author: HASTIE, Circuit Judge. SEITZ, Chief Judge

text:
    In the Matter of MIDDLE ATLANTIC STUD WELDING CO., Bankrupt. Appeal of TRU-FIT SCREW PRODUCTS CORP.
    No. 73-1719.
    United States Court of Appeals, Third Circuit.
    Argued Jan. 18, 1974.
    Decided Aug. 7, 1974.

      Seitz, Chief Judge, dissented and filed opinion.
    Jane R. Roth, David S. Swayze, Richard S. Layton & Finger, Wilmington, Del., for appellant.
    John Biggs, III, Biggs & Battaglia, Wilmington, Del., for bankrupt.
    John G. Mulford, Wilmington, Del., for trustee.
    Before SEITZ, Chief Judge, and HASTIE and ALDISERT, Circuit Judges.
   OPINION OF THE COURT

HASTIE, Circuit Judge.

In a proceeding for an arrangement under Chapter XI of the Bankruptcy Act, Tru-Fit Screw Products Corporation has appealed from the district court’s order affirming the referee’s determination that the lien of a security agreement under which appellant was the secured party did not attach to the debtor’s accounts receivable acquired after the date of the agreement.

On May 31, 1971 Middle Atlantic Stud Welding Co., now the debtor, executed a promissory note, two security agreements, and a financing statement in favor of appellant. One of the security agreements, which described various equipment as collateral, secured the amount of the note, and is not in question here. The other granted appellant a security interest in “all Receivables and proceeds thereof as security for the Liabilities”. This agreement defined Receivables as “all of Debtor’s Accounts Receivable”, and Liabilities to mean “any and all indebtedness of Debtor to Secured Party of every kind and description, now existing or hereafter arising”. The financing statement mirrored the security agreement.

The referee and the district court found that appellant and debtor intended the agreement to establish a security interest in after-acquired accounts receivable as well as those in existence on the date of the agreement. They found that the parties intended to create and secure a long-term, ongoing, supplier-manufacturer relationship. Both tribunals, held however, that the absence of explicit reference to after-acquired accounts defeated appellant’s claimed security interest under the Uniform Commercial Code, § 9-204.

At the time of the transactions now in question, section 9-204(3) of the Code stated, with exceptions not relevant here, that:

“ . . .a security agreement may provide that collateral, whenever acquired, shall secure all obligations covered by the security agreement.”

Two other Code sections guide proper judgment of the nature of the language necessary so to provide. Section 9-110 states:

“For the purposes of this Article any description of personal property or real estate is sufficient whether or not it is specific if it reasonably identifies what is described.”

The Comment advises courts not to require the most exact and detailed description possible, but to be satisfied with a description that enables identification of the intended collateral. More generally, but in the same vein, section 1-102 suggests liberal construction to the end that underlying purposes and policies be promoted, including simplification and clarification of the law and continued expansion of commercial practices. The Comment adds that narrow as well as broad constructions are appropriate, depending upon the purposes and policies involved in a particular issue.

Appellant argues that the agreeement designating “all accounts receivable” as collateral reasonably identified after-acquired accounts, and thus complied with the Code requirements. We now consider this issue in light of the present commercial practice of accounts receivable financing and possible abuse to which the statute, as appellant would apply it, might be subject.

As the Uniform Commercial Code gained nationwide acceptance much was written by commentators about floating lien financing. DuBay v. Williams, 9th Cir. 1969, 417 F.2d 1277, 1280 n. 2 (collecting commentary). The practice seems both familiar and important in the commercial world. E. g. Henson, “Proceeds” Under The Uniform Com-merical Code, 65 Colum.L.Rev. 232 (1965); Coogan & Gordon, The Effect Of The Uniform Commercial Code Upon Receivables Financing — Some Answers and Some Unresolved Problems, 76 Harv.L.Rev. 1529, 1530 n. 2. (1963). Certainly current commercial practice makes wide use of floating lien financing on inventory and accounts receivable. A seller who contemplates a long term relationship often will extend credit in return for a lien on buyer’s inventory and receivables. The scheme is likely to contemplate that day to day extension of credit be secured by day to day receivables. Because the identity of the latter is in flux, the lien may be intended to float from today’s receivables to tomorrow’s.

There is thus a rational basis for appellant’s premise that many persons, on reading that the collateral for the security agreement at bar is “all accounts receivable”, would be alerted that the parties may well have intended to include after-acquired accounts. That thought could be reinforced in this case by observation that the agreement explicitly secures after-arising liability. Thus, it is arguable that this particular agreement reasonably identifies after-acquired accounts receivable as part of the collateral. Indeed, in rather similar situations two courts of appeals have affirmed with little discussion district court decisions for the secured creditors. In re Nickerson & Nickerson, Inc., 8th Cir. 1971, 452 F.2d 56, affirming D. Neb., 329 F.Supp. 93 (floating lien on inventory); In re Fibre Glass Boat Corp., 5th Cir. 1971, 448 F.2d 781, affirming, S.D.Fla., 324 F.Supp. 1054 (inventory). In re Mitchell v. Shepherd Mall State Bank, 10th Cir. 1972, 458 F.2d 700, cited by appellees, is distinguishable because it did not involve after-acquired property at all.

On the other hand, it is neither onerous nor unreasonable to require a security agreement to make clear its intended collateral. This position does not require the most exact and detailed description possible, but only a clear designation of any class of items intended to be collateral. The general prohibition in pre-Code law on including after-acquired property as collateral heightens the sense of such a rule because, commerical practice of including after-acquired property in collateral notwithstanding, a subsequent lender might expect the parties to make explicit an intention to include this kind of property, both for precision and because of the law’s historic hostility-to such arrangements.

Further, a decision for appellant might well facilitate at least some abuse. Although it may be true that many, perhaps most, prospective lenders, on reading the present agreement, would obtain an unambiguous explanation of its full meaning from the secured party, some might be misled and proceed without inquiry. The ease with which a secured party could eliminate the danger of misleading any reasonable subsequent lender suggests that in administering the Code the courts should require him to do so.

A requirement that intended inclusion of after-acquired accounts receivable be unambiguously expressed will not significantly conflict with any important Code policies, and will support some. It will produce simpler, clearer and more certain law for all parties.

This appeal involves a question as yet infrequently adjudicated. Hence, our decision here cannot disturb any generally understood judicial interpretation of the Code. Affirmance will not require a return to the law of magic words. Neither will it go to the opposite extreme of flexibility urged ■ by the appellant. It will be in keeping with the observation in the Comment7to section 1-102, supra, that a degree of strictness in construction, as well as flexibility has proper application under the Code.

Last, this decision respects reasonable commercial need and expectation. The validity of after-acquired property clauses is recognized. Only the implication of such a clause through ambiguous language is rejected. It is hard to see how much implication would promote satisfactory conduct of business affairs. Moreover, there is a logical trap regarding reasonable commercial expectation in this context: given the law’s relatively recent hostility to after-acquired property clauses one might reasonably expect an express statement of any such intent and in the absence of such a statement, might reasonably conclude that in the bargaining process the parties agreed not to encumber after-acquired accounts.

The judgment will be affirmed.

SEITZ, Chief Judge

(dissenting).

The majority holds that a secured party obtains no security interest, as against third parties, in the debtor’s accounts receivable acquired after execution of a security agreement and filing of a financing statement absent an explicit declaration of such interest’s creation in the documents. Requiring a security agreement explicitly to declare the parties’ creation of a security'interest in after-acquired property of many types both simplifies interpretation of such agreements and insures third parties of adequate notice of the extent of a perfected security interest in the debt- or’s property. I dissent, however, because I believe that the agreement involved here sufficiently notified interested persons that the Secured Party had a perfected interest in “all of Debt- or’s Accounts Receivable,” including after-acquired accounts.

Financing of inventories and of accounts receivable has for years been the particular province of the “floating lien.” Fluid financing arrangements in these areas are obviously necessary because the nature of specific inventory items or accounts is likely to vary daily, although the total value of a business’ inventory or accounts may remain reasonably stable for long periods. It would, thus, be commercially reasonable to anticipate, unless the financing statement indicated otherwise, that security interests in inventory or accounts would include after-acquired property, even though the presumption would be reversed for other property.

The Code generally mandates that courts interpret its provisions in light of what is commercially reasonable. 5A Del.C. § 1-102. This general direction is incorporated into the provisions dealing with secured transactions by making any description that reasonably identifies the collateral sufficient description for a Security Agreement, 5A Del.C. § 9-203, Del. Study Comment; see also 5A Del.C. §§ 9-110, 9-402, and allowing a financing statement substantially complying with the requirements of § 9-402 to be effective even though it contains minor, not misleading errors. Del.C. § 9-402(5).

In line with the mandate of the UCC that it be given a commercially reasonable interpretation I would not read the Code as requiring an explicit statement to perfect an interest in after-acquired inventory or accounts, even though the requirement may not seem onerous to this Court — the Code enjoins courts to interpret its provisions in a commercially reasonable manner rather than to require businessmen to follow judicial decisions and comply with them so long as they are not onerous. We deal in commercial litigation with matters of contract; few requirements will be onerous in themselves, but we cannot reasonably expect businessmen to fulfill the onerous task of familiarizing themselves with all the pertinent case law before taking any action in the conduct of their businesses.

To justify the imposition of its explicit declaration requirement, the majority relies on pre-Code hostility to the use of after-acquired property as collateral. Whatever hostility existed prior to the UCC is irrelevant to our decision. The Code clearly authorizes security interests in after-acquired property and abolishes many of the technical rules of pre-Code law. The Financing Statement and Security Agreement make debtor’s receivables security for its liabilities to the secured party. They define “Receivables” to mean “all of Debtor’s Accounts Receivable” and “Liabilities” to mean “all indebtedness of Debtor to Secured Party . . . now existing or hereafter arising.” I would find, and I believe the pertinent state court would conclude, that under the UCC this language adequately notifies interested parties that the secured party had an interest in literally all debtor’s accounts receivable, including after-acquired accounts.

      . Because the contention had not been made to the referee, the district court refused to entertain an argument that some after-acquired accounts may have been proceeds of prior accounts. Accordingly, so do we.

      . So much of appellee’s argument as is based on a seemingly contrary premise is therefore flawed. It may be, however, that the appel-lee had in mind the understanding of a stranger to the agreement, not the intent of the parties themselves. That possibility is treated infra.

      . The latest Code revision has changed this to read:
      “ . . . a security agreement may provide that any or all obligations covered by the security agreement are to be secured by after-acquired collateral.”

      . In the alternative Tru-Fit contends, first that its interest at least attached to post-agreement receivables due from those of Middle Atlantic’s debtors who had open accounts on the date of the agreement. However, we find no basis for distinguishing these post-agreement receivables from after-acquired accounts generally. Second, Tru-Fit argues that it is entitled to all interest accrued on receivables held in escrow pendente lite, not only the pro rata portion attributable to the pre-May 31 accounts. The referee’s order allocates interest to the rightful owners of the money on a pro rata basis. Tru-Fit contends that because the referee had previously awarded it the interest in question he could not later alter his decision. The district court sensibly responded that the tentative nature of the earlier order permitted the change to prevent a windfall to Tru-Fit.

      . On the other hand, the explicit mention of after-arising liability without a parallel mention of after-acquired security might be read as some indication that the latter was not intended.


source: Caselaw Access Project

author: KOELSCH, Circuit Judge:

license: Public Domain

text:
    Clarence HAMILTON, Chairman of the Hopi Tribal Council of the Hopi Indian Tribe for and on Behalf of the Hopi Indian Tribe, Including All Villages and Clans Thereof, and on Behalf of Any and All Hopi Indians Claiming Any Interest in the Lands Described in the Executive Order Dated December 16, 1882, Plaintiff-Appellee, v. Peter MacDONALD, Chairman of the Navajo Tribal Council of the Navajo Indian Tribe for and on Behalf of the Navajo Indian Tribe, Including All Villages and Clans Thereof, and on Behalf of Any and All Navajo Indians Claiming Any Interest in the Lands Described in the Executive Order Dated December 16, 1882, Defendant-Appellant, William B. Saxbe, Attorney General of the United States, on Behalf of the United States, Defendant-Appellee.
    Nos. 73-1151 and 73-2572.
    United States Court of Appeals, Ninth Circuit.
    Sept. 12, 1974.

      George P. Vlassis (argued), Brown, Vlassis & Bain, Phoenix, Ariz., for defendant-appellant.
    John S. Boyden (argued), Boyden & Kennedy, Salt Lake City, Utah, for plaintiff-appellee.

      Before BARNES and KOELSCH, Circuit Judges, and FIRTH, District Judge.

       The Honorable Robert Firth, United States District Judge for the Central District of California, sitting by designation.

   OPINION

KOELSCH, Circuit Judge:

These appeals concern a further melancholy episode in the long-continuing and bitter litigation between the Hopi and Navajo Indian Tribes. By way of background, it should be noted that the Congress, by Act of July 22, 1958, P.L. 85-547, 72 Stat. 403, sought to provide for a judicial resolution of the longstanding territorial dispute between the two tribes over a reservation in Northeastern Arizona; the legislation authorized either tribe to commence or defend a suit against the other (and the Attorney General on behalf of the United States, holder of the trust title to the lands in question) in the United States District Court for the District of Arizona

“for the purpose of determining the rights and interests of said parties in and to said lands and quieting title thereto in the tribes or Indians establishing such claims pursuant to such Executive order as may be just and fair in law and equity. The action shall be heard and determined by a district court of three judges in accordance with the provisions of title 28, United States Code, section 2284, and any party may appeal directly to the Supreme Court from the final determination by such three judge district court.” 72 Stat. 403.

Thereafter the Hopi Indian Tribe brought suit, and a trial was held, extending over a period of months. The

three-judge district court first decided that the determination of the tribes’ equitable rights and interests in the reservation lands presented a justiciable question, and hence that the Act conferring jurisdiction was a proper exercise of Congressional power. Healing v. Jones, 174 F.Supp. 211 (D.Ariz.1959) (.Healing I). It then decided, on the merits, that the Hopi were entitled to exclusive possession of a portion of the reservation [land management district 6], and that, as to the remainder [the joint use area]:

“The Hopi and Navajo Indian Tribes have joint, undivided, and equal interests as to the surface and sub-surface including all resources appertaining thereto, subject to the trust title of the United States.

“It is just and fair in law and equity that the rights and interests of the Hopi and Navajo Indian Tribes be determined in the manner just stated, and that the respective titles of the two tribes in and to the lands of the 1882 reservation be quieted in accordance with that determination.” Healing v. Jones, 210 F.Supp. 125, 192 (D.Ariz.1962) (Healing II).

On direct appeal the Supreme Court, by decision “common to both” Healing I and Healing II, affirmed the district court (Jones v. Healing, 373 U.S. 758, 83 S.Ct. 1559, 10 L.Ed.2d 703 (1963) ), and the litigation temporarily came to rest. Some seven years later it resumed; on March 13, 1970, the Hopi Indian Tribe, alleging that it was still excluded from the joint use area, petitioned the district court for an order of compliance or writ of assistance to enforce the 1962 judgment. The single-judge district court, being of the opinion that it lacked jurisdiction to issue process to enforce the judgment, denied the petition. We reversed, holding that the district court had jurisdiction, under P.L. 85-547 and the “All Writs” Act, 28 U.S.C. § 1651(a), to enforce the judgment by a writ of assistance. Hamilton v. Nakai, 453 F.2d 152 (9th Cir. 1972). We remanded the matter to allow evidence to be taken with respect to conditions existing in the joint use area, so that the district court might

“Tailor the relief to be afforded to the facts that confront him, always bearing in mind that the objective is to achieve what the court has decreed, the exercise by the Hopi and the Navajo of their ‘joint, undivided and equal interests as to the surface and subsurface and a.ll resources appertaining thereto [in the lands in question], subject to the trust title of the United States.’ ” 453 F.2d at 162.

Certiorari was denied. 406 U.S. 945, 92 S.Ct. 2044, 32 L.Ed.2d 332 (1972).

Following our mandate, the district court then held hearings, heard evidence, made Findings of Fact and Conclusions of Law, and on October 14, 1972, entered its Order of Compliance, followed a few days later by a writ of assistance.

The matter is now here on the Navajo’s appeals from these orders: The appeal in No. 73-1151 is from the Order of Compliance, and the appeal in No. 73-2572 is from those portions of the plan incorporated by the court in its order of April 23, 1973, which (1) restrict Navajo construction in the joint use area and (2) limit livestock grazing by members of the Navajo Tribe to one-half or less of the joint use area.

The defendant United States has not appealed; its position is that the issues now tendered by the Navajo Indian Tribe are substantially the same as those previously resolved by this court in Hamilton v. Nakai, supra. We shall consider the appeals in chronological order.

I. No. 73-1151 — The Appeal from the Order of Compliance

A. The jurisdiction of the district court

Appellant contends that the district court lacked subject-matter jurisdiction to order that the Hopi Indian Tribe be put in possession of one-half of the joint use area, on the theory that P. L. 85-547 did not confer jurisdiction on the three-judge district court to determine, as it did in Healing II, 210 F. Supp. at 192, that the Hopi Indian Tribe’s joint and undivided interest is equal to that of appellant. While the Act authorized the district court to determine “the rights and interests of said parties” in the land in question and to quiet title accordingly, appellant nevertheless argues that Congress thereby authorized the district court to determine the nature of the tribes’ rights and interests in the reservation, but not their extent.

Essentially the same argument was made in Healing I. There the defendant United States, from the premise that Congress cannot assign the court a nonjudicial function, argued that the court lacked subject-matter jurisdiction because a determination of the tribes’ “rights and interests” required a non-

justiciable political judgment. The court concluded otherwise. It decided:

“[B]oth the identity of the holders of the vested equitable interest in these lands and the extent and nature of their respective holdings may be determined through the exercise of judicial power. . . . The conclusion necessarily follows that this court has jurisdiction to hear and determine this cause . . . . ” 174 F.Supp. at 218.

To paraphrase, the court interpreted its assigned task of determining the “rights and interests” of the tribes to be that of “identifying the holders of the vested equitable interests ... in determining the extent (emphasis added) and nature of the respective rights and interests of these holders, if any.” 174 F.Supp. at 218. It decided that the task could be accomplished employing traditional judicial means, that an Article III, § 2 case or controversy existed, and that jurisdiction was proper. The conclusion that the court decided it had jurisdiction to determine the extent of the equitable interests follows inexorably. That the court has such jurisdiction is now the law of the case.

Moreover, in Healing II the court exercised that jurisdiction to determine that the two tribes had “joint, undivided, and equal interests” in the joint use area. As noted earlier, the Supreme Court affirmed that judgment. (373 U. S. 758, 83 S.Ct. 1559, 10 L.Ed.2d 703 (1963).) And this court in Hamilton v. Nakai, supra, in response to the contention that the district court lacked jurisdiction to grant the relief sought by the plaintiff, observed that the relief sought, the possession of an equal portion of the joint use area, was the “enforcement of the decree quieting title in co-tenants, which the court did have authority to enter.” 453 F.2d at 160. Particularly as no compelling reasons demonstrating those prior decisions in this case “palpably erroneous” have been advanced, see Pachmayr Gun Works, Inc. v. Olin Mathieson Chemical Corp., 502 F.2d 802, at 805 (9th Cir., filed July 12, 1974) 1B J. Moore, Federal Practice jf 0.404 [1], at 401-403, we will not now reconsider the court’s jurisdiction.

B. The writ of assistance

Likewise foreclosed is appellant’s contention that the writ of assistance was improperly issued because such a writ does not lie against a party with a colorable claim to possession. In Hamilton v. Nakai, supra, this court expressly held that a writ of assistance to deliver joint possession in the joint use area to the excluded Hopi Indian Tribe was “agreeable to the usages and principles of law.” 28 U.S.C. § 1651(a). 453 F.2d at 157-158.

C. Potential equitable limitations on the relief ordered

Appellant’s major contention with respect to the Order of Compliance is that under traditional equitable principles, the relief granted is inappropriate for a court of equity.

1. The balance of hardships

Thus, appellant argues that the dislocation and attendant hardship which will be suffered by members of the Navajo Tribe if the Hopi are granted possession of their equal interest in the joint use area outweighs the hardship presently experienced by the Hopi, and therefore such relief should not be granted. That argument is essentially an effort to relitigate the determination made in Healing II that the Hopi are equitably entitled to share equally in the joint use area; such relitigation is precluded.

Appellant, in renewing the argument here, misconceives the scope of both the decision in Healing II and of this court's instruction on remand in Hamilton v. Nakai, supra. The decision in Healing II, affirmed by the Supreme Court and binding on us, did not leave open the question now urged — -it decided that the Hopi are equitably entitled to use lands presently occupied solely by Navajo. The three-judge district court, authorized by P.L. 85-547 to quiet title “as may be just and fair in law and equity” (emphasis added), sat as a court in equity. See 453 F.2d at 156-157. As the lengthy opinion in Healing II demonstrates, that court had before it the very information, including the evidence as to exclusive contemporary Navajo use, the poverty and economic need of the Navajos, and their much larger population, which appellant now urges as the basis for concluding that enforcement of the decree is excessively harsh. That court also had before it a great deal of evidence which appellant now ignores — evidence which in the balancing of equities favors the Hopi Indian Tribe. Included is a long history of the dispossession, with its attendant economic retardation, of the Hopi from lands to which they were legally entitled under United States treaty obligations; a dispossession resulting from the combined effects of Navajo intrusions and depredations, often in violation of Navajo treaty obligations, expediently sanctioned by bureaucratic indifference, and furthered by illegal governmental restraints on Hopi use of the reservation. With this evidence before it, the court determined that it was “just and fair in law and equity” for the tribes to share equally in the joint use area. In reaching that decision the court fully recognized and fairly considered the respective hardships confronting both the Navajo and Hopi.

The decision was not intended, as appellant seems to construe it, as an advisory opinion. Wisely or not, Congress assigned to the court the task of determining the respective rights of the tribes to the land in question and quieting title — presumably that was not intended as an idle task. The court in Healing II indicated that the Hopi had a present right to use the jointly held areas, and that the court thought one of two alternatives would be followed: either, (a) that the Bureau of Indian Affairs would act to implement the con-gressionally mandated judicial resolution and seek to “fairly [administer] [the joint use area] as a joint reservation,” or, (b) subsequent congressional action would partition the area, assigning a portion of the joint use area to the reservation of each tribe. 210 F.Supp. at 192.

Neither course was followed. The government procrastinated and the Navajo resisted the implementation of the court’s decision. The Hopi therefore petitioned the court for aid, and this court, in Hamilton v. Nakai, supra, decided that the district court had jurisdiction to enforce the original decision. As our remand made clear, the remedy to be fashioned by the district court was one which put the Hopi in possession of that to which they were entitled under the decree in Healing II — a joint, undivided and equal share. 453 F.2d at 162. There was no occasion for the district court to “re-balance” the hardship imposed on individual members of the Navajo Tribe if the decision is enforced. That balance was struck in Healing II, and is now the law of the case.

Moreover, were we now initially reviewing the original determination that each tribe was entitled to share and share alike, we could not say that the relative hardship thereby imposed on the members of the' Navajo Tribe so outweighed the alternative inequity and hardship which would be imposed on the members of the Hopi Tribe were they deprived of their interest that the decree constituted a reversible abuse of discretion. See Automatic Radio Mfg. Co. v. Ford Motor Co., 390 F.2d 113, 115-116 (1st Cir. 1968), cert. denied, 391 U.S. 914, 88 S.Ct. 1807, 20 L.Ed.2d 653 (1968). The cases cited by appellant, such as New York v. Pine, 185 U.S. 93, 22 S.Ct. 592, 46 L.Ed. 820 (1902), and Madison v. Ducktown Sulphur, Copper & Iron Co., 113 Tenn. 331, 83 S.W. 658 (1904), are simply inapposite. Those cases stand for the commonplace proposition that injunctive relief will not be granted to protect an individual’s legal rights if the effect of the equitable relief is to halt an enterprise on which many other men depend for their livelihood. As characterized by Professor Mechem, those cases ordain that:

“[I]f many other peasants are to be injured by the granting of an injunction, the complaining peasant is remitted to his valuation, and no more. This is not Poor Man v. Rich Man; but rather Poor Man v. Poor Man.

Mechem, The Peasant in His Cottage: Some Comments on the Relative Hardship Doctrine in Equity, 28 So.Cal.L. Rev. 139, 144 (1955). Appellant surely must recognize that this is not such a ease. This is poor men against other poor men, fighting against a long historical backdrop for an over-grazed, harsh, and inhospitable area which yields little above a subsistence living. Both tribes have historical claims to the area, and both undoubtedly have present economic need. Any solution is inevitably bound to cause suffering. The Order of Compliance and implementation plans attempt to minimize the economic dislocation caused the Navajo sheepherders, but the district court obviously cannot at the same time implement the decree protecting Hopi interests and not visit hardships on the Navajo, who presently use the entire area. Were the issue res nova, we could not say that the equal division struck was an abuse of discretion.

2. Election of remedy

We now turn to appellant’s contentions which are not governed by the doctrine of law of the case.

Appellant contends that the Hopi Tribe’s attempt to collect grazing fees from the Navajo for grazing their livestock on the Hopi half interest constituted an election of damages which precludes later equitable relief. We disagree. The Hopi’s yearly demand for rent merely reflected an effort to secure compensation for the Navajo’s excessive previous year’s use of an area from which the Hopi were unwillingly excluded, and cannot be interpreted as expressing a willingness to settle the Hopi claim for money. Nor, of course, did appellant in any way rely to its detriment on the expectation that year by year payments to the Hopi would settle the Hopi claim, as appellant consistently took the position that it had no obligation to pay the rent.

3. Difficulty of enforcement of the decree

Appellant also contends in substance that the Order of Compliance was improper because it will be insurmountably difficult to enforce. Again we disagree. While recognizing that the stock reduction order is most unpopular and may require extensive court supervision to enforce, we are confident that the district court will be able to solve such problems not resolved by the tribal officials and governmental officials charged with implementing the plan. As noted in Developments in the Law — Injunctions, 78 Harv.L.Rev. 994, 1012 (1965):

“The rule that a ‘court of equity will not issue an unenforceable decree of injunction’ comprehends two reasons for denying injunctive relief: that the court cannot discover violations of its decree, and that it does not have the means to punish disobedience once discovered.” (footnote omitted.)

Here neither condition exists. Given the stake of the Hopi Tribe in the implementation of the order, we are confident that the court has sufficient means of discovering violations. Nor does the order require anything impossible to be performed. If, as appellant appears to suggest, compliance will not be voluntarily forthcoming, then the district court possesses an ample reservoir of power to command respect for its orders.

4. No proof of ouster

Appellant further attacks the equity of the Order of Compliance on the ground that a court of equity will not intervene, absent proof of an ouster, to grant possession to a co-tenant out of possession. “An ouster is a wrongful dispossession or exclusion (emphasis added) of a party from real property It involves a question of intent.” Newell v. Woodruff, 30 Conn. 492, 497, cited in Mastbaum v. Mastbaum, 126 N.J.Eq. 366, 9 A.2d 51, 53 (1939). Assuming arguendo that proof of an ouster is a necessary predicate to equitable relief, that precondition was met here. The district court determined that the Hopi had been ousted, and that finding is not clearly erroneous — indeed, it is more than amply supported by the evidence. A careful review of the record reveals that the Hopi Tribe made demands for use of its joint interest to both the government and the Navajo Tribe, but that it has been excluded wrongfully from any but an insubstantial use of the joint use area by the acts of members and officials of appellant Tribe and of government officials.

5. No proof of waste

Appellant alternatively argues (presumably directed at the validity of the stock reduction and range conservation provisions of the relief) that: (1) in the absence of waste a court of equity will not provide injunctive relief to one co-tenant against the other, and that (2) no waste occurred in the Navajo’s use of the joint use area. The contention is without merit. The district court found that members of appellant Tribe have so extensively overgrazed the range that 80 per cent of the joint use area is producing only 0 per cent to 25 percent of its maximum forage, and that the range is still deteriorating. That condition constitutes waste. Appellant’s argument that the court’s finding is improperly predicated on “Anglo”, rather than Indian, range standards is fatuous. Appellant contends that Navajo grazing standards and customs dictate the most intensive possible use of the range, and that measured by that standard, Navajo grazing has been reasonable and no waste has occurred. Even if such indeed is the Navajo range standard, the short answer to the argument is that one co-tenant is not bound by the peculiar standards of the other co-tenant — he is entitled to protection of his rights in the estate as measured against an objective standard for determining reasonable use. The Hopi Indian Tribe is apparently willing to have waste measured against “Anglo” range standards, being of the opinion that standards which preserve the range are Indian standards as well. “A blade of grass cannot distinguish between an Anglo or an Indian.” (Brief of Hopi Indian Tribe at 33.) Nor do we think that Navajo sheep prefer being thin. The district court acted properly in enjoining the continued overgrazing and ordering the implementation of range conservation measures.

D. Indispensable parties

We reject out of hand appellant’s contention that creditors holding security interests in Navajo livestock presently grazed in the joint use area are indispensable parties, and that the action should be dismissed unless they are joined. The creditors are not conditionally necessary “persons to be joined if feasible,” F.R.Civ.P. 19(a), much less indispensable parties. The subject matter of this action is the title to and possession of the land, not the livestock — the secured creditors have no interest in the land, and the rights of the parties to the land can be determined, and complete relief accorded them, in the absence of the secured parties. F.R.Civ.P. 19(a)(1). While the stock reduction provisions of the Order of Compliance affect the livestock which is mortgaged to the secured parties, the order does not affect title to the livestock or alter the legal validity of the security interests, and therefore does not “as a practical matter impair or impede [the secured parties’] ability to protect” their interests. F.R.Civ.P. 19(a)(2)(i). The secured parties, in the event their security is impaired, may proceed to seek whatever remedies against either the livestock or proceeds of sale they are afforded under their agreements.

E. Time limitation on process to enforce judgment

The final contention urged in No. 73-1151 is that the present supplementary proceeding to enforce the judgment in Healing II is barred by the combined operation of F.R.Civ.P. 69(a) and A. R.S. § 12-1551 (B). Relying on Custer v. McCuteheon, 283 U.S. 514, 51 S'.Ct. 530, 75 L.Ed. 1239 (1931), appellant argues that Rule 69 requires the district court here to adopt Arizona procedures and rules for enforcement of judgments, including A.R.S. § 12-1551(B), which extinguishes the right of execution on a judgment after the passage of five years. Appellant concludes that the plaintiff is now barred from seeking supplementary aid to enforce the 1962 judgment.

Appellant is mistaken in the premise of the argument. Rule 69(a) does not apply to the judgment in Healing II. Rule 69(a) adopts state procedures on execution and supplementary proceedings only when the judgment is for the payment of money. NLRB v. Trans Ocean Export Packing, Inc., 473 F.2d 612, 615 (9th Cir. 1973); 7 J. Moore, Federal Practice f[ 69.02, at 69-8; Wright and Miller, Federal Practice and Procedure; Civil § 3011, at 63 (1973) ed. Final process on equitable decrees ordering performance of specific acts is governed by F.R.Civ.P. 70, which does not provide for conformity to state practice. As the judgment in Healing II is not for the payment of money, and is governed by the last sentence of Rule 70, the limitation on execution provided by A.R.S. § 12-1551(B) is inapplicable.

It is, of course, somewhat anomalous that the Federal Rules of Civil Procedure, which purport to abolish the distinction between suits at law and equity. (F.R.Civ.P. 2), operate to adopt a state statute extinguishing the right to execution on a judgment at law for money, but not in the case of an essentially equitable decree. The distinction traces to the sources of present Rules 69(a) and 70. Before the adoption of the Federal Rules, the predecessor of Rule 69, 28 U. S.C. § 727, R.S. § 916, provided that “[t]he party recovering a judgment in any common-law cause” should have process on execution or in aid of the judgment in accordance with the practice of the state in which the court sat. R.S. § 916 had no application to equitable decrees. Final process on the equity side of the federal courts was governed by Equity Rules 7, 8 and 9, see Rules of Practice in the United States Courts 436-443 (Dewhurst ed. 1919), the forerunners of present Rule 70. See J. Moore, supra, at 70-21. However, Equity Rule 8 provided: “Final process to execute any decree may, if the decree be solely for the payment of money, be by a writ of execution, in the form used in the District Court in suits at common law in actions of assumpsit.” Thus, through the combined effect of Equity Rule 8 and R.S. § 916, process to execute an equitable decree solely for the payment of money was, like that to execute a judgment at law, according to state practice. General Electric Co. v. Hurd, 171 F. 984 (C.C.Or.1909). See 7 Hughes, Federal Practice, Jurisdiction, and Procedure § 4511, at 224 (1931 ed.).

The drafters of the Federal Rules, in merging the two sets of procedures formerly applicable to federal courts sitting in law or equity, did not consider development of an entirely new series of rules on supplementary proceedings worthwhile. They therefore simply continued former practice. As most states had adequate supplementary proceedings to enforce money judgments, see J. Moore, supra, at 69 — 10, Rule 69(a) followed R.S. § 916 in adopting state practice for execution of a money judgment, whether it derived from a formerly legal judgment or equitable decree. Previously available federal remedies to enforce equitable decrees, including writs of assistance, continued, on the other hand, to be available under the terms of Rule 70, without reference to state practice. Thus, a state statute such as A.R.S. § 12-1551(B), which extinguishes the right to execution on all judgments, whether for the payment of money or performance of specific acts, applies in federal courts, through Rule 69(a), only to money judgments. As the state policy (and adopted federal policy) behind the statute is the same in either event, and the Federal Rules recognize only one form of suit, application of A. R.S. § 12-1551 (B) only to a money judgment incorporates a seemingly pointless distinction into the rules governing final process on federal court judgments. We are not at liberty to write the anomaly out of the Rules, and consequently appellant’s contention that supplementary proceedings are barred must be rejected.

Moreover, the anomaly is less significant than appears at first glance because A.R.S. § 12-1551 (B) probably applies to extinguish the right to execution on a federal court equitable decree in a diversity suit, not through operation of the Federal Rules, but because of the Rules of Decision Act, 28 U.S.C. § 1652. General Electric Co. v. Hurd, supra, at 988. See Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945). See Wright and Miller, supra, § 2943, at 387 et seq. Thus, only non-money judgments in suits, such as the present one, in which federal jurisdiction is founded on some other basis than diversity of citizenship, are exempt from state limits on execution.

Even if we were free to do so, we would be highly reluctant to apply A.R.S. § 12-1551 (B) to the case at bar. This is neither a suit in which the federal court is sitting as another court of the forum state, or even a suit in which, although jurisdiction is not based on diversity, the state has an interest, perhaps to be recognized out of comity, in protecting its citizen-litigant from an oppressive execution on a stale judgment. Because Congress possesses exclusive regulatory power over Indian tribes, U.S.Const. art. I, § 8, clause 3, because the consent of Congress is required for state courts to exercise jurisdiction over Indian territory, see 28 U. S.C. § 1360, and because the district court was authorized to exercise exclusive original jurisdiction over the present litigation, the matter is, in short, one in which the State of Arizona has very little cognizable interest, beyond the fortuity that the reservation is located in Arizona. Because of the historically unique “federal” status of the litigants, we see no reason to defeat the congressional policy of P.L. 85-547 in order to apply the state policy, absent some clear indication that Congress wishes to adopt it.

The judgment in No. 73-1151 is affirmed.

II. No. 73-2572 — The appeal from the order of April 23, 1973, approving the government’s implementation plans

Appellant raises two issues in this appeal. Neither has merit, nor requires extended discussion.

Appellant contends that paragraph 5 of the government's implementation plan of January 17, 1973 (approved by the court by the April 23, 1973, order), which restricts Navajo construction in the joint use area, effectively partitions the area and thus orders relief the court is without jurisdiction to provide. See Healing II, 210 F.Supp. at 192; Hamilton v. Nakai, supra, 453 F.2d at 160.

The short answer is that the building restriction is not in any sense a judicial partition of the joint estate. A partition is “[t]he dividing of lands held by joint tenants . . . into distinct portions, so that they may hold them in severalty.” Black’s Law Dictionary 1276 (rev. 4th ed. 1968). “Partition . severs the unity of possession.” Noble v. Beach, 21 Cal.2d 91, 130 P. 2d 426, 430 (1942). The restriction imposed on Navajo building applies in all parts of the joint use area, does not alter Navajo title, does not affect the Navajo right to “joint, equal, and undivided” possession in the entire area, nor, once the Hopi attain parity, to a voice in regulation of all new construction anywhere in the area. In short, rather than an effective partition, the building restriction is simply an appropriately designed equitable remedy to allow the Hopi the equal possession to which they are entitled. See Hamilton v. Nakai, supra, 453 F.2d at 160. In light of the fact that Hopi possession and use of the joint use area has been historically impeded by the exclusionary pressure of the overwhelmingly Navajo population living there, see Healing II, 210 F.Supp. at 184, 188, the district court was well within its discretion in fashioning a remedy to prevent further Navajo influx during the period in which the Hopi are attaining parity in the area.

Appellant’s other contention, that the provisions of the implementation plan requiring stock reduction, range reconnaissance, the cancellation of all present grazing permits, and issuance of one-half of the future permits to members of each tribe, constitute a partition of the area, is without merit and does not require discussion save in one particular —the potential creation and use of grazing districts assigned exclusively to members of one tribe.

Neither the Order of Compliance nor the implementation plans create exclusive grazing districts. However, the testimony of Mr. Irving Schwartz, which is incorporated as a gloss on the implementation plans by the court’s approval order of April 23, 1973, might be read to indicate that the government contemplates division of the joint use area into a number of grazing districts which will be divided between the two tribes in a manner which will allow each to graze land capable of sustaining the same number of animals, but with the permits in each district to be held exclusively by members of one tribe. R.T. of March 3, 1973, at 27 et seq. Appellant argues that such an arrangement constitutes a proscribed partition. We disagree.

Establishment of grazing districts without more does not constitute a partition. Such districts are a recognized land-management device which may cut across or combine parcels of land under separate legal ownership in order to regulate range for grazing purposes. See 25 C.F.R. § 151.1 (j). A grazing district does not alter either tribe’s rights in the land — it simply facilitates government regulation of the land to protect it from waste.

Nor do we think exclusive grazing districts (assuming the implementation plan contemplates issuance • of grazing permits in a particular district exclusively to members of one tribe) constitute an impermissible de facto partition. While as a matter of legal theory each co-tenant is entitled to use of the entire estate, it is clear as a practical matter that Hopi and Navajo livestock cannot share the same spot on the range at the same time. The use of exclusive grazing districts is a reasonable means of allowing the Hopi their equal share of the range, and at the same time avoiding continued strife. Such exclusive grazing districts lack many elements of a partition. The right conferred to exclusive use of a particular area is only for grazing — it does not extend to other uses. Both tribes continue to have a joint, undivided, and equal interest in the entire area —members of one tribe may appropriately live in the exclusive grazing district of the other, gather wood there, or do anything else there, except use the land for grazing livestock. Moreover, the proposed grazing districts lack the element of permanence associated with a partition. It is clear from Mr. Schwartz’ testimony that the boundaries of districts will be constantly changing as range restoration progresses. We therefore conclude that use of exclusive grazing districts does not constitute a partition, and is a reasonable and practical method of range conservation and of facilitating “the exercise by the Hopi and Navajo of their ‘joint, undivided and equal interests.’ ” 453 F.2d at 162.

The judgment in No. 73-2572 is affirmed.

      . The prayer for relief requested an order: “3. Directing the defendants to forthwith grant and permit the joint use and possession of the surface, including all resources, in and to all of the executive order reservation of December 16, 1882, lying outside of the boundaries of land management district 6, as defined on April 24, 1943 to the Hopi Indian Tribe and the Navajo Indian Tribe, share and share alike, and to remove sucli Navajo livestock from said lands as is necessary to aecom-plish such joint use without further damage to said lands.
      “4. Directing the clerk of this court to issue a writ of assistance to compel performance of' the judgment of this court entered herein on September 28, 1962 and to allow the plaintiff, the Hopi Indian Tribe, to enter upon said joint use area, and with the Navajo Tribe jointly and equally use and benefit from the grazing forage and all other surface resources of said area, for the benefit of the respective members of said tribes until further order of this court.”

      . Among other things, the order requires Navajo stock reduction; a program to restore the badly overgrazed range; a restriction of Navajo construction; a division of all income from rental or exploitation of the joint use area, including mineral resources; issuance of an equal number of grazing permits to members of each tribe; the issuance of a writ of assistance; and development of more specific plans to implement the broad outlines of the Order of Compliance.

      . Indeed, were the issue for us to decide, we would also conclude that the court had jurisdiction. The plain meaning of the words of the statute encompass a determination of the extent of each tribe’s interest. We doubt Congress intended to authorize a suit to quiet title without a concomitant determination of the extent of the equitable interest to which title was being quieted. The legislative history relied on by plaintiff does not address the power of the court to determine the extent of each tribe’s interest in jointly held, unpartitioned, areas.

      . Appellant’s corollary argument that the extent of the tribes’ interests is a non-justicia-ble political question has likewise already been rejected. In Healing I the court held that the extent of the interests could be determined and title quieted thereto by resort to “considerations of a kind which a court of equity may appropriately evaluate and apply.” 174 F.Supp. at 218.

      . Moreover, appellant’s contention is without merit The cases cited by appellant, Burney v. Lee, 57 Ariz. 41, 110 P.2d 554 (1941), and Dixon v. Dixon, 140 Fla. 166, 191 So. 292 (1939), stand only for the commonplace historical proposition that a court of equity will not intervene to transfer possession of land until legal ownership has been determined. Here the joint ownership of the 1-Iopi Indian Tribe has been established, and a writ of assistance clearly lies under the express terms of F.R.Civ.P. 70.

      . The legislative history indicating that Congress did not authorize the court to partition lands in which the two tribes liad a joint interest does not support appellant’s position that Congress did not intend the court’s determination of rights and interests to convey a right to possession. That history is primarily addressed to the question of how to divide up administrative jurisdiction over jointly held land, indicating that Congress thought that that issue should be resolved after being focused by a determination as to which lands were in issue. See 210 F.Supp. at 190. Nothing in the legislative history is inconsistent with the conclusion that until some subsequent action was taken, Congress intended the court’s determination to convey to both tribes a right to use jointly held lands. If Congress, out of consideration for the respective economic needs of each tribe, then wished to allow use of a greater proportion to either tribe, it could simply compensate the dispossessed tribe.

      . Presumably such a partition could be equal, or assign a greater proportion of the joint use area to the more populous Navajo Tribe, if compensation were paid to the Hopi Tribe for tiie interest thus taken.

      . As tiie Navajo expectation of exclusive possession of tiie area, and reliance thereon, lias been fostered by a long history of governmental inaction and tolerance of Navajo settlement in tiie area, and by official illegal restraint of Hopi settlement, it is now undoubtedly past time for Congress to act to alleviate the hardship occasioned by the disruption of those expectations.

      . In fact, we doubt there is any such requirement, although in most cases in which a co-tenant out of possession must seek court aid, the requirement will probably be met. The cases cited by appellant are inapposite, dealing with the requirement that an ouster be shown for a co-tenant to obtain prescriptive rights through adverse possession, or for a co-tenant to become liable to his co-tenants for the value of the use and occupation of the land. When the co-tenant seeks only possession, nothing more than a jjresent right to possession need be shown.

      . Our review of the record indicates that the district court’s other findings are not clearly erroneous. Conflicts in testimony are for the district court to resolve. Therefore, appellant’s contention that the Order of Compliance is not supported by competent evidence is without merit.

      . Consequently, the district court’s exclusion of evidence relating to the secured parties was proper. Likewise, no error was committed with respect to the population tabulations, as the underlying records were not offered into evidence. In any event, the figures were relevant solely to an issue, the equitable balance of hardships, which had previously been resolved.

      . F.R.Civ.P. 69(a) provides in part:
      “(a) In General. Process to enforce a judgment for tbe payment of money shall be a writ of execution, unless the court directs otherwise. The procedure on execution, in proceedings supplementary to and in aid of a judgment, and in proceedings on and in aid of execution shall be in accordance with the practice and procedure of the state in which the district court is held . . . .”

      . A.R.S. § 12-1551 (B) provides:
      “B. Xo execution shall be issued upon a judgment after the expiration of five years from the date of its entry unless the judgment is revived by affidavit or an action is brought thereon within five years from the date of the entry.”

      . See Custer v. McCutcheon, supra, at 519, 51 S.Ct. 530; United States v. Tacoma Gravel and Supply Co., 376 F.2d 343 (9th Cir. 1967); General Electric Co. v. Hurd, 171 F. 984, 988 (C.C.Or.1909).

      . Because Custer v. McCuteheon, supra, relied on R.S. § 916 to apply a state extin-guishment of judgment statute, it does not stand as precedent for application of such a statute to a non-money judgment.

      . The independence of federal equitable remedies was a response to the wide variation in equitable relief available in state courts. See Guaranty Trust Co. v. York, 326 U.S. 99, 104-105, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945).

      . The same dichotomy is found in F.R.Civ. P. 64, 65, and 66, providing respectively for provisional remedies, injunctions and the appointment of receivers. The essentially legal provisional remedies of Rule 64 follow state practice; Rules 65 and 66 follow former federal equity practice. See J. Moore, supra, K64.02-64.03, at 64-6-64-8; 1(64.04 [3] at 64-19-64-21; Wright and Miller, supra, § 2932, at 346.

      . The plan requires that new Navajo construction have a permit issued jointly by the two tribes, but does not impose the requirement on new Hopi construction until parity with existing Navajo structures is attained.

      . The parade of horribles listed by appellant is without foundation. The Hopi concede in their brief that (1) the district court’s order may not be properly read to require a permit for repairs or maintenance of present structures; and (2) that the district court has continuing jurisdiction to remedy any Hopi abuse of the veto power.

      . Paragraph 1(e) of the government plan submitted December 14, 1972, and approved by the court indicates that new grazing districts will be platted as part of the government’s program for range restoration, and that they will be used to regulate future grazing. Nothing in that clause indicates that permits in such grazing districts will be issued exclusively to members of one tribe.

      . Mr. Schwartz also indicated that, if the tribes wished, “their” grazing districts could be contiguous, and adjacent to the reservation areas over which each tribe presently has exclusive jurisdiction. We are clear that voluntary agreement by the tribes to so locate the grazing districts would not constitute a judicial partition.


author: LEVIN H. CAMPBELL, Circuit Judge.

text:
    FISHER ENGINEERING, etc., Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
    No. 74-1179.
    United States Court of Appeals, First Circuit.
    Submitted Sept. 9, 1974.
    Decided Oct. 15, 1974.

      Irving Isaacson and Brann & Isaac-son, Lewiston, Me., on brief for appellant.
    Scott P. Crampton, Asst. Atty. Gen., Washington, D. C., and Peter Mills, U. S. Atty., Portland, Me., Ernest J. Brown, William A. Friedlander and William M. Brown, Attys., Tax Div., Dept, of Justice, Washington, D. C., on brief for appellee.
    Before COFFIN, Chief Judge, Mc-ENTEE and CAMPBELL, Circuit Judges.
   LEVIN H. CAMPBELL, Circuit Judge.

Taxpayer appeals from the district court’s denial of its claim for recovery of taxes alleged to have been erroneously and illegally assessed. See 28 U.S.C. § 1346(a)(1). We are asked to determine whether the district court erred in sustaining the Internal Revenue Service’s ruling that the lifting mechanism forming part of a hydraulic snowplow manufactured and sold by taxpayer is an automobile part or accessory subject to the excise tax imposed by 26 U.S.C. § 4061(b)(1).

The snowplow is designed for attachment to light trucks and other vehicles not material here. It consists of a blade and its associated parts (the blade assembly) and the lifting mechanism. The latter includes hydraulic machinery to raise and lower the blade assembly, and a frame which serves to affix the entire apparatus to the vehicle’s chassis. The lifting mechanism takes power from the truck’s engine by means of a connection to the crankshaft pulley. Once installed, the lifting mechanism is designed to remain on the vehicle year round, but the blade assembly is detachable so that it may be removed when the vehicle is unlikely to be needed as a snowplow.

In 1962 the Internal Revenue Service issued a private ruling that the entire snowplow apparatus was nontaxable. But it partially reversed this determination in 1969, ruling that the lifting mechanism portion was taxable as a “part or accessory” under section 4061(b)(1) although the blade assembly was still nontaxable. Rev.Rul. 69-506, 1969-2 Cum.Bull. 203. Taxpayer takes exception to the 1969 ruling.

Section 4061(b)(1) of the Internal Revenue Code of 1954 imposes a tax upon parts or accessories (other than tires or inner tubes) for any of the articles enumerated in section 4061(a)(1) when sold by the manufacturer, producer, or importer. Among the articles enumerated in section 4061(a)(1) are chassis and bodies for automobile trucks, automobile buses, truck and bus trailers and semitrailers, and highway tractors. The parties do not dispute that trucks to which the snowplow apparatuses are designed to be affixed come within the enumeration of section 4061(a) (1).

The Treasury Regulations issued under section 4061(b)(1) provide that

“[t]he term ‘parts or accessories’ includes (1) any article the primary use of which is to improve, repair, replace, or serve as a component part of an automobile truck or bus chassis or body, or other automobile chassis or body, or taxable tractor, (2) any article designed to be attached to or used in connection with such chassis, body, or tractor to add to its utility or ornamentation, and (3) any article the primary use of which is in connection with such chassis, body, or tractor, whether or not essential to its operation or use.”

Taxpayer does not contest the validity of these Regulations, which were approved in substantially identical form in Universal Battery Co. v. United States, 281 U.S. 580, 50 S.Ct. 422, 74 L.Ed. 1051 (1930). It argues that the snowplow lifting mechanism cannot be considered a “part or accessory” under the definition set forth. However, the district court held, and we agree, that the taxpayer’s lifting mechanism met the definitional requirements of all three clauses. Its primary use is to improve the vehicle chassis to which it is affixed; it is designed to be attached to such chassis and add to its utility; and its primary use is in connection with such chassis. We do not repeat the district court’s careful and correct analysis of these points. See 376 F.Supp. at 543-544.

Appellant urges two additional objections to the inclusion of its lifting mechanism under section 4061(b)(1). It points to the administrative exclusion from parts or accessories of those articles that are “in effect the load being transported and the primary function of [which are] to serve a purpose unrelated to the vehicle as such.” Treas.Reg. § 48.4061b-2(a). Taxpayer contends that its snowplow apparatus, like other articles exempted from tax under this provision, is the “load” of the vehicle upon which it is mounted. The rulings upon which it relies, however, are distinguishable. They concern articles which were designed for stationary use and were to be operated completely independently of the transporting vehicle. See, e.g., Rev. Rul. 58-569, 1958-2 Cum.Bull. 767 (hydraulic towers for street light maintenance); Rev.Rul. 59-288, 1959-2 Cum. Bull. 250 (construction cranes); Rev. Rul. 64-166, 1964-1 Cum.Bull (Part 1) 378 (hydraulic derrick and digger); Rev.Rul. 64-189, id. (aerial maintenance platform). The present apparatus has no function apart from the vehicle to which it is attached. It is, in effect, an extension of the vehicle. We agree with the district court that taxpayer’s apparatus is not a “load” within the meaning of the Regulations.

Taxpayer’s final contention is that if the snowplow blade assembly is nontaxable, the lifting mechanism must likewise be nontaxable. Presented in taxpayer’s brief in several different fashions, this argument contains one central contention: the snowplow apparatus is unitary and all components must receive uniform tax treatment.

We cannot say, however, that the Commissioner went beyond the bounds of reason in affording different tax treatment to the two assemblies which together make up the snowplow that taxpayer markets. Clause (1) of the Regulations speaks in terms of “improving” a truck chassis or body, but nearby words such as “repair, replace, or serve as a component part” suggest a degree of more or less permanent incorporation of the article in the taxable chassis. The lifting mechanism, which is rigidly bolted to the chassis and which is custom designed for the particular model, meets the conception posited by the Regulations more than does the detachable blade, which may be stored separately for months at a time while the truck bearing the lifting mechanism goes about its other business. It is true that the lifting mechanism is useless without the blade assembly. But it is equally useless without the host vehicle to the body of which it is firmly bolted, and which supplies power for its hydraulic mechanism. We think the Commissioner could reasonably determine that the “primary use” of the lifting mechanism was to improve the truck chassis or body {viz., so that it was adapted to receive the plow blade assembly), while the “primary use” of the blade was not so much to “improve” the chassis or body as to plow snow.

Admittedly we are dealing with refined semantic distinctions. The continuum representing which article constitutes a part or accessory contains few obvious demarcations. But we think the Commissioner has drawn an acceptable line. We note that in Rex Chainbelt, Inc. v. United States, 484 F.2d 651 (7th Cir. 1973), a decision cited by appellant, the court, though not deciding the point, was unsympathetic to an argument similar to appellant’s. The court said that while a transfer case connecting a truck’s engine to a nontaxable concrete mixer was perhaps also related to the functioning of the exempt mixer,

“it would seem that an equally strong argument could be made to the effect that primacy was to be found in the connection with the chassis and particularly the motor thereof. It would be difficult in our opinion to say that the attachment did not add utility to the chassis.”

Cf. Rev.Rul. 59-288, 1959-2 Cum.Bull. 250, 251.

We conclude that the taxpayer has not established that the district court’s decision was incorrect as a matter of law.

Affirmed.

      . 376 F.Supp. 541 (D.Me.1974).

      . The district court found that each lifting mechanism is custom designed to fit the particular make and model of vehicle, and that plaintiff had designed a lifting mechanism for about ten makes and three models of each make and for about ten different, years of each model. To affix the lifting mechanism to a vehicle, it is necessary to modify the front bumper and bolt the mechanism to the chassis, a process requiring about eight trained man-hours. The lifting mechanism cannot be used with any other equipment or for any other type plow.

      . 484 F.2d at 653. The Seventh Circuit went on to hold that the transfer case was exempted from the excise tax by virtue of a separate provision of the Code, 26 U.S.C. § 4218(c). Section 4218(c) imposes a “use” tax upon tlie manufacturer of an automobile part or accessory who utilizes — rather than sells — the part or accessory, but the “use” tax does not apply if the manufacturer uses the part or accessory “as a component part of” any other article he manufactures. In Rex Chainbelt the lower court found as a fact that the transfer case was a component part of the mixer and the circuit court was persuaded that by virtue of the exception the taxpayer was exempt not only from the use tax but from any section 4061(b) tax as well. The latter point seems debatable as it is not entirely clear that the exemption from the section 4218(c) use tax provision necessarily permits an identifiable automobile part or accessory to escape tax under section 4061(b) when the nontaxable article with which it has become conjoined is sold. Cf. Treas.Reg. § 48.4218-1 (b) (2) (ii). However, that question is not now before us, the district court having declined to entertain argument belatedly offered concerning the possible effect of section 4218(c). In any event, this case is distinguishable from Rex Chain-belt in that the district court has found the “primary” use of the lifting mechanism to be associated with the truck. Moreover, as the Government points out, while a transfer case may be a component of a mixer, a lifting mechanism is less aptly described as a “component” of the blade. Rather the lifting mechanism and the blade assembly together constitute taxpayer’s snowplow. The articles are sufficiently distinguishable to permit separate tax treatment.


author: STALEY, Circuit Judge.

text:
    SYNTHETIC ORGANIC CHEMICAL MANUFACTURERS ASSOCIATION et al., Petitioners, v. Peter J. BRENNAN, Secretary, Department of Labor, and John H. Stender, Assistant Secretary of Labor for Occupational Safety and Health, Respondents.
    No. 74-1129.
    United States Court of Appeals, Third Circuit.
    Argued June 13, 1974.
    Decided Aug. 26, 1974.

      Donald L. Morgan, Cleary, Gottlieb, Steen & Hamilton; Washington, D. C., for petitioners.
    Michael H. Stein, U.S. Dept, of Justice; Washington, D. C., for respondents.
    Bertram Robert Cottine, Washington, D. C., for Oil, Chemical and Atomic Workers Int’l Union, AFL-CIO & Health Research Group.
    Before STALEY, GIBBONS and WEIS, Circuit Judges.
   OPINION OF THE COURT

STALEY, Circuit Judge.

This case is before the court upon petition to review an order of the Assistant Secretary of Labor for Occupational Safety and Health, published on January 29, 1974, 39 Fed.Reg. 3756, issuing permanent occupational health standards which regulate, inter alia, employee exposure to solid or liquid mixtures containing one percent or more of ethylenei-mine (“El”). See 29 C.F.R. § 1910.93ÍC. This court has jurisdiction to review and set aside these standards pursuant to § 6(f) of the Occupational Safety and Health Act of 1970, 29 U.S. C. § 655(f)(“Act”).

The standards in question are part of a group of permanent standards simultaneously issued pursuant of § 6(b) of the Act. 29 U.S.C. § 655(b). They were derived from similar emergency temporary standards issued on May 3, 1973, 38 Fed.Reg. 10929. This court has previously vacated and remanded to the Occupational Safety and Health Administration (“OSHA”) the temporary standards in so for as they applied to El and one other chemical. Dry Color Manufacturers’ Association, Inc. v. Department of Labor, 486 F.2d 98 (C.A. 3, 1973). We must now consider the permanent standards relating to EI.

On review the petitioners request that the court set aside OSHA’s standards applicable to EI. They challenge the validity of the standards on three principal grounds. They maintain that there is not substantial evidence to show that EI is carcinogenic; that the record does not support the particular EI standards; and that the Secretary failed to make sufficient findings of fact or to provide sufficient statements of reasons for the standards.

We deal first with the petitioners’ last contention. Subsection 6(e) of the Act provides;

“Whenever the Secretary promulgates any standard, ... he shall include a statement of the reasons for such action, which shall be published in the Federal Register.” 29 U.S.C. § 655(e).

As this court has previously stated, to satisfy subsection 6(e) the statement of reasons should indicate which data in the record is being relied upon, why that data shows the substances regulated are harmful, and why the particular standards were chosen. "Dry Color Manufacturers’ Assn., Inc. v. Department of Labor, 486 F.2d at 106. In that case a temporary emergency standard for the control of EI was invalidated by this court because the Secretary, in promulgating it, had not provided an adequate statement of reasons.

In the instant case, the statement of reasons offered by OSHA, published January 29, 1974, 39 Fed. Reg. 3756, consisted in part of the finding that EI was potentially carcinogenic to humans. In addition, according to OSHA, the case for El’s carcinogenicity rested on the extrapolation to humans of the findings of two animal studies. The Secretary justifies such extrapolation on the basis of the April 22, 1970 Report of the Ad Hoc Committee on" the Evaluation of Low Levels of Environmental Chemical Carcinogens to the Surgeon General. We have carefully examined the statements as well as those relating to the adopted standards themselves and conclude that they satisfy the requisites of subsection 6(e). We turn now to a consideration of the evidence in the record.

Subsection 6(f) directs courts reviewing a standard that “[t]he determinations of the Secretary shall be conclusive if supported by substantial evidence in the record considered as a whole.” 29 U.S.C. § 655(f). See Industrial Union Department, AFL-CIO v. Hodgson, 499 F.2d 467 (D.C.Cir. 1974); Associated Industries of New York State, Inc. v. United States Department of Labor, 487 F.2d 342 (C.A. 2, 1973). We find it extraordinarily difficult to apply this standard in this case. Section 6(a) of the Act directs the Secretary of Labor to promulgate by rule an occupational safety or health “standard which assures the greatest protection of the safety or health of the affected employees.” 29 U.S.C. § 655 (a). Section 6(b)(5) of the Act, 29 U.S.C. § 655(b)(5) directs that

“The Secretary, in promulgating standards dealing with toxic materials or harmful physical agents shall set the standard which most adequately assures, to the extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity even if such employee has regular exposure to the hazard dealt with by such standard for the period of his working life.”

Because the Dry Color case turned on noncompliance with § 6(e), it did not present us with an occasion to discuss the standard for review of informal rule making by the Secretary under the Act. However, the instant case requires that we do so.

It is made clear in § 6(b) that § 6(a) standards may be adopted by notice and comment rule making analogous to that provided for by § 4 of the Administrative Procedure Act, 5 U.S.C. § 553. Yet the quoted language of § 6(f) appears to limit judicial review to the scope of review which ordinarily applies to administrative determinations resulting from formal adjudications. See 5 U.S.C. § 706(2) (E). Compounding the confusion, § 10 of the Act, 29 U.S.C. § 659, provides for adjudications, § 11, 29 U.S.C. 660, provides for judicial review of adjudications, and the wording of the standard for review of adjudicatory findings set forth in § 11(a) is virtually the same as that for review of informal rule making set forth in § 6(f). See Brennan v. Occupational Safety & Health Review Commission (Hanovia Lamp), 502 F.2d 946 (C.A.3, filed — 1974). It is clear that application of the substantial evidence test to informal rule making was a deliberate legislative compromise between the House and Senate versions of the bill which became law. See the legislative history in Judge Friendly’s opinion in Associated Industries of New York State, Inc. v. United States Department of Labor, 487 F.2d 342, 348-349 (C.A. 2, 1973).

How a reviewing court applies the substantial evidence test in reviewing quasi-legislative informal rule making is an intriguing problem which is just beginning to generate what will prove to be, we suspect, an extensive literature. In Associated Industries of New York State, Inc. v. United States Department of Labor, supra, Judge Friendly suggests that the difference between the substantial evidence test and the more traditional abuse of discretion test in the context of informal rule making may be largely semantic. 487 F.2d at 349-350. In Florida Peach Growers Association, Inc. v. United States Department of Labor, 489 F.2d 120, 129 (C.A. 5, 1974); Judge Roney writes:

“ [I]t seems clear that even with the required substantial evidence test, our review basically must determine whether the Secretary carried out 'his essentially legislative task in a manner reasonable under the state of the record before him.”

In Industrial Union Department, AFL-CIO v. Hodgson, 499 F.2d 467 (D.C.Cir. 1974), Judge McGowan distinguished those rule making issues which were susceptible of resolution on a factual record, as to which the court would review for substantial evidence and those issues which by their nature were not capable of such resolution but represented policy judgments. As to the latter, Judge McGowan suggested that the Secretary’s policy judgment would be affirmed if he indicated that factual certainty was not possible and identified rationally the controlling considerations. But ef. Environmental Defense Fund, Inc. v. Environmental Protection Agency, 489 F.2d 1247 (D.C.Cir. 1973) and International Harvester Co. v. Ruckelshaus, 155 U.S. App.D.C. 411, 478 F.2d 615 (1973).

This case is a good illustration' of the difficulty of attempting to measure a legislative policy decision against a factual yardstick. OSHA’s position with respect to El is bottomed on an extrapolation from data gathered in two animal studies. The first is a study carried out jn 1954 by Walpole which concluded that El may be regarded as carcinogenic in rats and mice. The Innes study, the second upon which OSHA relied, concluded that mice under experimental exposure to El developed tumors with “malignant potentiality.” The extrapolation from the data gathered in these rodent experiments to humans is justified by the Report of the Ad Hoc Committee on the Evaluation of Low Levels of Environmental Chemical Carcinogens to the Surgeon General. This report states:

“Any substance which is shown conclusively to cause tumors in animals should be considered carcinogenic and therefore a potential cancer hazard for man.”

If the issue to be reviewed were merely whether El was carcinogenic in rats and mice, we believe that we could point to the Walpole and Innes studies and safely conclude that the Secretary’s determination of animal carcinogenicity was supported by substantial evidence. But the extrapolation of that determination from animals to humans is not really a factual matter. The Secretary’s § 6(e) statement puts it thus:

“Extrapolation of results obtained by animal experimentation is alleged to be vitiated by several considerations: (a) That certain cancers are specific only to some species; (b) that the conditions of animal experiments are out of proportion to, and not consistent with, conditions prevailing in industrial exposure; and (c) that no cancers have yet been detected in humans exposed to the substances.
* * * * * *
“The objections raise the much broader issue of human exposure to a chemical which is only known to have caused cancers in experimental animals.
* * * •>:- -» *
“We think it improper to afford less protection to workers when exposed to substances found to be carcinogenic only in experimental animals. Once the carcinogenicity of a substance has been demonstrated in animal experiments, the practical regulatory alternatives are to consider them either non-carcinogenic or cor-cinogenic to humans, until evidence to the contrary is produced. The first alternative would logically require, not relaxed controls on exposure, but exclusion from regulation. The other alternative 'logically leads to the treatment of a substance as if it was known to be carcinogenic in man.
“We agree with the director of NIOSH and the report of the Ad Hoc Committee on the Evaluation of Low Levels of Environmental Chemical Carcinogens to the Surgeon General, U.S. Public Health Service, April 22, 1970 that the second alternative is the responsible and correct one.” (Appendix at 845-46.)

It seems to us that what the Secretary has done in extrapolating from animal studies to humans is to make a legal rather than a factual determination. He has said in effect that if carcinogenicity in two animal species is established, as a matter of law §§ 6(a) and 6(b)(5) require that they be treated as carcinogenic in man. This is in the nature of a recommendation for prudent legislative action.

This raises the problem of our role under § 6(f) in reviewing the Secretary’s nonf actual policy decisions. The deliberate congressional choice of the substantial evidence standard for re- ¡ view might be interpreted to exclude ius from review of any but factual determinations and to require that we afford absolute deference to the Secretary’s interpretation of the statute. However, no court that has considered the scope of judicial review has so read § 6(f). By one formulation or another each seems to have found room under § 6(f) for judicial review for consistency between the Secretary’s rule and the statutory language and purpose. See Industrial Union Department, AFL-CIO v. Hodgson, supra; cf. Florida Peach Growers Association, Inc. v. United States Department of Labor, supra; Dry Color Manufacturers’ Assn., Inc., v. Department of Labor, supra; Associated Industries of New York State, Inc. v. United States Department of Labor, supra. Undoubtedly, this approach is sound, for the last sentence of § 6(f) cannot be read in a vacuum. Meaning must be given to all of § 6. TThe last sentence of § 6(f) must be i’eaa together with the requirement in § 6(e) that the Secretary “include a statement of the reasons for such action, which shall be published in the Federal Register.” He is not directed to file findings of fact. His reasons for action may include policy determinations as well as factual findings. The requirement that he state reasons strongly suggests that those reasons, whether policy judgments or factual findings, may be subjected to judicial review. Moreover, there are different legal criteria for the adoption of emergency temporary standards than for the adoption of permanent standards, .but § 6(f) provides for judicial review of both. Section 6(c)(1) authorizes adoption of emergency temporary standards when the Secretary “determines (A) that employees are exposed to grave danger from exposureto substances or agents determined to be toxic or physically harmful or from-new hazards, and (B) that such emer-' gency standard is necessary to protect' employees from such danger.” 29 U.S.C. § 655(c)(1). Permanent standardsmust assure “the greatest protection of the safety or health of the affected em-. ployees,” 29 U.S.C. § 655(a), and, with! respect to toxic substances, must “most* adequately assure[s], to the extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity even if such employee has regular exposure to the hazard dealt with by such standard for the period of his working life.” 29 U.S.C. § 655(b) (5). The very difference in the legal criteria suggests that the court in reviewing pursuant to § 6(f) must at a minimum determine if the Secretary applied the correct ones, and certainly, as we held in Dry Color Manufacturers’ Assn., Inc. v. Department of Labor, supra, judicial review under § 6(f) encompasses our evaluation of the procedural requirements of § 6 even though our interpretation differs from that of the Secretary.

It seems, then, that judicial review of a § 6 standard properly includes at least the following:

(1) determining whether the Secretary’s notice of proposed rule making adequately informed interested persons of the action taken;
(2) determining whether the Secretary’s promulgation adequately sets forth reasons for his action;
(3) determining whether the statement of reasons reflects consideration of factors relevant under the statute;
(4) determining whether presently available alternatives were at least considered; and
(5) if the Secretary’s determination is based in whole or in part on factual matters subject to eviden-tiary development, whether substantial evidence in the record as a whole supports the determination.

In the context of this case, all five steps are involved.

We note that there was a lack of notice regarding OSHA’s plans to make special provisions regarding El’s use in research laboratories. The Secretary’s notice did not advise that the agency planned to make special provisions regarding El use in laboratories. Because of this, we hold that to the extent that the standards in question relate to research laboratories, they will be vacated and remanded to OSHA. Further, as we concluded above, the statements of reasons reflect considerations relevant under §§ 6(a) and 6(b)(5) and are therefore sufficient under subsection 6(e). Lastly, we hold that there does exist substantial evidence in the record as a whole to support the Secretary’s finding that El is carcinogenic in rats and mice and in the absence of evidence of carcinogenicity in humans, the Secretary properly weighed the only available alternatives. We, therefore, reject the petitioners’ challenge to the El standards .except in so far as they relate to laboratories as outlined above.

The cause will be remanded to OSHA with directions to proceed in conformity with this opinion.

      . We are presently considering only the El standards. The petition as originally filed requested review of the standards for other substances as well as those relating to El. This court, however, ordered a separate consideration of tile El standards and stayed them pending this determination of the merits of the case.

      . Walpole, Roberts, Rose, Hendry, and Homer, Cytotoxic Agents: IV, The Carcinogenic Actions of Some Monofunctional Ethylenei-mine Derivatives, 9 Brit.J.Pliarmocol. 306 (1954).

      . Innes, et al., Bioassay of Pesticides and Industrial Chemicals for Tumorigenicity in Mice: A Preliminary Note, 42 J. Nat’l Cancer Inst. 1101 (1969).