author: SPRECHER, Circuit Judge. PELL, Circuit Judge

text:
    SOUTHWEST FOREST INDUSTRIES, INC., Plaintiff-Appellee, v. Robert SHARFSTEIN et al., Defendants-Appellants.
    No. 18712.
    United States Court of Appeals, Seventh Circuit.
    Feb. 23, 1972.

      Joseph L. Baime, Stephen G. Baime, Baime & Baime, Chicago, 111., for defendants-appellants Robert Sharfstein and Richard Sharfstein.
    Barry A. Pitler, Masor, Pitler & Wag-man, Chicago, 111., for defendant-appellant Pride Container Corp.
    Frank M. Covey, Jr., McDermott, Will & Emery, Chicago, 111., for Southwest Forest Ind., Inc.; Byron L. Gregory, Chicago, 111., of counsel.
    Before KERNER , PELL and SPRE-CHER, Circuit Judges.

       Judge Kerner heard oral argument, but did not participate in the adoption of this opinion.

   SPRECHER, Circuit Judge.

This diversity case involves the interpretation of the language in a non-competition covenant of an employment contract ancillary to the sale of the capital stock of a corporation.

In June of 1961, Southwest Forest Industries, Inc. (“Southwest”) was engaged in the manufacturing and selling of lumber and paper products, including paperboard and corrugated containers, on a national basis. Premier Container Corporation (“Premier”) was engaged in the manufacturing and selling of paperboard and corrugated containers within a radius of about 150 miles of its Franklin Park plant in the Chicago metropolitan area.

Because Chicago is “the largest box market in the world,” Southwest was then seeking to obtain an established container plant in that area. Premier had been operating since 1954; Robert Sharfstein, his son Richard Sharfstein, Joseph Sislow and Marshall Stein (“Premier shareholders”) each owned 25 percent of the capital stock.

Representatives of Southwest visited the Premier plant in July and began negotiations to purchase the Premier stock. A stock purchase agreement was executed on September 28, 1961 between Southwest and the Premier shareholders.

Under the stock agreement, the Premier shareholders agreed to sell all their capital stock for $800,000, subject to adjustment for the net profit or loss of Premier for the period from July 1, 1961 to December 31, 1962. The “closing date” for the transaction was to be March 13, 1963. At any time after September 28, 1961, the Premier shareholders, or at any time after March 13, 1962, Southwest, could upon 90 days’ written notice establish an earlier closing date and an earlier date for determining the adjustment to be made in the price of the stock.

The man who was president of Southwest in 1963 testified that “we had many problems in attempting to start our paper mill up, which drained us of cash; and we did not have the cash available to close.” Instead of accelerating the closing date, Southwest sought to postpone it. Consequently a supplemental agreement was executed by the parties on February 13, 1963.

Under the stock agreement as supplemented, the purchase price for the capital stock of Premier was $816,000, subject to adjustment for the net profit or loss of Premier for the period from July 1, 1962 to January 31, 1963, the latter date being established as the “Determination Date.” The “Closing Date” was established as April 3, 1963.

As an integral part of (and constituting a portion of the consideration by both Southwest and the Premier shareholders for) the stock agreement, each of the four shareholders was to be employed under a written contract for a period of five years at a basic salary of $400 per week plus an annual bonus of 5 percent of the net earnings of Premier up to $100,000 and 7% percent of the net earnings in excess of $100,000. The term of employment was to be “a period of five (5) years commencing on the Determination Date as such date is defined” in the stock agreement. On February 13, 1963, the parties supplemented each of the four written employment contracts to agree “that the ‘Determination Date’ occurred on January 31, 1963, and that the term of employment of Employee with Premier under the Employment Agreement commenced on February 1, 1963.”

Subsequent events occurred as scheduled in the stock and employment agreements as supplemented: Southwest began operating Premier as of January 31, 1963; the sale of the capital stock of Premier to Southwest was closed on April 3, 1963 for $924,150, divided equally among Robert and Richard Sharfstein, Joseph Sislow and Marshall Stein. The adjustment of the $816,000 basic price to the $924,150 final price was determined by an audit of Premier as of January 31, 1963.

For about four and a half years everything went smoothly; both the Southwest representatives and the Sharfsteins testified as to the pleasant and profitable relationship.

In May 1967, Southwest appointed a man named Dunavin as vice president in charge of container operations and sent him to Chicago, where he asserted aimless and highly abrasive authority over the Premier operation. He was replaced in four months, but in that short time he succeeded in destroying a great part of the valuable employee relations which the Sharfsteins had developed since 1954 and which Southwest had purchased in the form of employee good will in 1963. There is no need to relate in detail the multitude of pointless and ridiculous events in which Dunavin figured.

The testimony adduced on both sides indicated very clearly that, absent the Dunavin episode, there would have been no reason why the fine relationship between Southwest and the Sharfsteins would not have continued indefinitely. Instead, the association retrogressed into an arms’ length situation with the Sharfsteins, whose security had been seriously threatened, understandably wary about their future. As of January 31, 1968, Southwest had not notified them whether their employment contracts would be renewed.

The four employment contracts contained the following non-competition covenant:

“Employee covenants and agrees in connection with this Employment Agreement (and without regard to any termination thereof for any cause), and in connection with the contract for the sale of his Premier stock to Southwest, that for a period of five (5) years after conclusion of the sale of such stock to Southwest under and pursuant to the terms of the Stock Agreement (or, if upon the expiration of this Employment Agreement, Southwest is willing to extend the same upon terms not less favorable to Employee than those provided herein, and Employee shall be unwilling to do so, then for a period of five (5) years following the termination of this Employment Agreement) he will not, either directly or indirectly, own, manage, operate, control, be employed by, or be connected in any manner with any type of business in which Premier is now engaged, or in which it may be engaged upon expiration of such period at any point in Cook County, Illinois or within a radius of one hundred fifty miles of Premier’s plant at Franklin Park, Illinois, or in any such business which is making sales and distributions in any county in Illinois and adjoining states in which Premier has had sales and distributions, which is Premier’s agreed trade territory, and that he will not own any interest or stock in, or provide any financing for, any business which is so engaged within said radius, or in any such county.”

The Sharfsteins construed the covenant as terminating their employment and also their duty not to compete on January 31, 1968. On February 3, 1968, they tendered their resignations; on February 16, the resignations became effective. They then formed Pride Container Corporation (“Pride”), which engaged in the production of corrugated and other paper products and had its principal place of business in Chicago.

Southwest brought suit against Pride and Robert and Richard Sharfstein to enjoin the defendants from competing with Southwest in violation of the terms of the restrictive covenant and to recover actual and punitive damages.

The case was tried on the issue of liability only before the court sitting without a jury. The district court found that the non-competition covenant was effective through April 3, 1968, and that the defendants “committed a legal wrong” in connection with hiring Southwest personnel during the period February 3 through June 7, 1968.

The district court stated his opinion under 28 U.S.C. § 1292(b) that his ordei involved a controlling question of law as to which there is a substantial ground for difference of opinion “on the construction of a written agreement, under all of the facts and circumstances, and concerning the non-competitive terms thereof, both as to length and area.”

This court subsequently accepted the interlocutory appeal.

I

The crucial issue in this appeal is the determination of the expiration date of the original five-year period of non-competition. The language appearing in each of Robert and Richard Sharfstein’s employment contracts is that he will not compete “for a period of five (5) years after conclusion of the sale of such stock to Southwest.” Southwest contends that since the “closing date” for the sale of the stock was April 3, 1963, the termination date of the original five-year period was April 3, 1968. The Sharf-steins contend that, because the “Determination Date” under the stock agreement and employment agreements was January 31, 1963, the expiration date of the non-competition covenant was January 31, 1968. Disposition of the other issues hinges upon the determination of the first termination date.

The district court found as follows in his judgment order:

“1. The non-competition agreement contained in Paragraph 10 of the employment agreement is effective for the five year period February 1, 1968 through January 31, 1973, and is reasonable and enforceable.
“2. The alternate non-competition agreement contained in Paragraph 10 of the employment agreement was effective for the period February 1, 1968 through April 3, 1968, and it was violated by the defendants.”

The stock agreement provided that it “shall be construed in accordance with and governed by the laws of the State of Illinois;” the parties’ intention should be honored. Lauritzen v. Larsen, 345 U.S. 571, 588-589, 73 S.Ct. 921, 97 L.Ed. 1254 (1953); Tele-Controls, Inc. v. Ford Industries, Inc., 388 F.2d 48, 51 (7th Cir. 1967). The employment contracts did not contain a similar choice-of-law clause but, as shown hereafter, the stock agreement and employment contracts are inseparably related. In any event, the employment contracts were to be performed in Illinois and, under Illinois law, the place of performance would provide the governing law. Ryan v. Napier, 252 F.Supp. 730, 732 (N.D.Ill.1966). We therefore determine this appeal in accordance with Illinois law.

The evidence indicates that the various agreements between the parties were fully negotiated and bilaterally drawn by the parties and their attorneys. Hence, there is no occasion to apply the rule construing contracts against the party who drew them or whose attorney drew them. Cf. Marshall Field & Co. v. J. B. Noelle Co., 81 Ill.App.2d 409, 414, 226 N.E.2d 454, 457 (1967); Hansen v. Johnston, 111 Ill.App.2d 88, 94, 249 N.E.2d 133, 136 (1969).

On the other hand, in Illinois restrictive covenants are strictly construed. All doubts must be resolved in favor of natural rights and against restriction. Cockerill v. Wilson, 265 N.E.2d 514, 517 (Ill.App.1971); Staley v. Mears, 13 Ill.App.2d 451, 456, 142 N.E.2d 835, 837 (1957); Crest Commercial, Inc. v. Union-Hall, Inc., 104 Ill.App.2d 110, 117, 243 N.E.2d 652, 656 (1968).

It is elementary, of course, that the keystone of contract interpretation is to ascertain the intention of the parties from the language they used. The meaning of the words which the parties employed is found by focusing on the words themselves and then drawing back and testing that meaning in the context of the entire contract or, as here, in the combined context of the stock agreement and -employment contracts. This test must finally be read against the background of the circumstances and situation with which the parties were dealing.

The bare words “for a period of five (5) years after conclusion of the sale of such stock to Southwest” are ambiguous until the meaning of “conclusion of the sale” is determined.

Because the sale of stock refers to that sale described in the stock agreement and because the restrictive covenant in the employment contracts specifically refers to it (“Employee covenants and agrees in connection with this Employment Agreement . . . and in connection with the contract for the sale of his Premier stock to Southwest. . ”), the terms of the stock agreement executed on September 28, 1961, as supplemented by the agreement of February 13, 1963, are of vital importance.

The Premier shareholders on September 28, 1961, deposited all the capital stock certificates “properly endorsed in blank, with signatures guaranteed” in escrow with a Chicago bank. None of the certificates deposited with the escrow agency were to be returned or redelivered except as provided in the agreement (Par. 3). At the same time, the four employment contracts with the two Sharfsteins, Sislow and Stein were executed and deposited in the same escrow.

The supplemental agreement of February 13, 1963, added a new paragraph 6A which was entitled “Right of Stockholders To Cancel Agreement.” This “right to cancel” was conditioned upon Southwest’s selling all or substantially all its assets or effecting a merger in which Southwest was not the surviving corporation and after which the surviving corporation was not controlled by persons “who are presently stockholders of Southwest.” In other words, the so-called right of stockholders to cancel was fully controlled by the actions of Southwest.

The stock agreement as supplemented also provided that in the event that Southwest failed to close the transaction it should pay $150,000 to the Premier shareholders as liquidated damages (Par. 7). On September 28, 1961, Southwest advanced $150,000 to Premier in exchange for Premier’s promissory note (Par. 10). In the event of Southwest’s failure to close, payment of liquidated damages was to be made “by Southwest endorsing without recourse and delivering to Stockholders the promissory note of Premier in the principal amount of $150,000” (Par. 7).

The net effect of the provisions of the stock agreement as supplemented was that on September 28, 1961, Southwest made a down payment on the Premier stock of $150,000, the stock was deposited in escrow, and the determination of whether the sale would be consummated or the down payment forfeited was almost entirely within the control of Southwest.

In Bershad v. McDonough, 428 F.2d 693 (7th Cir. 1970), cert. denied, 400 U.S. 992, 91 S.Ct. 458, 27 L.Ed.2d 440 (1971), this court held that, for purposes of applying the rule for recovery of “short-swing” profits under Section 16(b) of the Securities Exchange Act of 1934, a sale of corporate stock occurred when the seller placed the stock in escrow and the buyer made a substantial payment (14 percent of the total price) for an option to buy, which was to apply to the purchase price if the option were exercised. This court said at page 698:

“The circumstances of the transactions clearly indicate that the stock was effectively transferred, for all practical purposes, long before the exercise of the option. . . . The extent of [the option] payment represented, if not the exercise of the option, a significant deterrent to the abandonment of the contemplated sale. ft

A similar result was reached in Blau v. Allen, 163 F.Supp. 702 (S.D.N.Y. 1958). In the present case, the down payment of $150,000 represented more than 18 percent of the basic purchase price of $816,000 and more than 16 percent of the final adjusted price.

In addition, the stock agreement here provided that until the closing date (1) no contract or commitment would be entered into by Premier other than normal commitments for the purchase of raw materials and supplies “except as may be first approved by Southwest”; (2) Premier would purchase all its corrugated sheet and other paper product requirements from suppliers, designated by Southwest; (3) Southwest would have full access “to all properties, books, contracts, leases, commitments and records of Premier” and to all information concerning the business and affairs of Premier as Southwest might request (Par. 9); (4) Southwest would advance additional working capital to Premier of up to $150,000 in cash or corrugated sheets under certain circumstances; and (5) Southwest could request Premier to install a corrugating machine and, if it did, would advance the required amount for a down payment (Par. 10).

Finally, the stock agreement as supplemented fixed the closing date (for the convenience of Southwest and its financial situation) as April 3, 1963 (Par. 4) and provided that the final purchase price would be enhanced by “interest on the amount so determined at the rate of 6% per annum from the Determination Date to the Closing Date” (Par. 2 as supplemented).

In view of the Bershad case and the provisions of the supplemented stock agreement, it could be argued that the sale of stock to Southwest occurred on September 28, 1961, a date earlier than that contended for by either side.

Other considerations are pertinent, however. In the first place, there are several provisions in the respective employment contracts themselves which throw considerable light upon the parties’ intention.

Paragraph 2 of each employment contract provides, “The term of employment hereunder shall be a period of five (5) years commencing on the Determination Date.” A separate supplement was executed for each employment contract on February 13, 1963, which provided:

“NOW, THEREFORE, Premier and Employee hereby agree that the ‘Determination Date’ occurred on January 31, 1963, and that the term of employment of Employee with Premier under the Employment Agreement commenced on February 1, 1963.”

All parties agree that the term of original employment of both Sharfsteins under their respective employment contracts was from February 1, 1963 through January 31, 1968.

The contract also states that if certain events occur “upon the expiration of this Employment Agreement” the employee will not compete “for a period of five (5) years following the termination of this Employment Agreement.” The “expiration” and “termination” of the employment agreement could only be January 31, 1968. The language used by the parties does not permit any gaps between January 31, 1968 and the beginning of the second five-year non-competition period.

Southwest appeared to concede this, as did the district court when it found that the second five-year non-competition agreement ran from February 1, 1968 through January 31, 1973.

However, the court went on to find an “alternate” non-competition agreement running from February 1, 1968 through April 3, 1968. No language in any of the agreements supports this finding; .it is clearly erroneous.

It is clear from a reading of the stock agreement and the employment contracts that the first five years’ employment and the first five years of non-competition were concurrent and ran from February 1, 1963 through January 31, 1968. The second five years of employment and non-competition, if the period took effect, was to run from February 1, 1968 through January 31, 1973.

Under Southwest’s contention and the district court’s findings, if upon the expiration of the first five years of employment, neither party was willing to continue the employment, the non-competition clause would nevertheless remain effective from February 1 through April 3,1968, whereas if Southwest was willing to continue the employment but the Sharfsteins were not, the second period of non-competition would run from April 3, 1968 through January 31, 1973. In other words, although there would be two five-year periods of employment, the two periods of non-competition would be for (a) five years, two months and three days and (b) four years, ten months less three days. Obviously, the language used by the parties does not permit these verbal gymnastics. To find two equal periods of five years for both employment and non-competition is the only interpretation completely consistent with the language employed.

There are many other factors which point unmistakenly to the conclusion that the original periods of both employment and non-competition ended on January 31, 1968.

As noted before and as conceded by all parties, the stock agreement and the employment contracts were inextricably intertwined. Each refers to the other and the effectiveness of each is conditional upon the effectiveness of the other. Obviously, they must be construed together.

The “Determination Date” under the stock agreement, as well as under the employment contracts, was fixed by the supplemental agreement of February 13, 1963 as January 31, 1963. As we have shown, it could be argued that the sale of Premier stock to Southwest took place on September 28, 1961, when the stock agreement was signed, the Premier stock deposited in escrow and $150,000 paid to Premier. However, because the purchase price was adjusted to include Premier’s net earnings through January 31, 1963, the Premier shareholders recouped net profits through January 31, 1963. Robert Sharfstein testified (and there was no contrary evidence) that from September 28, 1961 through January 31, 1963, the net profits of Premier were received by, and corporate salaries were fixed by, the original Premier shareholders. After January 31, 1963, net profits accrued in Premier for the sole benefit of Southwest and corporate salaries were determined by Southwest.

Although the “Closing Date” was established as April 3, 1963, the delay was for the benefit and convenience of Southwest. The purchase price had been determined as of January 31, 1963; the Premier shareholders were paid 6 percent interest on the established price from January 31 to April 3, 1963.

At the closing, the parties further agreed that (1) the original shareholders would remain liable for the excess of un-collectable accounts receivable outstanding on January 31, 1963 over the reserve for doubtful accounts on January 31, 1963; (2) Premier would pay to the original shareholders collections on accounts receivable charged off as uncol-lectable prior to February 1, 1963; and (3) the original shareholders would remain liable for the excess of federal income tax deficiencies assessed up to January 31, 1963 in excess of the audited reserve for taxes as of January 31, 1963.

The relative importance of the determination date and the unimportance of the closing date is demonstrated by a comparison of two cases. In Stern v. Bristol Corp., 273 App.Div. 371, 77 N.Y.S.2d 324, aff’d, 298 N.Y. 766, 83 N.E.2d 463 (1948), the court dismissed a complaint on the ground that plaintiff failed to prove an agreement on all the terms essential to the contract. The court said (77 N.Y.S.2d at 328):

“One term essential to any such agreement to transfer a going hotel business through the transfer of all its stock is the date on which the financial status of the corporation is fixed by the parties for the purpose of such transfer. Without a definitive agreement on such date, plaintiff’s syndicate could have no idea what assets they were getting and what liabilities, fixed and contingent, they were assuming; nor could defendants know what they were giving or getting in the transaction. The evidence fails to show even a claimed agreement on this indispensable term of the special type of contract alleged and relied on. ff

In Rainier v. Champion Container Co., 294 F.2d 96 (3rd Cir. 1961), the court of appeals distinguished the Stern case and held that a binding agreement for the sale of the capital stock of a corporation existed although no date was set for closing. The court said at page 101: “It is true that no date was set for closing but a reasonable time could be implied.”

The “Determination Date” was more than a label. It was the determinative or effective date of the sale of the Premier stock to Southwest. This confirms our analysis of the contractual language that the original five-year periods of employment and non-competition both began on January 31, 1963 and both ended on January 31, 1968.

Although not necessary to the decision of this appeal, there is yet another reason why all the circumstances surrounding the Premier stock sale to Southwest point to our conclusion that the original non-competition period expired on January 31, 1968.

The Illinois courts have consistently held that contracts in general restraint of trade are void as against pub-lie policy and that a restraint is general if it applies to the entire state of Illinois. Hursen v. Gavin, 162 Ill. 377, 44 N.E. 735 (1896); Lanzit v. J. W. Sefton Mfg. Co., 184 Ill. 326, 56 N.E. 393 (1900); Andrews v. Kingsbury, 212 Ill. 97, 72 N.E. 11 (1904); Parish v. Schwartz, 344 Ill. 563, 176 N.E. 757 (1931); L & R Insurance Agency, Inc. v. McPhail, 92 Ill.App.2d 107, 235 N.E.2d 153 (1968).

Paragraph 10 of the employment contracts here provides for non-competition “in any county in Illinois and adjoining states in which Premier has had sales and distributions.” Although the evidence showed that 90 percent of Premier’s sales were made within 50 to 100 miles of Chicago, there was no evidence that the restraint would not be applied to the entire state of Illinois.

However, the Illinois courts have recognized what they call an “in-term— post-term” distinction, that is, an otherwise unreasonably broad territorial restraint may be countenanced if it exists during the term of the employment or other pertinent agreement. Vendo Co. v. Stoner, 105 Ill.App.2d 261, 245 N.E.2d 263 (1969); Match Corp. of America v. Acme Match Corp., 285 Ill.App. 197, 1 N.E.2d 867 (1936); Guth v. Minnesota Mining & Mfg. Co., 72 F.2d 385 (7th Cir. 1934), cert. denied, 294 U.S. 711, 55 S.Ct. 506, 79 L.Ed. 1245 (1935); Ellis Electrical Laboratory Sales Corp. v. Ellis, 269 Ill.App. 417 (1933); Southern Fire Brick & Clay Co. v. Garden City Sand Co., 223 Ill. 616, 79 N.E. 313 (1906).

If the employment and non-competition periods were coexistent and coterminous, the restraints would fully comply with the Illinois law which the parties had in mind and expressly agreed would apply. If the contention of Southwest and the findings of the district court were applied, the restrictive covenant would be invalid under Illinois law under the facts of this ease. The Sharfsteins refused further employment after January 31, 1968, but the non-competition clause purportedly would continue for an additional five years. Even in the case of both sides’ mutually agreeing to discontinue the employment, the non-competition covenant purportedly would continue to April 3, 1968. Illinois law does not permit such a result.

We therefore conclude from the language used by the parties, from the terms of the employment contracts and stock agreement, and from the context, background and circumstances of their dealings, that the first period of both employment and non-competition began on February 1, 1963 and ended on January 31, 1968.

II

The next issue is whether a second period of employment and non-competition was created to begin on February 1, 1968 and to end on January 31, 1973.

Southwest representatives frankly admitted in their testimony that they tendered no written extensions or renewals of employment to either of the Sharf-steins on or prior to January 31, 1968.

On February 3, 1968, both Sharfsteins tendered their written resignations to Southwest effective immediately. They pointed out that the original employment contracts expired by their terms on January 31, 1968, but agreed to assist “in the orientation of my successor” for a short period.

On February 5, 1968, Eaymond E. Baker, executive vice president of Southwest, wrote both Sharfsteins to confirm his telephone conversations of that day that Southwest was “willing to extend the original Employment Agreement . upon terms not less favorable to you than those provided in the original Agreement’ dated September 28, 1961.” A longer letter containing substantially similar language was written to both Sharfsteins by Baker on February 7, 1968. The Sharfsteins each answered Baker by letter dated February 12, 1968, affirming their resignations. The employment of both Sharfsteins by Southwest ended on February 16, 1968.

It should be noted at the outset that Southwest is a “public” corporation with a board of directors of approximately 15 members. The stock agreement and supplemental agreement expressly provided that their execution had been authorized by a resolution of the board of directors or the executive committee of Southwest. The original employment contracts were executed by Premier through authorization of a resolution by its board of directors and were accepted by Southwest by its officers.

The employment contracts each provided for the payment of a basic salary of $400 per week plus 5 percent of the net earnings of Premier up to $100,000 and 7% percent of net earnings in excess of $100,000. The employment contracts also provided that the second period of non-competition would arise “if upon the expiration of this Employment Agreement, Southwest is willing to extend the same terms not less favorable than those provided herein, and Employee shall be unwilling to do so, then for a period of five (5) years following the termination of this Employment Agreement.” The words “not less favorable,” of course, required that the profit sharing should also continue.

Illinois law is particularly adamant in requiring that option contracts be strictly construed and that an option be considered exercised only if the person holding the opting power adheres exactly to the conditions precedent to its effective consummation. Epton v. CBC Corp., 48 Ill.App.2d 274, 197 N.E.2d 727 (1964); Morris v. Goldthorp, 390 Ill. 186, 60 N.E.2d 857 (1945).

In Lake Shore Country Club v. Brand, 339 Ill. 504, at pages 521-522, 171 N.E. 494, at page 501 (1930), the Illinois Supreme Court said:

“An option contract is unilateral. . Because but one party is bound thereby and the other is not, courts will exercise their discretion with great care in determining whether such a unilateral contract has been converted into a bilateral contract. . If conditions precedent to the right to convert a unilateral contract into a bilateral one are not met, the unilateral contract does not become bilateral. . . . An option contract is not a contract of sale within any definition of the term, and at best but gives to the option holder a right to purchase upon the terms and conditions, if any, specified in the option agreement. In order to avail himself of the right, the optionee must comply with the conditions set out in the option contract. .
“A court of equity cannot relieve the optionee from the effect of his failure to comply with the conditions on which he has been granted the privilege of buying.”

It is also well settled under Illinois law that the president or other officer of a corporation has no authority, in the absence of action by the board of directors, to make on its behalf an unusual or extraordinary contract. It is also universally held under Illinois law that a contract to pay as compensation a percentage of the profits of a corporation is not the usual and ordinary contract which a person authorized to offer employment may make without specific authority of the corporation. Sacks v. Helene Curtis Industries, Inc., 340 Ill. App. 76, 86, 91 N.E.2d 127, 132 (1950).

There is no evidence in the record that the board of directors of Southwest or even its executive committee authorized at any time the hiring of the Sharfsteins for an additional five years after January 31, 1968 for compensation which necessarily would include the payment to them of a percentage of the profits of the corporation.

Southwest contends principally that it communicated its “willingness” to extend the contract when on June 7, 1967 J. B. Edens, then the president of Southwest, in response to a statement by Dunavin that the Sharfsteins “could tear up their contracts,” reassured the Sharfsteins that Southwest “had no intention of tearing up the contracts.” Edens testified that he orally told the Sharfsteins at that meeting “that we were going to continue to want them throughout the ten-year period.” Both Sharfsteins testified that Edens told them that Southwest expected to live up to its contracts, but both denied that Edens mentioned any extension or renewal for the full ten-year period.

There are a host of conclusive reasons why, assuming that Edens did refer to a ten-year period, he did not exercise Southwest’s option: (1) A statement that “we were going to continue to want them” does not comply with the strict Illinois requirement for exercising an option. (2) Edens had no authority from his board of directors or executive committee. Tn fact, several officers of Southwest testified that it was Baker rather than Edens who had the requisite authority (with directors’ approval) to renew the employment contracts. (3) Edens was speaking on June 7, 1967, eight months prior to January 31, 1968. What Southwest’s “willingness” might be on June 7, 1967, has no relation to its willingness on the expiration date of January 31, 1968. (4) The terms were not even vague — they were completely unexpressed. (5) There was complete lack of mutuality of obligation: No one could seriously contend that the Sharf-steins could specifically enforce a five-year employment contract including profit sharing because Southwest was “going to continue to want them.”

In Bleck v. Cosgrove, 32 Ill.App.2d 267, 177 N.E.2d 647 (1961), the defendant had leased a golf course for many years and was in possession under a written lease which expired by its terms on December 31, 1958. The president of the club advised the defendant that if he undertook “major improvements” he would have a lease for 1959 and additional years “on the same terms as 1958.” The defendant made the improvements, but the Illinois Appellate Court held that there was no binding lease beyond December 31, 1958 for three reasons: (1) The alleged agreement was nebulous, requiring “a sojourn into the field of clairvoyance” to ascertain its terms. (2) The defendant “could not have successfully prosecuted a suit for specific performance.” (3) The alleged agreement was beyond the power of the president to bind the corporation because it was an unusual or extraordinary contract.

Edens also testified he had told Baker that “as far as I was concerned, we were going to extend the contract at the end of the five-year period.” However, Baker did not communicate Edens’ personal opinion on the subject to the Sharf-steins on or prior to January 31, 1968. Internal conversations within Southwest not communicated to the other contractual parties certainly cannot be considered an exercise of Southwest’s option to extend the employment contracts.

Southwest also contends that the fact that it raised the salaries of the Sharf-steins during the first five-year period somehow satisfied Southwest’s obligation to take some action to exercise the option. The original employment contracts provided for basic salaries of $400 per week. In 1966, Southwest increased the Sharf-steins’ salaries to $500 a week and later in the year to approximately $600 per week to Richard and $635 per week to Robert. If anything, these increases complicated the situation. Baker testified that, when Southwest wrote letters on February 5 and 7, 1968 to the Sharf-steins stating that Southwest “is willing to extend the original Employment Agreements . . . upon terms not less favorable to you. . .,” his intention was to continue the salaries at the increased rate. However, the letters themselves did not make this clear; it is doubtful that a contractual relation for the second five-year period could validly have been based on terms which did not specify the salary. But in any event the granting of the increases themselves obviously did not satisfy the Illinois requirements for creating the second period of employment.

One simple test to apply to those actions of Southwest which it contends constituted a sufficient demonstration of its “willingness” to renew is whether the Sharfsteins could have enforced a contract for the second five years against Southwest on the basis of those same actions. It is clear that they could not. For example, there were two parties other than the Sharfsteins to the stock agreement, Joseph Sislow and Marshall Stein, both of whom also received employment contracts identical to those of the Sharfsteins. Substantially the same manifestations of “willingness” to renew were demonstrated to Sislow and Stein. Nevertheless, Stein’s contract was not renewed and his employment was terminated at the end of the first five years. Sislow’s contract was renewed at $500 per week basic salary and he continued his employment.

In view of our conclusion that the Illinois requirements to extend the employment and non-competition agreements for a second five-year period were not met by Southwest, it is not necessary for us to determine whether the exercise of the options was required to be in writing.

The district court found, “Neither Robert nor Richard made inquiries at any time prior or subsequent to January 31, 1968, whether Southwest was willing to extend the employment agreement. . ” There is nothing in the agreements between the parties nor in Illinois law which placed any burden on the Sharfsteins to instigate Southwest’s exercise of its options.

Although there is implicit in the briefs of both sides the definite feeling that, without the intervention of Dunavin, the Sharfsteins would have been happy to continue their employment with Southwest and in any event would have initiated discussions leading to a renewal when Southwest failed to do so, these speculations about what courtesies the parties might have shown each other do not create any legal duties where none otherwise existed.

The record clearly reveals that the Southwest representatives simply overlooked the fact that the employment contracts expired on January 31, 1968. The fact that the Sharfsteins would have saved them from their neglect but for Dunavin does not even create a moral issue, much less a legal one. The Sharf-steins can argue that the Dunavin incident justified their arms’ length attitude; legally they were under no burden to remind Southwest of the fifth anniversary of their economic marriage. If either side is morally chargeable with Dunavin, it should be Southwest.

We conclude that Southwest did not activate the second five-year period of employment and non-competition for Robert or Richard Sharfstein and that the first five years of contractual relations ended on January 31, 1968. Insofar as the district court’s findings are contrary to this conclusion, they are clearly erroneous.

Ill

The last issue is whether, as the district court stated in his judgment order, “the defendants have committed a legal wrong in connection with the hiring during the period February 3, 1968 through June 7, 1968 of a large number of Southwest’s . . . key managerial and supervisory personnel.”

We believe that the following finding of the district court is amply supported by the evidence and is correct (emphasis added):

“While they have employed former employees of the plaintiff they have not, except in the instances above noted, made any special offer to the former employees of the plaintiff that have become employed by the defendants. Except for their agreement with plaintiff their competitive actions in hiring former employees of plaintiff and otherwise have been fair and honorable.”

Since the contract not to compete terminated on January 31, 1968, what occurred in the way of competition between February 3 and June 7, 1968 has no legal consequence, except for the fact that the Sharfsteins continued in the employment of Southwest until February 16, 1968. That fact necessitates consideration of what occurred up to the last date of employment to determine whether they breached their duty of loyalty as employees of Southwest.

The Sharfsteins were aware that Union Camp Corporation owned a corrugating plant located at 4545 West Palmer Avenue in Chicago. On January 25 or 26, 1968, Richard telephoned a Union Camp representative and learned that the plant was still available. On February 1 and 2, Richard met in New York with Union Camp representatives; tentative agreements were made for acquisition of the plant by the Sharfsteins. On February 3, the Sharfsteins submitted their written resignations to Southwest.

The agreement between Union Camp and the Sharfsteins was signed in New York on February 7, 1968. On the same day, a charter was issued by the Illinois Secretary of State for Pride Container Corporation.

The sale of the Union Camp plant was subject to Federal Trade Commission approval, which was granted March 8,1968. Union Camp gave the Sharfsteins permission to take possession on February 20, 1968, which they did. However, the plant had been closed for 18 months and needed a great deal of renovation. Pride began business operations on April 4,1968.

In James C. Wilborn & Sons, Inc. v. Heniff, 95 Ill.App.2d 155, 163, 237 N.E.2d 781, 786 (1968), the Illinois Appellate Court said:

“A review of the evidence indicates that the defendants merely exercised their right to leave one employment and form or join a rival business. Thus, this case is distinguishable from those cited by the plaintiff. The latter involve either the appropriation of a bona fide trade secret (e. g. Schulenberg v. Signatrol, Inc., supra) or a proven plot to destroy another’s business (Duane Jones Co. v. Burke, 306 N.Y. 172, 117 N.E.2d 237 (1954)). The defendant, Heniff, did not violate his duty of loyalty to Wilborn by forming Brandex and purchasing machinery for it while working for Wilborn. It is not necessarily a breach of duty for an agent to form a rival concern and purchase machinery for it while working for his principal (see e. g. Greenberg v. S. D. Childs & Co., 147 Ill.App. 477 (1909)), though it would be for an agent to continue to work for his principal after a rival corporation which he also served as agent begins business. Heniff immediately left Wilborn when Brandex commenced business.”

Since Pride commenced business subsequent to February 16, 1968, the Sharf-steins did not violate ther duty of loyalty to Southwest.

There is no claim here that any trade secrets were appropriated.

In January 1968, the Premier operation of Southwest employed about 200 persons. By April 3, 1968, 16 former Southwest employees had been employed by Pride. None of them was hired prior to February 16 nor as the result of solicitation by the Sharfsteins. Since they had all previously worked for the Sharf-steins at Premier, it is not difficult to imagine that they would want to transfer positions without urging or solicitation by the Sharfsteins. Hence, there was no “proven plot to destroy another’s business.”

We reverse the district court’s judgment and remand the case with directions to enter judgment for the defendants.

PELL, Circuit Judge

(concurring).

I concur in Judge Sprecher’s opinion that the district court’s judgment must be reversed with judgment to be entered for the defendants on remand.

I do, however, have some question as to whether the provisions pertaining to the second five years of noncompetition rise to the dignity of an option situation. See, e. g., Whitelaw v. Brady, 3 Ill.2d 583, 588, 121 N.E.2d 785 (1954). Southwest had no option right to further employment services. The most it could be opting for would be that the Sharfsteins would refrain from competing if Southwestern was “willing” to extend the employment contract for five years.

Irrespective, however, of nomenclature, Southwestern’s willingness, as demonstrated in Judge Sprecher’s opinion, must have been a legal willingness which it was not. A corporation may be en-ceinte with the ideas, hopes and intentions of its human representatives but when they involve a corporate commitment of the nature here involved, viability requires formal action which was not shown to exist. This is not a matter of communication. There was no corporate act of willingness in existence.

The Sharfsteins pointedly refrained from refreshing the memory of Southwestern as to the time for legalization of the willingness. Had they done so it may well have been that corporate action would have been taken. I agree with Judge Sprecher that the Sharfsteins had no legal duty in this respect.

As hereinbefore indicated and principally for the reasons expressed herein, I concur in and approve of the result reached in Judge Sprecher’s opinion.

      . The plaintiff is a Nevada corporation with its principal place of business in Phoenix, Arizona. The individual defendants are citizens of Illinois; the defendant Pride Container Corporation is an Illinois corporation with its principal place of business in Chicago.

      . The parties agree that, if they had used the words “for a period of five years after the determination date,” the period would have terminated on January 31, 1968; if they had used the words “for a period of five years after the closing date,” the period 'would have ended on April 3, 1968.

      . The Illinois Supreme Court held in Crest Finance Co. v. First State Bank, 37 Ill.2d 243, 250, 226 N.E.2d 369, 373 (1967), that a sale of corporate stock became an “irrevocable commitment” under Section 3-303 (c) of the Uniform Commercial Code when the shares of stock had been delivered into escrow and the only remaining act to complete delivery to the buyer was solely within the power of the buyer,

      . Restatement, Contracts, § 235(c) : “A writing is interpreted as a whole and all writings forming part of the same transaction are interpreted together.”

      . The public policy was expressed in Union Strawboard Co. v. Bonfield, 193 Ill. 420, 427, 61 N.E. 1038, 1040 (1901) : “It is against the policy of the state that its citizens should not have the privilege of pursuing their lawful occupations at some place within its borders, and that a citizen should be compelled to leave the state to engage in his business and to support himself and his family.” Another aspect of the public policy is that the people of the state should not be- totally deprived of its citizens’ labors. Vendo Co. v. Stoner, 105 Ill.App.2d 261, 281, 245 N.E.2d 263, 273 (1969).

      . In Morris v. Goldthorp, 390 Ill. 186, 195, 60 N.E.2d 857, 861 (1945), the Illinois Supreme Court said: “It is elementary that where one party gives an option to another, the acceptance, to be valid so as to conclude an agreement or contract between the parties, must, in every respect, meet and correspond with the offer, neither falling short of, nor going beyond, the terms proposed but exactly meeting them at all points and dosing witli them just as they stand.”

      . In Epton v. CBC Corp., 48 Ill.App.2rt 274, 283, 197 N.E.2d 727, 732 (1964), the court commented on its earlier abstract opinion in Van Meter v. Downing, 345 Ill.App. 605, 104 N.E.2d 126 (1952), as follows:
      “In that case we held that an allegation that the optionee was ready and willing to perform an option to purchase realty without alleging that such attitude had been communicated to the optionors was insufficient to show exercise or acceptance of the option so as to state a cause of action for breach of the option by the optionors who sold the realty to another before expiration of the option.”


source: Caselaw Access Project

author: KILKENNY, Circuit Judge:

license: Public Domain

text:
    UNITED STATES of America, Appellee, v. Robert Paul DORAN, Appellant.
    No. 72-2362.
    United States Court of Appeals, Ninth Circuit.
    July 10, 1973.
    Lupe Martinez, Deputy Federal Public Defender (argued), Los Angeles, Cal., for appellant.
    Jan Lawrence Handzlik, Asst. U. S. Atty. (argued), William D. Keller, U. S. Atty., Eric A. Nobles, Asst. U. S. Atty., Los Angeles, Cal., for appellee.
    Before MERRILL, KOELSCH and KILKENNY, Circuit Judges.
   KILKENNY, Circuit Judge:

While approaching the boarding area for a United Air Lines flight from Los Angeles to Chicago, Customs Air Security Officers placed appellant under arrest after a search of his small carry-on bag revealed a quantity of narcotics. Found guilty in a court trial on three counts of violating 21 U.S.C. § 841(a)(1), he appeals. We affirm.

FACTUAL BACKGROUND

On May 1, 1972, shortly before 1:00 P.M., the United Air Lines customer service representative was working at the boarding podium for the United flight to Chicago, checking passengers into the boarding area. At this time, appellant approached the boarding podium and handed his ticket to the representative. The representative observed the appellant’s eyes and noticed that they were glassy and appeared to be rolling in an unusual manner. At the same time, the representative observed that appellant presented a youth fare ticket and that appellant appeared to be too old to qualify for that type of ticket. The representative was familiar with the Federal Aviation Administration’s “profile” of one who might fit the pattern of a skyjacker. Doran fit this profile and the agent then designated him as a profile selectee by the placing of a notation on his ticket. Shortly thereafter, passengers began boarding the plane.

All passengers were required to walk through a magnetometer, a weapons detection device which reveals quantities of metal by setting up a magnetic flux wave between two poles. The magnetometer was so calibrated that the light signal attached to it would be illuminated only if larger masses of metal, such as the amount contained in a pair of handcuffs or a small pistol, were involved.

In due course, appellant approached the Customs Air Security Officer who was checking the tickets of passengers and spacing passengers for their walk through the magnetometer. The officer observed appellant’s boarding pass and his demeanor and felt that appellant might have been under the influence of some substance, such as narcotics or alcohol. While he was passing through the magnetometer, the officer further observed that his gait was slow, loose and lethargic.

As appellant passed through the poles of the magnetometer, the device was alarmed as indicated by the reading on the meter and the activation of the warning light. Appellant was advised that he had alarmed the metal detector. He was asked to empty his pockets of all metal objects and then walk through the magnetometer without the small carry-on bag. Only a small cigarette lighter was on his person. When Doran walked through the magnetometer the second time, the light was not activated and there was only a small reading on the meter. The officer was then of the belief that substantial quantities of metal were contained in the light flight bag. He asked Doran’s permission to examine the contents of the flight bag. There is a dispute over whether such permission was given or not. The officer testified that it was his belief that a weapon, which could be used in air piracy, might be contained in the bag. He had received extensive training and was aware that only a small amount of metal was necessary to detonate plastic explosives or dynamite. On opening the carry-on bag, which had a metal zipper, the officer observed a large clear plastic bag containing many red capsules which he immediately recognized as a barbiturate, commonly known as “reds.” He immediately placed appellant under arrest and summoned other officers. An examination of the bag after the arrest revealed that it contained 5,000 red capsules known as Seconal, 100,000 amphetamine tablets and a small quantity of heroin.

SIGNS

The following signs warning all passengers boarding the aircraft of a search of their persons and luggage were on conspicuous display.

(1) A sign at the boarding podium warning all passengers that it was a federal crime to carry a concealed weapon aboard the aircraft.

(2) Immediately before reaching the magnetometer field in the boarding area, passengers were faced with a sign warning them that their baggage was subject to search.

(3) Additionally, the public address system warned all passengers that before boarding they were going to be searched by a weapons detection device.

ISSUES PRESENTED

Appellant raises a number of objections to the search and subsequent arrest. They will be discussed in the order presented in the briefs.

1. Probable Cause to Arrest.

Doran suggests that there were two searches of his flight bag. The first by officer Green following the second walk-through of the magnetometer by Doran. This search disclosed the “reds” at the top of the bag. The second search was made after officer Green summoned officer Jerrell who then placed Doran under arrest. This search disclosed the amphetamines. (Shortly thereafter a third search by Agent Johnson disclosed the heroin).

It is clear that if the first search was valid, then the officers had probable cause to arrest Doran since officer Green recognized the “reds” as a controlled substance. It is equally clear that the subsequent searches were valid, though commenced without a warrant, since they were incident to a lawful arrest. United States v. Maynard, 439 F.2d 1086 (CA9 1971).

Appellant makes much of the failure of the trial court to specifically find that probable cause for arrest existed. The record establishes probable cause beyond any shadow of a doubt. The failure of the trial court to make a finding as to a question whose answer is so painfully obvious is, at worst, harmless error. Rule 52(a), F.R.Crim.P.

While thus holding that the second and third searches were valid, such a determination is necessarily dependent upon the validity of the initial search. Appellant’s next two contentions attack the validity of that search and will be discussed together.

2. The Initial Search.

Appellant complains that the trial court did not specifically find a valid consent to be searched and, secondly, did not hold that the search was valid as a “pat down” search of the type approved in Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968).

It is quite true that the trial court did not find specifically that consent was present in this ease. What it did find was that, under the facts and circumstances, the search was a reasonable one. Consent is only one of many grounds that could render such a search reasonable.

Recently, in a scholarly opinion by Judge Browning, this circuit explored the problems connected with airport searches and their reasonableness in United States v. Davis, 482 F.2d 893 (CA9, 1973). The conclusion there, that such searches are reasonable where limited in scope to the object of the anti-skyjacking program, is fully applicable here. On the basis of the conclusions reached in Davis, we hold that the search of appellant’s bag was reasonable and that the motion to suppress was properly denied.

3. The Magnetometer.

Appellant also complains of the magnetometer “search”. While we think such examinations are reasonable under Davis, we also note that the magnetometer search has been approved by a number of other courts whose reasoning on this particular issue, which was not raised in Davis, we find persuasive. See, e. g. United States v. Slocum, 464 F.2d 1180 (CA3 1972); United States v. Bell, 464 F.2d 667 (CA2 1972); United States v. Epperson, 454 F.2d 769 (CA4 1972), cert. denied 406 U.S. 947, 92 S.Ct. 2650, 32 L.Ed.2d 334.

Moreover, the magnetometer produced nothing. At most, it directed attention to appellant’s flight bag, but as held in Davis, the search of carry-on luggage is permissible under the circumstances found here. Thus, the magnetometer like the profile, infra, is no more than a. gratuitous means by the government to reduce the number of persons searched. Since the bag could have been searched in any event, the use of the magnetometer is hardly grounds for suppression.

4. The Profile.

Appellant claims that he was entitled to an in camera showing of the FAA skyjacker profile. Since the profile was not necessary to support the search, we find that the refusal to disclose it was not error. With or without having been selected as a profilee, appellant would still have been subject to search, and the reasonableness of that search is not in any way dependant on the profile. United States v. Bell, 464 F.2d 667, 674-675 (CA2 1972) [Judge Friendly’s concurring opinion].

5. Consent in Fact.

While not specifically raised by appellant, we deem it appropriate to consider the issue of consent in fact which was the basis of the remand in Davis, swpra. In the fact pattern of that case, there was no indication that the appellant was aware of the search program being conducted and so, the court held, consent, either implied or actual, could not be found on the record. Here, the situation is reversed. The record clearly establishes that signs and public address warnings announcing that all passengers were subject to search were in use at the time appellant attempted to board.

The Supreme Court has recently stated that: “ . . . [B]usinessmen engaged in such federally licensed and regulated enterprises accept the burden as well as the benefits of their- trade. . The businessman in a regulated industry in effect consents to the restrictions placed upon him.” Almeida-Sanchez v. United States, 413 U.S. 266, 271, 93 S.Ct. 2535, 2538 (1973). Here, appellant chose to engage in the regulated activity of bringing hand luggage on board a commercial aircraft. Having been exposed to the existence of the regulations and having chosen to participate in the activity, the implication of his consent is unavoidable.

CONCLUSION

Airport search cases, such as this, present important constitutional questions in a new and somewhat troublesome context. While the magnitude and novelty of the issues require careful consideration, they are no bar to the expansion of established constitutional principles to the ever-changing face of criminal activity.

The judgment of conviction is affirmed.

      . In Davis, an exception to the general rule on searches was created in connection with airport boarding checkpoints. Such a search in a critical zone is comparable to those checkpoint searches approved in border eases [Almeida-Sanchez v. United States, 413 U.S. 266, 93 S.Ct. 2535, 37 L.Ed.2d 596 (1973); United States v. Moreno, 475 F.2d 44, 51 (CA5 1973); Witt v. United States, 287 F.2d 389 (CA9 1961), cert. denied 366 U.S. 950, 81 S.Ct. 1904, 6 L.Ed.2d 1242] and those allowed in securing public buildings and oourtrooms [See, e. g., Downing v. Kunzig, 454 F.2d 1230 (CA6 1972)]. The policy considerations would seem to be the same in all three situations.


author: PER CURIAM:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Thurman Artis PORTER, Defendant-Appellant.
    No. 73-1733
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 1, 1973.
    A. Cecil Palmour, Summerville, Ga., for defendant-appellant.
    John W. Stokes, Jr., U. S. Atty., Atlanta, Ga., for plaintiff-appellee.
    Before BELL, GODBOLD and IN-GRAHAM, Circuit Judges.

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

      . Id. § 5601(a) (4).
      (4) Failure or refusal of distiller or rectifier to give bond. — carries on the business of a distiller or rectifier without having given bond as required by law.

      . Id. § 5604(a) (1).
      (a) General. — Any person who shall—
      (1) transport, possess, buy, sell, or transfer any distilled spirits, required to be stamped under the provisions of section 5205(a)(2), unless the immediate container thereof has affixed thereto a stamp as required by such section.

   PER CURIAM:

Defendant Porter was convicted of (1) possessing nonregistered distilling apparatus, (2) carrying on the business of distilling, and (3) possessing non-tax paid distilled spirits in violation of §§ 5601(a)(1), 5601(a)(4) and 5604(a) (l). Porter was sentenced to three two year terms to run concurrently.

The government contends that defendant had constructive possession of the distillery and illegal liquor because of his alleged residency on the property where the distillery and liquor were found. United States v. Jackson, 418 F.2d 787 (6th Cir., 1969). The government bases this contention upon the presumption of a marital relationship through the identity of names whereby the male is presumed to be the head of the household and the presumption of continuation of residence. See Government of the V.I. v. Williams, 438 F.2d 1085 (3rd Cir., 1971); 9 J. Wigmore, Evidence §§ 2529-30 (1940). Furthermore the government contends that the resident is presumed to have knowledge of the activities, such as the operation of a distillery, on the property upon which he resides. Defendant does not challenge the validity of the presumptions, but merely contends that the prosecution has not sufficiently demonstrated the underlying facts upon which to base the presumptions. Consequently, the series of inferences and presumptions are simply conjecture. The essential issue, therefore, is the sufficiency of evidence establishing defendant’s connection with the premises where the distillery and illegal whiskey were discovered.

Initially we point out that where a conviction is based upon circumstantial evidence, the evidence introduced and all reasonable inferences must be viewed in a light most favorable to the government. Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942). The evidence must be such that a jury could reasonably exclude every reasonable hypothesis of innocence. United States v. Johnson, 469 F.2d 973 (5th Cir., 1972); United States v. Martinez, 466 F.2d 679 (5th Cir., 1972); United States v. Sidan-Azzam, 457 F.2d 1309 (5th Cir., 1972).

It is essential, therefore, to outline the evidence introduced at trial. On September 7, 1972, revenue agents discovered a 225 gallon distillery located approximately 100 yards from a rural residence in Dade County, Georgia. The agents observed a shed located about 25 yards from the distillery in the direction of the residence. Between the shed and the distillery was a water tank on a trailer with a hose running from the distillery to the tank.

On September 8, 1972, the agents returned to the premises with a search warrant. The agents found illegal whiskey in the shed. In searching the area around the house they found another copper distillery similar to the one previously discovered, although it had not been used. Located approximately ten yards from the house, the agents found empty one gallon jugs around a garage, and in the garage they found an inoperative automobile with sixty-one gallons of unstamped liquor located in the trunk.

The agents proceeded to the residence located on the premises. Agent Farmer testified, over a hearsay objection, that a woman who answered the door identified herself as “Mrs. Thurman Artis Porter.” She was told that the agents were looking for Thurman Artis Porter and to have him contact the Sheriff of Dade County or the Alcohol, Tobacco and Firearms Office. Defendant subsequently appeared at the Marshal’s office on the following business day, September 11, 1972. Furthermore, on a search of the house Agent Williams testified that he located clothing and “everything that belonged to a male in the house.”

Additionally, State Revenue Agent Evans, who accompanied the federal agents on their search of September 8, testified he knew that it was defendant Porter’s house because defendant had so stated nine months prior to this occasion.

Therefore, viewing the evidence from a standpoint most favorable to the government, the jury clearly could reasonably exclude every reasonable hypothesis except that of guilt. The evidence introduced was ample to justify a finding by the jury that the defendant was guilty beyond a reasonable doubt of the offenses charged.

The judgment of the district court is therefore affirmed.

      . 26 U.S.C.A. § 5601(a) (1) (1967).
      (a) Offenses. — Any person who—
      (1) Unregistered stills. — has in his possession or custody, or under his control, any still or distilling apparatus set up which is not registered, as required by section 5179(a).

      . Defendant does not challenge the existence of this presumption and therefore this court does not pass upon its validity.

      . We find defendant’s contention that admission of the woman’s identity as “Mrs. Thurman Artis Porter” violates the hearsay rule without merit. The hearsay rule does not apply to utterances introduced as operative facts. The utterance by Mrs. Porter was within the scope of the issue regarding defendant’s constructive possession of the distillery by establishing his residency. C. McCormick, Law of Evidence § 228, at 463-64 (1954).


text:
    James Andrew TIMES, Petitioner-Appellant, v. Louie L. WAINWRIGHT, Director, Division of Corrections, State of Florida, Respondent-Appellee.
    No. 73-1761
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 3, 1973.
    James Andrew Times, pro se.
    Robert L. Shevin, Atty. Gen., Tallahassee, Fla., William W. Herring, West Palm Beach, Fla., for respondent-appel-lee.
    Before JOHN R. BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges.

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

   PER CURIAM:

This is an appeal from the dismissal of Appellant’s petition for a writ of habeas corpus concerning his conviction for second degree murder in a Florida state court. We are in agreement with the District Judge that Appellant’s challenge to the prosecutor’s question regarding Appellant’s conviction for aggravated assault does not raise an issue cognizable in this federal habeas corpus proceeding. See 28 U.S. C.A. § 2241. We also agree that the prosecutor’s question to Appellant during cross-examination concerning Appellant’s refusal to answer questions posed by a detective was an isolated remark cured by the trial Judge and constituted harmless constitutional error in view of the overwhelming evidence of guilt presented. See Chapman v. California, 1967, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705.

We finally note that Appellant’s claim that he was deprived of his rights under the Sixth and Fourteenth Amendments since he was not offered the benefit of or represented by counsel during his 1958 trial for aggravated assault which was mentioned before the jury during the course of his recent trial also presents an instance of harmless constitutional error.

The order dismissing the petition for the writ of habeas corpus is affirmed.

Affirmed.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Marvin McCALL, Defendant-Appellant.
    No. 73-1513
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit..
    Aug. 8, 1973.
    Rehearing Denied Sept. 7, 1973.
    Theodore J. Sakowitz, Asst. Federal Public Defender, Miami, Fla. (Court-appointed, not under Act), for defendant-appellant.
    Robert W. Rust, U. S. Atty., Jerome B. Ullman, Asst. U. S. Atty., Miami, Fla., for plaintiff-appellee.
    Before WISDOM, AINSWORTH and CLARK, Circuit Judges.

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

   PER CURIAM:

The district court’s order denying appellant McCall’s post-sentence motion for commitment for treatment under the Narcotic Addict Rehabilitation Act, 18 U.S.C. § 4251 et seq., was correct. Appellant had two prior felony convictions in Florida for possession of cocaine, in violation of 398.03 Florida Statutes, and for carrying a concealed weapon, in violation of 790.01 Florida Statutes, and thus was ineligible under 18 U.S.C. § 4251(f)(4) for NARA commitment.

Affirmed.

      . The pertinent provision of 18 U.S.C. § 4251 reads:
      “(f) ‘Eligible offender’ . . . does not ’include—
      (4) an offender who has been convicted of a felony on two or more prior occasions.”


author: FRIENDLY, Circuit Judge:

text:
    In the Matter of JOSEPH KANNER HAT CO., INC., Bankrupt. Stuart I. LEVIN, Trustee-Appellant, v. CITY TRUST COMPANY, Petitioner-Appellee.
    No. 663, Docket 72-1475.
    United States Court of Appeals, Second Circuit.
    Argued June 18, 1973.
    Decided July 5, 1973.
    Harry M. Lessin, Norwalk, Conn., for appellant.
    John P. Chiota, Bridgeport, Conn., for appellee.
    Before FRIENDLY, FEINBERG and MANSFIELD, Circuit Judges.
   FRIENDLY, Circuit Judge:

This appeal arises from the bankruptcy proceeding of Joseph Kanner Hat Co., Inc. (the company) in the District Court for Connecticut.

A proof of claim filed by City Trust Co. (the bank) alleged that on March 9, 1967, the company had obtained a loan from the bank of $25,000, evidenced by a note endorsed by Ruth and Morton Kan-ner, which was renewed in June, September and December, 1967; that “on March 9, 1967, the Joseph Kanner Hat Co., Inc., in consideration for the sum of $25,000.00 absolutely assigned, transferred and sold any and all right, title and interest it had, or may have, in and to all the moneys due it from the Nor-walk Redevelopment Agency by virtue of a certain claim for reimbursement of compensable moving expenses”; that, although the amount due from the Agency was originally $25,000, it had been reduced, as the result of a payment by the Agency directly to a mover, to $16,500, which the Agency had turned over to the trustee in bankruptcy; that the amount owing by the company to the bank had been reduced by $6,258.48, the remaining balance in a bankbook of Ruth Kanner which had been pledged to secure a personal loan; and that, in the bank’s opinion, the assignment constituted a transfer of “an absolute right to collect the sum due to the assignor-bankrupt from the Norwalk Redevelopment Agency.” The trustee answered, alleging sufficiently if inartfully, among other things, that the claim against the Agency was a transaction creating a security interest as defined in Connecticut General Statutes § 42a-9-102(l) (a), Connecticut’s version of the Uniform Commercial Code; that the security interest had not been perfected by the filing of a financial statement as required by § 42a-9-302(l); and that the trustee’s interest in the fund thus was prior to the bank’s by virtue of § 42a-9-301 and § 70, sub. c of the Bankruptcy Act, see 4A Collier, Bankruptcy ff 70.51, at 617 (14th ed. 1971).

After a hearing, Referee Trevethan held that the assignment of the claim against the Agency for relocation expenses was an outright sale, not involving the creation of a security interest, and therefore was exempt from any requirement of perfection. He rejected other defenses of the trustee, unnecessary to discuss here, and then directed payment of the $15,576 fund to the bank. The district court, by memorandum order, denied a petition to review.

Although both parties seem to have assumed that the appeal involves “findings of fact” which, under General Order 47 and F.R.Civ.P. 52(a), made applicable to proceedings in bankruptcy by General Order 37, may not be set aside unless clearly erroneous, see Preliminary Draft of Proposed Bankruptcy Rules and Official Forms Under Chapters I to YII of the Bankruptcy Act, Rules 752, 810 (March 1971), we are not at all convinced that this is so. The referee was required to determine not merely what acts the parties performed, as to which indeed there was little dispute, but what the legal consequences were. In a case somewhat akin to this, although arising in a different context; the Fifth Circuit has decided that a finding that a bank held municipal bonds in the course of sale to dealers as an owner rather than a secured lender was not protected by the “unless clearly erroneous rule,” American Nat’l Bank of Austin v. United States, 421 F.2d 442, 451 (5 Cir.), cert. denied, 400 U.S. 819, 91 S.Ct. 36, 27 L.Ed.2d 46 (1970). As the same court had earlier said:

Obeisance to the clearly erroneous rule must yield when the facts are undisputed and we are called upon to reason and interpret.

United States v. Winthrop, 417 F.2d 905, 910 (5 Cir. 1969). In a bankruptcy case, In re Hygrade Envelope Corp., 366 F.2d 584, 587-589 (2 Cir. 1966), although recognizing some division of opinion among the circuits, we held that the “unless clearly erroneous” rule did not protect a concurrent “finding” by a referee and a district judge that a creditor did not have reasonable cause to believe in a debtor’s insolvency. We there stated that, when the issue is a trial judge’s “application of a legal standard to facts undisputed or reasonably found, reversal is not limited to results that are ‘clearly erroneous’; it is enough that the appellate court should be convinced, as we are here, that the result does not jibe with the applicable rule of law.” 366 F.2d at 588 (footnote omitted). We adhere to that view, without intimating that our decision in this case would be different if the “unless clearly erroneous” rule applied.

The definition section in the U.C.C. as adopted in Connecticut, § 42a-l-201(37), says simply that

“Security interest” means an interest in personal property or fixtures which secures payment or performance of an obligation.

Section 42a-9~102(2) adds that Article 9, with its requirement of perfection of a security interest to prevent subordination to the rights of a trustee in bankruptcy, “applies to security created by contract” including, among other things, “assignment.” It is true, as Professor Gilmore has written, that the definition in § 1-201(37) of the U.C.C. “is essentially a declaration of faith.” 1 Security Interests in Personal Property § 11.1, at 334 (1965). But, as he also points out, this course was feasible for the draftsmen because of the long-standing rule “that the courts will determine the true nature of a security transaction, and will not be prevented from exercising their function of judicial review by the form of words the parties may have chosen.” Id. § 2.6, at 47; see id. § 11.1, at 335. Long before adoption of the U. C.C. it had become settled that, when A gives B a bill of sale of personal property and later claims this was a loan secured by mortgage, the courts would listen to him; “the parol evidence rule has opened like a leaky sieve to allow A to vary, contradict and explain” a bill of sale. Id. § 2.6, at 48. With the advent of recording statutes, this principle was applied for the benefit not simply of purported sellers but also of their creditors. Id. at 49-50.

Here the evidence that the assignment of the relocation claim was taken as security for the $25,000 loan was overwhelming, and the parol evidence rule clearly did not bar its receipt. See, e. g., Allen v. Home Nat. Bank, 120 Conn. 306, 180 A. 498 (1935) (assignment of an insurance policy absolute in form may be shown to have been intended as security); 4 Corbin, Contracts § 881, at 543 (1951); 3 Williston, Contracts § 431, at 175-76 (3d ed. 1960). The assignment was delivered simultaneously with the loan of $25,000 evidenced by a promissory note carrying two endorsements. A bank officer testified that any payment received under the assignment would be applied to reduce the amount of the loan; that, on the other hand, if payments had been made by the maker or endorsers on account of the loan, any excess over the amount of the loan received on account of the assignment would have been returned to the company; that the bank treated the assignment as a method of payment of the loan; and that the assignment was a source of payment of the loan if the parties to the note did not pay it. While the bank and the Kanners may have believed that the relocation payment would suffice to take care of the loan, that did not alter the fundamental nature of the transaction. The acts of the bank confirm that the intention was just what its officer stated. Recognizing that $25,000 was the maximum amount reimbursable by HUD for moving expenses, see 24 C.F.R. § 3.109 (1967), it required the note to be personally endorsed by the Kanners, and, when less than the full $25,000 was received, the bank attempted to realize on the note by attaching property of the endorsers and by applying the $6,258.48 in Ruth Kanner’s account. If the account had contained four thousand dollars more, the bank by its own admission would not be claiming the totality of the fund here at issue, compare Allen v. Home Nat. Bank, supra, 120 Conn. 306, 180 A. 498 (assignee for security may collect only up to the amount of the secured debt); 4 Corbin, Contracts, supra, § 881, at 541-42 (“[a]s long as the debt has not been paid in full, the assignee for security may collect the assigned claim and apply the proceeds in satisfaction of the debt secured; the balance, if any, belongs to the assignor”). Finally, despite the “absolute” assignment of the entire claim, the bank did not protest when the Agency paid part of the $25,000 to the mover and kept part for itself, see fn. 2. If this was not an assignment for security, we do not know what would be. Compare Bacon v. Kienzel, 21 A. 37, 39 (N.J. Ch. 1891), where an assignment of insurance policies was held to be for security, because there was no evidence that the assignor’s debt was in any way reduced on account of the assignment; and In re Boughner, 8 U.C.C.Rep.Serv. 144, 149 (W.D.Mich.1970), where a referee in bankruptcy found an assignment to be for security when the amount to be realized on the assigned claims was uncertain, the assignee required additional security, and there was no indication that the assignee was surrendering his right to full payment of the debt.

Since the assignment represented a security interest that was not perfected by the filing of a financial statement as required by Connecticut General Statutes § 42a-9~302(l), the trustee was right in asserting that, pursuant to § 42a-9-301 and § 70, sub. c of the Bankruptcy Act, his interest in the fund was entitled to priority over the claim of the bank.

Accordingly the order denying the petition to review is reversed, and the district court is instructed to remand the case to the referee for entry of an order denying the bank’s petition for the fund and declaring this to be a part of the bankrupt estate.

      . This claim had arisen under Act of Aug. 10, 1965, Pub.L. 89-117, tit. IV, §§ 401, 404(a), 79 Stat. 486, as amended, which authorized the Secretary of Housing and Urban Development to reimburse a local redevelopment agency engaged in an urban renewal project for relocation payments made to business concerns for reasonable and necessary moving expenses. The HUD’s regulations, 24 C.F.R. § 3.104(g) (1967), now 24 C.F.R. § 500.104(g), provided that no relocation payment in excess of $10,000 should be made by an agency without its approval.

      . It turned out that the Agency had paid $8,024 to the mover and had retained $1,400 as rent due from the bankrupt, so that the balance paid to the trustee was $15,576.

      . Apparently some document authorized the bank to apply Ruth’s bank account to satisfy her obligations as an endorser of the company’s note. In any event, no issue has been raised on this score.

      . This reads:
      Know All Men By These Presents: That Joseph Kanner Hat Company, Inc., a Connecticut corporation, acting herein by Morton Kanner, its Vice President and Treasurer, hereunto duly authorized, in consideration of the sum of $25,000.00, the receipt whereof is hereby acknowledged, does hereby sell, assign and transfer to City Trust Company, a Connecticut banking corporation with its principal office in the City of Bridgeport, County of Fairfield and State of Connecticut, its successors and assigns, to its own proper use and benefit, any and all sums of money due or owing to the said Joseph Kanner Hat Company, Inc., or to become due and owing to it, the said assignor, by virtue of a certain claim for reimbursement of compensable moving expenses against the Norwalk Redevelopment Agency in Norwalk, Connecticut, which claim has heretofore been filed by the assignor herein and accepted for processing by said Agency’s Relocation Office, on or about February 24, 1967, and the assignor hereby constitutes and appoints the said assignee bank its true and lawful attorney in fact with full power of substitution to ask, demand, sue for and in the name and right of said assignor to collect, receive and give acquittances for the said claim or any part thereof.
      In Witness Whereof I have hereunto set my hand and seal, acting in my capacity as Vice President and Treasurer of the assignor herein this 9th day of March, 1967.
      Joseph Kanner Hat Company, Inc.
      By /s/ Morton Kanner
      Morton Kanner, Vice Pres, and
      Treas. hereunto duly authorized

      . Section 42a-9-102(l) states that Article 9 applies to any transaction intended to create a security interest “in personal property or fixtures including goods, documents, instruments, general intangibles, chattel paper, accounts or contract rights,” as well as “to any sale of accounts, contract rights or chattel paper” (emphasis added). The referee determined, and we agree, that the claim against the Redevelopment Agency was a “general intangible,” see § 42a-9-106; Coogan, Intangibles as Collateral Under the Uniform Commercial Code, 77 Harv. L.Rev. 997, 1001-06 (1964). An outright sale of the claim would therefore not have been governed by the requirements of Article 9.

      . This had been the rule in bankruptcy proceedings long prior to the application of the Federal Rules of Civil Procedure, see 2 Collier, Bankruptcy t 25.30 [2.1], at 1023-24 (14th ed. 1971).

      . See S. Weiner, The Civil Nonjury Trial and the Law — Fact Distinction, 55 Calif. L.Rev. 1020 (1967), approving the general position of the Second Circuit on what constitutes a finding of fact, as well as the specific holding in Hygrade. Id. at 1042-43.

      . The amount owing on the $25,000 loan after application of the bank account was $18,741.52. After deductions, the Redevelopment Agency’s payment was $15,-576, see fn. 2.


author: BRIGHT, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Donald POWERS, Appellant.
    No. 72-1782.
    United States Court of Appeals, Eighth Circuit.
    Submitted June 12, 1973.
    Decided Aug. 13, 1973.

      Lynn S. Castner, Minneapolis, Minn., for appellant.
    John M. Lee, Asst. U. S. Atty., Minneapolis, Minn., for appellee.
    Before CLARK, Associate Justice; HEANEY and BRIGHT, Circuit Judges.

       The Honorable Tom O. Clark, Retired Associate Justice of the United States Supreme Court, sitting by designation.

   BRIGHT, Circuit Judge.

On June 27, 1972, a federal grand jury returned a four-count indictment against Donald Powers, charging him with violations of 18 U.S.C. § 495 in connection with the forgery and uttering of two United States Treasury checks. At the trial on the merits, a jury found him guilty as charged, and Powers now appeals that conviction. We affirm this conviction.

The record reveals that two Social Security benefit checks, one for $288.40 and one for $72.10, failed to reach their proper destination — a widow with four children. The checks subsequently turned up in the hands of one Paulette Anderson who cashed them in two Minneapolis supermarkets. At the trial, witness Anderson testified that defendant Powers had brought her the cheeks, talked her into cashing them and splitting the proceeds, and then driven her to the supermarkets to conduct the transactions. A clerk at one of the supermarkets had written down the license number of the automobile in which Paulette Anderson had left after cashing one of the checks; it was later identified as belonging to the defendant. At the trial, the defendant took the stand and testified to knowing nothing about any Treasury checks prior to his arrest, but the Government introduced rebuttal testimony to the effect that the defendant, shortly after his arrest and prior to being told any information about the forged checks, exclaimed: “You people have busted me for a couple of checks worth $350 when the government is spending $5,000 a year to send me to school.”

Appellant urges four grounds for reversal. He first argues that the indictment should have been dismissed because the Government deliberately presented only the hearsay testimony of a federal agent to the grand jury when first-hand testimony was readily available. Such a practice, it is urged, prevents the grand jury from fulfilling its traditional role as screening agency and, therefore, both threatens the integrity of the judicial system and deprives the appellant of his Fourth, Fifth, and Sixth Amendment rights. The Supreme Court long ago disposed of the constitutional objections to the use of mere hearsay in grand jury proceedings in Costello v. United States, 350 U.S. 359, 76 S.Ct. 406, 100 L.Ed. 397 (1956), and this decision has been steadily followed by the Eighth Circuit ever since. See, e. g., United States v. Akin, 464 F.2d 7 (8th Cir.), cert. denied, 409 U.S. 981, 93 S.Ct. 315, 34 L.Ed.2d 244 (1972). Nevertheless, appellant argues that we should adopt the view of the Second Circuit which has narrowed the broadly permissive tone of Costello recently through an exercise of its supervisory power over court officers. Appellant suggests the grand jury would have found such first-hand testimony to be less than credible and, therefore, might have refused an indictment.

In a series of cases beginning with United States v. Umans, 368 F.2d 725 (2d Cir. 1966), cert. granted, 386 U.S. 940, 87 S.Ct. 975, 17 L.Ed.2d 872, cert. dismissed as improvidently granted, 389 U.S. 80, 88 S.Ct. 253, 19 L.Ed.2d 255 (1967), that court struck at “excessive” use of hearsay as tending to destroy the protection against unwarranted prosecution which ought to be afforded by a grand jury, and recently reversed a conviction where the hearsay testimony of a federal agent, “wittingly or unwittingly,” appeared to be an actual eye-witness account and thus misled the grand jury. United States v. Estepa, 471 F.2d 1132 (2d Cir. 1972). Whatever may be the merits of the Second Circuit’s approach, which has not yet been adopted by this circuit, the case at bar does not fall within its purview. Even in the Second Circuit, the rule remains that:

Indictments obtained principally or wholly upon the basis of hearsay evidence, even though direct testimony was available, will not be dismissed unless it appears that dismissal is required to protect the integrity of the judicial process. [United States v. Leibowitz, 420 F.2d 39, 42 (2d Cir. 1969).]

Here, there was no claim and no evidence in the record to suggest that the grand jury was misled into believing that the agent had first-hand knowledge of all that he related. Absent such a circumstance, indictments are not open to attack on the grounds that mere hearsay was used before the grand jury.

Second, noting that the alleged crime had been committed within the State of Minnesota, appellant challenges the failure of the trial judge to apply the Minnesota state rule regarding accomplice testimony, found in Minn.Stat. § 634.04, which forbids conviction based solely on the uncorroborated evidence of an accomplice. He places primary reliance on an extension of the doctrine found in Erie Ry. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82. L.Ed. 1188 (1938) as requiring the application of the local statute in the absence of a controlling federal statute. This reliance is grossly misplaced, for Erie has no application whatsoever to federal criminal prosecutions. As this circuit has frequently held, it is “well-settled that a conviction can rest on the uncorroborated testimony of a codefendant or accomplice.” United States v. Smith, 464 F.2d-221, 222 (8th Cir. 1972). In any event, the testimony of Powers’ accomplice was circumstantially corroborated by the notation of the defendant’s license number on one of the forged Treasury checks and by observations of other witnesses.

Third, the appellant argues that it was a violation of his Fifth and Sixth Amendment rights for the trial judge to refuse to permit his counsel to participate in the voir dire examination of prospective jurors regarding race bias. As the appellant himself acknowledges, the court conducted the voir dire, but did, upon request of defense counsel, “inquire of the jury panel whether the defendant’s race, whether the defendant being a black person, would affect members of the jury’s ability to treat the defendant fairly and equally and to discharge their duties as jurors.” Two jurors were excused as a result of their responses to this question. Appellant, nevertheless, claims error. There is none.

As a general matter, under F.R. Cr.P. 24(a), the trial court has discretion either to permit counsel to conduct voir dire or to conduct the examination itself; in the latter event, the court may permit counsel to submit questions which the court, at its discretion, may ask. The constitutionality of Rule 24(a) was specifically upheld by this circuit in United States v. Anderson, 433 F.2d 856, 858 (8th Cir. 1970). Of course, the court’s discretion in this area is not unlimited.

For more than four decades, it has been the rule in federal courts that a trial court must inquire as to possible racial bias of the veniremen when the defendant is a member of a racial minority. Aldridge v. United States, 283 U.S. 308, 51 S.Ct. 470, 75 L.Ed. 1054 (1931). Yet, as recently noted by the Supreme Court in Ham v. South Carolina, 409 U.S. 524, 93 S.Ct. 848, 35 L.Ed.2d 46 (1973), neither the supervisory power of the Supreme Court over lower federal courts as exercised in Aldridge nor the Due Process Clause of the Fourteenth Amendment as applied to the state courts in Ham require the trial court “to put the question in any particular form, or to ask any particular number of questions on the subject, simply because requested to do so by petitioner.” 409 U.S. at 527, 93 S.Ct. at 830. If the trial court need not have asked any further questions than a general one regarding racial bias, a fortiori it need not have permitted the participation of counsel in further questioning.

Fourth and finally, appellant attacks the sufficiency of the evidence supporting the verdict. It is not the responsibility of an appellate court to reweigh the evidence or to determine the credibility of witnesses. A jury verdict must be sustained if there is substantial evidence, taking the view most favorable to the government as prevailing party, to support it. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942); United States v. Kye, 411 F.2d 120 (8th Cir. 1970). Here the evidence clearly appears to be substantial. In addition to the direct testimony of the defendant’s accomplice, Paulette Anderson, implicating him in the crime, corroborating circumstantial evidence placed him at the scene of the crime and the defendant himself made an incriminating statement after his arrest. These pieces of evidence fit together into a pattern which justifies our opinion that, on the whole record, there is ample evidence to sustain the jury’s verdict of guilty.

Affirmed.


text:
    OTTAWA SILICA COMPANY, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. and Cylinder Gas, etc., Employees Local No. 283 Teamsters, Intervenor. CYLINDER GAS, etc., EMPLOYEES LOCAL NO. 283 TEAMSTERS, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, and Ottawa Silica Company, Inc., Intervenor.
    Nos. 72-1590 and 72-1700.
    United States Court of Appeals, Sixth Circuit.
    Aug. 22, 1973.
    George W. Moehlenhof, McDermott, Will & Emery, Chicago, 111., for Ottawa Silica Co., Inc.; Gerald S. Patterson, Chicago, 111., on brief; J. Mack Swigert, Taft, Stettinius & Hollister, Cincinnati, Ohio, of counsel.
    Alan M. Levy, Milwaukee, Wis., for the Union; John S. Williamson, Jr., Milwaukee, Wis., on brief.
    Gerard C. Smetana, Chicago, 111., ami-cus curiae for Chamber of Commerce of the United States; Milton A. Smith, Gen. Counsel, Otto F. Wenzler, Labor Relations Counsel, Chamber of Commerce of the United States, Washington, D. C., and Lawrence M. Cohen, Herbert M. Ber-man, Chicago, 111., on brief; Lederer, Fox & Grove, Chicago, 111., on brief and of counsel.
    Steven C. Kahn, Atty. N. L. R. B., for respondent; Peter G. Nash, Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Paul J. Spielberg, Atty. N. L. R. B., Washington, D. C., on brief.
    Before WEICK, EDWARDS and KENT, Circuit Judges.

       Judge Kent participated in the argument of this case but died on May 28, 1973, before judgment was entered.

   ORDER

On receipt and consideration of the briefs, oral arguments and record in the above-styled case; and

Finding substantial evidence on the whole record in the unique circumstances of this case to support the findings of fact and conclusions of law of the Board majority,

Enforcement of the Board’s order is granted to the extent outlined in the Decision and Order of the National Labor Relations Board, 197 N.L.R.B. No. 53 (1972).


text:
    LITTLE BEAVER THEATRES, INC., Plaintiff-Appellee, v. The CITY OF ST. PETERSBURG et al., Etc., Defendants-Appellants.
    No. 73-2016
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 31, 1973.
    George M. Osborne, Jr., Asst. State Atty., Clearwater, Fla., for Russell.
    Michael S. Davis, James P. Ogden, St. Petersburg, Fla., Baya Harrison, III, Asst. Atty. Gen., Tampa, Fla., for City of St. Petersburg and others.
    David B. Javits, Tobias Simon, Elizabeth du Fresne, Miami, Fla., for plaintiff-appellee.
    Before GEWIN, COLEMAN and MORGAN, Circuit Judges.

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

   PER CURIAM:

The preliminary injunction issued by the district court is dissolved and this cause is remanded to that court for further proceedings in light of Heller v. New York, 413 U.S. 483, 93 S.Ct. 2789, 37 L.Ed.2d 745 (1973); Roaden v. Commonwealth, 413 U.S. 496, 93 S.Ct. 2796, 37 L.Ed.2d 757 (1973); Meyer v. Austin, 413 U.S. 902, 93 S.Ct. 3029, 37 L.Ed.2d 1018 (1973).


author: PHILLIPS, Chief Judge.

text:
    SAGINAW AGGREGATES, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD.
    No. 72-1854.
    United States Court of Appeals, Sixth Circuit.
    Aug. 30, 1973.
    Elliot Moore, Asst. Gen. Counsel, N. L. R. B., Washington, D. C., Jerome H. Brooks, Director, Region 7, N. L. R. B., Detroit, Mich., for respondent.
   ORDER

Before PHILLIPS, Chief Judge, and PECK and LIVELY, Circuit Judges.

PHILLIPS, Chief Judge.

This case originally was before the court on the petition of Saginaw Aggregates to review an order and supplemental order of the National Labor Relations Board. The decisions of the Board are reported at 191 NLRB No. 104 and 198 NLRB No. 78.

On February 9, 1973, this court issued an order directing the Company to show cause why its petition should not be dismissed for want of prosecution. The Company did not respond to the show cause order. On March 2, 1973, this court entered an order dismissing the Company’s petition to review for want of prosecution.

The Board has filed a cross-application for enforcement of its order. On March 28, 1973, the Board filed a motion for summary adjudication of enforcement.

Upon consideration, it is ordered that the motion of the Board for summary adjudication be granted and that enforcement of its orders of the Board be and hereby is granted.


text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. STANDARD HEATING AND COOLING, INC., Respondent.
    No. 73-1580.
    United States Court of Appeals, Sixth Circuit.
    Aug. 28, 1973.
    Elliot Moore, Asst. Gen. Counsel, N. L. R. B., Washington, D. C., Bernard Gott-fried, Director, Region 7, N. L. R. E., Detroit, Mich., for petitioner.
    Jack G. Burwell, Fiott & Burwell, Southfield, Mich., for respondent.
    Before WEICK, EDWARDS and CELEBREZZE, Circuit Judges.
   ORDER

Upon the filing by National Labor Relations Board of its application for summary entry of judgment upon the transcript of the record, this Court, on June 28, 1973, issued an order requiring the Respondent to show cause by July 18, 1973, why the Board’s application for entry of summary judgment should not be granted, which order was duly served on the Respondent. No response was made to the order to show cause, and Respondent is in default.

It is therefore ordered, adjudged and decreed that the application for summary entry of judgment be granted and that the order of the Board be enforced, and Respondent is ordered to comply therewith.


text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. Michael PALUMBO, d/b/a American Homes Systems, Respondent.
    No. 73-1624.
    United States Court of Appeals, Sixth Circuit.
    Aug. 30, 1973.
    Elliot Moore, Asst. Gen. Counsel, N. L. R. B., Washington, D. C., Philip Fusco, Director, Region 8, N. L. R. B., Cleveland, Ohio, for petitioner.
    Philip A. Lawrence, Class, Ketchel & Lawrence, Chagrin Falls, Ohio, for respondent.
    Before PHILLIPS, Chief Judge, and PECK and LIVELY, Circuit Judges.
   ORDER

PHILLIPS, Chief Judge.

This case is before the court on the petition of the National Labor Relations Board for enforcement of its order against respondent in case numbers 8-CA-6860 and 8-CA-6950.

On August 21, 1973, the Board filed a motion for summary enforcement of its order, stating that respondent soon will file a petition for bankruptcy and no longer will oppose enforcement of the Board’s order. The respondent has not filed any reply to the motion of the Board for summary adjudication.

Upon consideration, it is ordered that the motion of the Board for summary enforcement is granted and that the order of the Board be and hereby is enforced.