author: ADAMS, Circuit Judge. ALDISERT, Circuit Judge,

text:
    Samuel T. ROY, Justice of the Peace, et al., Appellants, v. Benjamin R. JONES, Chief Justice of the Supreme Court of Pennsylvania, et al., Appellees.
    No. 72-1737.
    United States Court of Appeals, Third Circuit.
    Submitted Under Third Circuit Rule 12(6).
    May 22, 1973.
    Decided Aug. 28, 1973.

      Stuart E. Savage, Karl W. Wiedt, III, Savage, Finkel & Love, Pittsburgh, Pa., for appellants.
    Frederick N. Frank, Asst. Atty. Gen., Pittsburgh, Pa., J. Shane Creamer, Atty. Gen., Harrisburg, for appellees.
    Before KALODNER, ALDISERT and ADAMS, Circuit Judge.
   OPINION OF THE COURT

ADAMS, Circuit Judge.

Appellants are justices of the peace who were elected, and commissioned by the Governor of Pennsylvania, for a six-year term of office expiring on the first Monday of January, 1974. On May 19, 1971, they were temporarily suspended from office by the Supreme Court of Pennsylvania acting upon the recommendation of the Judicial Inquiry and Review Board. The apparent cause for the temporary suspensions was an alleged violation by appellants of Rule 2, subd. A of The Rules of Conduct, Office Standards and Civil Procedure for Justices of the Peace, which prohibits justices of the peace from, inter alia, being employed by the Commonwealth or a political subdivision or holding office in a political party or political organization.

On June 1, 1971, appellants, together, with the Squires and Constables Association of Pennsylvania and other suspended justices of the peace, petitioned the Pennsylvania Supreme Court to revoke the suspension orders of May 19, 1971. This petition was denied by order of court dated July 14, 1971. Later, on August 23, 1971, the same group applied to Justice Brennan of the United States Supreme Court for a stay of the May 19th suspension orders pend-, ing the filing of a petition for a writ of certiorari with the United States Supreme Court. Justice Brennan denied the application for a stay on September 19, 1971, and no petition for a writ of certiorari was ever filed seeking appellate review of the Pennsylvania Supreme Court’s May 19th orders and its refusal to revoke its suspension orders.

Instead, appellants commenced this original action in the district court on December 30, 1971, alleging that their suspensions were effected without notice and without a hearing in violation of both the Commonwealth’s “Rules of Procedure Governing the Judicial Inquiry and Review Board” and the United States Constitution. They urged the district court (1) to enjoin enforcement of the Pennsylvania Supreme Court’s suspension order, and (2) to enjoin the Judicial Inquiry and Review Board from conducting hearings and making further recommendations to the Pennsylvania Supreme Court. In an opinion and order dated June 16, 1972, the district court, based on “abstention” principles, granted the defendants’ motion to dismiss the suit. 349 F.Supp. 315.

Although we affirm the judgment of the district court, we do so on a ground other than that relied upon by the district court.

I.

It is clear from a recitation of the facts of this case that the appellants have sought, through the vehicle of a section 1983 suit for injunctive relief, to have a lower federal court engage in what essentially constitutes relitigation of issues already decided by Pennsylvania’s highest court. Having failed to pursue the only available course for federal review of the state court’s determination — a writ of certiorari from the Supreme Court of the United States— the appellants are now barred by the principles of res judicata from obtaining such review in the lower federal courts.

Guided by the decision in Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832 (1947), the federal courts have held that litigants may not seek to have redetermined, by original actions in federal district courts, issues already settled in a prior state-court adjudication.6 Illustrative of the prevailing view, and similar to the present case, is Coogan v. Cincinnati Bar Assoc.

Coogan, an attorney, was indefinitely suspended as a result of a recommendation of the Board of Commissioners on Grievances and Discipline and the Cincinnati Bar Association. The Supreme Court of Ohio approved the findings and recommendations of the Board, and issued the suspension order. Coogan failed to seek certiorari from the United States Supreme Court for review of the Ohio court’s action. Instead, he brought an original action under the Civil Rights Act. in the federal district court, seeking to enjoin enforcement of the suspension. He claimed that his suspension contravened certain constitutional guarantees.

The district court dismissed the action and the Sixth Circuit affirmed. In so doing, it offered a succinct statement of the relevant principles:

“Coogan had an adequate remedy for review of his suspension by petitioning the Supreme Court of the United States for a writ of certiorari. He chose not to resort to that remedy.
“The Civil Rights Act was not designed to be used as a substitute for the right of appeal, or to collaterally attack a final judgment of the highest court of a state and relitigate the issues which it decided.
“The final judgment of the Supreme Court is conclusive and Coogan is precluded by the doctrine of res ju-dicata from relitigating not only the issues which were actually involved in the disbarment proceeding, but also the issues which he might have presented.”

As noted above, on June 1, 1971, appellants petitioned the Supreme Court of Pennsylvania to revoke the suspension orders of May 19, 1971. In addition to contentions based upon state law, the petition contains specific arguments that the suspension order violated the appellants’ federal constitutional rights. In denying the petition, Pennsylvania’s highest court necessarily rendered a decision rejecting on the merits the very federal claims asserted by appellants in their complaint filed in the district court. Having been content to forego the prescribed avenue for securing federal review — application for a writ of certiorari — the appellants are now barred from bringing what is, effectively, a collateral attack upon the state court’s judgment. Accordingly, the district court’s dismissal of this action ' must be affirmed.

II.

The district court based its decision on “abstention” principles. There are several legal doctrines that have, at times, been employed under the “abstention” rubric. Thus, the classical abstention principle, or Pullman doctrine, and the equitable concepts embodied in the Younger rule address different, though similar, concerns. Whichever abstention doctrine is applicable, however, its invocation serves as an impediment to a decision on the merits.

In the present case, the district' court stated that “plaintiffs have not suffered or are likely to suffer irreparable injury.” As indicated earlier, a hearing before the Judicial Inquiry and Review Board has been scheduled. To the extent that this hearing may be considered a continuing proceeding, the philosophy underlying Younger would counsel that the federal court stay its hand. 01 course, if there were no continuing procedure, the doctrine of Younger has no application.

Moreover, the Supreme Court of Pennsylvania having already construed the statute in question, Pullman abstention would not be apposite.

III.

Our attention has been invited to England v. Louisiana State Board of Medical Examiners, which provides an interesting comparison with the present case. In approaching England, it must be noted that the plaintiffs here chose to bring their action originally in state court. And, although England lends philosophical support to the result reached by us here, it embodies somewhat different legal issues and rests upon somewhat different doctrinal underpinnings.

In England, a group of chiropractors brought suit in the first instance in the federal court, seeking an injunction and a declaration that, as applied to them, the Louisiana Medical Practice Act violated the fourteenth amendment. The district court invoked the doctrine of abstention, as set forth in Pullman, supra, on the ground that a state court might effectively end the controversy by determining that chiropractors were not governed by the state statute. Having thus been remitted to the state courts, the chiropractors there “submitted for decision, and briefed and argued” both their state and federal claims. These were rejected by the state courts. Thereafter, the chiropractors returned to the district court and sought to raise the same federal claims that had been turned down in the state court. The district court dismissed the federal action, holding that:

“Since the [state] courts have passed on all issues raised, including the claims of deprivation under the Federal Constitution, this court, having no power to review those proceedings, must dismiss the complaint. The proper remedy was by appeal to the Supreme Court of the United States.”

On appeal, the Supreme Court held that a litigant may avoid the result reached by the district court by “reserving” his federal contentions during the course of the state litigation.

It is apparent that the procedures outlined in England were engrafted onto the law of abstention to insure that implementation of the Pullman doctrine not run afoul of Congressional mandate. In Willcox v. Consolidated Gas Co., 212 U.S. 19, 29 S.Ct. 192, 53 L.Ed. 382 (1909), the Supreme Court stated unequivocally that “the right of a party plaintiff to choose a federal court where there is a choice cannot be properly denied.” Recalling its earlier pronouncement, and mindful of the fact that remitting to state courts litigants „ who have properly invoked the statutory jurisdiction of the federal courts might be deemed an “abdication” of legislated responsibility, the Court in England fashioned the procedure for “reservation” of federal jurisdiction. The litigant who finds himself ordered into the state court against his will may specifically “reserve” presentation of his federal claims to the federal court pending state determination of his state-law claims. Upon resolution of the state questions, he is admitted back into federal court for disposition of any federal issues that remain. Thus, where Pullman abstention is ordered, there is avoided

“any conclusion that a litigant who has properly invoked the jurisdiction of a Federal District Court to consider federal constitutional claims can be compelled, without his consent and through no fault of his own, to accept a state court’s determination of those claims.”

Inasmuch as the genesis of England was the perceived need to insulate the Pullman doctrine from the taint of “abdication,” its application in a case where no Pullman problem is present is questionable. It would appear the power to “reserve” federal claims when proceeding in a state court can arise only when a plaintiff is before the state tribunal because the federal court has refused, on abstention grounds, to proceed with his case. The plaintiffs here elected to proceed first in the state courts, and thus waived the opportunity to “reserve” their federal claims. Having selected the state forum of their own accord, they msut abide by their choice.

The judgment of the district court will be affirmed.

ALDISERT, Circuit Judge,

(concurring) .

I concur in the result reached by the majority, but I do not join in the opinion. The district court dismissed the complaint on abstention principles. The majority affirms on res judicata, what they describe as “a ground other than that relied upon by the district court.” I am not persuaded that the abstention doctrine, relied upon by the district court, is divorced from res judicata.

Abstention is a judicially developed doctrine limiting district court action under certain circumstances. I perceive it to be a shorthand expression encompassing several aspects of federal restraint. (1) In a Pullman-type abstention, the Court stays its hand and retains jurisdiction until the state court acts. (2) In a Burford-type abstention, the Court dismisses the complaint and flatly declares that the subject matter is for state court determination. (3) An England-type abstention envisions two stages. Where the case is filed in federal court before a state court decision, a Pullman-type abstention comes into being, the federal court staying its hand until the state court acts. If, after the state proceedings terminate, the plaintiff returns, the federal court must make a factual determination. It must decide whether the federal questions were presented to the state court. If they were, and were not reserved, then, on the theory of res ju-dicata, the court may properly dismiss the federal action. It is this second stage which gives the label “England-type” to this category of abstention; the first stage is purely and simply a Pullman-type abstention.

In the case before us, we had only the second stage. The appellants came to the federal court after the state court proceedings. There was thus no need for a first stage Pullman-type abstention. Call it England-type abstention or garden variety res judicata, it is the same to me.

I do not believe it is necessary to cut terminology so fine as to suggest that England only applies where the filing of the federal action precedes the state action. I find no magic in the “right to return” expression in the opinion. The essence of the doctrine is as stated by Mr. Justice Brennan: “[W]e see no reason why a party, after unreservedly litigating his federal claims in the state courts although not required to do so, should be allowed to ignore the adverse state decision and start all over again in the District Court.” 375 U.S. at 419, 84 S.Ct. at 466. See Commonwealth ex rel. Specter v. Levin, 359 F.Supp. 12 (E.D. Pa., three-judge court, 1973).

Abstention takes even other forms. Professor Charles Alan Wright lists the Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), sextet as one of “The Abstention Doctrines.” The editors of Hart and Wechsler’s the Federal Courts and the Federal System, 2d Ed., prefer a general category of “Judicially Developed Limitations on Entertaining Actions Against State Officers” in which they include “B. Abstention: The Pullman Doctrine” and “C. Equitable Restraint: The Doctrine of Douglas v. City of Jeanette.” It is under “equitable restraint” rather than “abstention” that they place Younger Mechanical dependence upon labels leads to difficulties. The separate nomenclature used by America’s foremost federal court commentators emphasizes the importance of the conceptual and factual underpinnings of a case rather than reliance upon a neat label attached to its holding.

Although the majority’s discussion of Younger appears to be dictum, I find it necessary to add these observations. Younger held that federal courts will not entertain an action to restrain an ongoing state proceeding if the federal plaintiff has the opportunity of asserting his constitutional contentions in a single state action. I perceive nothing in this notion that limits the application of the conceptual basis of Younger to criminal cases. In Berryhill v. Gibson, 411 U.S. 564, 93 S.Ct. 1689, 36 L.Ed.2d 488 (1973), the Supreme Court had an uncluttered opportunity to say that the rationale of Younger was inapplicable to civil actions. But this, the court did not do.

I have found Lynch v. Snepp, 472 F.2d 769, 773 (4th Cir. 1973), to be the most scholarly discussion of this point. There, the Fourth Circuit, speaking through Judge Craven, applied Younger to a state civil action arising from a school disturbance:

These general notions of comity, equity, and federalism, applied since the early days of our Union of States and most recently restated in Younger and its companion cases, occupy a highly important place in our history and our future. Their application should never be made to turn on such labels as “civil” or “criminal” but rather upon an analysis of the competing interests in each case. Palaio v. McAuliffe, 466 F.2d 1230, 1232-1233 (5th Gir. 1972); Cousins v. Wigoda, 463 F.2d 603 (7th Cir.) application for stay denied, 409 U.S. 1201, 92 S.Ct. 2610, 34 L.Ed.2d 15 (1972) (Rehnquist, Circuit Justice) .

A fair reading of the district court’s opinion in the case before us discloses that Judge Scalera approached the problem much the same as Judge Craven in Snepp. Judge Scalera emphasized the “irreparable injury” test, citing De Vita v. Sills, 422 F.2d 1172 (3d Cir. 1970); Younger said that irreparable injury must be “both immediate and great.” 401 U.S. at 46, 91 S.Ct. 746 Snepp reversed the grant of a preliminary injunction because plaintiffs “failed to show great and immediate irreparable injury [and] that their rights would not be protected in the state proceedings. . . . ” 472 F.2d at 776.

The fundamental equitable concepts of Younger must never be subordinated. Thus, one piece of the Younger factual complex must not become the subject of controlling emphasis to the exclusion of the important legal principles constituting the rationale of the case. An example of this is the suggestion that the root premises of Younger do not lie where there is no ongoing state proceeding. While the contemporaneity of the state action may indeed be extremely important, this is but one factor, and this one factor must not be considered in vacuo.

Younger is a jurisprudential brew of many interdependent principles and traditions, which Judge Craven described as “general notions of comity, equity, and federalism applied since the early days of our Union of States.” And I find it difficult if not impossible, to lift one particular ingredient from the brew and then isolate it. And if I could, I dare say it would be impossible to divest it from the flavor of the other ingredients. Thus, if the presence of ah ongoing state proceeding is critical, so is the necessity of proving entitlement to an immediate injunction. So understood, there is a delightful Catch-22 quality about it all:

Plaintiff: Aha, you can’t apply Younger, because there is no ongoing state proceeding.
Defendant: Aha to you, sir. If there is no ongoing state proceeding, then why do you need an injunction? What’s there to enjoin?

On balance, while I agree that perhaps the neatest way of affirming the district court is via the England-res judicata route, I am also prepared to affirm Judge Scalera on the strength of his “irreparable harm” discussion.

      . The 1968 Constitution directs the establishment of the Board which is given the exclusive power to investigate alleged judicial misconduct and to recommend disciplinary action to the Supreme Court. Pa.Const. Art. V, § 18, P.S.

      . At the time of appellants’ election to office, justices of the peace were not prohibited from working for the Commonwealth or holding office in a political party. In 1968, however, the Pennsylvania Constitution was amended, and the Rules of Conduct, Office Standards and Civil Procedure for Justices of the Peace were promulgated by the Pennsylvania Supreme Court. In Petition of Squires and Constables of Pennsylvania, Inc., 442 Pa. 502, 275 A.2d 657 (1971), the Supreme Court of Pennsylvania upheld the validity of the Rules.

      . This action was brought under 42 U.S.C. § 1983, and jurisdiction was based on 28 U.S. C. §§ 1331, 1343.

      . Subsequent to their suspensions, appellants were formally notified of the institution of formal charges against them. They answered the charges, and a hearing before the Board was scheduled prior to the initiation of the present case.

      . See Helvering v. Gowran, 302 U.S. 238, 245, 58 S.Ct. 154, 82 L.Ed. 224 (1937).

      . As indicated above, appellants sought a stay from the U.S. Supreme Court of the suspension order. It was denied, and no petition for certiorari was filed.

      . See, e. g., Bricker v. Crane, 468 F.2d 1228, 1232 (1st Cir. 1972) ; P. I. Enterprises, Inc. v. Cataldo, 457 F.2d 1012, 1014 (1st Cir. 1972) ; Booth v. Lemont Mfg. Corp., 440 F.2d 385, 388 (7th Cir. 1971) ; Woolley v. Eastern Air Lines, Inc., 273 F.2d 615, 616 (5th Cir. 1960) ; Mertes v. Mertes, 350 F.Supp. 472, 474 (D.Del.1972) (3 judge court).

      . 431 F.2d 1209 (6th Cir. 1970).

      . 42 U.S.C. § 1983.

      . 431 F.2d at 1211.

      . There is a line of authority springing from the decision of the Supreme Court in Hooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923), which holds that a federal district court is without jurisdiction to redetermine issues already litigated in a prior state action. Apparently, the Supreme Court felt that allowing re-litigation in the district courts of issues once adjudicated in the state courts would amount to a usurpation of the Supreme Court’s exclusive power to review state determinations of federal questions. Thus the Court stated (263 U.S. at 415-416, 44 S.Ct. at 150) :
      “It affirmatively appears from the bill that the judgment was rendered in a cause wherein the circuit court had jurisdiction of both the subject matter and the parties; that a full hearing was had therein; that the judgment was responsive to the issues, and that it was affirmed by the Supreme Court of the State on an appeal by the plaintiffs. If the Constitutional questions stated in the bill actually arose in the cause, it was the province and duty of the state courts- to decide them; and their decision whether right or wrong, was an exercise of jurisdiction. If the decision was wrong, that did not make the judgment void, but merely left it open to reversal or modification in an appropriate and timely appellate proceeding. Unless and until so reversed or modified, it would be an effective and conclusive adjudication, [citing cases]
      “Under the legislation of Congress, no court of the United States other than this Court could entertain a proceeding to reverse or modify the judgment for errors of that character. [citing statute] To do so would be an exercise of appellate jurisdiction. The jurisdiction possessed by the District Courts is strictly original.”
      In Daniel B. Frazier Co. v. Long Beach Twp., 77 F.2d 764, 765 (3d Cir. 1935), this court, by application of the Roolcer principle, reached substantially the same result that we by resort to the doctrine of res judicata reach here. Other courts have also taken the Rooker approach. See, e. g., Paul v. Dade County, 419 F.2d 10, 12-13 (5th Cir. 1969), cert, denied, 397 U.S. 1065, 90 S.Ct. 1504, 25 L.Ed.2d 686 (1970) ; Mackay v. Nesbitt, 412 F.2d 846 (9th Cir.), cert, denied, 396 U.S. 960, 90 S.Ct. 435, 24 L.Ed.2d 425 (1969).

      . See Conover v. Montemuro, 477 F.2d 1073, 1086 (3d Cir. 1972) (Adams, J., concurring) aff’d en banc, (3d Cir. 1973).

      . Railroad Comm, of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). “Pullman” abstention involves, typically, deference by a federal court to state-court determinations of state law, with a view to obviating the need to reach questions of constitutional dimension. Several cases, however, have upheld abstention by the federal courts where federal jurisdiction was based entirely on diversity of citizenship, and where there thus existed no con-,, stitutional question to be avoided. See, e. g., Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25, 79 S.Ct. 1070, 3 L.Ed.2d 1058 (1959) ; Hawks v. Hamill, 288 U.S. 52, 53 S.Ct. 240, 77 L.Ed. 610 (1933).
      In other cases the Supreme Court has ordered abstention where a state has provided a special review mechanism for the determination of questions of state administrative law. See, e. g., Alabama Public Service Comm. v. Southern Ry., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002 (1951) ; Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943).
      These cases are, at least arguably, grounded in considerations somewhat distinct from those which underlie the Pullman doctrine.

      . Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971).

      . See note 4, supra.

      . See Lewis v. Kugler, 446 F.2d 1343, 1347 (3d Cir. 1971) (“They [the principles of Younger] are not applicable to situations where no prosecution is pending in state courts at the time a federal proceeding is begun. . . .”).

      . The considerations which appear to have motivated the Court in Younger emanated, to a great extent, from the desire to prevent federal interference with state criminal proceedings. See the concurring opinion of Mr. Justice Stewart, 401 U.S. at 55, 91 S. Ct. 746.

      . 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964).

      . Id. at 413, 84 S.Ct. at 463.

      . Id. at 414, 84 S.Ct. at 464.

      . 212 U.S. at 40, 29 S.Ct. at 195.

      . 375 U.S. at 415-416, 84 S.Ct. 461.

      . Id. at 421-422, 84 S.Ct. 461.

      . Id. at 415, 84 S.Ct. at 464.

      . Describing the England-type litigant as having a “right to return” to the district court strongly implies that the Supreme Court was referring in England only to cases where a litigant, because of the absention doctrine, has been sent by the federal courts to the state courts against his will. 375 U. S. at 422, 84 S.Ct. 461.

      . Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). See also Lake Carriers’ Association v. MacMullan, 406 U.S. 498, 92 S.Ct. 1749, 32 L.Ed.2d 257 (1972) ; Askew v. Hargrave, 401 U.S. 476, 91 S.Ct. 856, 28 L. Ed.2d 196 (1971) ; Fornaris v. Ridge Tool Co., 400 U.S. 41, 91 S.Ct. 156, 27 L.Ed.2d 174 (1970) ; Reetz v. Bozanich, 397 U.S. 82, 90 S.Ct. 788, 25 L.Ed.2d 68 (1970) ; United Gas Pipe Line Co. v. Ideal Cement Co., 369 U.S. 134, 82 S.Ct. 676, 7 L.Ed.2d 623 (1962) ; Clay v. Sun Insurance Office Ltd., 363 U.S. 207, 80 S.Ct. 1222, 4 L.Ed.2d 1170 (1960) ; City of Meridian v. Southern Bell Tel. and Tel. Co., 358 U.S. 639, 79 S.Ct. 455, 3 L.Ed.2d 562 (1959) ; Albertson v. Millard, Attorney General of Michigan, 345 U.S. 242, 73 S.Ct. 600, 97 L.Ed. 983 (1953) ; Spector Motor Co. v. McLaughlin, 323 U.S. 101, 65 S.Ct. 152, 89 L.Ed. 101 (1944).

      . Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). See also Alabama Public Service Commission v. Southern R. Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002 (1951) ; Magaziner v. Monte-muro, 468 F.2d 782 (3d Cir. 1972) ; Reich-man v. Pittsburgh National Bank, 465 F.2d 16, 18 (3d Cir. 1972) ; Allegheny Airlines, Inc. v. Pennsylvania Public Utility Commission, 465 F.2d 237 (3d Cir. 1972). Cf. ALI Study of the Division of Jurisdiction Between State and Federal Courts, § 1371(d) ; § 1371(d) of S. 1876, 93d Congress, 1st Session, proposed Federal Court Jurisdiction Act of 1973.

      . England v. Louisiana State Board of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, II L.Ed.2d 440 (1964).

      . Commissioner v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715, 92 L.Ed. 898 (1948).

      . C. Wright, Law of Federal Courts, 1972 Pocket Part, 23.

      . At 980.

      . At 985.

      . At 1009.

      . At 1021.


source: Caselaw Access Project

author: CLARK, Associate Justice.

license: Public Domain

text:
    Daniel KNIGHT, Appellant, v. STATE OF MINNESOTA, Appellee.
    No. 73-1137.
    United States Court of Appeals, Eighth Circuit.
    Submitted June 13, 1973'.
    Decided July 20, 1973.
    Luther A. Granquist, Minneapolis, Minn., for appellant.
    Theodore Rix, Asst. County Atty. of Hennepin County, Minneapolis, Minn., for appellee.
    Before Mr. Justice CLARK, HEANEY and BRIGHT, Circuit Judges.

       Associate Justice Tom C. Clark, United States Supreme Court, Retired, is sitting by designation.

   CLARK, Associate Justice.

In this habeas corpus action Knight challenges the validity of state conviction and sentence on a charge of theft by check of an amount in excess of $100.00. Minn.Stat. § 609.52, subd. 2(3). Originally he was charged on November 18, 1967, with aggravated forgery in violation of Minn.Stat. § 609.625, subds. 1 and 3, to which he pleaded not guilty. On December 6, 1967, Knight appeared before the court with his privately retained counsel and entered a guilty plea to the lesser degree crime of theft by check. The trial court accepted the plea, finding it voluntarily and freely made. However, on January 9, 1968, when his case came on for sentencing, Knight sought leave of the court to withdraw his plea on the ground that he had neither signed nor seen the check involved and, therefore, was not guilty of the charge. The court held a private conference in chambers with the prosecutor and Knight’s counsel and thereafter denied Knight’s motion to withdraw his plea; it then sentenced him to a term of 0-5 years to be served consecutively to a previously imposed sentence. Knight appealed and the Minnesota Supreme Court remanded the case for a post-conviction hearing. Post-conviction relief was denied and the Minnesota Supreme Court affirmed. 292 Minn. 419, 192 N.W.2d 829 (1971). This habeas corpus application was then filed and the District Court below denied relief. Apparently Knight is still being held under the sentence here challenged. In light of certain inadequacies in Knight’s guilty plea hearing and sentencing appearance, we believe that Knight is entitled to a full hearing in the District Court on his claims that his guilty plea was not made with knowledge of the elements of the crime charged and that he was denied the effective assistance of counsel.

1. Factual Background:

The basic facts upon which our decision turns appear undisputed. Two girls, Vicki Gottrey and Sheila Spence Smith, purchased a pair of men’s alligator shoes at a certain Florsheim Shoe Shop on October 11, 1967. They paid with a forged check in the amount of $115. Knight later either “took” the shoes or the girls gave them to him. Knight exchanged the shoes for another pair at the same price but which were of the style and size that he preferred. Police officers had an old arrest warrant for one of the girls, and they traced her to an apartment where they found Knight, the two girls and another man. The alligator shoes were on the floor. All four individuals were arrested, the shoes were seized, statements were taken and a charge of aggravated forgery was filed against Knight. He pleaded not guilty and filed a motion to suppress the shoes and his statement, arguing that the officers entered the apartment illegally and arrested him without probable cause. On December 6, 1967 the aggravated forgery charge was dismissed and the theft by check charge was filed to which Knight pleaded guilty. At a hearing he admitted under oath that he entered the plea of guilty of his “own free will and volition”, knowing that he could be sentenced to a term up to five years in the State Penitentiary; that he had “discussed the matter on numerous occasions” with his retained attorney; that “on the night of October 11, 1967, at Brookdale Shopping Center . a check” [was] given the Florsheim Shoe Shop”; that he was “not the person who wrote the check or gave the check”; but that “he knew that the check was a forged check” and “did not belong to the person who gave it”; that “the person who did pass the check . . . got a pair of alligator shoes”; that he “took the alligator shoes the next day and knowing that she had obtained it by a bad check”; and that he “knowingly took the shoes that were given to you from this purchase and exchanged them for another pair of shoes.” Knight also admitted that by his plea of guilty that he was waiving his right to question the entry into the apartment, the seizure of the shoes and the validity of his statement in connection therewith. Knight also testified that his retained counsel had “competently and conscientiously advised and represented .... [him] throughout this matter.” At the same hearing and on application of his counsel, Knight’s bail bond was reduced from $5000 to $2000 without objection from the State.

At his January 9, 1967 appearance for sentencing Knight stated that he had discussed his case with another lawyer and wanted to withdraw his guilty plea. The court announced a brief recess at which point Knight’s retained counsel stated that “before doing that, may I put on the record that I didn’t know anything about this”, and the judge replied, “I kind of gathered that.” The judge, Knight’s counsel and the prosecutor then went into the judge’s chambers. When they returned the judge asked Knight the name of the other attorney he had consulted, and Knight gave the court his name and said that they had discussed the case two days before. The judge then announced that he had read the transcript of the guilty plea hearing and that Knight’s motion to withdraw the guilty plea was denied. The judge asked Knight if he had anything to say before sentence was imposed. Knight replied:

“Well, I am not guilty of the charge. The State’s own witnesses said that two girls came in there and bought a pair of shoes, not I. I haven’t signed a check. I haven’t even seen a check.”

The state then announced: “it isn’t our contention that he passed this check. The contention is, and the plea of guilty shows, that he was a part of the conspiracy to steal by means of a false bank check over one hundred dollars.” Knight’s retained counsel, upon being asked if he wished to say anything before sentence was imposed said:

“Mr. Cohen. Yes, Your Honor, I think I should clarify the record and also make a record to the effect that I was not apprised to Mr. Knight’s desire to change or withdraw his plea of guilty until this morning, or until such time as he took the stand. I also should add in this particular case I represented Mr. Knight from the inception of the case, that there was a preliminary hearing in Municipal Court which I represented him and that subsequent to that I had numerous conferences with the county attorney’s office; and I should point out for the record that the initial charge was forgery which carried a term of ten years, but after discussions with the county attorney and pursuant to papers filed with the Court and in the Court file, the county attorney agreed to reduce the charge to theft by check which carries a maximum of five years.
“I feel under the circumstances, Your Honor, that the defendant was represented — I represented the defendant adequately and kept him informed at all times of what was going on and what the situation was. I think the Court is aware of the fact, and the record shows, that the questions asked at the plea of guilty were those put to the defendant by myself and that the defendant answered the questions in the affirmative and admitted his guilt.
“I can’t help what advice the defendant received in jail outside of my presence, Your Honor, and I would ask the Court to ignore that and refer to the original report and all reports on this defendant in making its sentence, and ignore anything that happened today with regard to the imposition of sentence.”

The court then sentenced Knight to an indeterminate, five-year maximum sentence at the St. Cloud Reformatory for Men.

2. The Guilty Plea Hearing of December 6, 1967:

We have carefully studied the record of this hearing and conclude that it leaves much to be desired. Although the prosecutor did not claim that Knight passed the check but “that he was a part of the conspiracy to steal by means of a false bank check over one hundred dollars”, we find no reference to any conspiracy in the record of December 6th. Knight was not queried about his knowledge of a conspiracy, the members composing it or any overt acts resulting therefrom. Indeed, the questions seem to skirt any mention of Vicki Gottrey and Sheila Spence Smith, who apparently passed the check. It is true that Knight admitted knowing that the check was forged when he took the shoes, but this alone was not sufficient to bring him within the offense charged. His receipt of the shoes merely indicated that he might have been an accessory after the fact, not an offense in Minnesota. State v. Matousek, 287 Minn. 344, 348, 178 N.W.2d 604 (1970); State v. Lyons, 144 Minn. 348, 175 N.W. 689 (1919). It appears strange to us that neither counsel, the prosecutor nor the judge developed the basic element necessary to the charge, i. e., Knight’s participation in a conspiracy.

Knight’s right to plead not guilty was taken from him — even though he demanded it — despite the Supreme Court’s admonition that the courts should exercise the “utmost solicitude” in making sure that the accused “has a full understanding of what the plea connotes and of its consequences.” Boykin v. Alabama, 395 U.S. 238, 243-244, 89 S.Ct. 1709, 1712, 23 L.Ed.2d 274 (1969). Although we have held that Boykin’s requirement that the record affirmatively show that a guilty plea was voluntarily and understanding^ made is not retroactive, Mel-ler v. Missouri, 431 F.2d 120 (8 Cir. 1970), the necessity that courts approach guilty pleas with “utmost solicitude” is to some extent inherent in the traditional concept of due process. See also Santobello v. New York, 404 U.S. 257, 92 S.Ct. 495, 30 L.Ed.2d 427 (1971) (Douglas, J., concurring; Marshall, J., concurring and dissenting).

3. The Sentencing Proceeding of January 9,1968:

We are also disturbed by Knight’s claim that he lacked the effective assistance of counsel at the hearing of January 9, 1968, when he attempted to withdraw his plea. It appears clear that he had no support from his counsel in this regard. Knight had advised the court that he was dissatisfied with his counsel and had sought the advice of another. Still his original counsel told the court that he was surprised at Knight’s request; that he had “represented the defendant adequately” and had obtained the agreement on the lesser offense. At no time did he speak on behalf of Knight’s request to withdraw his plea; on the contrary he gave every evidence of being against that course. Nor did counsel speak on Knight’s behalf with regard to the appropriate sentence. Subsequently the court imposed a maximum sentence consecutive to one already being served.

Four factors weigh heavily against the action of the court in refusing to allow Knight to withdraw his plea: (1) the inadequacy of the plea of guilty hearing of December 6th; (2) the failure of counsel to support Knight in his offer to withdraw his plea; (3) the failure of the court to hold a hearing on the motion to withdraw the plea; and (4) counsel’s apparent distraction from his duty to represent Knight on the issue of sentencing by his concern over justifying his past handling of the ease.

4. The Post-Conviction Hearing:

The State seems to say that all of these defects were cured by the subsequent post-conviction hearing held on March 9, 1970. However, we find the post-conviction hearing of little assistance since that court made no findings on the issue of whether Knight’s guilty plea was knowingly and intelligently made. There is no indication in the post-conviction transcript that Knight entered his guilty plea with knowledge of the elements of the offense charged; on the contrary, the only evidence on this point was Knight’s testimony that he did not understand the elements of theft by check. Resolution of this issue is crucial in view of the fact that the guilty plea transcript was insufficient on its face to support acceptance of the plea. Although the state post-conviction court did find that Knight was adequately represented by counsel “at all proceedings in this Court up to’ and including conviction,” our study of the transcripts of the guilty plea hearing and especially the sentencing proceedings leaves us with serious doubt as to the correctness of this ruling.

The State’s reliance on United States v. Rawlins, 440 F.2d 1043 (8 Cir. 1971), is misplaced. The Court there upheld the trial court’s refusal to permit the accused to withdraw his guilty plea even though “ . . . there remained a slight possibility that the defendant may not have understood all of the essential elements of the crime.” In Rawlins the defendant’s counsel actively supported his client’s effort to withdraw his plea. Furthermore, the motion was deferred for a hearing which encompassed the issue of defendant’s understanding of all the elements of the crime. In the present case Knight apparently had neither the assistance of his counsel in attempting to withdraw his plea nor a hearing on whether he understood the essential elements of the crime when he entered his guilty plea on December 6, 1967.

In light of these considerations, the judgment is reversed and the case remanded for a full hearing on whether Knight had the effective assistance of counsel and whether his guilty plea was knowingly and intelligently made.

Reversed and remanded.


author: MEHAFFY, Chief Judge.

text:
    WAL-LITE DIVISION OF UNITED STATES GYPSUM COMPANY, Petitioner, v. NATIONAL LABOR RELATIONS BOARD.
    No. 72-1773.
    United States Court of Appeals, Eighth Circuit.
    Submitted May 15, 1973.
    Decided Sept. 5, 1973.

      John A. McDonald, Price, Cushman, Keck & Mahin, Chicago, 111., for petitioner.
    Russell H. Gardner, N. L. R. B., Washington, D. C., for respondent.
    Before MEHAFFY, Chief Judge, MATTHES, Senior Circuit Judge, and STEPHENSON, Circuit Judge.
   MEHAFFY, Chief Judge.

This case is before us pursuant to a petition to review and set aside an order of the National Labor Relations Board reported at 200 N.L.R.B. No. 132 (Dec. 22, 1972) and the Board’s cross-application for enforcement of its order. The three-member Board, with its Chairman dissenting, found that United States Gypsum Company had violated § 8(a)(1) and (5) of the National Labor Relations Act by refusing to bargain in good faith with the United Steelworkers of America, AFL-CIO. We thoroughly agree with the Chairman’s very logical and well reasoned analysis of this case, and for that reason and others as hereinafter set forth we grant the petition to review and set aside the order and deny the cross-application for enforcement.

The background facts of this case can be briefly summarized. On August 1, 1970 United States Gypsum Company purchased Wallace Manufacturing Company, a wall paneling factory in Pittsburgh, Kansas. At the time of the purchase the Wallace employees were represented by the United Steelworkers of America and there was approximately one year remaining on the three-year contract that the Union had negotiated with Wallace. Although under no obligation to do so, United States Gypsum voluntarily agreed to honor the Union’s contract until it expired. Some two and one-half months prior to the expiration of this contract United States Gypsum opened negotiations with the Union concerning a new contract. In the course of the negotiations United States Gyp'■sum bargained for an agreement that was based largely on a contract the Company then had in effect with the same Union at its plant in Pinckneyville, Illinois. The Union, on the other hand, bargained for an agreement that was based largely on the contract the Union had formerly secured from Wallace. Both parties were equally adamant that their respective positions should be the starting point for any negotiations. After two and one-half months of bargaining the parties were unable to resolve their basic disagreement. Finally, on June 13, 1971 at the recommendation of the Union’s representative, the employees voted to reject the Company’s most recent offer and go out on strike.

The basic issue in this appeal is whether United States Gypsum engaged in an unfair labor practice by refusing to bargain in good faith. Of course, the record is clear that the Company did in fact negotiate with the Union, but the Union and the Board contend that these negotiations were nothing more than “surface bargaining,” and that the Company never intended to bargain in good faith.

After an evidentiary hearing the Administrative Law Judge (formerly the trial examiner) concluded that the Company had violated § 8(a)(1) and (5) of the National Labor Relations Act by refusing to bargain in good faith. The Board, with its Chairman dissenting noted that the Administrative Law Judge relied essentially on a statement of the Company’s labor relations manager at the end of the grievance meeting and two letters from the Company to its employees. It agreed with his conclusion but did so for additional reasons which emphasized the Company’s intransigence in insisting on broad scale departures from the old Wallace contract. According to the majority, the Company’s proposals were so inadequate that it “could not reasonably have expected the Union to acquiesce.”

Turning first to the Board’s additional reasons and examining the record we find that the Company’s proposal was based on and similar to a contract this Union had signed with the Company at its Pinckneyville plant. It would seem obvious that the Company could reasonably expect the Union to accept the proposal, at least as a starting point in the negotiations. Certainly no inference of bad faith could be drawn from the fact that the Company made this proposal. However, the Company’s final proposal, submitted five days before the Wallace contract was to expire, offered a wage scale providing increases for all employees ranging from fifteen to thirty-five cents per hour, an insurance plan with better coverage at lower cost for the employees and a pension plan with higher retirement benefits. The only inadequacy of the Company’s proposal was by comparison to the Wallace contract. The Union admitted the Wallace contract had led to inefficient and uneconomic operations. The dissenting Chairman found, and the record supports his finding, that the Union admitted “that the employees did not put in a full day’s work and that the Wallace contract terms and . . . work rules . . . had accounted in large part for that situation.” That contract and its side agreements contained such restrictive clauses as a provision which required the Company to pay one-half day’s pay to any employee who saw a foreman working. Under this provision a grievance was filed when a foreman worked seven seconds, apparently pouring a solvent across the rollers of a machine to prevent paint from drying on the rollers while the machine operator was in the bathroom. The Company introduced a study made of one of its competitors which showed that the competitor had a similar plant but only employed twenty-seven people on its production line while Wal-Lite employed forty-eight. The competitor produced approximately twice as many boards per shift than did Wal-Lite. In spite of the inefficiency of the plant’s operation under the Wallace contract, the Union offered as its proposal a modification of that contract which basically struck from the Wallace contract references to ability, experience and qualifications as those terms related to job bidding, job transfers and overtime.

In light of the economically wasteful operation of the plant under the Wallace contract, we do not find it surprising that the Company refused to accept the Wallace contract as the starting point for negotiations. Nor were they required to do so. The Company’s only obligation after the purchase was to recognize the Union and bargain in good faith with it. NLRB v. Burns Int’l Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972). The Company not only did this but it also voluntarily agreed to abide by the Union’s contract until it expired by its own terms.

We agree with the conclusion of the Board Chairman that “the case built up against [the Company] . . . rests, in the main, on the adamant refusal of [the Company] to acquiesce in the Union’s equally adamant demand to treat the benefits secured by the Union from Wallace as vested benefits and to bargain upward from that point.” The duty to bargain as set forth in § 8(d) of the Act, 29 U.S.C. § 158(d), requires that the parties meet and confer in good faith. However, § 8(d) “does not compel either party to agree to a proposal or require the making of a concession. .” In discussing this section and its history the Supreme Court in H. K. Porter Co., Disston Div.-Danville Works v. NLRB, 397 U.S. 99, 106, 90 S.Ct. 821, 825, 25 L.Ed.2d 146 (1970), quoted one of its earlier decisions that “it is ‘clear that the Board may not, either directly or indirectly, compel concessions or otherwise sit in judgment upon the substantive terms of collective bargaining agreements.’ ” The Court in Porter, in holding that the Board could not compel agreement, stated: “It cannot be said that the Act forbids an employer or a union to rely ultimately on its economic strength to try to secure what it cannot obtain through bargaining.” 397 U.S. at 109, 90 S.Ct. at 826. Without substantial evidence that a negotiating party’s attitude is inconsistent with its duty to seek an agreement, the mere fact that it adamantly insists on a bargaining position or has not budged from its position on most issues cannot suffice to render it guilty of a refusal to bargain in good faith. NLRB v. MacMillan Ring-Free Oil Co., 394 F.2d 26 (9th Cir.), cert, denied, 393 U.S. 914, 89 S.Ct. 237, 21 L.Ed.2d 199 (1968); NLRB v. Almeida Bus Lines, Inc., 333 F.2d 729 (1st Cir. 1964).

“ ‘If the insistence is genuinely and sincerely held, if it is not mere window dressing, it may be maintained forever though it produce a stalemate. Deep conviction, firmly held and from which no withdrawal will be made, may be more than the traditional opening gambit of a labor controversy. It may be both the right of the citizen and essential to our economic legal system * * * of free collective bargaining.’ (Citation omitted.)” NLRB v. Almeida Bus Lines, Inc., supra, at 731.

In the present case, by the time the proposals for both parties were on the table, it was clear that each side was insisting upon its own bargaining position. Yet agreements and concessions were made. In looking at the negotiations themselves we find that the Company changed its position on such provisions as conditions for receiving holidays, overtime, vacations and funeral leave. The parties agreed on, among other things, the amount of shift differentials and conditions governing shift differentials and provisions and pay for employees called or scheduled to work when there was insufficient work. We cannot characterize the agreements made and the Company’s changes as minor or unimportant as the Board has done. Rather, in a situation where both parties are insistent on their positions as they had the right to be, we find their agreements are strong evidence of good faith. We note the statement attributed, without contradiction, to the Union’s representative that he “supposed that both parties had negotiated to the point of satisfying the law and he didn’t feel that the parties could be hung for not negotiating.”

The Administrative Law Judge specifically found that the Company’s representative “. . . willingly met with the Union’s representatives; he explained his proposals; he talked about the Union’s counterproposals; and, despite his so-called best and final offer on June 10, he did not refuse further meetings or discussions.” Even though the Administrative Law Judge demeaned these negotiating efforts by the Company as merely a “well-tutored regard for the external appearances of collective bargaining”, he nonetheless concluded that “if the evidence in the case was limited to what had transpired during the formal meetings between the Union and the Company, I would hesitate to find that General Counsel has proved the alleged violations of the Act.”

The evidence that persuaded the Administrative Law Judge to conclude that the Company had bargained in bad faith was the alleged statement of a Company official and the two Company letters to its employees. The statement was allegedly made at the end of a grievance hearing some seven months before commencement of negotiations, not by the Company’s bargaining representative but by the industrial relations officer of the Company in Chicago. According to Crain, the Union representative, the statement was to the effect that the officer’s mission was to “break” the Union. We have serious doubts as to Crain’s credibility. He did not mention this statement in his pretrial affidavit to General Counsel even though Crain testified that he could never forget the statement. A witness for the Company testified that no meeting after the grievance hearing occurred. Assuming, arguendo, that the statement was made, it cannot, of course, be used as the basis of a finding of an unfair labor practice since it occurred approximately nine months before the complaint was filed. See § 10(b), National Labor Relations Act; NLRB v. MacMillan Ring-Free Oil Co., supra. Nor do we think that the isolated comment of the officer, made some nine months before filing the complaint, supports the Board’s finding. We so hold considering the absence of other evidence of illegal acts of the Company and the affirmative evidence of good faith bargaining.

“Individual acts or statements of a negotiating party which appear contrary to the required attitude cannot be drawn upon to dilute a finding of good faith where the totality of the party’s conduct conforms to the dictates of the statute.” NLRB v. Al-meida Bus Lines, Inc., supra, 333 F.2d at 731.

Sign & Pictorial Union Local 1175 v. NLRB, 136 U.S.App.D.C. 144, 419 F.2d 726 (1969). See, Local 1424, IAM v. NLRB, 362 U.S. 411, 80 S.Ct. 822, 4 L. E.2d 832 (1960); NLRB v. MacMillan Ring-Free Oil Co., supra.

As to the Company’s letters, we agree with the dissenting Chairman that they were no more than privileged expressions of the Company’s viewpoint. The right of expression given an employer by § 8(c) of the Act, 29 U.S.C. § 158(c), “we equate with what in other branches of the law is described as the right of fair comment.” Caribe General Electric, Inc. v. NLRB, 357 F.2d 664, 665 (1st Cir. 1966). We do not think the Company exceeded that right here.

When this case is analyzed by any rule of law or fairness, the conclusion reached by the Board Chairman is the only one applicable here as the present Board decision under any guidelines would make a mockery of the basic fundamentals of the Board’s function. It seems clear in this ease that the Board was relying on the fact that the Company adamantly insisted on a bargaining position and that the Board did not approve of the fact that the Company did not concede issues the Union was insisting upon. The Board was indirectly, if not directly, sitting in judgment upon the substantive terms of the parties’ bargaining agreement which it does not have authority to do.

Accordingly, the petition to set aside the order is granted and the cross-application for enforcement is denied.

      . While we do not find the relationship between the officer in Chicago and the Company’s bargaining representative to be of any significance in this case, the industrial relations officer drafted various letters and the contract proposals. However, the testimony clearly shows that they were drafted in accordance with the wishes of the Company’s bargaining representative after conferences between the two.


author: WEIS, Circuit Judge.

text:
    UNITED STATES of America v. Irving H. MEYERS et al. (two cases). Appeal of Joseph DiSTEFANO, in Nos. 72-2069, 72-2071. (two cases). Appeal of Dominick REINA, Jr., in No. 72-2070.
    Nos. 72-2069 to 72-2071.
    United States Court of Appeals, Third Circuit.
    Submitted Under Third Circuit Rule 12(6) June 15,1973 as to Nos. 72-2069 and 72-2071. .
    Argued June 12,1973 as to No. 72-2070.
    Decided Aug. 31, 1973.

      Arnold D. Levine, Levine, Freedman & Hirsch, Tampa, Fla., for appellant in Nos. 72-2069 and 72-2071.
    Henry Gonzalez, Tampa, Fla., for appellant in No. 72-2070.
    Robert E. J. Curran, U. S. Atty., Peter M. Shannon, Jr., Crim. Div., Appellate Section, U. S. Dept, of Justice, Washington, D. C., for appellee.
    Before GIBBONS, ROSENN and WEIS, Circuit Judges.
   OPINION OF THE COURT

WEIS, Circuit Judge.

The defendants Reina and DiStefano were indicted and convicted on various charges of mail fraud and conspiracy growing out of the sale of voting machines to Hillsborough County, Florida. The transactions involved bribery of local officials by the Shoup Voting Machine Company of Philadelphia and a loss to the taxpayers of Hillsborough County of about $750,000.

The details of the scheme are not particularly relevant to the issues presented in this appeal, and we will limit our review to the pertinent facts. Since the roles of DiStefano and Reina were quite different and their position on appeal somewhat adverse to each other, their cases will be treated separately.

The Reina Appeal

Reina is alleged to have participated in the scheme by permitting the use of a post office box to receive two checks, each for $20,000, from the Shoup Company destined for the co-defendant DiStefano. The post office box had been rented and used by the Reina Brothers and Company, Inc., a wholesale grocery company controlled by the defendant.

At the direction of DiStefano, the checks were* made out to “Arturo Garcia, P.O. Box 5116, Tampa, Florida.” The first check, which was the subject of Counts I and III, was mailed from Philadelphia on December 30, 1969 and delivered to the Reina box in Tampa.

The second check, which is the subject of Count II, was mailed from Philadelphia on March 26, 1970, was received in Nashville, Tennessee by a representative of the Shoup Company, and was hand delivered by him to DiStefano in Tampa.

One Manuel Rodriguez, a teller at the Columbia National Bank in Tampa, testified at the trial that DiStefano and another man, not Reina, presented a cheek on January 2, 1970 and that it was already endorsed. Rodriguez also testified that on April 1, 1970 the two men again appeared at the Bank, the one being identified by DiStefano as “Arturo Garcia,” and again a check was cashed.

The government also produced a handwriting expert who concluded that the endorsements on both checks had been made by the same person and that the signature of “Garcia” was in Reina’s handwriting.

A postal clerk testified that while the defendant Reina usually picked up the mail at the post office box, on occasion other employees of the company did so. It was also shown that Reina had been friendly with DiStefano for many years.

During the trial, Reina moved for a severance on the basis that if DiStefano were called to the stand, he would testify that when the checks had been presented to Rodriguez, they were not endorsed. The motion for severance was refused, and DiStefano did not testify.

After the jury returned guilty verdicts against Reina and DiStefano on March 15, 1972, motions for new trial were filed and at a later date, April 21, 1972, were argued before the district nourt. At the conclusion of the argument, defense counsel advised the court that he had just received a letter from the prosecutor stating that the state’s attorney for Hillsborough County was in possession of evidence which would be helpful to Reina.

On May 30, 1972 Reina filed another motion for acquittal or for a new trial on the basis that Rodriguez’s testimony had been perjured. The motion asserted that the state’s attorney had recently uncovered evidence showing that DiStefano had been alone when he appeared at the bank, that when the checks had been presented, they were not endorsed, but that at a later time, at the direction of Rodriguez, one Adelaide Lee had in fact written “Garcia’s” name on the back of the cheeks.

An evidentiary hearing was held in the district court on June 19, 1972 at which Mrs. Lee testified that the signature of “Garcia” on one check was in her handwriting and that probably it was her handwriting on the other check also.

Rodriguez invoked the Fifth Amendment and did not testify, but the sworn statement he had given to the state’s attorney on May 23 and May 26, 1972 admitted that DiStefano had been alone on both occasions and that the checks had not been endorsed at the time Rodriguez had received them.

The district court denied the motion for new trial on the ground that “The preferred new evidence does not alter the four basic factual propositions of the Government’s case against Reina, but rather one of the two corroborative propositions. Consequently, though the new evidence meets the materiality requisite, it is no more than cumulative of Reina’s involvement.”

We reverse and grant a new trial.

The district court outlined the government’s basic evidence against Reina as follows:

1. The first check was mailed to the post office box.
2. The check was delivered.
3. The defendant “generally” took the mail from the box.
4. The check was next shown to be in DiStefano’s possession.

While it may be conceded that the check was mailed and delivered to the Reina Company post office box and was later shown to be in DiStefano’s possession, point three, the link between post office box and DiStefano, is somewhat tenuous. There was no evidence to exclude the activities of a third party, perhaps another employee of the Reina Company, as having been the conduit, and there was no' direct evidence that the defendant in fact had delivered the check to DiStefano. Hence, there was ample reason for the government to argue as it did during the trial that the testimony tending to show that the defendant wrote “Garcia’s” signature on the back of the check provided the link to establish Reina’s participation in the transaction.

Furthermore, if the jury believed that the defendant had penned the fictitious endorsement, not only would the gap in the proof be filled, but a strong inference of complicity in additional wrongdoing would be established. It would be highly unlikely in the face of such evidence that a jury could consider the defendant to be a dupe or innocently accommodating a friend. To the average juror, signing a fictitious name to a check is forgery and bespeaks a criminal bent.

Thus, while in a sense it is true that the newly proffered evidence was merely corroborative, in the factual situation of this case it was corroborative of what otherwise would have been a rather weak inference. In no sense, therefore, can this particular phase of the evidence be considered cumulative of other equally strong and reliable evidence. Indeed, it was the strongest and most damaging element in the government’s case to connect Reina with the whole conspiracy.

Courts justifiably look, upon after-discovered evidence or recantations with skepticism and suspicion and do not generally grant new trials based on such grounds. Nevertheless, when such an important factor in the government’s case depends upon perjured testimony, the interests of justice mandate a new trial.

Generally, five essential requisites for ordering a new trial on the basis of “newly discovered” evidence have been set out:

1. The evidence must have been discovered after the trial;
2. The failure to learn of the evidence must not have been caused by defendant’s lack of diligence;
3. The new evidence must not be merely cumulative or impeaching;
4. It must be material to the principal issues involved; and
5. It must be of such a nature that in a new trial it would probably produce an acquittal.

This has been referred to as the “Berry” test and was adopted by this Court in United States v. Bertone, 249 F.2d 156, 160 (3rd Cir. 1957); United States v. Nigro, 253 F.2d 587 (3rd Cir. 1958).

In this case, however, the motion with respect to the Rodriguez testimony is not really based on “newly discovered” evidence but, rather, on the assertion that the evidence at the trial was perjured.

As is pointed out in 2 Wright, Federal Practice & Procedure, § 557, a different test is applied in the latter situation and what is termed the “Larrison rule” is used.

Professor Moore in 8A Moore’s Federal Practice, f 33.06 [1], says, “If the trial court finds that a material witness did commit perjury, and without his testimony the jury might not have convicted, a new trial is necessary.”

Larrison v. United States, 24 F. 2d 82, 87 (7th Cir. 1928), holds that when a contention has been made that a government witness testified falsely at trial, the test should be:

1. The court is reasonably well satisfied that the testimony given by a material witness is false ;
2. That without it a jury might have reached a different conclusion;
3. That the party seeking the new trial was taken by surprise when the false testimony was given and was unable to meet it or did not know of its falsity until after the trial.

It was not until the trial was underway that counsel for Reina first learned that the checks were not endorsed when originally presented to Rodriguez. The district court did not find any lack of diligence on the part of counsel in not launching an immediate investigation; nor do we. From a practical standpoint, the trial was held in Philadelphia, and crucial witnesses were located in Florida. Furthermore, it is apparent that only after the intervention of the state’s attorney in Florida with his broad authority was it possible to secure a recantation by Rodriguez and a statement by Mrs. Lee.

It is important in this case, also, that the government does not contest the fact that Rodriguez did testify falsely at the trial in Philadelphia, nor did the district court conclude that the recantation was not genuine. The denial of a new trial was not based on a finding that no perjury had been committed but, rather, accepting that it had in fact taken place, the testimony was corroborative only. Hence, we may properly review the action of the district court.

We conclude that under the facts in the record in this case whether the Ber-tone (“Berry”) or the Larrison test is applicable, the burden has been met by defendant Reina. We feel that the impact of the perjury by Rodriguez and the mistaken testimony by the government expert so tainted the original trial that the conviction based on such testimony should not be permitted to stand.

It should be clearly understood that we are not directing a verdict for the defendant Reina; we only state that a new trial should be ordered so that the government may present its case free of erroneous testimony.

The DiStefano Appeal

The defendant DiStefano also joined in the request for a new trial based on the same after-discovered evidence, and his motion was similarly rejected by the district court. However, we affirm the ruling and agree with the trial judge that by no stretch of the imagination could the corrected testimony of Rodriguez do anything other than further inculpate DiStefano. He can show no prejudice whatsoever, and in fact a new trial which included accurate statements from Rodriguez would only add to the overwhelming evidence against DiStefano.

Our affirmance applies also to the conviction on the fifth count of the indictment at 71-750, charging conspiracy against DeStefano, Reina, and others. In the circumstances of this case, the grant of a new trial as to Reina does not necessitate similar treatment to DiStefano. Cf. United States v. Shuford, 454 F.2d 772 (4th Cir. 1971).

The conspiracy count stated generally that, by the payment of money to public officials or members of their families, the defendants planned to defraud the taxpayers of Hillsborough County, Florida in the purchase of voting machines. It was further alleged that used voting machines owned by the county were sold at an inadequate price through the device of collusive bidding.

As to this count, guilty pleas were accepted before the trial on behalf of five of the defendants, namely, Meyers, Hir-shorn, Lemiseh, Schott and Chenoweth. A plea of nolo contendere was accepted as to Shoup Voting Machine Corporation. At the conclusion of the government’s case, defendant Grimaldi was granted a judgment of acquittal and the jury acquitted John C. Womack and Southern Municipal Sales, Inc.

The fact that five of the defendants had pleaded guilty was made known to the jury during the trial. Evidence was introduced to show that DiStefano received money from the Shoup Company in the guise of “commissions” and that he exerted his influence as a former county official to bring about the sale. There was testimony that DiStefano had arranged to have $5,000 of his “commission” paid through defendant Chenoweth to one of the county commissioners, and that the defendant was involved in other phases of the scheme.

Thus, we have a situation where a number of the defendants had pleaded guilty to the same conspiracy to which DiStefano was linked by competent evidence. Realistically, therefore, DiStefa-no’s guilt was established without the necessity of Reina’s participation in the activity at all. The rationale of United States v. Gordon, 242 F.2d 122 (3rd Cir. 1957), is applicable. Judge Staley, writing for the court, said at page 125:

“However, if the indictment names even persons unknown as co-eonspira-tors, and there is evidence to support the charge that one of the two defendants conspired with the unknown persons, that defendant’s conviction may-stand in spite of the fact that the other defendant was acquitted, [citation], If the conviction of one defendant may be sustained for conspiring with unknown persons, certainly it may be sustained where the evidence discloses a conspiracy between the defendant and the named co-conspirator, even if the latter is not indicted.”

DiStefano’s other assertions of error with respect to admission of evidence concerning transactions before the indictment and complaints about the court’s instructions on conspiracy are without merit.

As to the defendant Reina, the judgment of the District Court will be reversed and the cause remanded with the direction that a new trial be granted.

The judgments against DiStefano will be affirmed.

      . Reina and DiStefano were indicted, along with others, at No. 71-750. DiStefano was also included, although Reina was not, among those indicted at No. 71-460 which involved events on earlier dates than those at No. 71-750.

      . Count IV which alleged receipt of the check at the Reina box in Tampa was dismissed by the trial judge at the conclusion of the government’s case.

      . Some other alleged members of the conspiracy were acquitted, and others had pleaded guilty before the trial began.

      . Cf. United States v. Johnson, 327 U.S. 106, 66 S.Ct. 464, 90 L.Ed. 562 (1946).


author: PER CURIAM:

text:
    Douglas Dale SUTTER, Appellant, v. UNITED STATES of America, Appellee.
    No. 73-1668.
    United States Court of Appeals, Ninth Circuit.
    Sept. 5, 1973.
    Joseph J. Mogilner, (argued), San Diego, Cal., for appellant.
    William A. Bower, Asst. U. S. Atty. (argued), Harry D. Steward, U. S. Atty., Stephen G. Nelson, Asst. U. S. Atty., San Diego, Cal., for appellee.
    Before . GOODWIN and WALLACE, Circuit Judges, and BYRNE, District Judge.

       The Honorable William M. Byrne, Senior United States District Judge for the Central District of California, sitting by designation.

   PER CURIAM:

Appellant, convicted of violating 21 U.S.C. § 841(a)(1) (possessing a controlled substance with intent to sell) appeals. He asserts that the district court abused its discretiori when it permitted the government to place in evidence three marijuana cigarettes found on his person at the time he was arrested with a commercial quantity of the substance in his automobile.

To keep out the evidence, the appellant had offered to stipulate that he was acquainted with the characteristics of marijuana, the principal purpose for which the three cigarettes were being offered. The government rejected the stipulation.

We find no abuse of discretion. See Deck v. United States, 395 F.2d 89 (9th Cir. 1968).

Affirmed.


author: CECIL, Senior Circuit Judge.

text:
    CARPENTERS DISTRICT COUNCIL OF MAHONING AND TRUMBULL COUNTIES, OHIO AND MERCER COUNTY, PENNSYLVANIA, et al., Plaintiffs-Appellants, v. UNITED CONTRACTORS ASSOCIATION OF OHIO, INC., et al., Defendants-Appellees.
    No. 72-2209.
    United States Court of Appeals, Sixth Circuit.
    Argued April 9, 1973.
    Decided Sept. 14, 1973.
    Eugene Green, Green, Schiavoni, Murphy & Haines, Youngstown, Ohio, on brief, for plaintiffs-appellants.
    Eldon S. Wright, Louis M. Davies, Youngstown, Ohio, Burton C. Duerring, Pittsburgh, Pa., Stephen J. Knerly, Cleveland, Ohio, for defendants-appel-lees; Jay Tims, Harrington, Huxley & Smith, Youngstown, Ohio, on brief.
    Before WEICK and PECK, Circuit Judges, and CECIL, Senior Circuit Judge.
   CECIL, Senior Circuit Judge.

The plaintiffs herein appeal from an order of the United States District Court for the Northern District of Ohio, Eastern Division, dismissing their petition.

The plaintiffs are Carpenters District Council of Mahoning and Trumbull Counties, Ohio and Mercer County, Pennsylvania, a labor organization composed of labor unions on whose behalf it represents carpenters in the building construction trades in the states of Ohio and Pennsylvania for collective bargaining purposes and ten other local labor unions affiliated with AFL-CIO.

The action is against sixty-one defendants includirig United Contractors Association of Ohio, Inc., and Associated Trades and Crafts. It is alleged that the United Contractors Association, is an Ohio corporation purporting to represent, for trade association and collective bargaining purposes, employers engaged in the construction industry in the states of Ohio and Pennsylvania. Associated Trades and Crafts is International Construction Union Local No. 1 and Local No. 2. It is alleged that it purports to represent, for collective bargaining purposes, employees employed in the construction industry in Ohio and Pennsylvania.

Three of the named defendants are trustees of the United Contractors Association, four are officers of the Associated Trades and Crafts International Construction Union and one is Business Agent of the Trades and Crafts Union. Other defendants are individuals and firms, members of the United Contractors Association.

The thrust of the complaint is that the defendant individuals have entered into a conspiracy and created combinations for the purpose of restraining trade and interstate commerce and eliminating competition in the construction industry, with the object of preventing the plaintiff unions from representing, for collective bargaining purposes, the employees of the individual defendant employers. Briefly stated, it is charged that the conspiracy is accomplished by the individual defendants organizing the Defendant United Contractors Association of Ohio, Inc., and the Defendant Associated Trades and Crafts International Construction Union.

The purpose of the Contractors Association is to act as bargaining representative of its members. It is alleged that the Associated Trades and Craft Union purports to be a labor organization for employees employed in the construction industry. Funds to support this Union are supplied by the employers in the guise of dues for the employees who are compelled by the employers to become and maintain membership in the Union. It is further claimed that a sham collective bargaining agreement was executed between the Contractors Association and the Union. A distinctive feature of these organizations is that membership in the Contractors Association automatically entitles its members to membership in the Trades and Craft Union. Thus through this dual membership the individual defendant employers are able to control the activities of both organizations. The plaintiffs conclude that these arrangements are combinations in restraint of trade in violation of the Sherman and Clayton Anti-trust Acts.

The defendant Associated Trades and Crafts International Construction Union moved to dismiss the petition on the grounds that the defendants were immune from prosecution under federal anti-trust laws.

“Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, * * * organizations, instituted for the purposes of mutual help, * *

Sec. 17, Title 15, U.S.C. (See also Secs. 52 and 102, Title 29, U.S.C.) And that all allegations of the complaint allege violations of the Labor Management Relations Act.

At the time this case was pending in the District Court a similar case was pending in the United States District Court for the Western District of Pennsylvania. The district judge sustained defendants’ motions to dismiss. International Association of H. & F. I. & A. W. v. United Contractors Association, 331 F.Supp. 1298. The district judge of the Northern District of Ohio likewise sustained a motion to dismiss on authority of the opinion of the district judge in the above entitled case. The Court of Appeals for the Third Circuit vacated the ordér of the District Court and remanded the case with instructions to certify labor issues to the Labor Board. Upon receiving a finding of facts from the Labor Board the District Court would proceed to determine the antitrust issues. International Association of Heat and Frost Insulators and Asbestos Workers, etc., et al., appellants v. United Contractors Association, Inc. of Pittsburgh, Pennsylvania, a corporation, and Associated Trades and Crafts Union, appellees. 483 F.2d 384, 3rd Cir. 1973.

Two issues are presented. Do the charges made by the appellants constitute unfair labor practices subject to the primary jurisdiction of the National Labor Relations Board or alternatively are the defendants entitled to the immunity of labor organizations from the antitrust laws?

The District Court in Pennsylvania held that its jurisdiction to entertain the action was not preempted by the primary jurisdiction of the National Labor Relations Board and it proceeded to determine whether the activities of the association and the Trades and Craft Union were immune from antitrust attack. The district judge said:

“Notwithstanding the bold conclusion that competition in the construction industry of Western Pennsylvania is adversely affected by the instant collective bargaining agreement (competition in which the plaintiffs, in any event, ■ have no justiciable interest), the plaintiffs in this case allege no facts which would even remotely taint the immunity provided the defendant Associated Trades from the antitrust laws. By § 6 of the Clayton Act, the existence of Associated Trades is expressly insulated from the anti-trust laws. * * *” 331 F.Supp. 1298, 1301.

We consider first whether the defendants in the case before us are entitled to this immunity.

At the threshold we are met with the distinction in the relationship between the defendants in this case and the usual relationship between unions and employer organizations where they deal at arm’s length with each other. Here, membership in the association automatically makes a member a member of Trades and Crafts Union. Trades and Crafts is supported by funds of the employer association and the employees are compelled to join the Trades and Crafts Union.

It would seem obvious that the employers under such circumstances are independent contractors and that any purported collective bargaining agreement between them and their employees would be a sham, as alleged. We consider that a so-called union formed and dominated by the contractors as Trades and Crafts is in this case cannot be a bona fide union entitled to the immunity of the antitrust laws. We must assume that the employers as independent contractors had some gainful purpose in mind in forming such a hybrid union. Either they expected to restrain competition with other contractors who had legitimate collective bargaining agreements with the regular trades unions or they were competing with those unions to keep their employees from becoming members and thus maintain lower wages.

We consider that a cause of action is stated and that the court should try the issues and determine what effect, if any, these defendant organizations have on trade, interstate commerce and competition and whether the antitrust laws are violated. In Allen Bradley v. Union, 325 U.S. 797, 809, 65 S.Ct. 1533, 1540, 89 L. Ed. 1939 the Court said,

“But when the unions participated with a combination of businessmen who had complete power to eliminate all competition among themselves and to prevent all competition from others, a situation was created not included within the exemptions of the Clayton and Norris-LaGuardia Acts.”

See also Mine Workers v. Pennington, 381 U.S. 657, 663, 85 S.Ct. 1585, 1589, 14 L.Ed.2d 626, where the Court held that collective bargaining agreements may violate the antitrust laws,

“ * * * even though the mechanism for effectuating the purpose of the combination was an agreement on wages, * * * ”

Reference is hereby made to the opinion of the Third Circuit in the case cited above for a full discussion of the related issues and supporting citations. There the Court said on page 396 of 483 F.2d.

“Within a labor dispute a competition between unions is the concern of the Board, but where a case is made out that there is no labor dispute, or that the labor group is not immune, there is no reason to hold that a union is any different from any other economic unit in its rights to be protected from illegal restraints on its freedom to compete.”

We turn now to a consideration of whether there are issues which constitute unfair labor practices subject to the primary jurisdiction of the National Labor Relations Board.

In Allen Bradley Co. v. Union, 325 U. S. 797, 806, 65 S.Ct. 1533, 1538, 89 L.Ed. 1939, the Court said,

“The result of all this” (the antitrust laws and the labor laws, United States v. Hutcheson, 312 U.S. 219, 61 S.Ct. 463, 85 L.Ed. 788) “is that we have two declared congressional policies which it is our responsibility to try to reconcile. The one seeks to preserve a competitive business economy; the other to preserve the rights of labor to organize to better its conditions through the agency of collective bargaining. We must determine here how far Congress intended activities under one of these policies to neutralize the results envisioned by the other.”

In United States v. Western Pac. R. Co., 352 U.S. 59, 63-64, 77 S.Ct. 161, 165,1 L.Ed.2d 126, the Court said,

“The doctrine of primary jurisdiction, * * * applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views.” Emphasis added. See also, Far East Conf. v. United States, 342 U.S. 570, 574, 72 S.Ct. 492, 96 L.Ed. 576; U. S. v. Philadelphia Natl. Bank, 374 U.S. 321, 353, 83 S.Ct. 1715, 10 L.Ed.2d 915; Meat Cutters v. Jewel Tea, 381 U.S. 676, 684-685, 85 S.Ct. 1596, 14 L.Ed. 2d 640.

Pertinent allegations of the complaint charging conspiracy in restraint of trade are:

1) The defendant individuals organized the United Contractors Association with color of authority to act as bargaining representative of its members.
2) The individual defendants organized and/or supported the Associated Trades and Crafts International Construction Union, which purports to be a labor organization for employees employed in the construction industry.
3) A sham collective bargaining agreement was executed between the Contractors Association and the Trades and Crafts Union, the purpose of which agreements were:
(a) To permit the Defendant employers to conduct their business activities free from any interference by the Plaintiffs;
(b) To use the agreement as a bar to any and all organizational and representation efforts undertaken by the Plaintiffs;
(c) To prevent their employees from becoming members of the Plaintiff Unions;
(d) To eliminate competition of businesses operating under the terms of bona fide collective bargaining agreements.
4) Membership in the Contractors Association automatically entitles an employer to membership in the Trades and Craft Union permitting the defendant employers to control the activities of each organization in order to maintain competitive advantages over other contractors and to destroy competition in the construction industry.

These allegations if proven would constitute unfair labor practices. The complaint in the case before us is practically identical with the complaint in the above cited case before the Third Circuit. The Third Circuit concluded that under similar allegations of fact the doctrine of primary jurisdiction was applicable. We likewise conclude that it is applicable in the instant case. Reference is hereby made to the opinion of the Third Circuit beginning with page 397 of 483 F.2d.

The case will be remanded to the District Court with instructions to certify all labor issues to the National Labor Relations Board. The Board will return to the District Court findings of fact and conclusions of law on those issues. The District Court will stay further proceedings pending determination by the Board. After the Board certifies its findings and conclusions to the court it will proceed to decide the antitrust issues.

The order of the District Court is vacated and the cause remanded for further proceedings consistent with this opinion.


author: BARNES, Circuit Judge:

text:
    James C. HADSELL, Plaintiff-Appellee, v. Larry H. HOOVER, Defendant-Appellant. Computronic Industries Corporation et al., Defendants.
    No. 73-1110.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Aug. 13, 1973.
    Decided Sept. 13, 1973.

      William R. Fishman, Denver, Colo., for plaintiff-appellee.
    James W. Heyer, Lakewood, Colo., for defendant-appellant.
    Before LEWIS, BARNES and MC-WILLIAMS, Circuit Judges.

       Honorable Stanley N. Barnes of the Ninth Circuit, sitting by designation.

   BARNES, Circuit Judge:

This appeal is from a judgment entered upon a jury verdict against appellant and others for fraud under the federal securities laws. Plaintiff-appellee, Hadsell, filed his complaint in the United States District Court for the District of Colorado, alleging, inter alia, conduct in violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j, 48 Stat. 891, and Rule 10b-5, 17 C.F.R. § 240.10b-5, implemented thereunder; and Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q, 48 Stat. 84. Only defendant-appellant Hoover, one of several defendants who received the adverse judgment in the matter below, has appealed. Our jurisdiction rests in 28 U.S.C. § 1291.

At all material times, Hoover was president of Western General Corporation (herein Western General or Western), a New York corporation with offices in Denver, Colorado. Western was a holding company with assets consisting of securities and real estate investments, most of them pledged or mortgaged. Through Hoover, Western solicited operating funds from Hadsell. Hadsell refused an offer to loan Western money, but agreed to purchase unregistered stock held by Western in General Energy Corporation (herein General Energy). Thirty thousand shares of General Energy were sold to Hadsell for $75,000 through two transactions: twenty thousand shares were sold on December 11, 1968, and an additional ten thousand shares were sold on January 11, 1969. The price per share each time was $2.50 per share. The alleged fraud occurred with respect to these two transactions.

The following material evidence was admitted at trial in support of a finding of fraud:

(1) Western General’s repurchase agreement, (Plaintiff’s Ex. 3):

Western agreed to repurchase the General Energy stock from Hadsell one year from the date of sale (December 11, 1969) at a price of $3.50 per share. At the time of the sale to Hadsell, registered shares were traded over the counter at $6.00. The shares which Hadsell purchased, however, were unregistered and could not have been sold over the counter at any price. Hadsell knew this, and therefore it seems obvious to us that he primarily relied upon the repurchase agreement in making his purchases. Subsequent to the purchase, both Western and General Energy became insolvent; the shares were worthless and Western was unable to repurchase. (Hadsell still has the stock; he has made no efforts to register it so as to effect a secondary sale.)

(2) Western General’s financial statement:

Prior to the purchases, Hoover showed Hadsell a financial statement purportedly showing the net worth of Western General as of September 30, 1968, and discussed the statement in detail with him. It, and he, indicated that Western General was worth “substantially more” than $3,000,000 (R.T. at 27), and that “all its companies were operating at a profit” (R.T. at 29). At trial, Hadsell proved that Western General, in the fall of 1968, and on or about September 30, 1968, had operating expenses of $3,000 per month, but no income; was some $3,200,000 in debt, and had current liabilities (due in one year) of $309,000 (R.T. at 133). It had overdue or pressing lease obligations with respect to certain of its real estate investments. None of this was told Hadsell. No profit and loss statement was shown Hadsell (R.T. at 109). Hadsell necessarily relied upon the financial stability of Western General if he relied upon its repurchase agreement in making the stock purchases of General Energy.

(3) Material misstatements or omissions :

The following misstatements or omissions were made incident to the sale of the General Energy stock:

(a) The accountant who prepared the financial statement of Western General as of September 30, 1968, (Ex. 1), issued a “qualification letter” (Ex. 2) which became a part of the statement (R.T. at 181-82), to the effect that he could not verify assets and accounts receivable, nor could he verify the value of the assets included in the statement. Hoover had received the letter prior to his discussion with Hadsell, but there is no indication in the record that he showed the letter to Hadsell nor that he mentioned it to him.

(b) In discussing the financial statement with Hadsell, Hoover represented that the listed assets were worth more than they were indicated on the statement. (R.T. at 27).

(c) Hoover failed to indicate that Western General was planning to liquidate some of its assets to pay off debts.

(d) Hadsell was not informed that certain parties would receivS commissions for obtaining the General Energy stock sale to Hadsell, and that the commissions would be taken from the receipts of the transactions. (R.T. at 38).

(4) Computronic Industries:

Computronic Industries Corporation (herein Computronic), is a corporation whose stock was traded over the counter. After the sale of General Energy stock to Hadsell, Western General encountered further financial difficulties. An arrangement was made (Ex. 9) whereby almost all Western General’s assets were transferred to- Computronic.

Hadsell was not informed by Western General of the transfer of its assets. Western General retained the obligation to Hadsell, however, together with other liabilities and some “three to four hundred thousand shares of Computronic stock.” (R.T. at 146).

Hadsell learned of this, and his attorney made demand upon Computronic to assume Western General’s obligation to Hadsell under the repurchase agreement. Computronic agreed, and assumed the obligation. Hadsell was then shown two financial statements indicating the net worth of Computronic as of August 31, 1969; one was audited and indicated a net worth of $4,894,273, the second was unaudited and indicated a net worth of $5,334,622.13. It was signed by Mr. Hoover (Ex. 10). The audited statement was later withdrawn because the Securities and Exchange Commission objected to a lack of proof of the value of the underlying assets. At the time of trial, Computronic was insolvent.

(5) Promissory notes:

Computronic assumed the Western General obligation to repurchase the General Energy stock from Hadsell by executing three promissory notes for a total amount of $115,400, $10,400 more than the original repurchase agreement called for. The notes were issued on January 15, 1970, and were due in 75 days. Computronic retained the option to make payment by delivery of certain irrevocable letters of credit on the Bank of Asia, Bangkok, Thailand. Hadsell did not receive payment of the notes, either in the form of cash, or letters of credit.

The matter was tried before a jury and a judgment was entered upon a verdict against Hoover and three other defendants.- Following the verdict, the defendants unsuccessfully moved for a judgment notwithstanding the verdict.

On appeal, Hoover does “. . . not contest the credibility or sufficiency of the evidence . . .” (Appellant’s Brief at 5.) He does not deny that when there is conflicting testimony, “the resolution of the jury is conclusive”. (id.) Rather, he argues that Hadsell does not have a cause of action pursuant to the federal securities laws. At best, Hoover maintains there exists only an action for breach of contract with respect to the repurchase agreement. He also argues that “[tjhere was no fraud in connection with the purchase of securities involved here. The purity of that sale was unsullied.” (Appellant’s Brief at 16.)

This argument, however, is in direct conflict with Hoover’s statement that he does not contest the credibility or sufficiency of the evidence. We do not find it necessary to determine which position Hoover intends to rely upon, because we find that there was sufficient substantial evidence to warrant a jury in finding a scheme to defraud. It did so. We therefore confine our analysis to the question of whether Hadsell made out an actionable claim under the federal securities laws, or whether his only remedy was a common law claim for breach of contract.

Hoover relies upon Seward v. Hammond, 8 F.R.D. 457 (D.C.Mass.1948), where a district court held that a failure to perform under an agreement in which the plaintiff was to induce another to sell stock in return for the defendant’s payment of money was not a securities fraud, but a breach of contract. Cf. Fuller v. F. I. Dupont, Glore, Forgan & Co., 54 F.R.D. 557 (D.C.Mo.1971). In Richardson v. MacArthur, 451 F.2d 35 (10th Cir. 1971), this court announced the rule for determining whether a claim is one actionable under the federal securities laws or under common law contract.

“In short, whether the failure to follow through on an agreement to purchase or sell stock is a mere breach of a contract or whether it amounts to a manipulative or deceptive device, or a contrivance in contravention of § 10(b) depends upon the facts and circumstances developed at trial.” (Footnotes omitted.) Richardson v. MacArthur, supra, at 40. Cf. also: Brod v. Perlow, 375 F.2d 393 (2nd Cir. 1967); Allico v. Amalgamated, 397 F.2d 727 (7th Cir. 1968).

As Judge Hill stated in 1965, a wide and broad interpretation of the law is required by the definitions in the federal law as to what is a “purchase”, a “sale”, or a “security”.

“It is not necessary to allege or prove common law fraud to make out a ease under the statute and rule (Xb-5). It is only necessary to prove one of the prohibited actions such as the material' misstatement of fact or omission to state a material fact.” Stevens v. Vowell, 343 F.2d 374, 379 (10th Cir. 1965).

Immediately before the last statement quoted, this circuit held that the rule makes it unlawful to

“. . . Employ any device, scheme or artifice to defraud; make any untrue statement of a material fact or* to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person. The validity of this rule has been upheld as a lawful exercise of the Commission’s power. Hooper v. Mountain States Securities Corporation, 5th Cir., 282 F.2d 195, cert, denied, 365 U.S. 814, [81 S.Ct. 695, 5 L.Ed.2d 693]. . . .” (id. at 379.)

And the same opinion holds that proof of but one prohibited action (such as a material misstatement, or the omission to state a material fact) makes out a case, citing three Ninth Circuit cases.

When we consider the broad remedial policies of the federal securities laws advocated and advanced by our Supreme Court (J. I. Case v. Borak, 377 U.S. 426, 431-432, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964), and SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 195, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963)) such policies are best served by such pronouncements as those already enunciated by this circuit, and as quoted above, we have no difficulty in holding that common law breach of contract relief cannot be plaintiff’s only remedy below. See also: Mitchell v. Texas Gulf Sulphur Co., 446 F.2d 90, 96-99 (10th Cir. 1971), cert, denied, 404 U.S. 1004, 92 S.Ct. 564, 30 L.Ed.2d 558 (1971).

Upon the record, we find that the facts and circumstances developed at trial were clearly sufficient to indicate a scheme to defraud within the meaning of Section 10(b) of the Securities and Exchange Act of 1934.

For these reasons, the judgment of the district court entered upon a verdict against Hoover and for Hadsell is affirmed.

      . The briefs are not clear on this issue. Both parties agree on the fact that all or most all the assets were transferred by Western General to Computronic, and the record so states (R.T. at 148), but the method whereby this was effected is not indicated. We conclude that Western General received 5,000,000 shares of Computronic stock in return for most of its assets.