bowen, 500 F.2d 962, 968 (9th Cir. 1974) (Wallace, J. dissenting), fails to distinguish between where a majority of Justices has made a pronouncement and where it has not. Justice White, writing for himself and three other Justices, reviewed decisions of each of the courts of appeals having jurisdiction over districts bordering Mexico and concluded:

[Tjhose courts and judges best positioned to make intelligent and sensible assessments of the requirements of reasonableness in the context of controlling illegal entries into this country have consistently and almost without dissent come to the same conclusion that is embodied in the judgment that is reversed today.

413 U.S. at 298 (footnote omitted). Justice Powell, although concurring in the Opinion of the Court, agreed with Justice White’s conclusion on this point:

Roving automobile searches in border regions for aliens, likewise, have been consistently approved by the judiciary. While the question is one of first impression in this Court, such searches uniformly have been sustained by the courts of appeals whose jurisdictions include those areas of the border between Mexico and the United States where the problem has been most severe.

413 U.S. at 278. The tenor of these statements, representing five of the nine Justices, seems more consistent with the conclusion that Almeida-Sanchez established a new constitutional rule.

I

Even ignoring that a majority of the Supreme Court may well believe that Al-meida-Sanchez constitutes a new rule, the test adopted by the majority, when properly applied, also demonstrates that the rule of Almeida-Sanchez is new. Under the first alternative of the majority’s test, a decision constitutes a new constitutional rule if it overrules “clear past precedent.” It cannot be contended that to meet this alternative, the Supreme Court must reverse one of its prior decisions. On the contrary, as we held in United States v. Bowen, 500 F.2d 960, 976 (9th Cir. 1974): “The test does not require . . . that the Supreme Court reverse itself in order for there to be an overruling of clear past precedent.”

Prior to Almeida-Sanchez, the courts of appeals gave no indication that roving stops and searches were unconstitutional. See, e.g., United States v. Miranda, 426 F.2d 283 (9th Cir. 1970); Roa-Rodriquez v. United States, 410 F.2d 1206 (10th Cir. 1969). See United States v. McDaniel, 463 F.2d 129 (5th Cir. 1972), cert. denied, 413 U.S. 919, 93 S.Ct. 3046, 37 L.Ed.2d 1041 (1973). The majority contends that this stream of judicial pronouncements is a mere aberration. However, these consistent holdings can hardly be said to be a deviation from the law when 35 of 36 judges who have considered the question in the three circuits involved in enforcing the immigration laws along our Mexican border have upheld immigration stops and searches. Almeida-Sanchez v. United States, 413 U.S. at 298-299 n. 10 (White, J., dissenting). Almeida-Sanchez does overrule clear past precedent.

The majority’s treatment of the statute pursuant to which the Border Patrol acted also deserves attention. Since 1952, searches for aliens within a reasonable distance from the border have been authorized by Congress. 8 U.S.C. § 1357(a)(3). Merely stating, as does the majority, that statutes have to be measured by the Constitution only begs the question. As we held in United States v. Bowen, 500 F.2d at 977:

Although it is true that statutes have to be measured by the Constitution, a legally enacted statute becomes the law until it is vitiated by a court decision. Where the constitutionality of the statute has been repeatedly upheld by the lower courts, it becomes a clear precedent for law enforcement action. Prior statutory law should be treated no differently from prior case law.

The identical statute which we held to be clear past precedent in Bowen is involved in this case. There we held that in applying the first alternative of the threshold test, “[p]rior statutory law should be treated no differently from prior case law.” United States v. Bowen, 500 F.2d at 977 I, therefore, fail to see why Almeida-Sanchez does not overrule clear past precedent, both statutory and case law.

II

Under the second alternative of the majority’s test, a decision constitutes a new constitutional rule if it “disrupts a practice long accepted and widely relied upon.” Justice Stewart, in Chevron Oil Co. v. Huson, 404 U.S. 97, 106, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), formulated the second alternative in language that adds an additional dimension. He stated that a decision may constitute a new rule either by overruling past precedent (the first alternative of the majority’s test) “or by deciding an issue of first impression whose resolution was not clearly foreshadowed . . . .” Under the Chevron Oil formulation of the test, Almeida-Sanchez clearly constitutes a new rule. First, the majority concedes that this issue has not previously been presented to the Supreme Court, making it by definition “an issue of first impression” before that Court. Second, the resolution of an issue that would invalidate immigration stops and searches was not foreshadowed. As Justice White stated in Almeida-Sanchez:

.. I cannot but uphold the judgment of Congress that for purposes of enforcing the immigration laws it is reasonable to treat the exterior boundaries of the country as a zone, not a line, and that there are recurring circumstances in which the search of vehicular traffic without warrant and without probable cause may be reasonable under the Fourth Amendment although not carried out at the border itself.
This has also been the considered judgment of the three Courts of Appeals whose daily concern is the enforcement of the immigration laws along the Mexican-Ameriean border, and who, although as sensitive to constitutional commands as we are, perhaps have a better vantage point than we here on the Potomac to judge the practicalities of border-area law enforcement and the reasonableness of official searches of vehicles to enforce the immigration statutes.

413 U.S. at 294-295. Numerous appellate court cases have dealt with this issue and yet, the result prior to Almeida-San-chez was consistently to uphold the stop and search. There simply was no foreshadowing of the Almeida-Sanchez rule.

However, even under the majority’s formulation of the second alternative, Almeida-Sanchez still constitutes a new rule. The majority reaches an opposite conclusion by contending that there is only one prior decision in our circuit squarely upholding the roving patrol search. The majority observes in a footnote that, in cases dating back to 1961, we have approved similar immigration searches (500 F.2d at 978, n. 3), but discounts all of those cases on the basis that any approving language is dicta. The majority, however, fails to explain why this classification should make a difference. The cases, whether or not the language is dicta, are important because they demonstrate a long accepted practice that has been widely relied upon. Apparently four Justices of the Supreme Court did not make such a distinction, for Justice White stated in reference to our circuit:

[Ujnder § 1357(a)(3), automobiles may be stopped without warrant or probable cause and a limited search for aliens carried out in those portions of the conveyance capable of concealing any illegal immigrant. This has been the consistent view of that court.

Almeida-Sanchez, 413 U.S. at 295 (White, J., dissenting) (emphasis added).

Not only has the Border Patrol been following a practice sanctioned by our prior cases, it has also been complying with 8 U.S.C. § 1357(a)(3) in making roving patrol stops. The statute explicitly authorizes immigration officials, within a reasonable distance of the border, to search vehicles without a warrant for illegal aliens. The statute in its present form was adopted in 1952. Since 1963, we have upheld the constitutionality of the statute. Fernandez v. United States, 321 F.2d 283 (9th Cir. 1963). A law enforcement practice, authorized for over a decade, adequately meets the second requirement of the majority’s threshold test.

Ill

If either alternative of the majority’s threshold test is met, Almeida-Sanchez states a new rule. Here, both alternatives are met and, therefore, retroactivity should be judged by the Stovall test. Applying that test and for reasons similar to those stated in Part II of United States v. Bowen, 500 F.2d at 975, I would hold that the retroactivity test would require prospective application in this case. As the Court stated in Linkletter v. Walker, 381 U.S. at 637:

In rejecting the Wolf doctrine as to the exclusionary rule the purpose was to deter the lawless action of the police and to effectively enforce the Fourth Amendment. That purpose will not at this late date be served by the wholesale release of the guilty victims.

Circuit Judges KOELSCH, EUGENE A. WRIGHT, TRASK, CHOY and SNEED concur in this dissenting opinion.

      . We do not have before us the question of the effect of Almeiia-8 anches upon a eon-viction being tested in a collateral attack, and we express no opinion upon that.

      . Mr. Justice Powell, in his concurring opinion, also noted:
      “ * * * [I] join in the opinion of the Court, which sufficiently establishes that none of our Fourth Amendment decisions supports the search conducted in this case * * 413 U.S. at 275.

      . We concede that a number of other opinions do contain some dicta from which the government might infer that this court would uphold a roving-patrol search so long as it was conducted within the 100-mile area defined in 8 C.F.R. § 287.1. See, e. g., Du-prez v. United States, 435 F.2d 1276, 1277 (9th Cir. 1970); Fumagalli v. United States, 429 F.2d 1011, 1013 (9th Cir. 1970); United States v. Elder, 425 F.2d 1002, 1004 (9th Cir. 1970); Barba-Reyes v. United States, 387 F.2d 91 (9th Cir. 1967); Fernandez v. United States, 321 F.2d 283 (9th Cir. 1963); Contreras v. United States, 291 F.2d 63 (9th Cir. 1961). Nonetheless, United States v. Miranda, supra, is the only ease which has been called to our attention in which this court held that a stop and search conducted by immigration agents on roving patrol was proper.

      . The majority’s disclaimer in footnote 1, reserving the question of the application of Almeida-Sanchez to collateral attacks upon prior convictions, does not minimize the potential havoc tl le majority’s ruling could have on the administration of justice. Because of its retroactivity stance, any distinction between a defendant with a case on appeal at the time of the Almeida-Sanchez decision and the countless others whose convictions were final prior to that time would be artificial at best. It appears to me that if the Court in Almeida-Sanchez did not enunciate a new rule, all convictions based upon evidence obtained during a roving patrol search without warrant or probable cause must be reversed,, regardless of whether they are now final or on direct review. This conclusion is supported by the Court’s statement in Stovall v. Denno, 388 U.S. 293, 300, 87 S.Ct. 1967, 1972, 18 L.Ed.2d 1199 (1967):
      We also conclude that, for these purposes, no distinction is justified between convictions now final, as in the instant ease, and convictions at various stages of trial and direct review.
      As Justice White said in Williams v. United States, 401 U.S. 646, 656, 91 S.Ct. 1148, 1154, 28 L.Ed.2d 388 (1971) :
      [I] t should be clear that we find no constitutional difference between the applicability of Ghimel to those prior convictions that are here on direct appeal and those involving collateral proceedings.
      Three other Justices joined in Justice White’s opinion and Justice Marshall’s dissent can be considered to be in harmony with the language quoted to the extent that he would apply the Stovall test in cases that are before the Court on collateral attack.


author: PELL, Circuit Judge.

text:
    George T. HUPP, Plaintiff-Appellant, v. Laurence GRAY, an Individual, and A. G. Becker and Company, a corporation, Defendants-Appellees.
    No. 73-1121.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 11, 1974.
    Decided Aug. 12, 1974.
    Rehearing Denied Sept. 13, 1974.

      Jason E. Bellows, Ronald N. Heftman, Chicago, 111., for plaintiff-appellant.

      James T. Griffin, Chicago, 111., for defendants-appellees.
    Before SWYGERT, Chief Judge, and PELL and STEVENS, Circuit Judges.
   PELL, Circuit Judge.

Plaintiff-appellant George T. Hupp appeals from the district court’s order dismissing plaintiff’s complaint and denying plaintiff leave to file a proposed first amended complaint.

Hupp filed his original complaint in September 1971 seeking damages from Laurence Gray, an individual, and A. G. Becker & Company, Incorporated, a corporate broker-dealer. The complaint had four counts, each of which set forth an alternative theory of recovery. Count I was based on section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78j(b)) and Rule 10b-5 of the Securities Exchange Commission (17 C.F.R. § 240.10b-5). Count II was based on the Illinois common law of fraud. Count III wras based on section 7 of the Securities Exchange Act of 1934 (15 U. S.C. § 78g) and the Rules of the Board of Governors of the Federal Reserve System promulgated thereunder. Count IV was based on the Illinois common law of negligence.

Both defendants moved, pursuant to Rule 12(b), Fed.R.Civ.P., to dismiss the complaint on the theory that the action was barred by the statute of limitations. Hupp’s deposition was submitted by the defendants in support of their motion to dismiss. On the basis of the pleadings and Hupp’s deposition, the district court dismissed Counts I and III as time barred. Counts II and IV, being based upon pendent jurisdiction, were dismissed for lack of federal jurisdiction.

Hupp then sought leave to file a first amended complaint which contained three counts, corresponding to Counts I, II, and IV in his original complaint. The district court denied plaintiff leave to file this proposed first amended complaint on the ground that the federal counts of the proposed complaint would also be barred by the statute of limitations and would, therefore, be subject to a motion to dismiss.

The facts, as disclosed in Hupp’s complaint and deposition, are as follows. From May 1, 1965, to January 10, 1966, Hupp made a number of purchases of shares of stock in the Variable Annuity Life Insurance Company of America (Valic) through the defendant Gray, a stockbroker in the employ of Becker. Gray allegedly induced Hupp to make these purchases by means of misrepresentations and omissions of material facts concerning Valic. These misrepresentations allegedly included statements indieating that Valic had a commanding lead over the major insurance companies in the field of variable annuity life in- . surance and that the Chicago School Board was about to execute a contract with Valic for the purchase of a group policy covering thousands of teachers. The price paid by Hupp for the Valic stock ranged from $24.75 per share to $47 per share. At the time of Hupp’s last purchase of Valic stock in January 1966, when the price was $47 per share, Gray allegedly stated that, in his opinion, Valic stock might go to $75 per share “at an early date.” In the weeks after this purchase, however, the market price of Valic stock began to drop. In March 1967, Hupp sold his shares of Valic through a different broker-dealer for approximately $17.50 per share. Gray made no further representations to Hupp concerning Valic after March 1967. Hupp discovered Gray’s alleged misrepresentations and omissions by accident in August 1970, during a conversation with a fellow employee in which Gray was told that the co-worker’s wife, “a Chicago school teacher, had been solicited to purchase a variable annuity life insurance policy by several large insurance firms, contrary to Gray’s representation that Valic was the only firm marketing a variable policy.”

The sole question on appeal is whether the plaintiff can avoid the bar of the statute of limitations.

The Section 10(b) Claim

In Parrent v. Midwest Rug Mills, Inc., 455 F.2d 123 (7th Cir. 1972), this court held that where an action is brought under § 10(b) of the Securities Exchange Act of 1934 and Illinois is the forum state, the district court should apply the three-year statute of limitations of the Illinois Securities Law (Ill.Rev.Stat. ch. 121%, § 137.13D). In the present case, all of the plaintiff’s dealings in Valic stock ended in 1967 and yet the complaint was not filed until September 1971, over four years later. The plaintiff contends, however, that the doctrine of fraudulent concealment, which he particularly emphasized in the proposed amended complaint, tolled the statute of limitations in this case until Hupp discovered the misrepresentations in August 1970.

This court recognized in Par-rent that the statute of limitations in a § 10(b) action may be tolled by the “equitable doctrine” of fraudulent concealment. In order to invoke this doctrine, however, the plaintiff must have remained ignorant of the fraud “without any fault or want of diligence or care on his part.” Bailey v. Glover, 88 U.S. (21 Wall.) 342, 348, 22 L.Ed. 636 (1874). It is well established that a plaintiff may not merely rely on his own unawareness of the facts or law to toll the statute. Morgan v. Koch, 419 F.2d 993, 997 (7th Cir. 1969); Laundry Equip. Sales Corp. v. Borg-Warner Corp., 334 F.2d 788, 792 (7th Cir. 1964). The plaintiff, rather, has the burden of showing that he “exercised reasonable care and diligence in seeking to learn the facts which would disclose fraud.” Morgan v. Koch, supra 419 F.2d at 997. The statutory period “[does] not await appellant’s leisurely discovery of the full details of the alleged scheme.” Klein v. Bower, 421 F.2d 338, 343 (2d Cir. 1970).

In the present case, Hupp alleged, in his original complaint, that in the exercise of due diligence, he learned of the facts giving rise to this cause of action in August 1970. Yet in neither the complaint, the proposed amended complaint, nor the deposition did the plaintiff indicate by way of fleshing out the allegations of diligence any actual steps which he had taken prior to August 1970 to discover the true facts about Valic. Indeed, the only conclusion is that he remained narcous until August 1970.

The undisputed facts in the plaintiff’s complaint and deposition reveal that Hupp was on notice by March 1967, at the very latest, of the facts from which he should have known of the claimed fraud. When Hupp made his final purchase of Valic stock in January 1966 (at $47 per share), Gray told the plaintiff that the market price might soon rise to $75 per share. Shortly thereafter the price of Valic stock fell and, by March 1967, when Hupp ultimately sold his shares, the price was approximately $17.50 per share. This represented nearly a $30 per share loss for Hupp.

Even a wholly unsophisticated investor should have realized in March 1967 — when the market price had fallen to $17.50 rather than rising to $75 — the existence of facts sufficient to precipitate into his consciousness a geographical paraphrase of the somewhat hackneyed remark of Marcellus to Horatio. The sharp fall in the market price was not a concealed fact but, rather, was clearly and painfully revealed to the plaintiff. “At the very least, these circumstances should have aroused suspicion or curiosity on the part of plaintiff.” Morgan v. Koch, supra 419 F.2d at 998. Hupp, moreover, had an opportunity to investigate the representations made to him concerning Valic. The plaintiff sold his Valic stock through a broker-dealer other than Becker and could easily have inquired, at the time of the sale, as to what had happened to Valic. Yet although Hupp had notice that something was amiss and ample opportunity to investigate, he did nothing.

In his proposed amended complaint, Hupp added the allegations that “plaintiff reposed in defendant Gray special trust and confidence with respect to transactions in securities” and that, due to this trust and confidence, Hupp was “lulled into a sense of security” and “deterred from suspecting that fraud had been perpetrated upon him.” Hupp contends that the existence of a fiduciary relationship could excuse his non-discovery of the fraud and that the proposed complaint was, therefore, not barred by the statute of limitations.

While the existence of a fiduciary relationship is, no doubt, one factor which a court should consider in determining whether a plaintiff has exercised due diligence, a mere allegation that such a relationship existed is alone not necessarily determinative. A court should also consider other factors, including the nature of the fraud alleged, the opportunity to discover the fraud, and the subsequent actions of the defendant. Morgan v. Koch, supra at 997. Here, as indicated above, the fact which would have put a reasonable person on notice of the possibility of fraud, namely, the drastic fall in the market price, was not concealed from Hupp. In addition, Hupp admitted that, after March 1967, Gray made no further representations to him about Valic. Yet in his proposed amended complaint, Hupp again failed to indicate any steps he had taken to find out why Valic stock had failed so dismally to live up to Gray’s representations. Hupp’s conclusory assertion that he had been “lulled into a sense of security” by his fiduciary relationship with Gray is, moreover, not sufficient to invoke the doctrine of fraudulent concealment. Turner v. Lundquist, 377 F.2d 44, 48 (9th Cir. 1967).

Hupp also argues that even though certain facts were undisputed, these facts were susceptible of conflicting inferences and would not support a summary judgment type of dismissal, citing United States v. Diebold, Inc., 369 U.S. 653, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). However, we do not deem the salient facts of the 1967 notice and subsequent inactivity to be either disputed or susceptible of conflicting inferences.

Plaintiff, having failed to take any steps to uncover the fraud — although by March 1967 he knew of facts which would have put a reasonable person on notice — cannot invoke the doctrine of fraudulent concealment for the period subsequent to March 1967. And since Hupp’s failure to exercise due diligence was apparent from the undisputed facts in his complaint and deposition, the district court acted properly in dismissing the complaint and denying leave to file the proposed amended complaint on the ground that both were barred by the three-year statute of limitations.

The Common Law Claims

Hupp’s claims under the Illinois common law were before the district court under the doctrine of pendent jurisdiction. Since the plaintiff’s federal claim is time barred, the district court properly dismissed the pendent state claims. United Mine Workers v. Gibbs, 383 U.S. 715, 725-726, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).

Affirmed.

      . Rule 12(b) provides, in part: “If, on a motion asserting . . . failure of the jjleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56 ... . .”

      . W. Shakespeare, Hamlet, Prince of Denmark, Act I, Scene iv, 90.

      . The present case is thus distinguishable from Dzenitis v. Merrill Lynch, Pierce, Fen-ner & Smith, Inc., 494 F.2d 168 (10th Cir. 1974). In Dzenitis, the alleged fraud was churning, an activity “not easily recognizable to unsophisticated investors.” 494 F.2d at 172.

      . Hupp did speak to Gray on two occasions after March 1967, but Yalic was not discussed at either time.

      . The present situation is distinguishable from those cases in which summary disposition was held to be improper due to the presence of a genuine factual dispute. E. g., Johns Hopkins University v. Hutton, 422 F.2d 1124 (4th Cir. 1970); Azalea Meats, Inc. v. Muscat, 386 F.2d 5 (5th Cir. 1967).

      . In his original compiaint, Hupp alleged that defendants violated the margin trading requirements of § 7 of the Securities Exchange Act of 1934 by arranging certain loans for Hupp. The § 7 claim was not included in plaintiff’s proposed amended complaint. Hupp, moreover, did not argue on appeal that the district court erred in its dismissal of this count. It would appear, therefore, that Hupp has abandoned the § 7 claim. In any ease, having examined the record, we agree with the district court that the § 7 claim is time barred. The loans in question were made in the last three months o£ 1965. Hupp admitted, in his deposition, that he was fully aware, at the end of 1965, of the facts which would give rise to a cause of action for violation of § 7. The doctrine of fraudulent concealment, therefore, is in-aplacable to this claim. The longest statute of limitations cited by Hupp is five years (Ill.Rev.Stat. ch. 83, § 16). The statute of limitations began to run on the § 7 claim in December 1965 and this suit was filed in September 1971, nine months after the period of limitations had expired.


author: SPRECHER, Circuit Judge.

text:
    GENERAL SPLIT CORPORATION, a Wisconsin corporation, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
    No. 73-2002.
    United States Court of Appeals, Seventh Circuit.
    Argued May 31, 1974.
    Decided July 17, 1974.
    George J. Laikin and Joseph I. Swiet-lik, Milwaukee, Wis., for plaintiff-appellant.
    Scott P. Crampton, Asst. Atty. Gen., Libero Martinelli, Jr., Atty., Tax Div., U. S. Department of Justice, Washington, D. C., David J. Cannon, U. S. Atty., Milwaukee, Wis., for defendant-appellee.
    Before PELL, STEVENS and SPRECHER, Circuit Judges.
   SPRECHER, Circuit Judge.

This case presents the question of whether a settlement agreement, effected by, inter alia, the execution of a Form 870-AD equitably estopped the taxpayer from later seeking a refund of deficiencies paid as part of the settlement.

I

Commencing with its organization in 1955, the taxpayer entered into a loan agreement with Kivie Kaplan (Kaplan Loan) providing for a loan of $175,000 to be repaid with interest within ten years. In 1959, taxpayer entered into a loan agreement with the Levine and So-kol family trusts (trust loans) providing . for a $50,000 loan to be repaid with interest within ten years. Taxpayer claimed interest deductions in every year that interest was payable. Upon an audit of taxpayer’s returns for the taxable years of 1962, 1963, and 1964, the interest deductions on the Kaplan loan for those years were disallowed on the grounds that the advances were not true loans but equity capital. Deficiencies were asserted by statutory notice on December 17, 1964, and on March 15, 1965 taxpayer petitioned the United States Tax Court for a redetermination. Subsequent audits for the taxable years of 1964 and 1965 resulted in disallowance of interest deductions with respect to both the Kaplan and trust loans on the same theory as the earlier disallowance. For the entire five year period, 1962 through 1966, deficiencies totalling $255,707.06 were asserted by the IRS.

In October 1966 during the pendency of the Tax Court case, the parties negotiated a settlement of all deficiencies asserted. The agreement was evidenced by the following:

(1) A stipulated Tax Court decision entered November 9, 1966 which effect-ed a 20 percent disallowance of the interest deductions claimed with respect to the Kaplan loan in the taxable years of 1962, 1963 and 1964. This decision became final in February, 1967; 26 U.S.C. §§ 7481, 7483.

(2) The execution of a “Collateral Agreement” dated October 31, 1966. The agreement stated that taxpayer had offered to effect a settlement of tax liabilities with respect to the Kaplan loan for' the 1965 and 1966 years which offer consisted of a 20 percent disallowance of the claimed deductions. The agreement further stated that “as an integral part of the proposal for settlement of its tax liabilities for the taxable years [1965 and 1966] . . . and as additional consideration for the acceptance of said proposal by . the Commissioner of Internal Revenue . . . ” the taxpayer agreed not to claim interest deductions on the Kaplan loan for subsequent taxable years. The agreement was executed by taxpayer on October 31, 1966.

(3) The execution of a Form 870-AD which effected an approximately 20 percent disallowance of the interest deductions claimed with respect to the Kaplan loan and a 100 percent disallowance of the interest deduction claimed on the trust loans. This agreement covered the 1965 and 1966 taxable years. The 870-AD was executed by taxpayer on October 31, 1966 and accepted on behalf of the Commissioner of Internal Revenue by the Chief of the Appellate Branch Office on November 2, 1966.

The taxpayer paid the deficiencies assessed under the settlement by April 24, 1967. On February 11, 1969, taxpayer filed a claim for refund alleging an improper disallowance of interest payments on the trust loans. The claim for refund was disallowed in full on May 19, 1970 and accordingly, on December 30, 1971 this suit was filed in the district court. At the time the refund claim was filed, assessment of deficiencies for all years but 1966 was barred either by the stipulated Tax Court decision or the statute of limitations on assessments (26 U.S.C. §§ 6501, 6072(b)).

The transactions of the parties up to this point can be summarized as follows:

Kaplan Loan Interest Deductions Claimed Total Deficiency Assessed Total Assessment Under Stipulated Decision Total Assessment Under Collateral Agreement and 870-AD
1962 1963 1964 $ 31,107.85 33,302.08 129,960.30 $102,126.86 $22,632.71 (20% dis-allowance) None
1965 1966 239,546.56 ' 9,555.24 , 127,403.74 None [ $32,332.28 (Approx. 20% dis-allowance)
$443,472.03 $229,530.60 $22,632.71 $32,332.28
Trust Loan Interest Deductions Claimed Total Deficiency Asserted Total Assessment Under Stipulated Decision Total Assessment Under 870-AD
1965 1966 $17,110.46 36,828.24 $26,117.46 None $26,177.46
$53,938.70 $26,177.46 $26,177.46

The district court granted summary-judgment for defendant on the theory that taxpayer was estopped from bringing the action because of the settlement agreement on which the government detrimentally relied, citing Lignos v. United States, 439 F.2d 1365 (2d Cir. 1971); General Split Corp. v. United States, 363 F.Supp. 313 (E.D.Wis.1973). We affirm.

II

The 1954 Internal Revenue Code includes two provisions for the administrative settlement of liability for taxes. Under 26 U.S.C. § 7121 the Secretary or his delegate is authorized to enter into a closing agreement regarding the tax liability of any person which, when approved, is final and conclusive. Under 26 U.S.C. § 7122 the Secretary or his delegate is authorized to compromise any civil or criminal tax case where there is doubt as to liability and/or col-lectibility (Treas.Reg. § 301.7122-1). These provisions have not, however, meshed well with the realities attending the settlement of tax controversies.

The unwieldiness of these statutory schemes for the settlement of cases involving our internal revenue laws, the physical impossibility of having the designated officers pass on every proposed agreement, and the many months of indecision between the inception of an offer and ultimate action by the Department have all contributed to the development of an expanding practice in Bureau procedure, the non-statutory settlement.

The agreement with respect to the trust loans was embodied in a Form 870-AD, Offer of Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and of Acceptance of Ov-erassessment, which is an appellate device for effecting a non-statutory settlement. The form recites that the taxpayer, pursuant to 26 U.S.C. § 6213(d), offers to waive the restrictions on assessment and collection provided in 26 U.S. C. § 6213(a) ; that the taxpayer consents to the assessment and collection of the deficiencies specified and accepts the overassessments as correct; that after acceptance by or on behalf of the Commissioner “the ease shall not be reopened in the absence of fraud, malfeasance, concealment or misrepresentation of material fact, an important mistake in mathematical calculation, or an excessive tentative allowance of a net operating loss carryback”; and that “no claim for refund or credit shall be filed or prosecuted for the year(s) above stated .” The form also contains the following disclaimer:

NOTE — The execution and filing of this offer will expedite the adjustment of your tax liability. It is not, however, a final closing agreement under section 7121 . . . nor does it extend the statutory period of limitation for refund, assessment, or collection of the tax.

In Botany Worsted Mills v. United States, 278 U.S. 282, 49 S.Ct. 129, 73 L.Ed. 379 (1929), the Supreme Court resolved the question of whether an agreement which did not comply with the statutory requirements for compromises constituted a binding settlement between the taxpayer and the government.

We think that Congress intended by the statute to prescribe the exclusive method by which tax cases could be compromised .... When a statute limits a thing to be done in a particular mode, it includes the negative of any other mode. Raleigh, etc. R. R. Co. v. Reid, 13 Wall. 269, 270, 20 L.Ed. 570; Scott v. Ford, 52 Or. 288, 296, 97 P. 99.

278 U.S. at 288-289, 49 S.Ct. at 131. Under the Revenue Act of 1916, a compromise was the only settlement procedure provided. See 278 U.S. at 286 n. 5, 49 S.Ct. 129. The compromise provision (similar to the present section 7122) provided, inter alia, that only the Commissioner, with the advice and consent of the Secretary of the Treasury, was authorized to compromise tax suits. Since the Secretary of the Treasury had not assented to the agreement, the Court concluded that “[f]or this reason, if for' no other, the informal agreement made in this case did not constitute a settlement which in itself was binding upon the Government or the Mills.” 278 U.S. at 289, 49 S.Ct. at 132.

In Botany Mills, although not expressly stated, it would appear that the statute of limitations on assessments had run. In the Court of Claims, the government’s theory was that “an agreement was entered into . . . under which plaintiff accepted the partial dis-allowance as to compensation, and also received certain concessions as to other disputed items, the benefit of which it still enjoys, and that, therefore, plaintiff is estopped from recovery in this action.” Botany Worsted Mills v. United States, 63 Ct.Cl. 405 (1927). The Supreme Court without suggesting whether it was considering the running of the government’s right to assess a deficiency stated:

[Wjithout determining whether such an agreement, though not binding in itself, may when executed become, under some circumstances, binding on the parties by estoppel, it suffices to say that here the findings disclose no adequate ground for any claim of es-toppel by the United States.

278 U.S. at 289, 49 S.Ct. at 132.

Since the Supreme Court decided Botany Mills, the courts have been grappling with the question of under what circumstances, if any, a non-statutory agreement can become “binding on the parties by estoppel.” The cases are by no means consistent. Bennett v. United States, 231 F.2d 465 (7th Cir. 1956) involved an executor’s action for a refund of estate tax which was held by the district court to be barred by reason of a settlement agreement. In accordance with the settlement, the executors executed a waiver of restriction against immediate assessment and collection of the deficiency which was accepted by the Head of the Chicago Division Technical Staff. The executors paid the agreed-upon deficiency but after the statute of limitations for assessments had run, the executors filed a claim for a refund of the taxes so paid. This court reversed the district court, which had held the action to be barred.

In Bennett, the waiver of restrictions recited that the waiver was “subject to acceptance by or on behalf of the Commissioner . . . and if not thus accepted will have no force or effect.” The waiver also stated that the taxpayer agreed “upon request of the Commissioner to execute at any time a final closing agreement . . . under the provisions of section 3760 of the Internal Revenue Code.”

Section 3760, Internal Revenue Code of 1939, 53 Stat. 462, provided:

The Commissioner (or any officer or employee of the Bureau of Internal Revenue, including the field service, authorized in writing by the Commissioner) is authorized to enter into an agreement in writing with any person relating to the liability of such person (or of the person or estate for whom he acts) in respect of any internal revenue tax for any taxable period.

The Court in Bennett indicated that the record did not show that the Head of the Technical Staff had been authorized “to close out the matters described” in the waiver of restrictions. The court concluded:

The statutory power to bind the government stems from § 3760. For Exhibit D [the waiver agreement] to effectively foreclose these executors it should have been executed by the Commissioner, or by some officer or employee expressly authorized so to do by the Commissioner, under § 3760. By that provision Congress mandated the specific administrative process by which finality of closing agreements could be achieved. Nothing short of action by the Commissioner will satisfy the exclusive statutory method for vitalizing and formalizing the subject-matter of Exhibit D. Botany Worsted Mills v. United States, 1929, 278 U.S. 282, 49 S.Ct. 129, 73 L.Ed. 379. We think it a conservative assumption to make, that the Internal Revenue Service possessed some faint awareness that the applicable statute of limitations was not tolled. The power and ability to comply with § 3760 lay solely within the organization of the Service, nothing else was needed from these executors.

231 F.2d at 468.

Clearly, the court was concerned with the fact that under the circumstances the government knew or should have known that the waiver as executed was not binding either because the form itself recited that the agreement would have no effect absent acceptance by or on behalf of the Commissioner or because the agreement was not a “formal closing agreement” within section 3760. Thus the government had not relied on the agreement in allowing its rights of assessment to expire. Accordingly, a bar to the suit on an equitable estoppel basis was not appropriate.

In the case before us, the government has contended that the stipulated Tax Court decision, the Collateral Agreement, and Form 870-AD represent a package settlement. The affidavit of the Internal Revenue Appellate Conferee filed in the district court by the defendants bears out this contention. In February, 1967 when the time for appeal had expired, the portion of the settlement effected by the Tax Court decision became final and could not be set aside or reviewed. Lasky v. Commissioner, 235 F.2d 97 (9th Cir. 1956), aff’d per curiam, 352 U.S. 1027, 77 S.Ct. 594, 1 L.Ed.2d 598 (1957). At that point a large part of the consideration furnished by the government for the package deal was beyond its reach. The taxpayer seeks to litigate the question of appropriate taxation of the trust loans even though the government is now able to recoup by setoff at' best only the asserted tax liability for the taxable years of 1965 and 1966.

The taxpayer has not suggested here or in the district court that the government would have agreed to the stipulation in the Tax Court litigation regardless of any settlement agreement for tax years 1965 and 1966. The parties here, unlike in Bennett, were bound at the time the Tax Court decision became final. At that juncture, considering the integrated nature of the settlement, there was no equitable way to undo the portion of the settlement reflected in Form 870-AD. The district court appropriately granted summary judgment for the government.

Affirmed.

      . When the claim for refund was filed, the IRS arguably had three months to assess a deficiency for 1966 even though the claim for refund did not refer to the settlement agreement or state that the taxpayer was repudiating Form 870-AD.

       Amount which Is the subject of the refund suit.

      . Section 7121. Closing agreements
      (a) Authorization. — The Secretary or his delegate is authorized to enter into an agreement in writing with any person relating to the liability of such person (or of the person or estate for whom he acts) in respect of any internal revenue tax for any taxable period.
      (b) Finality. — If such agreement is approved by the Secretary or his delegate (within such time as may be stated in such agreement, or later agreed to) such agreement shall be final and conclusive, and, except upon a showing of fraud or malfeasance, or misrepresentation of a material fact—
      (1) the case shall not be reopened as to the matters agreed upon or the agreement modified by any officer, employee, or agent of the United States, and
      (2) in any suit, action, or proceeding, such agreement, or any determination, assessment, collection, payment, abatement, refund, or credit made in accordance therewith, shall not be annulled, modified, set aside, or disregarded. Aug. 16, 1954, c. 736, 68A Stat. 849.

      . Section 7122. Compromises
      (a) Authorization. — The Secretary or his delegate may compromise any civil or criminal ease arising under the internal revenue laws prior to reference to the Department of Justice for prosecution or defense ; and the Attorney General or his delegates may compromise any such case after reference to the Department of Justice for prosecution or defense.
      (b) Record. — Whenever a compromise is made by the Secretary or his delegate in any case, there shall be placed on file in the office of the Secretary or his delegate the opinion of the General Counsel for the Department of the Treasury or his delegate, with his reasons therefor, with a statement of — ■
      (1) The amount of tax assessed,
      (2) The amount of interest, additional amount, addition to the tax, or assessable penalty, imposed by law on the person against whom the tax is assessed, and
      (3) The amount actually paid in accordance with the terms of the compromise. Notwithstanding the foregoing provisions of this subsection, no such opinion shall be required with respect to the compromise of any civil case in which the unpaid amount of tax assessed (including any interest, additional amount, addition to the tax, or assessable penalty) is less than $500. Aug. 16, 1954, c. 736, 68A Stat. 849.

      . Gutkin, Informal Federal Tax Settlements and Their Binding Effect, 4 Tax L.R. 477, 480 (1949).

      . 26 U.S.C. § 6212 requires the Service to send a written notice of deficiency and under 26 U.S.C. § 6213 the Service is prohibited from assessing or collecting the deficiency for 90 days. During the 90 day period the taxpayer may file a petition for redetermi-nation in the Tax Court. However, 26 U.S. C. § 6213(d) permits the taxpayer to waive his right to written notice. The waiver allows the Service to immediately assess and collect the deficiency and denies the taxpayer the right to petition the Tax Court for a redetermination.

      . Section 14(a) of the Revenue Act of 1916, ch. 463, 39 Stat. 772 provided for a three year statute of limitations on assessments.

      . The minutes of. the board of directors of Botany Mills revealed that the agreement reached “shows a saving to the company between the original amount claimed and what will be the final assessment of $663,507.16.” 63 Ct.Cl. at 414.

      . For a collection of the cases see Uinta Livestock Corp. v. United States, 355 F.2d 761 (10th Cir. 1966). See also 9 Mertens, Law of Federal Income Taxation § 52.07 (1971) ; Gutkin, supra note 4, at 483-89.

      . The Chief of the Appellate Branch Office, the official who executed Form 870-AD in this case, is now authorized by the Commissioner to enter into closing agreements, Delegation Order No. 97 (Rev. 2), 1966-2 Cum.Bull. 1189.

      . Taxpayer’s briefs here and in the district court cite Lignos v. United States, 439 F.2d 1365 (2d Cir. 1971), for the proposition that summary judgment will be denied when material issues of fact are in dispute. The court in Lignos remanded the cause because the affidavits placed in dispute the issue of whether the parties had entered into a package agreement. On this basis, inter alia, we think that taxpayer was sufficiently aware of the importance of determining whether or not the Tax Court stipulation and Form 870-AD agreement were integrally related.


author: PER CURIAM:

text:
    Ramon Servin HUANTE, Plaintiff-Appellee, v. Walter S. CRAVEN, Warden, California State Prison at Folsom, Defendant-Appellant.
    No. 74-1041.
    United States Court of Appeals, Ninth Circuit.
    July 15, 1974.
    Charles R. B. Kirk (argued), Deputy Atty. Gen., San Francisco, Cal., for defendant-appellant.
    Lee Newfield (argued), San Jose, Cal., for plaintiff-appellee.
    Before WRIGHT and CHOY, Circuit Judges, and PALMIERI District Judge.

       Of the Southern District of New York.

   OPINION

PER CURIAM:

The question presented by this appeal is simply this: Does the district court have jurisdiction to entertain a petition for habeas corpus when the petitioner had been released on parole in California on condition that he report to the Immigration Service for deportation and had in fact been delivered to federal officials at the time his petition was filed? We hold that it does not and we remand for dismissal of the petition.

The appeal was taken by the warden of the California state prison at Folsom from an order refusing to dismiss the habeas corpus petition brought under 28 U.S.C. § 2241. We have jurisdiction under 28 U.S.C. § 1292(b).

It is petitioner’s position that he was in the custody of the California authorities when his petition for habeas corpus relief was filed in the district court. Although a Mexican citizen, Huante lived as a permanent resident in the United States from 1957 to 1971. In 1964 he was convicted on two counts of receiving stolen property and was placed on probation. His probation was revoked in 1967 after he was convicted of possession of narcotics and he was ordered to serve both sentences concurrently. Petitioner challenges both convictions in this habeas corpus proceeding.

In 1969, on the basis of the narcotics conviction, he was ordered deported by federal authorities. He was granted a parole in 1970 on condition that he report to the Immigration and Naturalization Service for deportation. This condition he refused to accept, and the offer of parole was later rescinded. On January 19, 1971, Huante was granted another parole on the same condition and this he accepted, the parole to begin on May 10, 1971.

On May 7, 1971 Huante delivered his pro se petition to the prison authorities for mailing to the district court. It was received by the district court on May 13, 1971, and then stamped with a file stamp. It was formally filed in forma pauperis on September 23, 1971, and a show cause order was issued to the defendant. Huante had been delivered to the immigration authorities on May 10 and was deported on May 15, 1971.

The district court found that it had jurisdiction because Huante was on parole in California on May 13. The court concluded that the additional restraints placed on Huante by virtue of his parole status were sufficient to make the California authorities his custodian for purposes of federal habeas corpus.

The state argues that Huante left its custody when he was delivered to the Immigration Service three days before the petition was filed, and therefore the-court has no jurisdiction.

Petitioner argues that he was on parole in California until May 15, and that he remains on parole so far as the California authorities are concerned because of the additional restraints he must suffer should he reenter the United States. He argues that certainly on May 13, 1971 he was on parole in California and was therefore in the custody of the California authorities within the meaning of 28 U.S.C. § 2241.

For the district court to acquire subject matter jurisdiction over a habeas corpus proceeding petitioner must be in custody at the time his petition is filed. 28 U.S.C. §§ 2241(c)(3), 2254(a). The purpose of the custody requirement is to restrict habeas corpus relief to those severe cases where normal remedies are inadequate. Hensley v. Municipal Court, 411 U.S. 345, 93 S.Ct. 1571, 36 L.Ed.2d 294 (1973). Although it is not necessary for the petitioner to be physically present within the district, the court must have jurisdiction of the petitioner’s custodian. Braden v. 30th Judicial Circuit Court of Ky., 410 U.S. 484, 93 S.Ct. 1123, 35 L.Ed.2d 443 (1973).

We agree that Huante was still, theoretically, on parole in California on May 13, 1971. However, after he was delivered to the federal immigration authorities on May 10, the ties between Huante and the California authorities became so attenuated that we must conclude that they were insufficient to support a finding of custodianship.

Petitioner cites several cases which have considerably expanded the concept of custody. They do not reach the situation before us.

In Jones v. Cunningham, 371 U.S. 236, 83 S.Ct. 373, 9 L.Ed.2d 285 (1963), the court found that one on parole is in custody for habeas corpus purposes. There, however, the state parole authorities had not surrendered the petitioner to federal authorities for deportation. In Braden, the court found custody through an agency relationship based specifically on a detainer lodged by Kentucky authorities against a defendant incarcerated in Alabama. 410 U.S. at 489 n.4, 93 S.Ct. 1123. There was no detainer or other condition attached to Huante’s delivery to federal officials. Both the state and Huante had agreed to deportation as a condition of parole.

The issue in Carafas v. LaVallee, 391 U.S. 234, 88 S.Ct. 1556, 20 L.Ed.2d 554 (1968), was whether petitioner’s case had been mooted because he had been released from custody while awaiting appeal. The petitioner was unquestionably in custody at the time his petition was filed.

Finally, in Hensley v. Municipal Court, supra, the court found that a petitioner who had been released on his own recognizance was in custody for ha-beas corpus purposes. He was, however, subject to significant state controls which California would have been unable to exercise over Huante because it had voluntarily released him to the custody of the Immigration Service.

In all of these eases the named custodian clearly had the power to exercise significant control over the petitioner at the time of filing. In Huante’s case, although he was still, theoretically, on parole in California on May 13, 1971, he was not subject to sufficient state control to be in the custody of California authorities. Assuming arguendo that Huante would be permitted to name the proper defendant, we conclude that he was not in the custody of the California authorities when his petition was filed, and therefore the district court has no jurisdiction to entertain these proceedings.

The decision of the district court is reversed, and the case is remanded to the district court with instructions to dismiss the petition.

      . Since petitioner was on parole, the proper defendant would appear not to be the warden of the prison where he was incarcerated before parole was granted. As it would be fruitless to remand in order to name the proper California authority as defendant, we assume arguendo that Huante has named the correct defendant.

      . Huante exhausted his state court remedies in February, 1971.

      . One of petitioner’s arguments was that his petition should be taken as constructively filed on May 7, 1971, because of the delay of the prison authorities in mailing the petition to the district court.
      The defendant argued that the petition should be deemed filed on September 23, 1971, when it was formally filed in forma pauperis and an order to show cause was issued.
      The district court found that the September filing operated nuno pro tuno to validate the May 13th filing. We assume arguendo that the district court’s decision on this point is correct. We find no bad faith on the part of the prison authorities and we reject petitioner’s argument that the petition should be treated as being filed on May 7.

      . We note that petitioner is not arguing, and in fact cannot argue, that he was improperly deported because he was on parole. 8 U.S. C. § 1252(h) expressly permits immigration officials to deport a parolee.


author: J. JOSEPH SMITH, Circuit Judge:

text:
    Ned MILLER and Frances Miller, Plaintiffs-Appellants, v. The UNITED STATES of America, Defendant-Appellee.
    No. 911, Docket 73-2756.
    United States Court of Appeals, Second Circuit.
    Argued May 22, 1974.
    Decided July 11, 1974.
    Leonard Feldman, New York City (Frederick & Goglio, Mineóla, N. Y.), for plaintiffs-appellants.

      Carolyn R Just, Atty., Tax Div., Dept, of Justice (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Bennet N. Hollander, Attys., Tax Div., Dept, of Justice, Washington, D. C., and Robert Morse, U. S. Atty., E.D.N.Y., of counsel), for defendant-appellee.
    Before SMITH and TIMBERS, Circuit Judges, and TYLER, District Judge.

       Of the Southern District of New York, sitting by designation.

   J. JOSEPH SMITH, Circuit Judge:

This is an appeal from an order of the United States District Court for the Eastern District of New York, Mark A. Costantino, Judge, dismissing taxpayers’ refund action on the grounds that the statute of limitations had expired. 365 F.Supp. 383 (1973). Because we agree with the taxpayers that the Commissioner is precluded from pleading the statute of limitations because he inadvertently led them to believe that their filing deadline had been extended, we reverse.

The relevant facts are unusual, but not unique. Taxpayers are husband and wife who elected to pay a contested deficiency of almost $38,000 and then seek a refund from the Commissioner or the courts. Following a timely claim, the Service — according to normal practice— requested that the taxpayers waive a formal notice of disallowance. As the waiver form — known in the trade as Form 2297 — clearly indicates, the effect of such an irrevocable waiver is to commence the- two-year statute of limitations on refund actions. 26 U.S.C. § 6532(a)(3).

Taxpayers apparently executed this form, for the Service’s files contain a létter from taxpayers’ attorneys dated November 7,1966, which states:

In re: Ned and Frances Miller
Claim for Refund — Year 1957
Gentlemen: Enclosed herein please find Form 2297, waiver of statutory notification of claim disallowance, executed by the above named clients.

We must say “apparently” because the Service has since misplaced the form. It is therefore forced to rely on the cover letter and consistent notations in its files to prove that the formal notice was waived.

Based on this circumstantial evidence the district court found that the waiver form had in fact been executed.' While we recognize that the Commissioner has the burden of proving the affirmative defense of the statute of limitations, Fed.R.Civ.P. 8(c), and that here that burden is increased by his failure to produce the waiver form, we cannot say that the district court was “clearly erroneous” in reasoning that the cover letter must have been accompanied by the form. See, Daniel v. United States, 454 F.2d 1166, 1167 (6th Cir.), cert. denied, 409 U.S. 843, 93 S.Ct. 42, 34 L.Ed.2d 82 (1972); United States v. Ross, 368 F.2d 455, 457 (2d Cir. 1966).

Assuming then that the waiver was executed on or before November 7, 1966, the filing deadline for a timely claim would have been November 7, 1968. However the higher echelons in the Service apparently overlooked the cover letter and docket entries — the form presumably having been misplaced — for on May 20, 1968 the Service sent the taxpayers the very disallowance notice they had waived eighteen months before. That notice — which was but a form letter — was faithful to a different subsection of the statute of limitations in advising the taxpayers that they had two years from the date of the notice to file their refund action. 26 U.S.C. § 6532(a)(1).

Thus the unnecessary disallowance notice apparently extended the filing deadline from November 7, 1968 — as calculated according to the waiver form — to May 20, 1970. The taxpayers filed this action on June 20, 1969 — seven months after the original deadline, but eleven months before the new one.

The Commissioner, in arguing that the unnecessary disallowance notice should be disregarded, stresses the general rule that a statute authorizing an action against the government must be strictly construed as a waiver of sovereign immunity. United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941); Minnesota v. United States, 305 U.S. 382, 388, 59 S.Ct. 292, 83 L.Ed. 235 (1939); Hammond-Knowlton v. United States, 121 F.2d 192, 201-202 (2d Cir.), cert. denied, 314 U.S. 694, 62 S.Ct. 410, 86 L.Ed. 555 (1941). But see, Panella v. United States, 216 F.2d 622, 624 n. 3 (2d Cir. 1954) where then Judge Harlan' noted that in the absence of specific congressional intent, the courts have vacillated between strict and liberal constructions of such statutes.

These cases, however, deal with the substantive nature of the authorization, and here there is no doubt that the taxpayers’ refund action is authorized. 26 U.S.C. § 7422. Nor is this case controlled by United States v. Michel, 282 U.S. 656, 658-660, 51 S.Ct. 284, 75 L.Ed. 598 (1931), where the Court held that the statute of limitations on tax actions must similarly be narrowly construed. See also, Gallion v. United States, 389 F.2d 522, 523-524 (5th Cir. 1968) (citing numerous cases involving strict application of the statute); Wallace v. United States, 142 F.2d 240, 242-243 (2d Cir.), cert. denied, 323 U.S. 712, 65 S.Ct. 37, 89 L.Ed. 573 (1944) (reluctantly following this “niggardly rule”). Here the problem is not that there is one ambiguous statute that must be construed, but rather that there are two unambiguous subsections that appear to be equally controlling. That is, if we focus on the fact that the waiver was executed, § 6532(a)(3) clearly requires that the taxpayers’ action be dismissed. But if we focus on the equally undeniable fact that the Commissioner sent the taxpayers a formal disallowance notice, the. more general rule of § 6532(a)(1) applies and their action is timely.

The point, of course, is that these two subsections were intended to be mutually exclusive: And in the normal course of events, they are, as disallowance notices are not issued where a waiver has been excuted. But here — through an oversight in the Commissioner’s office — both events occurred, and hence the problem remains as to which subsection applies.

Both the Commissioner and the court below rely on § 6532(a)(4) and its attendant regulation, § 301.6532-l(d), in arguing that the earlier date should control:

Any consideration, reconsideration, •or other action with respect to a claim after the mailing . . of a notice of disallowance or after the execution of a waiver . . . shall not extend the period for bringing suit.

Again we must disagree. Rather it seems clear that this regulation — in keeping with § 6532 as a whole — merely nullifies any informal reconsideration after a formal disallowance notice or waiver. Here there was no such reconsideration, but rather two equally formal events. Cf. Beardsley v. United States, 126 F.Supp. 775, 776-777 (D.Conn.1954).

Nor do we find any merit in the Commissioner’s reliance on the line of cases holding that a taxpayer cannot extend the statute by filing successive claims. See Stratmore v. United States, 463 F.2d 1195, 1196-1197 (3d Cir. 1972); Einson-Freeman Co. v. Corwin, 112 F.2d 683, 684 (2d Cir.), cert. denied, 311 U.S. 693, 61 S.Ct. 75, 85 L.Ed. 449 (1940); Fajardo Sugar Growers Ass’n v. United States, 161 F.Supp. 912, 916 (S.D.N.Y.1958), aff’d per curiam, 264 F.2d 671 (2d Cir. 1959). Here, of course, it was not the taxpayers’ unilateral filing of a second claim, but rather the Commissioner’s error in sending the unnecessary disallowance notice that arguably extended the critical deadline.

Finally, we are faced with the somewhat more troublesome question of whether in any event such inadvertence can estop the government. Here we are not unmindful of the line of cases — declining in force, but nevertheless still with us — holding that the government is not estopped by an unauthorized act of one of its agents. Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 383-385, 68 S.Ct. 1, 92 L.Ed. 10 (1947); Wilber National Bank v. United States, 294 U.S. 120, 123-124, 55 S.Ct. 362, 79 L.Ed. 798 (1935); Yuma Water Ass’n v. Schlecht, 262 U.S. 138, 144, 43 S.Ct. 498, 67 L.Ed. 909 (1923); Utah Power & Light Co. v. United States, 243 U.S. 389, 408-409, 37 S.Ct. 387, 61 L.Ed. 791 (1917); Posey v. United States, 449 F.2d 228, 233-234 (5th Cir. 1971); Bornstein v. United States, 345 F.2d 558, 562-563, 170 Ct.Cl. 576 (1965); Walsonavich v. United States, 335 F.2d 96, 101 (3d Cir. 1964); Goldstein v. United States, 227 F.2d 1, 4 (8th Cir. 1955); United States v. Globe Indemnity Co., 94 F.2d 576, 578 (2d Cir.), cert. denied, 304 U.S. 575, 58 S.Ct. 1047, 82 L.Ed. 1538 (1938).

But while the issuance of the disallowance notice was obviously erroneous, we cannot say that it was “unauthorized” or even that it was contrary to congressional intent. Rather we believe that the alternative subsections of § 6532 demonstrate a flexible approach. As another court has held in a case where the Service similarly issued a disallowance notice after a waiver had been executed:

A judge must be careful not to hold the government estopped to set up the defense of limitations in situations where there is any suggestion of collusion, or in a way which would either invite collusion, or defeat the purpose of the statute. In this instance, the statute, in paragraph (2) of sec. 6532(a), permits an extension of the 2-year period of limitations by an agreement in writing between the taxpayer and the Secretary or his delegate. Thus there is clear legislative recognition that the 2-year period of limitation is not inflexible. It will do no violence to the spirit of sec. 6532 in its entirety to hold that . the inadvertent action of the Director in sending notices of disallowance which stated that no suit “may be begun after the expiration of two years from the date of mailing this letter”, coupled with the reliance, albeit careless, by taxpayer’s lawyer on that statement, estops the government from successfully asserting that this action must be dismissed because not brought within two years after the filing of the waivers.

Exchange and Savings Bank of Berlin v. United States, 226 F.Supp. 56, 58 (D.Md.1964). See also, Exchange and Savings Bank of Berlin v. United States, 242 F.Supp. 838 (D.Md.1965), rev’d in part, 368 F.2d 334 (4th Cir. 1966).

We would note in this regard that our holding does no violence to the fundamental purpose of any statute of limitations — the barring of stale- claims. Order of Railroad Telegraphers v. Railway Express Agency, 321 U.S. 342, 348-349, 64 S.Ct. 582, 88 L.Ed. 788 (1944). The statutory limit of two years remains the same whichever triggering event is chosen, and the timing of that critical event remains completely within the control of the Commissioner. Indeed it is difficult to see how the Commissioner will be prejudiced by a seven-month “extension” on a claim which he did not disallow until four years after the contested taxes were paid and the initial refund claim was filed. The Commissioner must merely defend one more refund action for a not insubstantial amount.

In sum, given that the relevant statute of limitations is by its very terms rather flexible, that there is no suggestion that anyone in the Service acted in collusion with the taxpayers to defraud the federal fisc, and that the taxpayers’ reliance on the erroneously issued disal-lowance notice was not unreasonable, we conclude that the government is es-topped from raising the earlier deadline as a bar to this action.

We reverse and order that the case be restored to the district court’s docket.

      . 26 U.S.C. § 6532(a)(3) :

        Waiver of notice of disallowance. — If any person files a written waiver of the requirement that he be mailed a notice of disallowance, the 2-year period . . . shall begin on the date such waiver is filed.

      . We might well hold differently if the only evidence of the waiver were the Service’s internal notes, or if the precise terms of the waiver had to be proven. Here, however, the critical evidence is the cover letter from the taxpayers’ attorneys, and there is no suggestion that the Form 2297 therein conveyed was anything other than the standard form which we can judicially notice.

      . 26 U.S.C. § 6532(a) (1) :

        General rule. — No suit or proceeding under section 7422(a) for the recovery of any internal revenue tax, penalty, or other sum, shall be begun . . . after the expiration of 2 years from the date of mailing ... to the taxpayer of a notice of the disallowance of the part of the claim to which the suit or proceeding relates.

      . The cited regulation actually embellishes upon § 6532(a)(4) in one important respect. Where the statute nullified reconsiderations “following the mailing of a notice . . . of disallowance,” the regulation adds “or after the execution of a waiver. . . . ” Taxpayers protest that this addition is improper and that the regulation is therefore inapplicable.
      We cannot agree. In view of the latitude given the Commissioner in developing the regulations which provide the intricate— some would say labyrinthian — detail of our tax laws, Bingler v. Johnson, 394 U.S. 741, 749-751, 89 S.Ct. 1439, 22 L.Ed.2d 695 (1969), we do not think that the extension here was “arbitrary” or “patently inconsistent with congressional intent.” Indeed, we find the addition quite consistent with our holding that Congress intended the execution of a waiver and the issuance of a disallowance notice to be treated as equally significant events.

      . Though the Commissioner candidly admits that he believes Exchange Bank was wrongly decided, he nevertheless gamely attempts to distinguish it on the grounds that there the attorney who prepared and filed the action had not been with the law firm when the waiver was executed, while here the same attorneys were responsible for the case throughout. However this distinction assumes that it is less likely that a new attorney — reviewing a file in preparation of a complaint — will note the inconsistency between the waiver and disallowance forms than that an attorney will remember a routine waiver for almost two years,
      While we doubt that either is very likely, we trust that most in our profession would judge legal competency more by an ability to read than by a photographic memory. Thus while we cannot endorse the rather lax filing system of taxpayers’ attorneys — who apparently also misplaced the waiver form — we cannot say that their reliance on the subsequent disallowance notice was so unreasonable that their clients should be denied their day in court.