author: SNEED, Circuit Judge:

text:
    TWIN CITY SPORTSERVICE, INC., a Missouri Corporation, and SPORT-SERVICE CORPORATION, a New York Corporation, Appellants, v. CHARLES O. FINLEY & COMPANY, INC., an Illinois Corporation, Appellee.
    Nos. 73-1126, 73-1585.
    United States Court of Appeals, Ninth Circuit.
    Feb. 21, 1975.

      John P. Frank, of Lewis & Roca (argued), Phoenix, Ariz., for appellants.
    William G. Myers, of Rothschild, Barry & Myers, Chicago, 111. (argued), for appellee.

       Honorable William P. Gray, United States District Judge, Central District of California, sitting by designation.

   OPINION

Before TRASK and SNEED, Circuit Judges, GRAY, District Judge.

SNEED, Circuit Judge:

This is an appeal from a trial court judgment awarding treble damages, attorney’s fees and costs to appellee-counterclaimant Charles O. Finley & Company, Inc. (Finley) on the ground that a 1950 contract between the then-owner of the Athletics baseball team and a predecessor in interest of appellant Twin City Sportservice, Inc. (Sportservice) violated §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Sportservice initiated the suit against Finley in 1967, alleging breach of contract by the latter, and seeking declaratory, injunctive, and monetary relief. Finley filed a counterclaim, charging antitrust violations, and joined Sportservice Corporation, the parent of Sportservice. Jurisdiction was based, in the contract action, upon 28 U.S.C. § 1332 and, on the antitrust claims, upon 15 U.S.C. §§ 15 and 22.

The dispute which culminated in this litigation finds its origins in a concession franchise contract signed September 25, 1950, the parties to which were Penn Sportservice, Inc. (Penn), a predecessor in interest of Sportservice, and the American League Baseball Club of Philadelphia (the then-owner of the Philadelphia Athletics baseball club), which in turn was owned by Connie Mack. The latter also owned Shibe Park (Connie Mack Stadium) where the Athletics’ home games were played. At the time the contract was negotiated the Athletics had just concluded the baseball season with a losing record and were experiencing financial problems. On August 28, 1950 Mack had arranged to borrow $1,750,000 from the Connecticut General Life Insurance Company and in return gave a first mortgage on the stadium and agreed to assign his share of concession receipts as security.

The 1950 contract with Penn produced an additional source of revenue for the Athletics. By its terms Penn obtained a fifteen-year exclusive concession franchise for all events at Shibe Park, which was to be “unaffected by change of ownership” for whatever reason. For its part, Penn advanced the team the sum of $150,000 and agreed to pay them 29% of its gross concession receipts and 35% of its advertising receipts, guaranteeing certain minimum payments. Penn also purchased the existing concession equipment at the stadium for $100,000, subject to an obligation on the part of the team to repurchase it for a like sum under certain conditions, and agreed to loan the Athletics an additional $100,000 in the future.

The contract was amended on July 1, 1952 to terminate any obligation of the team to repay the $100,000 equipment purchase price and in return the franchise was extended by ten years. In 1953, in order to secure a loan from Penn, the Athletics confirmed by letter that if the team should move, the concessionaire would “follow the franchise,” i. e., the Sportservice franchise would continue both at Shibe Park and at any new location of the club.

The Athletics changed hands in 1954 and when Arnold Johnson, the new owner, moved the team to Kansas City shortly thereafter, Penn’s concession franchise right travelled with it under the follow-the-franchise provision. Johnson also decided to sell Shibe Park to the Phillies ball club and in order to facilitate the transaction, arranged to reduce the remaining term of the Penn franchise at the stadium by eight years and in turn, to extend the duration of the concession agreement with the Athletics by the same period. At that time Penn assigned its franchise right under the contract — which now ran for 33 years— to Sportservice and the latter undertook the concessions operations in Kansas City.

In 1961 Charles O. Finley & Company acquired ownership of the Kansas City Athletics, and Sportservice continued its concessions operations through the end of the 1967 baseball season, when Finley moved the team to Oakland, California. Sportservice, on the basis of the follow-the-franchise provision, insisted that its concession franchise was not terminated by the move; Finley, however, countered that it was not bound by the 1950 agreement. In 1968 another concessionaire, Volume Service Company, commen.ced operations at the Athletics’ home games pursuant to a 1966 contract with Coliseum, Inc., the Oakland stadium authorities.

Sportservice filed suit, claiming that Finley is bound by the 1950 contract. Finley denied this and argued that the terms of the contract violated §§ 1 and 2 of the Sherman Act. The case was bifurcated into contract and antitrust segments and trial on the latter claim awaited resolution of the former. At the conclusion of trial on the contract issue the court found that “there was an understanding that the concession contract would follow the franchise prior to Finley’s purchase of the Athletics or, in any event, that Finley had ratified such an understanding and was now estopped from denying it.” Twin City Sportservice, Inc. v. Charles O. Finley & Co., Inc., 365 F.Supp. 235, 238 (N.D.Cal.1972). Thus Finley would be bound by the 1950 contract and liable to Sportservice for damages for breach unless it prevailed on the antitrust counterclaim in the subsequent trial. There, the court found that the counterdefendants had violated §§ 1 and 2 of the Sherman Act and that Finley had been proximately injured thereby in the amount of $282,168, to be trebled. This appeal followed. We reverse and remand for further proceedings.

We shall first discuss whether Finley’s antitrust claims are barred by limitations. Next we shall discuss the trial court’s holdings that Sportservice properly was guilty of actual monopolization and restraint of trade pursuant to Sections 2 and 1, respectively, of the Sherman Act. Thereafter we shall consider the trial court’s conclusion, which it considered unnecessary to its judgment, that Sportservice engaged in a tying arrangement constituting a per se violation of § 1 of the Sherman Act. To conclude this opinion, we shall consider the trial court’s holding that Sportservice, contrary to § 2 of the Sherman Act, attempted to monopolize. Throughout this opinion, for convenience, all actions taken by Sportserviee’s predecessor in interest, Penn, are attributed to Sportservice.

I.

Limitations

[L 2] Certain defenses to Finley’s counterclaim were raised in the Sportservice brief that were not pressed upon the trial court. In view of our disposition of this ease we feel it necessary to deal only with the assertion by Sportservice that Finley’s treble damage action is barred under 15 U.S.C. § 15b, which provides that such actions are “forever barred unless commenced within four years after the cause of action accrued.” A civil cause of action under the Sherman Act arises at each time the plaintiff’s interest is invaded to his damage, and the statute of limitations begins to run at that time. Suckow Borax Mines Consol., Inc. v. Borax Consol., Ltd., 185 F.2d 196, 208 (9th Cir. 1950), cert. denied 340 U.S. 943, 71 S.Ct. 506, 95 L.Ed. 680 (1951). Sportservice argues that Finley’s suit is barred because it was not filed within four years of the last allegedly damaging act, the amendment or extension of the contract to its complete 33-year duration in 1954. This argument overlooks the necessarily continuing nature of the alleged harm. As the Supreme Court stated in Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 502 n. 15, 88 S.Ct. 2224, 2236, 20 L.Ed.2d 1231 (1968),

“We are not dealing with a violation which, if it occurs at all, must occur within some specific and limited time span. [Citation omitted.] Rather, we are dealing with conduct which constituted a continuing violation of the Sherman Act and which inflicted continuing and accumulating harm . . ”

Thus the fact that the final amendment to the contract was made in 1954 does not preclude Finley from bringing suit in 1968. To hold otherwise is to say that some damage that might have been sustained was barred before it accrued. Highland Supply Corp. v. Reynolds Metals Co., 327 F.2d 725, 732 (8th Cir. 1964).

II.

Actual Monopolization

'There are two prerequisites to a showing of actual monopolization under § 2 of the Sherman Act, “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1704, 16 L.Ed.2d 778 (1966); Case-Swayne Co. v. Sunkist Growers, Inc., 369 F.2d 449, 458 (9th Cir. 1966), rev’d on other grounds, 389 U.S. 384, 88 S.Ct. 528, 19 L.Ed.2d 621 (1967). If the first element is absent the analysis need proceed no further.

Monopoly power is the power to control prices or exclude competition. United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 391, 76 S.Ct. 994, 100 L.Ed. 1264 (1956); Lessig v. Tidewater Oil Co., 327 F.2d 459, 474 (9th Cir.), cert. denied 377 U.S. 993, 84 S.Ct. 1920, 12 L.Ed.2d 1046 (1964). Since “size is of course an earmark of monopoly power,” United States v. Griffith, 334 U.S. 100, 107 n. 10, 68 S.Ct. 941, 946, 92 L.Ed. 1236 (1948), the existence of such power ordinarily may be inferred from the predominant share of the market. United States v. Grinnell Corp., supra, 384 U.S. at 571, 86 S.Ct. 1698; Jack Winter, Inc. v. Koratron Co., Inc., 375 F.Supp. 1, 68 (N.D.Cal.1974).

Therefore, to determine whether a party has monopoly power it is essential first to define the “relevant market.” Case-Swayne Co., supra, 369 F.2d at 454. Clearly, a determination of the relevant market is a necessary predicate to finding a violation of § 7 of the Clayton Act because the threatened monopoly must be one which will substantially lessen competition “within the area of effective competition.” Brown Shoe Co. v. United States, 370 U.S. 294, 324, 82 S.Ct. 1502, 1523, 8 L.Ed.2d 510 (1962); United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 593, 77 S.Ct. 872, 1 L.Ed.2d 1057 (1957). The area of effective competition is defined in terms of a product market and a geographic market. Brown Shoe, supra, 370 U.S. at 324, 82 S.Ct. at 1502; Crown Zellerbach Corp. v. F. T. C., 296 F.2d 800, 804 (9th Cir. 1961), cert. denied 370 U.S. 937, 82 S.Ct. 1581, 8 L.Ed.2d 807 (1962). The same inquiries regarding the relevant market must, therefore, be undertaken in actions charging violation of § 2 of the Sherman Act since there is “no reason to differentiate between ‘line’ of commerce in the context of the Clayton Act and ‘part’ of commerce for purposes of the Sherman Act.” United States v. Grinnell Corp., supra, 384 U.S. at 573, 86 S.Ct. at 1705; Case-Swayne Co., supra, 369 F.2d at 454.

In the present case, the lower court held, and it was not disputed on appeal, that the relevant geographic market is a national one. Controversy arises, however, in connection with the definition of the relevant product market. The Supreme Court has recognized that “[t]he ‘market,’ as most concepts in law or economies, cannot be measured by metes and bounds . . . . For every product, substitutes exist. But a relevant market cannot meaningfully encompass that infinite range.” Times Picayune Publishing Co. v. United States, 345 U.S. 594, 611, 612 n. 31, 73 S.Ct. 872, 881, 882, 97 L.Ed. 1277 (1953). Nor, however, is it proper to read the Sherman Act “to require that products be fungible to be considered in the relevant market.” United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 394, 76 S.Ct. 994, 1006, 100 L.Ed. 1264 (1956). Therefore, “[i]n defining the product market between these terminal extremes, we must recognize meaningful competition where it is found to exist.” United States v. Continental Can Co., 378 U.S. 441, 449, 84 S.Ct. 1738, 1743, 12 L.Ed.2d 953 (1964).

The proper point of departure in any discussion of the relevant product market must be the rule of “reasonable interchangeability,” enunciated in United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 395, 76 S.Ct. 994, 1007, 100 L.Ed. 1264 (1956). According to the Court,

In considering what is the relevant market for determining the control of price and competition, no more definite rule can be declared than that commodities reasonably interchangeable by consumers for the same purposes make up that “part of trade or commerce”, monopolization of which may be illegal.

That is, where there is a high degree of substitutability in the use of two commodities, it may be said that the cross-elasticity of demand between them is relatively high, and therefore the two should be considered in the same market.

A like analysis applies when the market is viewed from the production rather than the consumption standpoint; the degree of substitutability in production is measured by cross-elasticity of supply. Substitutability in production refers to the ability of firms in a given line of commerce to turn their productive facilities toward the production of commodities in another line because of similarities in technology between them. Where the degree of substitutability in production is high, cross-elasticities of supply will also be high, and again the two commodities in question should be treated as part of the same market. While the majority of the decided cases in which the rule of reasonable interchangeability is employed deal with the “use” side of the market, the courts have not been unaware of the importance of substitutability on the “production” side as well. Brown Shoe Co. v. United States, 370 U.S. 294, 325 n. 42, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962); United States v. Columbia Steel Co., 334 U.S. 495, 510-11, 68 S.Ct. 1107, 92 L.Ed. 1533 (1948).

With these principles in mind, we turn to the district court’s definition of the relevant market. Its definition is founded on the premise that the concessionaire is the seller of concession services and that the purchaser of these services is the baseball team or stadium owner. From this premise it derived the conclusion that the sale of concession services to major league baseball was the relevant market. In reaching this conclusion it relied heavily upon its characterization of major league concession contracts as uniquely desirable contracts from the standpoint of a concessionaire. The district court observed, “There is no evidence of any willingness of a concessionaire to trade a major league baseball concession for any other or for a cluster of others; nor is there evidence of a club owner trading his share for a non-baseball concession share.” Twin City Sport-service, supra, 365 F.Supp. at 245. In addition, the trial court found that the per team annual spectator attendance is larger for major league baseball than for any other sport and that it enjoys the highest per capita concession revenues and produces the highest total concession revenues and profits of all sports. Id. at 242. We cannot accept this definition of the relevant market.

We begin by pointing out that a concessionaire sells hot dogs, beer, and other concession items to spectators at various types of events. The market in which the concessionaire sells is the concession products market. Payment for these products is made by the spectators to the concessionaire. The authority to enter the concession products market in a particular place, manner, and time is obtained by the concessionaire from the ball team or stadium owner. This authority constitutes a franchise. In exchange for obtaining a franchise the concessionaire undertakes to make certain payments to the grantor of the franchise, at least a portion of which payments generally are determined by reference to the gross receipts of the concessionaire.

These facts lead us to conclude that the trial court erred in treating Sportservice as a seller of concession services to major league baseball teams. Such services are sold to spectators who directly and immediately pay therefor — not to the major league baseball teams. The relationship between the major league baseball team or stadium owner and the concessionaire is one in which a franchise is sold by the ball team or stadium owner to the purchasing concessionaire. The market in which the franchise is sold is the franchise market — a market quite distinct from the concession products market. It follows that the relevant market with which we are concerned here is one in which the articles of commerce are franchises, not concession services. Ample testimony to support this conclusion of law was offered in the proceedings below.

We must hold, therefore, that the district court erred in its designation of the relevant market. We do not believe, however, that the present record permits us to fix the relevant franchise market. At trial, Sportservice argued that the relevant market should be defined in terms of “the exchange of concession franchises, for the sale of a limited menu of concession items, to spectators in a closed area, either by vendors, by stands or both, where the preparation requires at most a grill and not a kitchen.” So defined the market would encompass franchises at 1,250 arena-auditoriums, 850 stadiums, 623 horse racing tracks, and 35 dog racing tracks. Sportservice on appeal appears to have narrowed its definition to include only major sports stadiums and arenas. In view of the fact that the district court erroneously focused its attention on the sale of concession services, the present record does not enable us to determine the precise outlines of the relevant franchise market. We must, therefore, remand this case to the district court to determine the scope of the relevant franchise market.

In determining the proper relevant franchise market the district court should be guided by the following observations. We have already indicated that a concessionaire is a buyer in the franchise market and a seller in the concession products market. The willingness of a concessionaire to bid for a concession franchise depends upon his ability to move from selling concession items to spectators at one type of event or facility to those at the event or facility for which the franchise is offered. Only when his resources easily can be devoted to the concession products market for which the franchise is offered can the concessionaire make effective use of the franchise. Put in the technical terms of antitrust law, the cross-elasticity of supply in the concession products market limits the cross-elasticity of demand in the franchise market.

The evidence before the trial court strongly suggests that there is a high degree of “substitutability in production.” That is, the evidence was sufficient to support a finding that many aspects of the concession operations at the various facilities presenting leisure time events other than major league baseball are the same or similar enough to each other and to those existing at major league baseball parks to be considered substitutable or transferable. Moreover, some concessionaires utilize the same employees, stands and equipment to sell concession items at different events in a given facility and, at the higher managerial level, also employ the same purchasing agents and supervisorial personnel. There exists evidence of inter-facility transferability as well. Stadium and ball club owners testified that in choosing a concessionaire, previous baseball experience is not a sine qua non for selection. It is only necessary that the prospective concessionaire have engaged in a concession operation of a comparable magnitude so as to demonstrate an ability to perform satisfactorily.

It follows that the relevant franchise market cannot be limited to those offered for sale by major league baseball teams. The mere fact that, as the trial court found, major league baseball, because of its long season, frequency of games, and pace of play, produces the highest total concession revenues and profits of all sports does not alter this conclusion. The major league baseball team concession is a coveted franchise for this reason and, as a consequence, commands a high price on the franchise market. There are, however, other leisure time activities that offer for sale other concession franchises for which there are bids by concessionaires capable of serving both that for which they bid as well as major league baseball.

The authorities involving “submarkets” cited by the trial court to support its conclusion of law that the sale of concession services to major league baseball teams constituted the relevant “sub-market” or “part” of commerce included International Boxing Club v. United States, 358 U.S. 242, 79 S.Ct. 245, 3 L.Ed.2d 270 (1959) (promotion of championship boxing contests); United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 77 S.Ct. 872, 1 L.Ed.2d 1057 (1957) (automobile finishes and fabrics); United States v. Columbia Steel Co., 334 U.S. 495, 68 S.Ct. 1107, 92 L.Ed. 1533 (1948) (rolled steel); United States v. Paramount Pictures, 334 U.S. 131, 68 S. Ct. 915, 92 L.Ed. 1260 (1948) (first run movies); Fashion Originators Guild v. F. T. C., 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949 (1941) (original design dresses). These cases are inapposite. Each involved the issue whether a seller of a unique property in the relevant sub-market had violated the antitrust laws. Were the issue before us whether major league baseball, in whole or in part, constituted an illegal monopoly, these cases would be in point. The focus of our attention is different, however. It is upon the buyer of concession franchises from major league baseball teams as well as other vendors who offer other sporting events or who operate stadia and arenas. To determine the relevant market in which this buyer operates we must, as already indicated, examine the cross-elasticity of supply in the concession products market.

Moreover, the scope of the relevant market is not governed by the presence of a price differential between competing products. In du Pont, for example, the Supreme Court included cellophane in the flexible wrapping market, along with glassine and grease-proof papers, its chief competitors, despite the fact that its cost was two or three times as great. 351 U.S. at 401, 76 S.Ct. at 994.

The relevant franchise market, however, does not embrace franchises offered in connection with leisure time activities that require the maintenance of a full kitchen. The requisite substitutability in production is lacking in this instance. The franchise market with which the trial court should be concerned on remand of this case is that which envisions the sale by the concessionaire of a limited range of concession items to spectators in a closed area, either by vendors, stands, or both, where the preparation requires at most a grill and not a kitchen. The leisure time activities with respect to which franchises within the relevant market are available are undoubtedly numerous. They may include all or a substantial number of the following: viz., football, basketball, hockey, soccer, boxing, racing, track and field, rodeos, circuses, and music festivals. Likewise the sellers of such franchises may include professional teams, sports organizations, and public and private operators of stadiums, arenas, race tracks, convention centers and amusement parks.

We conclude these guides to the trial court by observing that in establishing the relevant franchise market the trial court (1) should apply the test of reasonable interchangeability and (2) should treat the leisure time activity or facility manager as the seller of the franchise and the concessionaire as the purchaser.

Our decision to remand this case makes it unnecessary to determine whether a 50% share of a major league baseball concession market amounts to a sufficient showing of monopoly power. We do, however, wish to remind the trial court when considering this case on remand of Judge Learned Hand’s famous dictum that while 90% of the market “is enough to constitute a monopoly; it is doubtful whether sixty or sixty-four per cent would be enough; and certainly thirty-three per cent is not.” United States v. Aluminum Co. of America, 148 F.2d 416, 424 (2d Cir. 1945). It also should be recalled that on several occasions courts have considered a 50% share of the market as inadequate to establish a proscribed monopoly. See Continental Baking Co. v. Old Homestead Bread Co., 476 F.2d 97, 104 (10th Cir.), cert. denied, 414 U.S. 975, 94 S.Ct. 290, 38 L.Ed.2d 218 (1973); Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203, 207 (5th Cir. 1969); Jack Winter, Inc. v. Koratron Co., Inc., 375 F.Supp. 1, 68 (N.D.Cal.1974); United States v. United Shoe Machinery Corp., 110 F.Supp. 295, 346 (D.Mass.1953), aff’d per curiam, 347 U.S. 521, 74 S.Ct. 699, 98 L.Ed. 910 (1954).

III.

Restraint of Trade

Our reversal and remand to determine the relevant franchise market also requires that we reverse and remand the trial court’s finding that the 1950’s contract between Sportservice and the Athletics was “unreasonably long in its original form and highly anti-competitive upon the addition of the ten and eight-year provisions . . . ” Twin City Sportservice, supra, 365 F.Supp. at 253. This is required because it is necessary to establish the proper relevant market before it can be determined whether a particular exclusive-dealing arrangement unreasonably restrained competition in a substantial share of that market. This determination is necessary by reason of the application of the teaching of Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 81 S.Ct. 623, 5 L.Ed.2d 580 (1961), a § 3 of the Clayton Act case, to § 1 of the Sherman Act.

The test announced in Tampa Electric is as follows: “In practical application, even though a contract is found to be an exclusive-dealing arrangement, it does not violate the section [§ 3, Clayton Act] unless the court believes it probable that performance of the contract will foreclose competition in a substantial share of the line of commerce affected.” Id. at 327, 81 S.Ct. at 628. These parties appear to agree that this test provides an appropriate guide. To apply this test it is necessary to determine (1) the line of commerce affected, (2) “the area of effective competition” in this line of commerce, and (3) whether the competition foreclosed constitutes a substantial share of that within “the area of effective competition.” Inasmuch as “the area of effective competition” is the relevant market, id. at 328, 81 S.Ct. at 623, it follows that application of the Tampa Electric test under § 1 of the Sherman Act requires a proper determination of the relevant franchise market. Since this has not been done there is no need for us to comment further on whether the facts of this case meet the test.

Nonetheless, we should not close this discussion without making two observations. The first is that a greater showing of anti-competitive effect is required to establish a Sherman Act violation than a § 3 Clayton Act violation in exclusive-dealing or requirements contracts cases. See E. Kintner, An Antitrust Primer, 58 (2d ed. 1973). The existence of this heavier burden is rooted in the language of the two statutes; the Sherman Act speaks of actual restraints of trade while § 3 of the Clayton Act speaks of effects of arrangements which may substantially lessen competition or tend to create a monopoly. The heavier burden required by the Sherman Act was recognized in connection with “tying” cases in Times Picayune v. United States, 345 U.S. 594, 608-9, 73 S.Ct. 872, 97 L.Ed. 1277 (1953). See also, Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 335, 81 S.Ct. 623, 5 L.Ed.2d 580 (1960); Curly’s Dairy, Inc. v. Dairy Cooperative Ass’n, 202 F.Supp. 481, 485 (D.Or.1962).

Our second comment relates to the follow-the-franchise provision in the Sportservice-Athletics agreement which the trial court found acted as a restraint of trade as well as a mechanism to enforce the long term contract. We are inclined to doubt that this provision has independent anti-competitive effects apart from those springing from the length of the contract. Our doubt rests on the belief that in these days of highly mobile professional sports franchises follow-the-franchise provisions are needed even when the duration of the concession franchise is relatively short.

IV.

Tying-

Our decision to reverse and remand the judgment of the trial court for the purpose of fixing the relevant franchise market makes it necessary that we consider the trial court’s conclusion that Sportservice is guilty of a per se violation of § 1 of the Sherman Act under the reasoning of Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969).

Fortner held that to offer loans on favorable terms on condition that the borrower purchase prefabricated houses constituted “a tying arrangement of the traditional kind,” 394 U.S. at 498, 89 S.Ct. at 1256. Such an arrangement is illegal per se “whenever a party [the lender-seller] has sufficient economic power with respect to the tying product [the loan] to appreciably restrain free competition in the market for the tied product [prefabricated houses] and a ‘not insubstantial’ amount of interstate commerce is affected.” Id. at 499, 89 S.Ct. at 1256, citing Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 6, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958). Here the trial court characterized the advances made by Sportservice to the Athletics as the tying product and its concession services as the tied product and concluded that there was an appreciable restraint on free competition and that a not insubstantial amount of interstate commerce was affected.

Our holding with respect to the relevant franchise market dictates our disapproval of this conclusion of the trial court. We view Sportservice as a purchaser of a concession franchise from the Athletics, the seller, in exchange for payments consisting of (1) certain loans and advances and (2) a percentage of gross receipts, payable throughout the life of the contract. Viewed in this manner, the sine qua non of a tying case, viz. two separate products, is lacking. See Siegel v. Chicken Delight, Inc., 448 F.2d 43, 47 (9th Cir. 1971), cert. denied, 405 U.S. 955, 92 S.Ct. 1172, 31 L.Ed.2d 232 (1972). The cash, advances, and percentage of the gross receipts constitute the means by which Sportservice is to pay the purchase price of the franchise. The only product involved is the franchise. A loan on favorable terms in connection with a purchase of a commodity by the lender is simply a means by which the lender meets his purchase money obligation. This is true without regard to the type of commodity purchased. The favorable aspect of the loan undoubtedly would not have been agreed to by the purchaser had he not wished to acquire the commodity the seller-borrower is offering for sale. The seller-borrower’s monopoly power may induce such a loan; but that does not warrant the transformation of the purchaser-lender into a seller of two commodities, cash payments and a favorable loan, for the purpose of charging such purchaser-lender with Sherman Act violations.

The absence of two separate products, the presence of which must exist in order to justify invoking Fortner, 394 U.S. at 507, 89 S.Ct. at 1252, makes it unnecessary for us to review the trial court’s findings that Sportservice had sufficient economic power in the market for the tying product, credit, and that the amount of commerce affected in the tied product, concession services, was not insubstantial. We merely wish to point out that the trial court’s determination that the Athletics “had exhausted its credit,” 365 F.Supp. at 254, alone cannot support such findings. The near insolvency of the Athletics in the early 1950’s and Sportservice’s loan to it does not establish the requisite market power.

V.

Attempt to Monopolize

The trial court’s finding that Sportservice is guilty of an attempt to monopolize under § 2 of the Sherman Act must also be reversed. Although it is well established in this circuit that the “probability of actual monopolization” is not an essential element of proof of intent to monopolize, Lessig v. Tidewater Oil Co., 327 F.2d 459, 474 (9th Cir.), cert. denied, 377 U.S. 993, 84 S.Ct. 1920, 12 L.Ed.2d 1046 (1964), it is also clear that evidence of market power is relevant but “not indispensable where a substantial claim of restraint of trade is made.” Hallmark Industry v. Reynolds Metals Co., 489 F.2d 8, 12-13 (9th Cir. 1974). In view of our rejection of the trial court’s characterization of the relevant market and the necessity on remand to consider concession franchises other than those offered by major league baseball teams, it is not possible for us to conclude under the present state of the record that a “substantial claim of restraint of trade” has been made. In due course such a claim may be made. Under present circumstances, however, such a claim could be said to exist only if we were prepared to accept the trial court’s determination that the relevant market is concession services furnished to major league baseball teams. This we cannot do. We reverse the trial court’s finding with respect to an attempt to monopolize and remand for further proceedings.

Reversed and remanded.

      . Even if we agreed with the trial court’s basic premise, that the provision of concession services to major league baseball was the relevant market, its failure to include as participants in that market baseball clubs which supply their own concessions very likely would compel reversal on that ground. The considerations which, in the view of the trial court, make the opportunity to provide concession services to a major league baseball club a uniquely desirable and profitable one in the eyes of a professional concessionaire must also appeal to the stadium or team owner-cum-entrepreneur. Thus, the exclusion from the relevant market of baseball teams which run their own concessions operations — a pro-competitive influence in that market — could not be supported even under the trial court’s conceptualization.


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    H. S. EQUITIES, INC., formerly Hayden Stone, Inc., a Delaware Corp., Plaintiff-Appellant, v. HARTFORD ACCIDENT & INDEMNITY CO., a Connecticut Corp., Defendant-Appellee.
    No. 74-3503
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    May 14, 1975.
    Stanley Arthur Beiley, Miami, Fla., for plaintiff-appellant.
    Walton, Lantaff, Schroeder, Carson & Wahl, Edward J. Atkins, Miami, Fla., for defendant-appellee.
    Before THORNBERRY, MORGAN and RONEY, Circuit Judges.

       Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir. 1970, 431 F.2d 409, Part I.

   PER CURIAM:

This diversity appeal, involving a suit to enforce rights under a liability insurance contract, presents important issues concerning the choice of applicable law. We believe these issues are particularly appropriate for resolution by the Supreme Court of Florida. Thus, we defer decision in the cause and certify the issues to the Supreme Court of Florida.

Following our practice, see West v. Caterpillar Tractor Co., Inc., 5 Cir. 1974, 504 F.2d 967, we requested that the parties submit a proposed agreed statement of the case and certificate of issues for decision. The parties have agreed on the statement of the case and the first certified issue. They remain in disagreement, however, with respect to the second issue and/or additional issues to be certified. In consideration of the parties’ respective positions, we have determined that two issues shall be certified: the first is that presently agreed upon by the parties; the second is that which was adopted by the appellant in its original brief to this court, and now advanced by the appellee. By so limiting the issues which we certify, we of course do not intend or desire that the Supreme Court of Florida confine its reply to the precise form or scope of the questions certified.

CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF FLORIDA, PURSUANT TO § 25.031 FLORIDA STATUTES 1974, AND RULE 4.61 FLORIDA APPELLATE RULES

TO THE SUPREME COURT OF FLORIDA AND THE HONORABLE JUSTICES THEREOF:

It appears to the United States Court of Appeals for the Fifth Circuit that the above-styled case in this Court involves questions or propositions of the law of the State of Florida which are determinative of the cause, and there appear to be no clear controlling precedents in the decisions of the Supreme Court of Florida. This Court hereby certifies the following questions of law to the Supreme Court of Florida for instructions concerning said questions of law, based on the facts recited herein, pursuant to § 25.031, Florida Statutes 1974, and Rule 4.61, Florida Appellate Rules, as follows:

1. Style of the Case.

The style of the case in which this certificate is made is H. S. Equities, Inc., formerly Hayden Stone, Inc., Appellant, v. Hartford Accident & Indemnity Company, Appellee, being Case No. 74-3503 United States Court of Appeals for the Fifth Circuit, such case being an appeal from the United States District Court for the Southern District of Florida.

2. Statement of the Case.

In 1967, H. S. Equities, Inc., formerly known as Hayden Stone, Inc., obtained a brokers liability policy from Hartford Accident & Indemnity Company. Both H. S. Equities and Hartford maintain offices and do business throughout the United States and are licensed to do business in Florida. The liability policy obtained by H. S. Equities from Hartford in New York was designed to cover claims throughout the United States and Canada. The policy provided that Hartford would pay any final judgment rendered against H. S. Equities for damages sustained by its customers through acts committed or omitted by officers or employees in the ordinary course of H. S. Equities’ business as a stockbroker in all of its offices throughout the United States. The policy limits were $100,-000.00. The policy also obligated Hartford to pay H. S. Equities’ counsel fees and court costs in defending customer suits. One of the policy provisions required that H. S. Equities give notice to Hartford as soon as practicable of any act or circumstance indicating a claim under the policy. The policy did not contain a choice of law provision.

The policy of insurance was applied for in New York, countersigned in New York, and premiums were paid in New York. The policy was kept by H. S. Equities in New York and when it gave notice of the claim to Hartford, the notice was given in New York.

On June 3, 1970, a customer of H. S. Equities, one Robert Uricho, Jr., of Bro-ward County, Florida, gave notice to Appellant of his probable claim. On May 6, 1971, the customer sued H. S. Equities in Broward County Circuit Court seeking damages because the customer’s securities were sold out contrary to representations made by H. S. Equities’ employees that they would not sell out the customer’s account. The suit was removed to the U. S. District Court for the Southern District of Florida. At the conclusion of a non-jury trial, final judgment was entered in favor of the customer and against H. S. Equities, Inc., on March 31, 1972, for $186,310.38. In September, 1972, H. S. Equities satisfied the judgment by paying the customer, in Florida, the amount awarded in the judgment plus interest. The customer’s claim was a type of risk covered by the broker’s liability policy. H. S. Equities first gave notice to Hartford of the customer’s claim on May 4, 1972. Hartford refused to honor the claim on the grounds of late notice and this lawsuit was filed.

After issue was joined, Hartford moved for summary judgment, claiming no issue of material fact and entitlement to judgment on the grounds that Florida’s conflicts or choice of law rule required the application of New York law to the notice provision in the insurance contract. Under New York law, late notice or lack of timely notice is an absolute defense regardless of whether the insurer is prejudiced thereby. H. S. Equities claimed in opposition to summary judgment that, under Florida’s conflicts or choice of law rule, Florida law would apply to the notice provision. Under Florida law, late or untimely Notice is not an absolute defense to performance of an insurance contract, but rather, if the insured can demonstrate the insurer was not prejudiced by late Notice, then the insurer will be liable under the contract.

The trial court concluded, in agreement with Hartford’s contention, that Florida’s choice of law would apply New York law on the late notice issue and that failure to give notice as soon as practicable, as a matter of law, was fatal to H. S. Equities’ case. Therefore, final judgment was entered for Hartford. This appeal followed.

3. Questions to be Certified.

(1) Whether Florida or New York law applies to the issue of the effect of late notice given under the insurance policy sued upon.

(2) Whether the district court erred in granting summary judgment for the defendant/insurer on the ground that plaintiff gave late notice of a claim to the defendant and that under New York law late notice was an absolute defense regardless whether the insurer was prejudiced by the late notice.

The Clerk shall cause the entire record in this case, together with copies of the briefs of the parties in this court,- the appendix, and agreed certification in this court together with the responses of counsel to be transmitted herewith. The court expresses its appreciation for the parties’ assistance and cooperation.

      . In their respective briefs the parties cite Security Mutual Ins. Co. v. Acker-Fitzsimons Corp., 31 N.Y.2d 436, 340 N.Y.S.2d 902, 293 N.E.2d 76 (1972). [Footnote by the court.]


text:
    Jimmy HODGES, Plaintiff-Appellant, v. S. S. TILLIE LYKES and Lykes Brothers, Inc., Defendants-Third-Party Plaintiffs-Appellees, v. DIXIE MACHINE WELDING & METAL WORKS, INC., Third-Party Defendants.
    No. 74-1518.
    United States Court of Appeals, Fifth Circuit.
    May 14, 1975.
    John R. Martzell, Ronald Tanet, New Orleans, La., for plaintiff-appellant.

      Andrew T. Martínez, New Orleans, La., for Lykes Bros. S.S. Co.
    Donald L. King, Edward J. Koehl, Jr., New Orleans, La., for Dixie Machine.
    Before GEWIN, DYER and ADAMS, Circuit Judges.

       Of the Third Circuit, sitting by designation.

   PER CURIAM:

Hodges, a shore-based employee of Dixie Machine Welding and Metal Works, Inc., instituted this action against Lykes Brothers Steamship Co. and its vessel, the S.S. Tillie Lykes, to recover damages for personal injuries sustained during repair operations aboard ship.

Based on the pleadings, depositions, affidavits and oral argument of counsel, the district court granted summary judgment in favor of the defendant. Hodges now contends that such disposition was improper, because the dual questions whether the Tillie Lykes was in navigation and whether Lykes Brothers was negligent should have been submitted to the trier of fact. We disagree and therefore affirm the district court’s grant of summary judgment.

The facts underlying the cause of action are not in dispute. The Tillie Lykes underwent an extensive overhaul that lasted seventy-seven days. Dixie Machine was the primary contractor in charge of refurbishing the ship for its five-year special survey required by the American Bureau of Shipping, though other off-shore contractors performed some repairs. The crew of the Tillie Lykes was discharged during these operations, and only a few Lykes personnel remained aboard to watch the ship and provide access to various parts of the vessel. They had no supervisory power over the employees of Dixie Machine, who performed both structural changes and regular maintenance. At the time appellant allegedly slipped on sandblasting debris, there were no Lykes personnel on board. The Tillie Lykes did not move under its own power during these operations, but had to be towed by tug from one drydock to another. The total cost of repairs incurred by Lykes Brothers was $660,145.

If a vessel is not in navigation, the owner owes no duty of seaworthiness to seamen or those enjoying Sieracki seaman status. Roper v. United States, 368 U.S. 20, 82 S.Ct. 5, 7 L.Ed.2d 1 (1961); West v. United States, 361 U.S. 118, 80 S.Ct. 189, 4 L.Ed.2d 161 (1959); see Seas Shipping Co. v. Sieracki, 328 U.S. 85, 66 S.Ct. 872, 90 L.Ed. 1099 (1946). In determining the status of the vessel, inquiry should focus on the extent of repair operations and on who controls those operations. Erwin v. Lykes Brothers Steamship Co., 472 F.2d 1217 (5th Cir. 1973). We conclude that the district court was justified in ruling that the Tillie Lykes was out of navigation. Unlike Waganer v. Sea Land Service, Inc., 486 F.2d 955 (5th Cir. 1973), there is no dispute here concerning the extent of repairs or who had control of the vessel.

Similarly, Hodges has demonstrated no dispute over the facts concerning control for purposes of assessing Lykes Brothers’ negligence. All the evidence indicates the owner relinquished control of the ship to the off-shore contractors. The instrumentalities that caused appellant’s claimed injuries — sand and gravel from sandblasting and a misplaced ladder — were put there by the contractor and were not under the control of the owner in any way. See West v. United States, supra.

When the record thus lacks any dispute over material facts, this court has approved summary judgment treatment in maritime cases. Johnson v. Oil Transport Co., 440 F.2d 109 (5th Cir. 1971). The district court properly held as a matter of law that the Tillie Lykes was removed from navigation and that Lykes Brothers was not negligent.

. Affirmed.


author: COLEMAN, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. James Walter DURHAM, a/k/a "Whitey” Durham, James H. Durham, Defendant-Appellant.
    No. 74-1994.
    United States Court of Appeals, Fifth Circuit.
    May 14, 1975.
    Rehearing Denied June 11, 1975.

      James L. Harrison, Jacksonville, Fla., for defendant-appellant.
    John L. Briggs, U. S. Atty., John J. Daley, Jr., Asst. U. S. Atty., Jacksonville, Fla., for plaintiff-appellee.
    Before TUTTLE, COLEMAN and SIMPSON, Circuit Judges.
   COLEMAN, Circuit Judge.

The appellant, James Walter Durham, was tried to a jury and convicted on both counts of an indictment charging him with aiding and abetting the interstate transportation of a fraudulently obtained bank draft.

On appeal, he asserts three separate grounds for granting a new trial, that is, the District Court erred:

1. By giving an instruction on intent which, in certain instances, has been specifically condemned by this Court;

2. In failing to give defendant’s requested instruction on the extent to which certain fingerprint evidence could be considered by the jury; and

3. In admitting over objection the testimony of a certain government witness on rebuttal.

Finding no reversible merit in any of these contentions we affirm the convictions.

Viewing the evidence in the light most favorable to the verdict, the relevant facts follow:

In late July, 1971, Durham was employed by John H. Wall to work as a weigher at the Big Top Tobacco Warehouse in Jasper, Florida, near the Georgia state line. The agreement with Wall, a partner in the warehouse, was that Durham would come to Jasper from his home in Reidsville, North Carolina, and work throughout the first four weeks in August in return for compensation of $1500-1800. At the time of his employment, the defendant needed money, so Wall advanced $200 before Durham started work.

Durham’s duties as a tobacco weigher entailed weighing truckloads of tobacco and filling out farmers’ tobacco marketing cards. This was confined primarily to the warehouse area, although on occasion Durham would be required to go to the office to remove marketing cards or to pick up farmers’ checks, if requested. He had no authority in his own right to either issue checks or to encode them on Big Top’s check writing machine.

On Monday, August 23, Durham was working late at the warehouse to assist in unloading and weighing several truckloads of tobacco. At about 9:00 that evening he asked the warehouse manager to give him the keys to the storage cabinet in the office so that he could get a check for Mr. Wall. Apparently Wall had never requested that defendant get him a check, but he got the keys. About thirty minutes later the keys were returned to the floor manager. The following morning, while setting up for the day’s work, one of the office personnel discovered that the metal box containing the keys to the check writing machine was unlocked.

The next day Timothy Reagan, a friend of Durham’s, arrived in Jasper and was seen with the defendant at the defendant’s hotel room.

One day later, August 25, in an automobile leased by Durham, Reagan appeared at the Hamilton County Bank and presented two Big Top Warehouse checks for payment. Both checks were dated August 23, had the imprint of the Big Top check writing machine, and were made payable to one James D. Campeau. Both checks were bogus instruments, neither of them authorized by the Big Top Tobacco Warehouse.

Reagan represented to the bank officers that he was Campeau, a tobacco farmer, and that he needed the checks cashed immediately to pay off other tobacco farmers. The bankers were initially concerned by the total amount of the checks — some $42,000 — and they asked Reagan for some identification. However, when Reagan produced a driver’s license bearing the name James D. Campeau, and it was found that the endorsements on the checks matched the signature on the license, the bank officers’ suspicions were allayed, and they agreed to pay the instruments. At that time the bank did not have $42,000 in large denomination bills, as requested by Reagan, so an alternative method of payment was arranged. Reagan was given approximately $10,000 in large denomination bills, and a bank draft was issued payable to James D. Campeau for the remaining $32,000.

On the afternoon of Thursday, August 26, Reagan checked out of his hotel near Jasper and traveled to Valdosta, Georgia, some twenty-five miles away. There he appeared at the Citizens and Southern National Bank and requested payment of the $32,000 draft he had obtained the previous day in Jasper, Florida, completing an interstate transportation of the draft. Since the instrument was not drawn on the Citizens and Southern National Bank, and since James D. Campeau was not a Citizen and Southern customer, the bank officers in Valdosta refused payment.

Reagan then returned to Jasper and presented the draft to the Hamilton County Bank. Though the officers at the Hamilton County Bank were somewhat reluctant to honor the draft at that time, they realized that the end of the tobacco season was drawing nigh and that it was necessary that the various farmers be paid. Therefore, they ordered payment of the draft. Reagan was given approximately $32,000 in large denomination bills.

Later that same afternoon, two different times, the defendant was seen in Valdosta, Georgia, with a man resembling Reagan. In addition, when Durham picked up his car at a Valdosta repair shop, the attendant noted that he paid the $200 charge out of a large roll of money taken from his pocket.

That same night Durham and Reagan were seen together at the home of a girl in Jasper whom Durham was dating. In a conversation with this woman, the defendant said that he had been in Valdosta that day with Reagan. Durham and Reagan left the girl’s home about 4:00 A.M. The defendant then checked out of his hotel room and proceeded with Reagan to Albany, Georgia, to catch a chartered flight to Atlanta. The trip to Albany was made by way of a leased automobile, the defendant having left his own car in Jasper. In addition, the defendant left Jasper without receiving the remainder of his salary owed by the Big Top Warehouse.

On Friday morning, August 27, Durham, Reagan, and an unidentified man were seen at the Albany, Georgia, airport. There they hired a private plane and were flown to Atlanta. An employee of the aviation company testified that Reagan paid the $96 charge for chartering the plane with a $100 bill, which he pulled from a large roll of money carried in his pocket.

Meanwhile, back in Jasper, on the morning of Friday, August 27, the disbursing clerk for the Big Top Tobacco Warehouse went to the Hamilton County Bank to pick up the weekly bank statement. Upon examining the cancelled checks, she immediately discovered the two checks ostensibly made payable to James D. Campeau. She brought the matter to the attention of the warehouse office manager, who notified the bank to stop payment on the checks in the series from which the two unauthorized checks had been drawn. The Campeau checks were then turned over to David Jones, a partner in the warehouse, who took them to the bank. These checks had been paid the previous day, so any effort to stop payment on them was futile.

On August 30, 1971, the defendant, now back in North Carolina, paid off in cash approximately $650 in indebtedness owed to a North Carolina bank, this despite the fact that Durham had to borrow money to commence work in Jasper and had left Jasper without being paid.

A federal indictment was returned by a grand jury in Jacksonville, Florida, on September 8, 1972, charging the defendant with aiding and abetting the interstate transportation of a fraudulently obtained bank draft and conspiracy to transport in interstate commerce a fraudulently obtained bank draft. The conspiracy count was subsequently dismissed from the case. Subsequent to the indictment, the defendant on two occasions approached two employees of the Big Top Tobacco Warehouse and offered them money to alter their testimony in connection with his trial.

With all reasonable inferences which could be drawn therefrom, the foregoing proof is clearly sufficient to support a belief beyond a reasonable doubt that Durham purloined the tobacco warehouse blank checks, that he surreptitiously used Big Top’s check writing machine to give those checks the necessary appearance of authenticity, that he immediately passed the bogus checks to Reagan, that he shared in the proceeds of the criminal transaction, and that, indeed, he had to be the very one who had initiated the fraudulent activity.

It is true that Durham was not seen with Reagan when the latter visited the Valdosta bank in an effort to cash the draft and he may not have been the one who physically transported the drafts the short distance back and forth across the Georgia-Florida state line, but he was not indicted for the transportation. He was indicted for aiding and abetting such transportation.

His visits to Valdosta, his presence there with Reagan, his statement that he had been there on the day prior to his precipitate departure, his abandonment of his own automobile and use of a rented vehicle which might hinder immediate apprehension, his abandonment of his employment without so much as picking up the wages due, the possession of large rolls of bills which could not have been obtained in the course of his employment, and his ultimate get away by hired aircraft were highly inculpatory activities. To this it must be added that Durham, not Reagan, rented the automobile which Reagan used to make his unsuccessful trip to Valdosta.

But for one thing, the convictions would be due a quick affirmance.

The District Court gave a jury charge on intent which, in cases to be discussed hereinafter, has repeatedly met with the disapproval of this Court and which has necessitated several reversals, depending on the nature of the individual case. In the face of our repeated efforts to extinguish this instruction we find its continued use hard to comprehend, but our function here is to determine whether it invalidated this particular conviction. The task is not rendered any the easier by the fact that on a prior trial in which the objectionable instruction was not used the jury was unable to agree on a verdict.

The Instruction on Intent

The instructional stage now up for review was set as follows:

At the conference prior to the instructions being given the government requested the following instruction upon intent:

“Intent ordinarily may not be proved directly, because there is no way of fathoming or scrutinizing the operations of the human mind. But you may infer the defendant’s intent from the surrounding circumstances. You may consider any statement made and done or omitted by the defendant, and all other facts and circumstances in evidence which indicate his state of mind. It is ordinarily reasonable to infer that a person intends the natural and probable consequences of acts knowingly done or knowingly omitted.”

The request was denied by the Court. At the same conference the defense offered the following instruction, also denied:

“Intent is operation of mind; the subjective fact is seldom susceptible of direct proof and may be established by consideration of objective facts from which a conclusion may be drawn.
“Intent is a necessary part of the offense here charged and must be proven beyond any reasonable doubt. It may not be assumed nor may evidence be accepted sufficient to prove its existence which does not point to that conclusion and no other.”

In lieu of the requested instructions, the Court instructed the jury as follows:

“Intent being an essential element in the perpetration of the offense charged, it must be determined by you. It may be deduced from the facts and circumstances shown in the evidence from which it may reasonably and satisfactorily be inferred. This includes the evidence which shows all of the acts done or statements made by the defendant and the acts and declarations in the presence of those, if any, concerned with him in carrying out the transaction. In other words, the intent is to be gathered by the Jury by those sources by applying their reason and judgment to the evidence and making deductions therefrom which men and women of ordinary experience and observation in the affairs of life would ordinarily draw. When the intent is thus made manifest and the Jury is able to so find beyond a reasonable doubt that satisfies the law and is sufficient if the other elements were shown to sustain guilt. And intent, of course, may not ordinarily be proved directly, because there is no way of fathoming or scrutinizing the human mind. But you may, as I say, infer the defendant’s intent by considering the surrounding circumstances. Indeed it is rarely possible, if at all, ever to indicate intent other than by circumstantial evidence, for while a witness may see or hear, and so be able to give direct testimony of what the defendant does or fails to do, of course, there can be no eye witness account as to the state of mind with which the acts were done or omitted. But what a defendant does or fails to do may indicate his intent or lack of intent to commit a crime.
“As a general rule, it is reasonable to infer that a person ordinarily intends all of the natural and probable consequences of acts knowingly done and knowingly omitted. So, unless the evidence in this case leaves you, as the Jury, to draw a different or contrary conclusion, you may draw the inference and find that the accused intended all of those natural and probable consequences which one, standing in like or similar circumstances and possessing like knowledge, would reasonably have expected to result from any act knowingly done or omitted.”

There was timely objection, and overruled.

It is at once apparent that, at the end, the instruction contained the following language, disapproved in Mann v. United States, 5 Cir., 1963, 319 F.2d 404, because it has the effect of improperly shifting the burden of proof to the defendant:

“So, unless evidence in the case leads the jury to a different or contrary conclusion, the jury may draw the inference, and find, that the accused intended all of the natural and probable consequences which one, standing in like circumstances, and possessing like knowledge, should reasonably have expected to result from any act knowingly done or knowingly omitted by the accused.”

During the course of the charge the jury was also instructed:

“Fourth, the defendant in a criminal action is presumed to be innocent until the contrary is proved. And in case of a reasonable doubt as to whether his guilt is satisfactorily shown he is entitled to acquittal. This simply means that the burden of proving the guilt of the defendant rests upon the prosecution, that is, the government of the United States in this case, and that burden includes the proof of every element of the offense necessary to be proved. And that burden, as I said, rests upon the government and never shifts to the defendant.” ******
“If the accused be proven guilty beyond a reasonable doubt, — say so. If not so proven — say so. Keep constantly in mind that it would be a violation of your sworn duty to base a verdict of guilt upon anything other than the evidence in this case, and remember as well, that the law never imposes upon
a defendant in a criminal case the burden or duty of calling any witness or producing any evidence.”

The Prior Cases

Despite the emphatic disapproval appearing in several cases, from the discussion to follow it will be seen that up to the present time the use of the Mann instruction has not been held to dictate “automatic” reversal.

Mann was an income tax evasion case in which the sole defense was lack of intent and wilfulness. We held that the charge quoted in our Footnote 2 was plain error, despite the fact that appropriate instructions had been given on the necessity of intent and burden of proof. It was said, as generally held, that a correct instruction does not cure the error in giving another inconsistent one. The opinion of the Court declared:

“If the charge had ended when the jury was told that a person is presumed to intend the natural consequences of his own acts, when considered in the light of the charge as a whole, there would have been no error. When the words, ‘So unless the contrary appears from the evidence’ were introduced, the burden of proof was thereupon shifted from the prosecution to the defendant to prove lack of intent. If an inference from a fact or set of facts must be overcome with opposing evidence, then the inference becomes a presumption and places a burden on the accused to overcome that presumption. Such a burden is especially harmful when a person is required to overcome a presumption as to anything subjective, such as intent or wilfulness, and a barrier almost impossible to hurdle results.” 319 F.2d at 409.

Mann was soon followed by Helms v. United States, 5 Cir., 1964, 340 F.2d 15, cert. denied 382 U.S. 814, 86 S.Ct. 33, 15 L.Ed.2d 62. This was another income tax case, charging wilful understatement of income. The Mann charge had been given but there had been no objection. The proof on behalf of the prosecution showed that the defendant had kept, or caused to be kept, two sets of records involving the use of falsified tickets. We denied plain error on the ground that the defendant’s alleged objective conduct was the crucial issue, not his wilfulness or criminal intent.

In our present appeal, however, objection was duly made and overruled.

Then came Henderson v. United States, 5 Cir., 1970, 425 F.2d 134. This was a case of mail fraud, wire fraud, and conspiracy. The Mann instruction was given and we reversed. We there said that “In Helms, if the objective conduct were proven, ‘there [could not] be much doubt about * * * willfulness or criminal intent’ ”, pointing out that in the ease then under consideration the defense was that the defendants had not made statements known to be false or with intent to defraud (emphasis in the original).

The Mann instruction held on to at least a portion of its nine lives and we next met it in United States v. Jenkins, 5 Cir., 1971, 442 F.2d 429. Interestingly enough, this was a Mann Act prosecution, in which the Mann charge was given. For its illuminating value as to what Helms, supra, meant, we quote, 442 F.2d 437, 438,

“In Mann v. United States, 5 Cir., 1963, 319 F.2d 404 we reversed where the same charge was given. We pointed out in that case that ‘(i)f an inference from a fact or set of facts must be overcome with opposing evidence, then the inference becomes a presumption and places a burden on the accused to overcome that presumption.’ 319 F.2d at 409.
However, we subsequently distinguished Mann in Helms v. United States, 5 Cir., 1964, 340 F.2d 15. In that case we noted that while the government always bears the burden of proof, in Mann the sole defense turned on mental state, i. e., that the defendant did not intend to willfully evade or defeat the income tax imposed. We held that a different result obtains where the contest centers around objective conduct. See also Henderson v. United States, 5 Cir., 1970, 425 F.2d 134 and South v. United States, 5 Cir., 1969, 412 F.2d 697: which adhere to Mann but reiterate the Helms distinction.
The government urges Helms as controlling here but we pretermit that question for the reason that there is another ground for sustaining the charge as given by the trial court. Immediately following that part complained of, the trial judge added this curative provision:
‘Unless otherwise instructed, in determining the issue as to intent, the jury is entitled to consider any statements made and acts done or omitted by the accused, and all facts and circumstances in evidence in the case which may aid in determination of state of mind.
‘But the jury will always bear in mind that the law never imposes upon a defendant in a criminal case the burden or duty of calling any witness or producing any evidence.’
This added language avoided the vice in the charge in Mann v. United States, supra.”

To that point, then, it seems quite clear that Mann remained the law but neither had the Helms objective conduct exception been repudiated.

We journey next to United States v. Driscoll, 5 Cir., 1972, 454 F.2d 792. Driscoll was convicted of “causing the interstate transport of falsely made or forged traveler’s checks with the knowledge that the checks were falsely made or forged, and that with unlawful or fraudulent intent.” Driscoll got the Mann treatment and the conviction was reversed because the instruction shifted to the defendant the burden of proof on fraudulent intent. Helms was noted but not discussed.

Finally, we arrive at the door of United States v. Wilkinson, 5 Cir., 1972, 460 F.2d 725, another mail fraud case.

In a thoroughly incisive opinion, as the organ of the Court, Judge Clark wrote, 460 F.2d at 733,

Third, any decision as to whether asserted “burden-shifting” language is so prejudicial as to necessitate reversal must to some extent turn upon the type of case and nature of the evidence which has been presented to the jury. In Helms v. United States, 340 F.2d 15 (5th Cir. 1964), we distinguished the Mann case on the ground that Mann involved a situation where the entire case turned upon the defendant’s mental state, i. e., whether he had deliberately and wilfully evaded certain income taxes, whereas in Helms “the contest center(ed) about objective conduct, ... If the defendant actually instructed Borel to prepare the two sets of records and used the false tickets in making his income tax returns, there cannot be much doubt about his wilfulness or criminal intent.” Id. at 18-19. We decline now, as we did in Jenkins, to place this case squarely in either a Mann-subjective or Helms-objective category. However, we do note that here the jurors were not reduced solely to presuming intent as they were in Mann and Driscoll, supra n. 4. Here, if they chose to accept it, they were presented with undisputed evidence that Wilkinson made admissions indicating he knew certain invoices were fraudulent, allowed the practice to continue, and that he was even able to estimate the amount which Phillips had been erroneously charged. Thus, the government’s case did not rest upon mere implications of evil motive, but was supported by affirmative objective evidence of that particular element of the alleged crime. To paraphrase Mann, in a criminal case of this nature, the overall effect of the charge did not place a burden upon the defendant to produce evidence to overcome a presumption of guilt.

From the foregoing examination of relevant cases we can only conclude that the Helms exception yet pertains in proper cases.

The question is whether the exception applies to this appeal. We think that it does.

The purloining of the warehouse’s ' blank check forms, the fraudulent use of the check writing machine, and the actual forgery of the checks for large sums of money were, as in Helms, physical acts. Those acts could have been inspired by only one intent, which was that however, wherever, and whenever it could be brought off those bogus checks would be passed. The proceeds would fraudulently be obtained. Moreover, the jury could reasonably infer that this was the sole purpose for giving the checks to visitor Reagan, to say nothing of furnishing Reagan with a rented automobile which hardly would have been needed for the purpose of getting around the town of Jasper. The light to be derived from Durham’s subsequent conduct has already been described. It inescapably follows from all this that the real issue in this case was what, if anything, Durham had done; intent could not have been the crucial issue in the case. Considering the nature of the case, the giving of the Mann instruction does not warrant reversal.

While somewhat remotely placed in relation to the appearance of the Mann charge, it is nevertheless true that the jury was told that the defendant was entitled to the presumption of innocence, that the government had the burden of proving the guilt of the defendant beyond a reasonable doubt, and that that burden never shifted to the defendant. It is true that in United States v. Jenkins, supra, the Court emphasized the proximity of such instructions to the objectionable ones but the emphasis there does not remotely hint that we must totally discount their presence in this case.

Although we are convinced that the Mann instruction does not here require reversal we consider it highly in order to direct attention to a form for instructions on intent expressly approved in United States v. Wilkinson, supra, 460 F.2d 725:

“It is reasonable to infer that a person ordinarily intends the natural and probable consequences of his knowing acts. The jury may draw the inference that the accused intended all of the consequences which one standing in like circumstances and possessing like knowledge should reasonably have expected to result from any intentional act or conscious omission. Any such inference drawn is entitled to be considered by the jury in determining whether or not the government has proved beyond a reasonable doubt that the defendant possessed the required criminal intent.”

Remaining Points

The government offered proof that Durham’s latent fingerprints were found on the back of one of the stolen Big Top Warehouse checks. Of course, the experts were unable to say precisely when those fingerprints came to be placed on the check. Consequently, says the defendant, under the teachings of Borum v. United States, 1967, 127 U.S.App.D.C. 48, 380 F.2d 595, and similar authority, the District Court should have instructed the jury that it could consider the fingerprint evidence only if the circumstances were such that they could have only been impressed at the time of the perpetration of the alleged crime. Otherwise, that they would have no probative value whatever.

This reliance on Borum is misplaced for the reason that in that case the fingerprint evidence was the only evidence presented by the government tending to link Borum with the crime. There was no evidence tending to prove that he could not have had access to the articles at some time prior to the offense. In this present appeal, there was, as already set forth, a wealth of evidence indicating that Durham was the individual who not only purloined the checks but also fraudulently used the company’s check writing machine in the perpetration of the offense. We find no merit whatever in this contention.

It is next said that the District Judge abused his discretion when he permitted the jury to hear the testimony of an F.B.I. handwriting expert in rebuttal to, and by way of impeachment of, the testimony of Durham’s expert to the effect that the defendant’s handwriting appeared on neither of the bogus checks. Viewed as impeaching testimony and not as direct evidence in support of the government’s case in chief, it was well within the discretion of the trial judge to have allowed the submission of this testimony to the jury.

The judgment of conviction on both counts is

Affirmed.

      . The substantive provisions under which the defendant was charged are as follows:
      18 U.S.C.A., § 2314 (1970). Transportation of stolen goods, securities, moneys, fraudulent State tax stamps, or articles used in counterfeiting
      Whoever transports in interstate or foreign commerce any goods, wares, merchandise, securities or money, of the value of $5,000 or more, knowing the same to have been stolen, converted or taken by fraud;
      sfs * * * * * Shall be fined not more than $10,000 or imprisoned not more than ten years, or both.
      This section shall not apply to any falsely made, forged, altered, counterfeited or spurious representation of an obligation or other security of the United States, or of an obligation, bond, certificate, security, treasury note, bill, promise to pay or bank note issued by any foreign government or by a bank or corporation of any foreign country.
      18 U.S.C.A., § 2 (1970). Principals
      (a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.
      (b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.

      . The exact instruction given in Mann was as follows:
      “It is reasonable to infer that a person ordinarily intends the natural and probable consequences of acts knowingly done or knowingly omitted. So unless the contrary appears from the evidence, the jury may draw the inference that the accused intended all of the consequences which one standing in like circumstances and possessing like knowledge should reasonably have expected to result from any act knowingly done or knowingly omitted by the accused.” Mann v. United States, 319 F.2d at 408, n. 3.


text:
    Walter Mario PICCIRILLO et al., Petitioners, v. IMMIGRATION & NATURALIZATION SERVICE, Respondent.
    No. 74-1914.
    United States Court of Appeals, Ninth Circuit.
    March 12, 1975.

      Seward H. French, Idaho Falls, Idaho, for petitioners.
    James L. Browning, Jr., U. S. Atty., Henry Petersen, Asst. U. S. Atty., Bernard Hornbach, I&NS, Joseph Surreck, Regional Counsel, I&NS, John L. Murphy, Chief, Dept, of Justice, John Reddy, District Director, I&NS, Richard I. Chaifetz, Dept, of Justice, San Francisco, Cal., for respondent.
    Before MERRILL, CARTER and CHOY, Circuit Judges.
   OPINION

PER CURIAM:

The Piccirillo family petition this court for review of the refusal by the Board of Immigration Appeals (the Board) to reconsider the dismissal of their appeal from a Special Inquiry Officer’s (S.I.O.’s) denial of their motion to reopen deportation proceedings affecting them. We reverse.

Petitioners are citizens of Uruguay who entered this country at Miami, Florida on May 28, 1968. They failed to depart within the time allowed them as visitors. Instead they settled in Idaho Falls, Idaho.

A deportation hearing duly held on February 19, 1969, at which the Piccirillos were present and represented by counsel, resulted in an order for their deportation to Uruguay. They took no appeal from the order.

Due to a private bill having been introduced in Congress to enable petitioners to remain here, deportation was stayed. But in February, 1972, action on the bill was deferred to permit the Piccirillos to apply for withholding of deportation under § 243(h) of the Immigration and Nationality Act, 8 U.S.C. § 1253(h).

Meanwhile on November 28, 1971, Piccirillo wrote a letter to the District Director of the Immigration and Naturalization Service at Helena, Montana, requesting the forms to use to apply for § 243(h) relief and enclosing $25 for the forms. The letter, which was sent without the knowledge of petitioners’ counsel, alleged bodily attacks on and threats to Piccirillo and threats to his family while they were in Uruguay by the Tupamaros, a leftist political faction opposing the established government. The District Director made no reply to Piccirillo’s letter; instead, he transmitted it to the S.I.O. for handling as a motion to reopen to apply for relief under § 243(h).

By letter dated March 13, 1972, petitioners’ counsel asked the District Director for the procedure to apply for § 243(h) relief. On March 17, 1972 the District Director responded by mail saying that inquiries should be directed to the S.I.O. to whom Piccirillo’s motion to reopen had been sent. Still unaware of Piccirillo’s November 28, 1971 letter to the District Director and its treatment by the latter as a motion to reopen, counsel on March 29, 1972 wrote to the 5.1.0. again requesting advice on how to apply for suspension of deportation for the Piccirillos under § 243(h). The S.I.O. made no reply.

On May 2, 1972 the S.I.O. issued a decision finding that Piccirillo’s “motion to reopen” was unsubstantiated by “any material facts to be proved at a reopened proceeding, nor does it contain affidavits or other evidentiary material supporting the position of the [Piccirillos] as required by 8 C.F.R. § 103.5 and § 242.22”. Concluding that, since the claims could have been made at the deportation hearing which had not been appealed, this was just another dilatory tactic, the motion to reopen was denied.

We have detailed the history of this case to illustrate its uncommon nature with the hope that an agency of the United States will not repeat the conduct of the agency concerned here. It would have required the exercise of but a modicum of common courtesy and consideration for the District Director or the 5.1.0. to respond to the requests of Piccirillo and his counsel, persons obviously ignorant of immigration practice and procedure. Such response costing but little effort would have obviated the clear denial of due process presented here. We cannot condone the headstrong insistence of the agency that an alien’s mere request for forms for a § 243(h) proceeding was a motion to reopen that was faulty and deficient for failure to comply with certain regulations applicable to motions to reopen — all after ignoring the requests of alien and

counsel thrice made for information on how to proceed under § 243(h).

It may well ensue that the Piccirillos’ case on the merits will fail, but they must be afforded a fair chance at it. Reversed and remanded.

      . The Attorney General is authorized to withhold deportation of any alien within the United States to any country in which in his opinion the alien would be subject to persecution on account of race, religion, or political opinion and for such period of time as he deems to be necessary for such reason.

      . In part, this section provides:
      “When the alien is the moving party, a motion to reopen . . shall be filed in duplicate, accompanied by a supporting brief, if any, and the appropriate fee .... A motion to reopen shall state the facts to be proved at the reopened proceedings and shall be supported by affidavits or other evidentiary material.”

      . In part, this section provides:
      “A motion to reopen will not be granted unless the special inquiry officer is satisfied that evidence sought to be offered is material and was not available and could not have been discovered or presented at the hearing;


author: PER CURIAM;

text:
    John C. PENNINGTON, Trustee of the Estates of Balasco Industries, Inc., No. 74396, et al., etc., Plaintiffs-Appellants, v. TOYOMENKA, INC., Defendant-Appellee.
    No. 75-1178
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    May 14, 1975.
    Rehearing Denied June 23, 1975.

      Ben F. Johnson, III, Atlanta, Ga., for plaintiffs-appellants.
    E. Lee Redfern, Rex M. Lamb, III, Atlanta, Ga., for defendant-appellee.
    Before COLEMAN, AINSWORTH and SIMPSON, Circuit Judges.

       Rule 18, 5 Cir., See Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir., 1970, 431 F.2d 409, Part I.

   PER CURIAM;

The sole question presented in this appeal is whether the District Court correctly held that defendant-appellee was not “doing business” in Georgia, which resulted in the dismissal of appellant’s action for lack of personal jurisdiction.

Appellant, the Trustee in Bankruptcy for the estates of three bankrupt corporations, filed the instant action in the Northern District of Georgia, alleging preferential transfers by the bankrupts to Toyomenka in the amount of $99,524. Process was served on Toyomenka, a New York corporation, at its New York address under the Georgia Long Arm Statute, Georgia Code §§ 24-113.1 — 24-118.

Toyomenka answered, denying that it had transacted any business within Georgia such as to enable service under the Georgia Long Arm Statute, and then filed a motion to dismiss. The District Court granted this motion to dismiss, and it is from this judgment that appellant now appeals.

There have been no allegations that would make sub-sections (b), (c), or (d) of Georgia’s Long Arm Statute applicable. Consequently, the sole question involved is whether or not Toyomenka has, under the Georgia definition, “transacted business” within Georgia, and thereby conferred in personam jurisdiction on that state’s courts.

The evidence established that Toyomenka transmitted communications from New York to Georgia by means of telephone and mail. It sent goods into Georgia, and was paid by checks drawn on Atlanta banks. However, Toyomenka has never had an agent or employee located in Georgia, has never manufactured any product in Georgia, and has never been domesticated or authorized to conduct business in Georgia.

It appears that the District Judge has accurately interpreted Georgia law. In Coe & Payne Company v. Wood-Mosaic Corporation, 125 Ga.App. 845, 189 S.E.2d 459 (1972), reversed on other grounds, 230 Ga. 58, 195 S.E.2d 399 (1973), jurisdiction over two non-resident corporations was asserted under sub-sections (a) and (c) of the Georgia Long Arm Statute. In considering jurisdiction under sub-section (a), the Georgia Court of Appeals noted:

“We would point out that it (transacting business) would seem to encompass more than mail orders which require acceptance in a nonresident state. Furthermore, transacting business would not be involved where the sole local performance was delivery of items ordered to this state.”

Also relevant is J. C. Penney Company v. Malouf, 230 Ga. 140, 196 S.E.2d 145 (1973). In that case, Malouf, a foreign corporation, sold merchandise to Penney, which was resold by Penney at retail. When the plaintiffs filed suit against Penney for damages allegedly caused by this merchandise, Penney sought to bring Malouf in as a third party defendant.

In allowing Penney to join Malouf, the Supreme Court of Georgia stated:

“We conclude that the manufacture and shipment of merchandise by Malouf for delivery to Penney in Georgia placed the merchandise in the stream of commerce for resale at retail to Georgia citizens; and placing the merchandise in that stream pursuant to the warranty-indemnity contract previously referred to amounted to ‘transacting any business’ in Georgia by Malouf under subsection (a) of our Long Arm Statute.”

Thus it was only when coupled with a warranty-indemnity contract that the Georgia Supreme Court held that shipping goods into Georgia constituted “transacting business”.

Appellant discounts Penney by pointing out that on a motion for rehearing, the Court summarized its earlier action as follows:

“We held that by manufacturing merchandise and placing it in the stream of commerce in Georgia, Malouf was doing business in Georgia. In connection with that doing business in Georgia, Malouf entered into a contract with Penney agreeing to hold Penney harmless for any and all expenses and damages arising or resulting from any ‘alleged defect’ in its merchandise. Penney was sued in Fulton County for an ‘alleged defect’ in the merchandise. The ‘act’ causing expenses and damages to Penney occurred when the suit was brought in Fulton County. The bringing of the suit in 1968 in Fulton County against Penney activated the obligations of Malouf to Penney contained in the contract of indemnity.” Penney, supra, at 149.

Appellant contends that this opinion on rehearing puts the emphasis on placing goods in the stream of commerce.

However, this opinion was written with only the venue question in mind. By saying “We held . . . ”, the

Court does not seem to intend to modify its original holding, but merely to refer to it.

Finally, appellant cites Delta Equities, Inc. v. Larwin Mortgage Investors, 133 Ga.App. 382, 211 S.E.2d 9 (1974). The parties agree on the holding in Delta. It holds that where a non-resident corporation’s agents made two trips into Georgia to negotiate a contract, the “minimum contracts” necessary to constitute “transacting business” were satisfied. Although it was established that Toyomenka sent agents into Georgia to meet with the bankrupts on the accounts at issue, the business had already been consummated.

The judgment of the District Court is

Affirmed.

      . Georgia Long Arm Statute.
      24-113.1. Personal jurisdiction over nonresidents of State. — A court of this State may exercise personal jurisdiction over any nonresident, or his executor or administrator, as to a cause of action arising from any of the acts, omissions, ownership, use or possession enumerated in this section, in the same manner as if he were a resident of the State, if in person or through an agent, he:
      (a) Transacts any business within this State; or
      (b) Commits a tortious act or omission within this State, except as to a cause of action for defamation of character arising from the act; or
      (c) Commits a tortious injury in this State caused by an act or omission outside this State, if the tortfeasor regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this State; or
      (d) Owns, uses or possesses any real property situated within this State.