author: MULLIGAN, Circuit Judge:

text:
    Oliver R. GRACE et al., Plaintiffs-Appellants, v. Daniel K. LUDWIG et al., Defendants-Appellees.
    No. 859, Docket 73-1212.
    United States Court of Appeals, Second Circuit.
    Argued June 5, 1973.
    Decided Sept. 12, 1973.

      Sidney Bender, New York City (Lev-entritt, Lewittes & Bender, New York City, of counsel), pro s'e and for all other plaintiffs-appellants.
    William E. Haudek, New York City (Pomerantz, Levy, Haudek & Block, New York City, Abraham L. Pomerantz and Julius Levy, New York City, of counsel), for defendants-appellees Daniel K. Ludwig, Berkshire Industries, Inc., and American Hawaiian Steamship Co.
    Charles A. Stillman, New York City (Morrison, Paul, Stillman & Beiley, New York City, and Peter H. Morrison, Benjamin Zelermyer and Julian W. Friedman, New York City, of counsel), for defendant-appellee Robert Korsen.
    Gary J. Greenberg, New York City (Stroock & Stroock & Lavan, New York City, of counsel), for defendants-appel-lees Trude Weininger and Premier Investing Corp.
    Before HAYS, MANSFIELD and MULLIGAN, Circuit Judges.
   MULLIGAN, Circuit Judge:

The controversy before us on appeal originated when the defendant Berkshire Industries, Inc. (“Berkshire”) applied to the SEC for an exemption under Section 17 of the Investment Company Act of 1940 (the “Act”), 15 U.S.C. § 80a-17, which would permit it to absorb its 91% owned subsidiary the defendant American-Hawaiian Steamship Company (“American”) by a short form merger. American is a registered closed-end investment company and the Act prohibits such merger unless the SEC finds that the transaction is reasonable, fair, free of overreaching and consistent with the general purposes of the Act. Under the terms of the proposed merger, American’s minority stockholders were to be paid cash for their stock and Berkshire’s stock in American was to be cancelled. The plaintiffs Grace, et al. were minority stockholders of American. Plaintiffs Leventritt Lewittes & Bender (“LLB”) were their counsel. In addition to Berkshire and American the other defendants in this action are Daniel K. Ludwig (Ludwig) the sole stockholder of Berkshire and Trude Weininger, Premier Investing Corporation and Robert Korsen who were or are, other minority stockholders of American.

The SEC Proceeding

Berkshire filed its 17(b) application on July 31, 1967, proposing a short form merger of American into Berkshire pursuant to the then § 14:12-10 of the New Jersey General Corporation Law which was concededly applicable and permitted a New Jersey corporation owning 90% or more of a New Jersey subsidiary to merge the subsidiary into the parent by resolution of the parent’s board of directors setting forth the terms of the merger. Minority stockholders could accept the price fixed in the resolution or demand an appraisal of their stock. Berkshire estimated the net value of American at about $53 million and proposed to offer $275 per share to American minority stockholders.

The parties to the SEC proceeding were Berkshire and the SEC’s Division of Corporate Regulation (Rule 9(a), SEC Rules of Practice, 17 C.F.R. § 201.9(a)); The SEC on October 25, 1967 directed a hearing on notice to all interested parties. Grace and the other plaintiffs thereupon retained LLB who appeared for them after leave to participate- had been granted pursuant to Rule 9(c), 17 C.F.R. § 201.9(e). Evidentiary hearings on Berkshire’s application were conducted before a hearing examiner of the SEC from January 4th to June 7th, 1968, totalling about 50 hearing days. Counsel for the SEC’s Division of Corporate Regulation also appeared. Seventeen witnesses testified, 550 exhibits were introduced and a 7500 page transcript of the hearing was compiled. At the end of the hearings the parties agreed pursuant to Rules 8(b) and (c), 17 C.F.R. § 201.8(b) and (e), to waive an initial decision by the hearing examiner and to permit the SEC staff to assist the Commission in the preparation of its decision. A hearing before the full Commission was held on November 12, 1968. Prior to any decision by the Commission, Berkshire advised the SEC that a sale of certain property owned by American might have an impact on the valuation of the American stock. Berkshire thereafter applied for and was granted on June 12, 1969 a re-opening of the proceedings to adduce additional evidence. After two days of hearings (August 4 and 11, 1969) a settlement proposal of Berkshire was rejected by LLB and Berkshire sought leave to withdraw its 17(b) application. The SEC on November 28th, 1969 allowed the withdrawal and denied LLB’s claim for a fee to be paid by American or Berkshire, without prejudice to any other legal remedy which the plaintiffs might pursue, since the agency lacked jurisdiction to award counsel fees. This action set the stage for the proceeding below.

The Court Proceedings

On March 20, 1970 plaintiffs commenced an action in the United States District Court, Southern District of New York, seeking attorney’s fees and expenses against the defendants arising out of the SEC proceeding. In essence, LLB claims that although Berkshire initially offered only $275 per share as the fair and reasonable value of American shares, primarily due to the services of LLB Berkshire successively raised its offer to $375 per share, $575 per share and eventually $650 per share or more than double the initial offer. American’s net value was thus considered to be $126 million instead of the $53 million initially estimated by Berkshire.

Plaintiffs allege that Ludwig and Berkshire, as controlling shareholders, owed a fiduciary obligation to American and its minority shareholders to propose the merger on fair and reasonable terms. They claim that these defendants breached that obligation, committed an oppressive fraud against American and its minority shareholders and violated sections 17(a), (b) and 34(b) of the Investment Company Act (15 U.S.C. §§ 80a-17(a), (b) and 80a-33(b)) and sections 10, 14(e) and 27 of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78j, 78n(e) and 78aa) as well as Rule 10b-5 (17 C.F.R. § 240.10b-5) by submitting the merger plan and application, supported by fraudulent misrepresentations, to the SEC.

LLB further claims that through its efforts the plan of Ludwig, Berkshire and American to defraud the American minority stockholder plaintiffs was thwarted and the added value of the American shares has been preserved to American and its stockholders. LLB seeks judgment against Ludwig or alternatively Berkshire or alternatively American for a fair and reasonable attorney’s fee of ten million dollars (LLB would reimburse plaintiff stockholders’ legal fees of $154,314 already paid to LLB). In the alternative, on the assumption that there was no corporate benefit to American, then Ludwig, Berkshire or American should pay LLB attorney’s fees in the sum of $2,418,262 which is alleged to represent the benefit conferred upon the minority shareholders (excluding plaintiff shareholders) plus attorney’s fees paid by plaintiffs to LLB. In the alternative, these amounts would be paid proportionately by the defendant shareholders of American. As a last alternative plaintiffs demanded “[t]hat the appropriate combination of defendants be adjudged liable to make appropriate payments quantum meruit to LLB and the appropriate combination of the above, excluding the [defendant shareholders of American], make appropriate reimbursement to plaintiff stockholders of fees paid or payable to LLB.” Finally, Grace seeks reimbursement of expenses in the sum of $54,911.92 from Ludwig or in the alternative Berkshire.

Discovery proceedings were conducted, seven witnesses were deposed and scores of exhibits were introduced. Defendants American, Berkshire and Ludwig moved for judgment on the pleadings because of the legal insufficiency of the complaint; the remaining defendants moved for dismissal or summary judgment. The plaintiffs moved for summary judgment with supporting papers including a 40 page affidavit of LLB which incorporated the 7500 page SEC hearing transcript, as well as the exhibits and briefs before the SEC, plus the depositions and exhibits in the case below. The motions were argued on January 10, 1973 before the Hon. Whitman Knapp, District Judge. Judge Knapp announced that the only issue he would decide was whether the complaint stated a cause of action. He assumed the truth of the facts alleged in the complaint and the supporting papers and then dismissed the complaint without any formal opinion.

Jurisdiction

An initial and vexing question here is finding a basis for the jurisdiction of the federal court. The defendant minority stockholders urge that since the SEC denied LLB’s application for a fee, the exclusive remedy was an appeal to this court which would preclude a collateral proceeding in the district court challenging the agency’s ruling. (Securities Exchange Act, § 25(a), 15 U.S.C. § 78y(a); Investment Company Act, § 43(a), 15 U.S.C. § 80a-42(a)). The difficulty with this position is that the' SEC simply held that it had no statutory authority to grant a fee and further held that its denial on jurisdictional grounds was without prejudice to LLB’s “taking legal action to pursue any remedy they may have in this respect.” The present action does not attack the determination that the SEC has no jurisdiction to award a fee but rather seeks a fee to be awarded by the court. There is therefore no res judicata problem here and no collateral attack. The question is whether the district court as a court of equity should award a fee to prevent an unjust enrichment. That question in our view is here litigable.

In essence, the complaint here charges that Berkshire and Ludwig, in proposing the “fair and reasonable” price of $275 per share for American stock in the application to the SEC for a 17(b) exemption, were engaged in a fraudulent scheme to freeze out the public stockholders and to eliminate American as an independent entity. Since we must accept the allegations of the complaint as true on this appeal (Gardner v. Toilet Goods Ass’n, 387 U.S. 167, 172, 87 S.Ct. 1526, 18 L.Ed.2d 704 (1967)), it would appear that the illicit behavior charged is encompassed within the substantive sections of the Investment Company Act, and of the Securities Exchange Act relied upon in the complaint. See Saylor v. Lindsley, 456 F.2d 896, 903-904 (2d Cir. 1972); cf. Entel v. Allen, 270 F.Supp. 60 (S.D.N.Y.1967). However, the jurisdictional sections (section 44 of the Investment Company Act, 15 U.S.C. § 80a-43, and section 27 of the Securities Exchange Act, 15 U.S. C. § 78aa) specify that federal courts shall have jurisdiction only of “violations” of these statutes and actions in equity and at law brought to enforce any “liability or duty” created by the statute or the rules promulgated thereunder. The minority stockholder defendants urge that they have committed no violations of the statutes involved and have no liabilities or duties under such statutes and therefore there is no jurisdiction here as to them. Indeed the complaint urges not that they have made any deceptive statements or participated in any fraudulent schemes but were rather the intended victims. This argument would be persuasive except that the plaintiffs also urge that the federal court has jurisdiction under 28 U.S.C. § 1331 which grants jurisdiction where the amount in controversy exceeds $10,000 and “arises under the Constitution, laws or treaties of the United States.” We think that this action for fees and expenses does arise under the stated substantive sections of the Investment Company Act and Securities Exchange Act. Even though the minority stockholder defendants did not violate the sections, it is alleged that they bene-fitted from the LLB representation. We rely on Judge Friendly's en bane opinion in Gilson v. Chock Full O’Nuts Corp., 331 F.2d 107 (2d Cir. 1964) where an attorney had found a claim for recovery of “short swing” profits under § 16(b) of the 1934 Act, 15 U.S.C. § 78p(b), which the corporation at his urging then successfully pursued. We found that an action to recover an attorney’s fee for this service to the corporation was a remedial incident to the § 16(b) action and was properly brought in the federal court. The corporation there was not in violation of the Securities laws any more than the minority stockholders here. What we have held with respect to the section 1331 jurisdiction is of course equally applicable to American and a fortiori to Ludwig and Berkshire who are accused of substantive violations of the Acts in question in the complaint.

The Merits

In American jurisprudence the general rule is that a successful litigant is not permitted to recover his attorney’s fees as damages or as reimbursable costs. Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 717-720, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967); Day v. Woodworth, 54 U.S. (13 How.) 362, 371-375, 14 L.Ed. 181 (1852); Arcambel v. Wiseman, 3 U.S. (3 Dali.) 306, 1 L.Ed. 613 (1796). However, it is also established that in special circumstances a court of equity does have the inherent power to reimburse a successful suitor for the costs of litigation, including his attorney’s fees. Sprague v. Ticonic National Bank, 307 U.S. 161, 166, 59 S.Ct. 777, 83 L.Ed. 1184 (1939). In J. I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964), the Supreme Court emphasized that the private enforcement of the Securities laws as a supplement to SEC action, was highly desirable. It was not surprising therefore that in Mills v. Electric Auto-Lite Co., 396 U.S. 375, 391, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970) the Court gave its approbation to an award of attorney’s fees to successful champions who in private litigation had vindicated the policy of the Securities laws. However, the Court found that there were “special circumstances” present which justified the award. We find no such circumstances here; we find no precedent for such an award here and indeed find considerations which would strongly militate against exercising our discretion in favor of the plaintiffs here.

At the heart of the doctrine favoring the award of counsel fees in securities cases is the need to encourage the vigilance of private attorneys general to provide corporate therapy protecting the public investor who might otherwise be victimized. See Rosenblatt v. Northwest Airlines, Inc., 435 F.2d 1121, 1124 (2d Cir. 1970). Thus in Borak the Court commented upon the practical inability of the SEC to thoroughly and independently examine the veracity of facts set out in proxy materials which, except for private litigant scrutiny, would be undetected until after a merger had been accomplished. J. I. Case Co. v. Borak, supra, 377 U.S. at 432-433, 84 S.Ct. 1555. Professor Cary has noted in reference to proxy statements and written proxy soliciting material: “The SEC does not purport to pass upon the merits or underwrite the accuracy or adequacy of the statements made.” W. Cary, Corporations 306 (4th ed. 1969). The need for private enforcement continues and is accented as the filings burgeon.

The same policy underlies the holdings of this court in leading cases such as Smolowe v. Delendo Corp., 136 F.2d 231 (2d Cir.), cert, denied, 320 U.S. 751, 64 S.Ct. 56, 88 L.Ed. 446 (1943), Gilson v. Chock Full O’Nuts Corp., 331 F.2d 107 (2d Cir. 1964) (en banc), and Blau v. Rayette-Faberge, Inc., 389 F.2d 469 (2d Cir. 1968), which permitted the recovery of attorney’s fees where a derivative action had been brought to recover or to instigate the recovery of insider short swing profits under section 16(b) which the corporation had failed or refused to bring on its own behalf. As we pointed out in Smolowe, “the possibility of recovering attorney’s fees will provide the sole stimulus for the enforcement of § 16(b) . . . ” 136 F.2d at 241.

We find no such “special circumstances” here. The role of the SEC in the case at hand was markedly distinguishable. The statute here did not envisage a simple reporting procedure or the mere submission of written materials for pro forma or perfunctory review. Under 17 (a) of the Investment Company Act, the merger of American and Berkshire was prohibited unless application was made under 17(b) for an order of exemption. The Commission could only issue such an order if evidence established that the consideration to be paid was reasonable and fair and did not involve overreaching, and was consistent with the policy of the investment company and the Act. The SEC called for a hearing before a hearing examiner; extensive hearings were held with the SEC’s Division of Corporate Regulation represented by counsel throughout. *********17 Eventually, the .17(b) application was withdrawn by Berkshire. In this proceeding LLB entered its appearance on behalf of the Grace stockholders who had over a $3,800,000 interest and who had paid LLB some $154,314 in fees and expenses. In view of the direct and substantial interest of the Grace stockholders, LLB’s representation was not stimulated solely by the expectation of fees from those who had not retained them. (See Smolowe, supra). Inasmuch as Berkshire submitted the application for exemption to the Agency charged with protection of the public investors and extensive proceedings were held, there is no parallel here to cases where SEC scrutiny either has been avoided or in the nature of things its function is ministerial or casual.

LLB takes the position however that it pulled the “laboring oar” in the SEC proceedings and that primarily through its efforts Berkshire continuously increased its offer to the public shareholders. In the posture this case reaches us, these allegations must be accepted as true. We cannot accept, however, the premise that but for LLB’s intervention the SEC would have approved as “fair and reasonable” the initial offer of Berkshire. If LLB had never appeared how can we properly assume that the SEC would have been so totally supine or so derelict as to give its approval to a price which plaintiffs urge was not merely unconscionably low but was in fact the product of a deception and fraud practiced by Berkshire and Ludwig? The record before us does not permit this inference, and in his letter announcing the Commission’s refusal to submit an amicus brief, the SEC’s General Counsel states: “It is by no means clear to the Commission that but for plaintiffs’ intervention in the administrative proceeding the Commission and its then-Division of Corporate Regulation would have sanctioned a violation of the Investment Company Act, and since the application was withdrawn no finding concerning the proposed transaction was made.”

The complaint here does not allege that “but for” the LLB intervention the SEC would have granted the application for an exemption based on the initial offer by Berkshire. Appellant relies on the colloquy between Judge Knapp and counsel below in which he stated that he assumed that the SEC had done nothing and in fact had acted “horrendously” (even LLB recoiled from this characterization of the SEC performance). We cannot consider this comment as a finding of fact but only as an assumption not supported by any reference to the record. In re Rosen, 66 F.Supp. 174, 179 (D.N.J.), aff’d, 157 F.2d 997 (3rd Cir. 1946), cert, denied, 330 U.S. 835, 67 S.Ct. 972, 91 L.Ed. 1282 (1947). The motion here was for judgment on the pleadings and even as expanded by the affidavit we do not find warrant for the assumption.

Had the SEC granted the exemption and the initial $275 offer been approved and had LLB then successfully appeared in a derivative action on behalf of the public stockholders, we would have a decidedly different situation. The failure of the SEC to act properly would have been established.' Saylor v. Lindsley, supra, 456 F.2d at 902 — 903; Entel v. Allen, supra; cf. Thomas v. Honeybrook Mines, Inc., 428 F.2d 981 (3d Cir. 1970), cert, denied, 401 U.S. 911, 91 S.Ct. 874, 27 L.Ed.2d 809 (1971); Powell v. Pennsylvania R.R., 166 F.Supp. 448 (E.D.Pa. 1958), reversed on other grounds, 267 F.2d 241 (3d Cir. 1959).

Assuming that LLB did pull the “laboring oar” in the proceeding before the SEC, it was in the interest of a substantial minority stockholder and it was the basis for a not insignificant fee. The fact that the SEC permitted admittedly able and persistent counsel to man the oars does not at all establish that the vessel would have otherwise foundered. LLB must then be characterized as a mere volunteer who aids a public body or trust in the performance of their official duties on behalf of a certain class, but who is not entitled to compensation. Edison Light & Power Co. v. Pennsylvania Pub. Util. Comm’n, 34 F.Supp. 939 (E.D.Pa.1940), aff’d on the opinion below, 119 F.2d 779 (3d Cir. 1941); King v. City of Covington, 289 Ky. 695, 160 S.W.2d 13 (1942); City of Englewood v. Allison Land Co., 45 N.J.Super. 538, 133 A.2d 680 (App.Div.1957); In re Katz’ Estate, 40 N.J.Super. 103, 122 A.2d 185 (Super.Ct.1956); Peoples-Pittsburgh Trust Co. v. Pittsburgh United Corp., 334 Pa. 107, 5 A.2d 890 (1939). See Restatement of Restitution § 115, comment a, at 482 (1937).

Although we find no “special circumstances” here which would justify an award of counsel fees we should further state that the equitable basis in any event for such an award is the prevention of unjust enrichment. Mills v. Electric Auto-Lite Co., supra, 396 U.S. at 392, 90 S.Ct. 616; Fleischmann Distilling Corp. v. Maier Brewing Co., supra, 386 U.S. at 719, 87 S.Ct. 1404. The plaintiff at his own expense has conferred a benefit upon the defendant which justice demands he recompense. Restatement of Restitution § 1 (1937). We cannot agree that American or its principal shareholder, Berkshire (controlled by Ludwig), has been enriched by Grace or LLB. In sum, the complaint urges that Ludwig who controlled Berkshire and in turn American, knew full well the value of the American shares but was bent upon fleecing the public minority shareholders. No matter what transpired before the SEC the intrinsic value of American would be the same in so far as Berkshire and Ludwig were concerned. The merger was aborted and the theory of the complaint is that they have not been enriched but rather deprived by the intervention of plaintiffs. The only possible benefit could be to the minority stockholders who would have received less than half the true value of their holdings. The only other benefit alleged is that American’s corporate identity was preserved. Realistically, however, since the merger was never effectuated American still remains with 91% of its shares in the hands of Berkshire with Ludwig still at the helm. Conceptually the corporation is intact but the Augean stables, if indeed they be, remained uncleansed. We therefore see no merit to the claim that Berkshire or Ludwig should indemnify American because of its debt to the plaintiffs who have realistically conferred no benefit at all upon American.

We do not ignore the contention that Ludwig and Berkshire are directly responsible to the plaintiffs on the theory that a court may award attorney’s fees in favor of a party who is forced to litigate by reason of the vexatious, wanton conduct of a defendant who brings an unfounded action or presents an unfounded defense. See Stolberg v. Board of Trustees, 474 F.2d 485 (2d Cir. 1973) and Kahan v. Rosensteil, 424 F.2d 161 (3d Cir.), cert, denied, 398 U.S. 950, 90 S.Ct. 1870, 26 L.Ed.2d 290 (1970). Judge Mansfield’s recent opinion in Stol-berg reviews the unusual circumstances which authorize the award of counsel fees. In that case, he emphasized that suit was compelled by the defendant’s recalcitrant conduct, 474 F.2d at 490. As we have pointed out, the administrative proceeding here was prompted by the statute. The appearance of plaintiffs was compelled by their substantial interest in the price to be fixed for the stock. The extensive participation of LLB was voluntary and, as we have already noted, we cannot assume that the SEC would have failed to act without it. The fraud charged was not for the purpose of abusing process and forcing unnecessary litigation but to freeze out the public stockholders. °

We are left then with the claim that the plaintiffs’ intervention enriched the minority stockholders and therefore a quantum meruit recovery is authorized. In addition to the grounds already set forth, we find in any event no precedent for a recovery on this basis. We agree with appellant that its failure to establish a fund or to appear for a class does not automatically bar a recovery. The fact that minority stockholders did not retain or expressly rejected LLB’s representation is not necessarily fatal. See Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184 (1939). However, in the cases where the activity of counsel has produced no fund, it has at least resulted in either the establishment of a principle of law which necessarily established a recovery for those who allegedly benefited or at least contributed to general corporate therapeutics by disclosing a fraud that otherwise would have gone undetected. This plaintiffs have failed to establish. In Ticonic, supra, a private litigant established her right to funds which she had deposited in a bankrupt institution. The court stated:

In her main suit the petitioner neither avowed herself to be the representative of a class nor did she automatically establish a fund in which others could participate. But in view of the consequences of stare decisis, the petitioner by establishing her claim necessarily established the claims of fourteen other trusts pertaining to the same bonds. 307 U.S. at 166, 59 S.Ct. at 780.

Since the SEC proceeding was terminated here by withdrawal of the application for exemption, LLB established no violation of the Securities acts and created no fund for the benefit of the minority stockholders. At best, LLB succeeded in prodding Berkshire-Ludwig over a two year period from an offer of $275 to $650 per share. But the offer was never accepted and no valuation binding upon the offeror was ever established. Thus, in this case, the Weininger appel-lees sold their American stock to Berkshire at the $275 per share offer in October, 1967 with the understanding that if any other shareholder within a year received a higher price or if the SEC ordered a higher price in the 17(b) proceeding, they would receive the difference. Since neither eventuality occurred they were not entitled to additional sums and Berkshire instead offered to rescind the agreement. Weininger then commenced an action in February, 1970 (Weininger v. National Bulk Carriers, 70 Civ. 610 (S.D.N.Y.) ) to recover damages under the federal Securities laws. In 1972, after extensive discovery, the aetion was settled at less than $635 per share with Weininger expending some $108,500 in counsel fees plus additional amounts for disbursements. LLB had not established any statutory violation which automatically inured to their benefit.

The offer by Berkshire-Ludwig obviously failed to establish any market value under the circumstances and to now assess additional counsel fees upon unwilling minority stockholders who were forced to lengthy and expensive litigation to achieve any benefit, does not particularly appeal to this court of equity.

In conclusion, we find not only that there is no precedent for the award here sought but in fact that there are policy considerations against it. Aside from the lack of special circumstances calling for the intervention of a private attorney general as well as the difficulty of assessing the value of the putative benefit here, we would face the impossible task of attempting to measure the value of the service of the intervenor. A precedent here would encourage intervention in comparable cases not only before the SEC but other agencies as well. The competition and maneuvering among counsel to assume the lead role would not only be disruptive of administrative procedures but might very well encourage agency inaction. The SEC was here charged with a responsibility and it presumably has the expertise to make the assessment required by the statute. The introduction of additional cooks might not only spoil the broth but paralyze the chef. See Casey v. Woodruff, 49 N.Y.S.2d 625, 648 (Sup.Ct. 1944). A district court would be hard put to determine the value of the contributions of each in a subsequent aetion far removed from the agency proceeding. If in fact the role of the SEC in these cases is or becomes perfunctory then the statute might be amended to provide for legal fees to be fixed by the agency which has conducted the proceeding and which is in a much better position to estimate the value of the interve-nor’s contribution. As Judge Kaufman pointed out in Greene County Planning Board v. FPC, .455 F.2d 412, 427 (2d Cir.), cert, denied, 409 U.S. 849, 93 S.Ct. 56, 34 L.Ed.2d 90 (1972), in somewhat comparable circumstances:

Fully mindful that petitioners invoke our equitable powers, we cannot ignore parallel developments in this rapidly changing area of administrative law. As recently as December 7, 1971, the Administrative Conference of the United States refused to adopt a recommendation which would have endorsed the principle of reimbursing the legal expenses incurred by interve-nors in administrative proceedings. Recommendation 28, Public Participation in Administrative Hearings § D, adopted December 7, 1971. Without a showing of compelling need, it would be premature for us to inject the federal courts into this area of administrative discretion, perhaps foreclosing more flexible approaches through agency action or rules.

For those reasons we affirm the judgment below dismissing the complaint for failure to state a cause of action.

      . Section 17 of the Investment Company Act of 1940, 15 U.S.C. § 80a-17, provides in pertinent part:
      (a) It shall be unlawful for any affiliated person or promoter of or principal underwriter for a registered investment company (other than a company of the character described in Section 80a-12(d) (3) (A) and (B) of this title), or any affiliated person of such a person, promoter, or principal underwriter, acting as principal—
      (1) knowingly to sell any security or other property to such registered company or to any company controlled by such registered company, unless such sale involves solely (A) securities of which the buyer is the issuer, (B) securities of which the seller is the issuer and which are part of a general offering to the holders of a class of its securities, or (O) securities deposited with the trustee of a unit investment trust or periodic payment plan by the depositor thereof ;
      (2) knowingly to purchase from such registered company, or from any company controlled by such registered company, any security or other property (except securities of which the seller is the issuer) or
      (3) to borrow money or other property from such registered company or from any company controlled by such registered company (unless the borrower is controlled by the lender) except as permitted in section 80a-21(b) of this title.
      (b) Notwithstanding subsection (a) of this section, any person may file with the Commission an application for an order exempting a proposed transaction of the applicant from one or more provisions of said subsection. The Commission shall grant such application and issue such order of exemption if evidence establishes that — ■ v
      (1) the terms of the proposed transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned;
      (2) the proposed transaction is consistent with the policy of each registered investment company concerned, as recited in its registration statement and reports filed under this subchapter ; and
      (3) the proposed transaction is consistent with the general purposes of this sub-chapter.

      . American had 194,177 shares outstanding. Berkshire owned 91% or 176,719 shares. Of the remaining 9% or 17,558 shares, the plaintiff shareholders owned 4,830; defendant Korsen owned 825 and defendants Wein-inger and Premier Investing Corporation had owned 6,150. The balance, 5,653 shares, were widely held.

      . Judge Knapp stated below “no one is interested in my views on this subject but is interested in getting to the Court of Appeals. . . . I don’t see anything further to be gained by discussion here or by my writing an opinion. The less I say the quicker you can get before the Court of Appeals.” A similar reticence was expressed by the SEC on July 26, 1973 which declined to file an amicus brief expressing its opinion as to the propriety of a District Court award of a fee in the circumstances of this case. Counsel for all parties have however been generous in supplying this court with extensive briefs on appeal.

      . It is noteworthy that the (Hlson litigation was originally commenced in the state courts, but was removed to the federal district court on the express ground that the claim for attorney’s fees was one arising under the laws of the United States, specifically section 16(b) of the Securities Exchange Act, 15 U.S.C. § 78p(b). Gilson v. Chock Pull O’Nuts Corp., 326 P.2d 246, 247 (2d Cir. 1964).

      . In colonial America, most courts adopted the English practice of awarding attorney’s fees to the successful party in actions at law. (O. McCormick, Damages 235 (1935)). Explanations as to why this practice was soon abandoned include statutory provisions granting attorneys fixed amounts which eventually lost all relation to actual costs (Ehrenzweig, Reimbursement of Counsel Fees and the Great Society, 54 Cal.D.Rev. 792, 798-99 (1966)), the distrust the colonists felt toward the legal profession (Good-hart, Costs, 38 Yale L.J. 849, 873 (1929)), and the individualistic spirit of the frontier society which viewed lawyers as an unnecessary luxury. (Note, Attorney’s Fees: Where Shall the Ultimate Burden Lie?, 20 Vand.L.Rev. 1216, 1220 (1967)).

      . In Bor ale the Court pointed to the large number of proxy statements annually filed with the SEC (then over 2000) and the pressures of time under which the agency works in reviewing proxy materials. For fiscal year 1969 (the year in question here), the Commission reported that some 5,316 proxy statements in final form were filed, vis-a-vis some 249 applications for orders under the Investment Company Act submitted in that year. SEC, 35th Annual Report: 1969, at 46, 133.

      . This distinguishes Honda v. Mitchell, 136 US.App.D.C. 22, 419 F.2d 324 (D.C.Cir. 1969), relied upon by plaintiffs. The Attorney General, as successor to the Alien Property Custodian, sponsored hearings to determine the value of yen certificates held by American depositors of a Japanese bank whose assets had been seized during the war. While it is unquestioned that the Attorney General was required to deal “equitably” with the depositors’ claims, his position was adverse to the claimants’ who demanded that the certificates be redeemed at the pre-war conversion rate, rather than the lower post-war rate he proposed. Clearly the award of counsel fees in that situation is no precedent for plaintiffs’ instant claim, for the depositors’ interests were not impartially represented by any Government agency. Furthermore, the claimants in Honda, unlike the defendants here, actually retained the legal counsel whose prosecution of their claims led in substantial part to the recovery out of which his fee was paid.


source: Caselaw Access Project

author: PER CURIAM!: OAKES, Circuit Judge

license: Public Domain

text:
    UNITED STATES of America, Appellee, v. HENG AWKAK ROMAN, a/k/a Roman and Lee Koo, a/k/a Lee, a/k/a Lanky Lee, Defendants-Appellants.
    Nos. 1109, 1117, Dockets 73-1483, 73-1484.
    United States Court of Appeals, Second Circuit.
    Argued Aug. 16, 1973.
    Decided Sept. 26, 1973.

      Franklin B. Velie, Asst. U. S. Atty., New York City (Paul J. Curran, U. S. Atty., S. D. N. Y., John D. Gordan, III, Asst. U. S. Atty., of counsel), for appel-lee.
    Clendenen & Lesser, New Haven, Conn. (David M. Lesser, William H. Clendenen, Jr., New Haven, Conn.) for defendants-appellants.
    Before MULLIGAN, OAKES and TIMBERS, Circuit Judges.
   PER CURIAM!:

The defendants here were indicted for conspiracy to possess and distribute and to import narcotic drugs into the United States in violation of Title 21, United States Code, Sections 846 and 963, and also for unlawful possession for distribution of 2.5 kilograms of heroin in violation of Title 21, United States Code, Sections 812 and 841. A four-day non-jury trial before Hon. Frederick van Pelt Bryan, United States District Judge, Southern District of New York, resulted in a guilty verdict on the conspiracy charges. The court reserved decision on the substantive counts and eventually found both defendants guilty of an attempt to commit the substantive crime, writing an opinion which is reported as United States v. Heng Awkak Roman, 356 F.Supp. 434 (S.D.N.Y.1973). This is an appeal from these judgments.

We are persuaded by the opinion below that the defendants were properly convicted of an attempt to commit the substantive crime which was charged in the indictment. We see no purpose in adding to the scholarly discussion and survey of the authorities by Judge Bryan on this rather esoteric question. On this appeal it is urged that the district court which sentenced each defendant to the maximum of 15 years on each of the two counts to run consecutively, abused its discretion in refusing to order and consider a pre-sentence report. At the time of sentencing the trial judge stated for the record that the Chief Probation Officer had advised the court that since the defendants lived in Singapore and Malaysia and had never been in the United States prior to their arrest, that department could not supply any information which would be helpful in determining the sentence. The judge stated that he agreed with that assessment. There does not seem to be any doubt but that the defendants were proposing a large scale drug operation in the United States and had previously engaged in a similar business in the Orient. Fed.R.Crim.P. 32(c)(1) does not mandate the preparation of a pre-sen-tence report but leaves the matter in the discretion of the trial judge. United States v. Manuella, 478 F.2d 440 (2d Cir. 1973) and United States v. Frazier, 479 F.2d 983 (2d Cir., May 17, 1973), involved distinguishable situations where the trial judge sentenced without benefit of pre-sentence reports, not because he considered them to be of no value, but because of his impatience with the time it took for their preparation. Under these circumstances, this court disapproved the practice of immediately sentencing a defendant subject to a later Rule 35 motion for reduction within 120 days. Here, an experienced trial judge, after consultation with the Chief Probation Officer, was persuaded that nothing fruitful could be developed in view of the fleeting presence of the defendants in this country. The possibility that these defendants might be assisted by inquiries abroad is belied by a letter to the Bureau of Narcotics and Dangerous Drugs which was read into the record just before sentencing. The Director, Central Narcotics Bureau, Singapore, stated in the letter that the “nefarious” activities of these defendants had been known for sometime. He stated that both were affiliated with a big international drug syndicate which operates from Malaysia. Under the circumstances, we find no abuse of discretion. See United States v. Warren, 453 F.2d 738, 743-744 (2d Cir.), cert, denied, 406 U.S. 944, 92 S.Ct. 2040, 32 L.Ed.2d 331 (1972), where Judge Smith suggested it would be wise for trial judges “to state on the record the reasons” for dispensing with a pre-sentence report. Here Judge Bryan did just that. We have considered the other points made on this appeal and find them to be without merit.

Affirmed.

OAKES, Circuit Judge

(concurring):

I concur.

This ease may present the one situation in which a heavy sentence may be imposed without the benefit of a presentence report in the discretion of the judge under Fed.R.Crim.P. 32(c)(1). The trial judge here also stated his reasons for sentencing without a presentence report as he was required to do by United States v. Warren, 453 F.2d 738, 744 (2d Cir.), cert, denied, 406 U.S. 944, 92 S.Ct. 2040, 32 L.Ed.2d 331 (1972).

Under the proposed amendments to the Rules of Criminal Procedure for the United States District Courts, Rule 32.-2(a), 48 F.R.D. 614, generally requires a presentence report wherever there is a possible sentence of more than one year in prison; one exception to the general rule, however, is that the presentenee report may be dispensed with if it is impracticable to verify the defendant’s background. And the ABA Standards Relating to Sentencing Alternatives and Procedures, Approved Draft 1968, § 4.-1(c), at 207, recognize that “. . .it is not feasible at this time to require a presentenee report in every case. >>

It could be argued, on the other hand, that appellants’ absence by half the globe from their home is not a compelling reason for the probation office omitting at least to attempt to gather some information about them or at the very least to interview appellants themselves to obtain at least minimal information. Just as we in the United States would want to see our nationals given fair consideration by sentencing authorities abroad, so too must we give fair consideration to those from remote lands. Even one year less in prison to a man who is serving 30 years can mean a great deal.

This may be a situation, however, in which it is more practicable. to- develop information about the offenders after their incarceration. In concurring with the judgment of the court, I would express the hope that these offenders — regardless of the nature of their crime — at least be given the opportunity to present favorable data in their own behalf, 'if any there be.


author: PER CURIAM:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Theresa Ann OGDEN, Defendant-Appellant.
    No. 73-1428.
    United States Court of Appeals, Ninth Circuit.
    Sept. 19, 1973,
    Rehearing Denied Oct. 26, 1973'.
    J. A. Milchen (argued), San Diego, Cal., for defendant-appellant.
    William A. Bower, Asst. U. S. Atty. (argued), Harry D. Steward, U. S. Atty., Stephen G. Nelson, Asst. U. S. Atty., San Diego, Cal., for plaintiff-ap-pellee.
    Before CHAMBERS and CHOY, Circuit Judges, and LUCAS, District Judge.

       The Honorable Malcolm M. Lucas, United States District Judge for the Central District of California.

   PER CURIAM:

Theresa Ogden was convicted after a nonjury trial of conspiracy to possess and possession with intent to distribute forty-six pounds of marijuana in violation of 21 U.S.C. §§ 841(a)(1), 846. She was sentenced to two-year terms of imprisonment under 18 U.S.C. § 4208(a)(2) on each count to run concurrently. We affirm.

The exact Fourth Amendment issues raised by appellant were decided in favor of the government position in the companion case of United States v. Ogden, -F.2d-(9th Cir. 1973).

We must view the evidence in the light most favorable to the government on this appeal. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942). Mrs. Ogden was in Nebraska when her husband, David Ogden, was growing and harvesting marijuana and was aware of his activities. She was traveling with him to Monterey, California at the time of their arrest and had in her possession claim cheeks to three pieces of baggage which contained either contraband or paraphernalia for making marijuana bricks. The trier of fact was not compelled to believe Mrs. Ogden’s self-serving story, corroborated by her husband, that she was not involved in the growing, harvesting, and distribution of marijuana. United States v. Cisneros, 448 F.2d 298 (9th Cir. 1971). We agree with the conclusion of the district court that the evidence was sufficient to convict Mrs. Ogden.

The trial judge properly complied with Rule 23(c), F.R.Cr.P., by filing the findings of fact in- a memorandum decision, although subsequently to sentencing.

Affirmed.


author: BELL, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Winston Evans BEAN and Nelson Raymond Bean, Defendants-Appellants.
    No. 73-1689.
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Sept. 28, 1973.
    Manley F. Brown, Macon, Ga. (Bean, Bean), Clement J. Cartron, Huntsville, Ala., for defendants-appellants.
    William J. Schloth, U. S. Atty., 0. Hale Almand, Jr., Asst. U. S. Atty., Macon, 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.

   BELL, Circuit Judge:

The principal issue on this appeal arises from the district court’s denial of appellants’ motion to suppress a quantity of marijuana seized from a truck driven by a co-defendant. The marijuana had been loaded on the truck from appellants’ light plane near Montezuma, Georgia, where they had made an unauthorized landing on a trip from Jamaica to Atlanta. The truck was stopped on 1-75 as it approached Atlanta, and the marijuana was found in the course of a search by a customs agent. At appellants’ non-jury trial on a two-count indictment, the marijuana was admitted into evidence. Upon a judgment of guilty, appellants were sentenced on each count to five years imprisonment to be followed by special parole terms, under 21 U.S.C.A. §§ 841(b)(1)(B), 960(b)(2)(A), of fifteen years, the sentences on each count to run concurrently-

Appellants challenge the constitutionality of the search on the grounds that the customs agent did not have probable cause to believe the truck contained contraband, and that the search of the truck did not qualify for the border search exception to the probable cause requirement. Since we conclude the search was supported by probable cause, we pretermit the border search issue.

The following facts known to the customs agent at the time of the search supported the conclusion that the truck contained marijuana:

(1) The plane, upon entering the country, had landed in Montezuma prior to reporting for a customs inspection in Atlanta. (This landing, which constituted a violation of customs regulations because Montezuma was not an authorized port of entry, was known by virtue of aerial surveillance of the plane from the time it approached the Florida coast.)

(2) The driver and the truck had been seen in Montezuma earlier the same evening.

(3) The customs agent had received a report that the guard at the Montezuma airport had seen a truck approach a light plane which had landed at the time the appellants made their unauthorized stop; however, no description of the truck was given by the guard.

(4) The driver of the truck had been seen with the appellants when the customs agent had inspected the plane in Atlanta some three weeks earlier.

(5) A license registration report indicated that the truck was owned by Nelson R. Beam, correctly assumed by the customs agent to be one of the appellants, Nelson R. Bean.

(6) The customs agent had received a “hotline tip” that the driver of the truck was engaged in smuggling by means of a Piper aircraft and a 1972 orange-and-white truck, and that he carried a .25 caliber pistol; while the informer was not known to be reliable, the details of his information had been largely verified at the time of the search — the appellants had flown a Piper aircraft, the truck was an orange-and-white 1972 model, the driver was armed with a .25 caliber pistol and, as will be detailed in paragraphs 7-11, the agent at the time of the search had cause to believe that the plane had been engaged in smuggling marijuana.

(7) In his earlier search of the plane the customs agent had found a marijuana seed.

(8) The plane had been reliably reported to have flown with its rear seats removed on a previous trip into the country.

(9) The plane had behaved suspiciously in its flight from Jamaica to Atlanta — it had padded its flight schedule by some 25 minutes, it had turned off its transponder near Montezuma (this is a violation of F.A.A. regulations and makes it more difficult for flight controllers to determine the location of the aircraft), it had given a false altitude report to flight controllers, and it had made an unauthorized landing.

(10) On an earlier trip into the country, the plane had landed at an unsupervised field near Eustis, Florida.

(11) Appellants, upon landing in Atlanta, had denied making a stop before reporting to customs.

This array of information is clearly a sufficient basis for a search under the probable cause standard. See Chambers v. Maroney, 1970, 399 U.S. 42, 90 S.Ct, 1975, 26 L.Ed.2d 419; United States v. Hill, 5 Cir., 1971, 442 F.2d 259; United States v. Roberts, 5 Cir., 1970, 434 F.2d 1016.

Appellants’ other contentions are without merit. Accordingly, the judgment below is affirmed.

      . The indictment charged conspiracy to import marijuana into the United States, in vi-elation of 21 U.S.C.A. § 963, and possession of marijuana with intent to distribute, in violation of 21 U.S.C.A. § 841(a) (1).

      . The issue that would otherwise have been presented is a novel one in this circuit— what connection must exist between actual border crossings and a vehicle which itself has not crossed a border, in order to justify warrantless search of the vehicle on the relaxed standard applicable to border searches? See United States v. Markham, 9 Cir., 1971, 440 F.2d 1119; United States v. Weil, 9 Cir., 1970, 432 F.2d 1320; See also United States v. Glaziou, 2 Cir., 1968, 402 F.2d 8; United States v. McGlone, 4 Cir., 1968, 394 F.2d 75.


author: PER CURIAM. ADAMS, Circuit Judge

text:
    Edwin H. HELFANT, Appellant, v. George F. KUGLER, Attorney General of the State of New Jersey, et al., Appellees.
    No. 73-1386.
    United States Court of Appeals, Third Circuit.
    Argued Sept. 7, 1973.
    Decided Sept. 10, 1973.
    Rehearing En Banc Granted Jan. 11,1974.

      Marvin D. Perskie, Perskie & Calli-nan, Wildwood, N. J., Patrick T. Mc-Gahn, Jr., Atlantic City, N. J., for appellant.
    Edward C. Laird, State of N. J., Dept, of Law & Public Safety, Division of Law, George F. Kugler, Jr., Atty. Gen. of N. J., Trenton, N. J., for appellees.
    Before STALEY, ADAMS and GIBBONS, Circuit Judges.
   OPINION OF THE COURT

PER CURIAM.

This is an appeal from an order of the district court which (1) denied plaintiff’s motion for a preliminary injunction prohibiting the Attorney General of New Jersey and others from proceeding with the prosecution of an indictment pending in that state, and (2) granted the defendants’ motion to dismiss the complaint for failure to state a claim upon which relief could be granted. The district court held an evidentiary hearing on the motion for a preliminary injunction, but in view of its ruling on the defendants’ motion made no findings of fact.

The plaintiff-appellant Helfant is a member of the New Jersey bar and a former municipal court judge of that state. His verified complaint alleges:

“4. Some time before October 18, 1972 the State of New Jersey began a State Grand Jury Investigation, inter alia, into an alleged illegal withdrawal of an indictable criminal charge of atrocious assault and battery arising out of an incident occurring on March 17, 1968 in Egg Harbor City, Atlantic County, New Jersey, in which the [plaintiff] was alleged to have participated. This State Grand Jury investigation was personally conducted by the defendant, Joseph A. Hayden, Jr., Deputy Attorney General of the State of New Jersey.

5. The plaintiff, Edwin H. Helfant, was a designated target of the State Grand Jury investigation and was so advised by the Deputy Attorney General aforedesignated, who was handling the matter, when he first appeared before the State Grand Jury on October 18, 1972 at which time he resorted to his privilege under the Fifth Amendment of the United States Constitution and refused to testify.

6. He was subsequently subpoenaed to appear again before the State Grand Jury on November 8, 1972. The State Grand Jury at that time sat at the State House Annex, Trenton, New Jersey at the other end of the hall from the private chambers of the Chief Justice and Justices of the New Jersey Supreme Court.

7. On November 6, the Administrative Director of the Courts of New Jersey called the law offices of the plaintiff in Atlantic City, New Jersey. About 3:30 in the afternoon, after being given the message of this call, plaintiff returned the call to the Administrative Director. He was directed by the Administrative Director to appear before the Supreme Court in their private chambers at 10 minutes before 10 on November 8, 1972. The plaintiff advised the Administrative Director that at 10 o’clock he had to appear before the Grand Jury. The Administrative Director advised the plaintiff that the Supreme Court was well aware of this fact and that he was still to be before the Supreme Court. No reason was given for this appearance and no other direction to appear, other than the telephone message of the Administrative Director made to the plaintiff directly, and to his office. At or about the designated time on November 8, 1972 the plaintiff went into the chambers of the Supreme Court at the State House, Trenton, New Jersey. He was questioned by the Chief Justice and Associate Justice Sullivan in the presence of the Court. The Chief Justice inquired of the defendant whether he thought a Judge should invoke the Fifth Amendment. Justice Sullivan asked what the plaintiff’s feelings were about a Judge sitting in judgment of other people while he himself was invoking the Fifth Amendment before a Grand Jury. He also asked plaintiff if he had sat as a Judge since invoking the Fifth Amendment. Chief Justice Wein-traub and another Justice also asked of plaintiff some questions about his son’s Bar Mitzvah, which matters were contemporaneously being considered by the State Grand Jury, including seating arrangements and who paid for the liquor. These questions also concerned an Abe Schusterman, who was a State’s witness against the plaintiff and who had appeared before the State Grand Jury. The Chief Justice also questioned plaintiff about Atlantic County Judge Thomas Rauffenbart and about an ice-making machine that was involved in an alleged pay-off in a criminal case involving Abe Schusterman, all of which matters were then being considered and investigated by the State Grand Jury which was being conducted by the defendant Joseph A. Hayden, Jr. under the direction of Attorney General George F. Kugler.

The questions posed to the plaintiff by the Justices of the Supreme Court were in connection with matters then being considered by the State Grand Jury. There had been no public release of these matters, particularly the Bar Mitzvah, seating arrangements thereat, arrangements for the liquor and the gift of an ice machine. These matters had to be a portion of the raw evidence then being considered by the State Grand Jury and released and given to the Supreme Court during the pendency of the Grand Jury proceedings by defendant Deputy Attorney General Joseph A. Hayden, Jr., who was conducting the Grand Jury investigation.

After the plaintiff left the Supreme Court chambers, he was in . a state of confusion and bewilderment and had to go immediately before the State Grand Jury. On a previous occasion before the State Grand Jury he had encountered three State’s witnesses who were then in State and County Prisons serving sentences for various crimes, two of said witnesses having long records. He had been advised by Detective William Sullivan of the New Jersey State Police, who was assisting Deputy Attorney General Hayden in the investigation, of the thrust of some of the testimony of these witnesses, which testimony if believed would incriminate the plaintiff. He was therefore in a position that if he testified at variance with these witnesses, even though it were the truth, the State Grand Jury would be faced with inconsistent statements and could indict him for false swearing, as he was. He was faced with the proposition that if he agreed with the testimony of these witnesses, he could be indicted for conspiracy, as he was. Knowing of these witnesses, i. e., John Cantoni, Shelly Krav-itz and Abe Schusterman, their reputations and backgrounds and long records of convictions, plaintiff was aware that they had to have testified as a result of promises and commitments made to them in connection with shortening their prison stays, which facts were later admitted by the Deputy Attorney General Joseph A. Hayden, Jr. in connection with answers made to discovery wherein he admitted that recommendations of leniency and dropping of charges had been made in the cases of all three men.

8. As a result of these questions, the plaintiff, whose previous counsel-advised intentions and will were completely discarded and overcome and who was quite emotionally upset by the confrontation, indicated to the Justices that he would indeed waive his Fifth Amendment privilege and testify in full before the State Grand Jury, fearing not only the loss of his Judgeship, but his accreditation as a member of the bar as well.

9. Immediately after the plaintiff left the chambers of the New Jersey Supreme Court, Deputy Attorney General Joseph A. Hayden, Jr., who was then conducting the State Grand Jury investigation of which plaintiff was a target, went into the Supreme Court chambers and stayed there for a short period of time and then left. It is believed he preceded the plaintiff into the chambers and that he had previous contact about plaintiff with the Supreme Court about the pending investigation.”

The complaint also alleges:

“14. As a result of the intrusion by the Deputy Attorney General and the disclosure to the Supreme Court of factual matters involved in a Grand Jury investigation during pendency of that investigation, and because of the intrusion of the New Jersey Supreme Court into the Grand Jury investigation and the communication between the Supreme Court of New Jersey and the Deputy Attorney General conducting the Grand Jury investigation, the plaintiff herein is made to suffer great, immediate, substantial and irreparable harm in that he must attempt to defend criminal charges brought in a State in which there has been prejudicial collusion directly affecting plaintiff, whether intentional or inadvertent between the Judicial and Executive branches of the New Jersey State government. Plaintiff is being made to defend criminal charges which have been obtained, inter alia, as a result of that collusion, and the deprivation of plaintiff’s constitutional rights by not too subtle cooperative coercion on the part of the defendants. Furthermore, in the event of his conviction upon any one of the charges presently pending against him, plaintiff’s only recourse would be review by the State Courts and ultimately the New Jersey Supreme Court, which Court he has alleged has been involved in the prosecution of the charges against him.”

Insofar as this appeal reviews the order dismissing Helfant’s appeal for failure to state a claim upon which relief may be granted these factual allegations must be taken as true.

The opposing affidavits filed by the state defendants in opposition to Hel-fant’s motion for a preliminary injunction do not dispute any of the historical factual allegations of the Complaint quoted above, except that defendant Hayden avers:

“I had no knowledge that Helfant was to appear before the New Jersey Supreme Court until I was called by the Supreme Court on November 6, 1972 and told that Helfant might be a few minutes late for his grand jury appearance.”

Read in the light most favorable to those defendants, the affidavits do tend to suggest that Helfant’s testimony before the grand jury was the result of a voluntary waiver of his privilege against self incrimination rather than of any compulsion by the Supreme Court. It is 'fair to say that for purposes of the motion for a preliminary injunction, whether Helfant’s testimony was the result of compulsion was put in issue and that this issue could be resolved only by an evidentiary hearing.

At the evidentiary hearing Helfant presented the testimony of Patrick T. McGahn, one of his attorneys, and testified himself. On the disputed issue of compulsion to testify before the grand jury this testimony by Helfant is relevant:

“Q. Now you went to Trenton on November the 8th in the company of your two attorneys ?
A. Both you and Mr. McGahn.
Q. What was your intention with regard to appearing and testifying before the State Grand Jury on that date before you arrived at Trenton?
A. Well actually I had no intention, Mr. Perskie, because Mr. Sullivan had said something about immunity and I had already invoked the Fifth Amendment and I didn’t intend to testify about anything. I asked you in the car what are they going to give me immunity for?
Q. When you arrived at Trenton, you went to the Clerk’s Office of the Supreme Court, did you not?
A. Yes.
Q. And you were subsequently ushered into the Supreme Court private Chambers ?
A. Well, it was scheduled for 9:50 and if you will remember Mr. Perskie, it was raining something awful and the Supreme Court was a little late; and about 9:55 Mrs. Pesco took me from her office to the Supreme Court Chambers or conference room, not the Chambers.
Q. Conference Room. Do you know how many Judges were there ?
A. To my knowledge one judge, I think Justice Proctor was missing, I am not sure, but I think, that Justice Proctor was missing.
Q. Were they sitting in their robes? A. Yes, sir, I think they were; yes, sir.
Q. Now what happened when you came in?
A. I walked in and without any good mornings or anything else, the Chief Justice asked me if I thought it right for a Judge to invoke the Fifth Amendment.
Q. Now were they sitting down, the Judges?
A. Yes, they were seated.
Q. Were you standing or-
A. Mr. Perskie, I don’t remember if they told me to be seated or if I was standing up.
Q. And what was your state of mind and your feelings as you entered those Chambers ?
A. Well Mr. Perskie, I couldn’t understand why they wanted me on such short notice, five minutes or ten minutes before the Grand Jury hearing and I was scared.
Q. Now you said the Chief Justice said something to you. Relate the conversation that took place as nearly as you can?
A. The Chief Justice asked me if I thought it right for a Judge to invoke the Fifth Amendment? And I said, Mr. Chief, before I can answer that I’d like to explain. He said, I don’t want to get into the merits. I just want you to answer the question. And I said, well the answer to your question is no, I don’t think it right; but I said, I would like to explain; and he said, no explanation is necessary.
Q. Was there any other conversation?
A. Mr. Justice Sullivan, who had just been appointed and I recognized him, I never met Justice Sullivan before; asked me if I had sat in the Municipal Court since I had invoked the Fifth Amendment; and I told him I had sat once in Somers Point; and he then asked, do I think it right to sit in judgment of other people when I myself had invoked the Fifth Amendment and refused to answer certain questions that were posed to me.
Q. What did you respond ?
A. I then tried to tell Justice Sullivan about the three convicts and the reports that I had had of what they were saying and I felt that the only way I could protect myself, and the Chief Justice then said, we do not want to get into the merits; and I was cut off from saying any more. The Chief Justice then began to ask me about an ice maker that I was suppose to have purchased for Judge Rauffenbart and I told him I had purchased one and I had a receipt for it and cancelled check; and he then began to inquire about this fellow Schusterman and was Schusterman at my son’s Bar Mitzvah and I tried to explain how he happened to be there, that he supplied the novelities and the favors. The Chief Justice asked me about the seating arrangements for the Bar Mitzvah and then he asked me who had purchased the liquor for the Bar Mitzvah, whether Mrs. Schuster-man was there and whether I had purchased any other gifts for Judge Rauffenbart. He asked if formal invitations were sent out. It was basically things pertaining to Abe Schus-terman who I had known had testified on the 25th of October, one week before.
Q. Now was there any file in the presence of the Chief Justice?
A. There was a file in front of the Chief Justice, Mr. Perskie, but it was closed and it was with the same brown folder that was submitted to you by Mr. Hayden in your request with the clasp on the top of it. I don’t absolutely recall Mr. Perskie, everything that went on in front of the Supreme Court.
Q. How long would you say you were totally, the total time you were before the Court?
A. It wasn’t longer than ten or twelve minutes, Mr. Perskie.
Q. And when you came out-
A. Well, there was one other question the Chief asked me and I think it was the tone, when he said, what do you intend to do today ?
Q. And what did you tell him?
A. I said, Mr. Chief Justice, I am going to testify.”

The district court denied preliminary relief and dismissed the complaint on the ground that Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971) precluded federal intervention. In the posture in which the case is before us, the district court has ruled only on the legal sufficiency of the complaint, and has not made any findings of fact. Whether or not Helfant’s testimony before the grand jury was voluntary or coerced is a crucial fact issue. Although no testimony was offered by the state defendants, on that crucial fact issue the district court, had it made factual findings, might have found Hel-fant’s testimony not credible, and might on this ground have declined to issue a preliminary injunction. But for purposes of a motion to dismiss pursuant to Rule 12(b)(6) that possibility is irrelevant. In reviewing the order granting that motion we must take as true Hel-fant’s contention that he was coerced by the Supreme Court of New Jersey into testifying before the grand jury and that he is about to be tried on an indictment resulting from that coerced testimony. The record establishes that a trial court has declined to quash the indictment and that attempts to obtain interlocutory appellate relief in the New Jersey courts have been unavailing. Even if at a later stage a New Jersey trial court were to quash the indictment the state could appeal that decision to the Supreme Court of New Jersey. See, e. g., State v. Winne, 12 N.J. 152, 96 A. 2d 63 (1953).

Younger v. Harris, supra, holds that a federal court should not enjoin a pending state prosecution in the absence of a showing of bad faith, harassment or “ . . . [other] extraordinary circumstances in which the necessary irreparable injury can be shown even in the absence of the usual prerequisites of bad faith and harassment.” Younger v. Harris, supra, 401 U.S. 53, 91 S.Ct. 755. See Lewis v. Kugler, 446 F.2d 1343 (3d Cir. 1971); Conover v. Montemuro, 477 F.2d 1073, 1080 (3d Cir. 1973). Neither the Supreme Court nor this court has considered what extraordinary circumstances will justify federal intervention in a pending state prosecution. But the Younger v. Harris line of cases is predicated upon the fundamental assumption that defense of the pending state prosecution affords an adequate remedy at law for the vindication of the federal constitutional right at issue. Exceptional circumstances, then, must include circumstances reflecting upon the likelihood that the state forum will afford an adequate remedy at law. If the circumstances here alleged do not fall within that category it would be difficult to imagine any that would. If it is true that Helfant is being tried on an indictment which resulted from his testimony before the grand jury coerced from him by the Supreme Court of New Jersey, his fifth amendment privilege against self incrimination has already been violated, and the effect of that violation is, by virtue of the ongoing prosecution, continuing. Since the Supreme Court of New Jersey is accused of having exercised the coercion, a remedy in the courts of New Jersey, and ultimately in that Court, hardly seems adequate.

We hold, then, that Younger v.Harris, supra, did not require the dismissal of the complaint. That holding requires a reversal and remand.

The order denying the preliminary injunction is also predicated upon Younger v. Harris, supra. We did not hear the testimony of Mr. McGahn and Mr. Helfant, and we cannot judge the credibility of Helfant’s testimony that he was coerced. At the same time, on the record before us his testimony is not contradicted except by affidavits, and those affiants have not been cross examined. The record is sufficient to suggest that the status quo be preserved until such time as the district court can make findings of fact. Mindful that present or even potential interference with a pending state prosecution is a matter of utmost gravity, this case should on remand receive accelerated consideration, and the court should enter an order consolidating the hearing on the motion for a preliminary injunction with a trial on the merits. Rule 65(a)(2) Fed.R.Civ.Proc.

At the oral argument on this appeal we asked the attorney for the appellees if the State intended to commence the trial of the indictment, now scheduled for September 10, 1973, while this appeal was sub judice. We were advised that this was the State’s intention. Accordingly we issued an order enjoining commencement of the prosecution until such time as we could decide the appeal.

The order dismissing the complaint will be reversed. The order denying the motion for a preliminary injunction will be vacated, and the case will be remanded to the district court for the entry of an order temporarily enjoining the trial of Indictment No. SCJ 10-72-10 until final hearing, and for the entry of an order consolidating hearing on the motion for a preliminary injunction with trial on the merits. We direct that that trial be commenced forthwith, and that the district court shall make findings of fact and conclusions of law within thirty days from the date of the mandate of this court. The mandate of this court shall issue forthwith.

ADAMS, Circuit Judge

(concurring):

I concur in the result reached by the majority in this matter. Although the doctrine of Younger v. Harris generally precludes a federal district court from enjoining a criminal proceeding already under way in the state court, there are limited exceptions to this wise rule of comity. One of those exceptions, as I read Younger, arises when “extraordinary circumstances” or “unusual circumstances,” 401 U.S., at 53 and 54, 91 S.Ct. 746, exist. As the recitation set forth in the majority opinion demonstrates, it would seem to me that such extraordinary or unusual circumstances are asserted here so as to make it appropriate for the district court to proceed with findings of fact and conclusions of law.

The plaintiff claims, both in his pleadings and in his evidence, that he was coerced by members of the State Supreme Court into relinquishing his Fifth Amendment right not to testify before the grand jury. He asserts that he then did testify, and that, as a result, he was indicted because of his allegedly coerced testimony. He sought, in the state court, to have the indictment dismissed because it was based on the coerced testimony, but his motion was refused, and the state appellate courts declined to entertain his appeal.

If the district court should determine, after an appropriate evidentiary inquiry, that this plaintiff’s Fifth Amendment right has been abridged, in the factual setting of this case an exception to Younger’s precept of non-interference would obtain.

      . Although the plaintiff names as defendants the Justices of the Supreme Court of New Jersey as well as that State’s Attorney General, the final injunction, if issued, may be limited to the Attorney General, prohibiting him from continuing criminal proceedings against plaintiff. It should also be noted that plaintiff does not seek money damages.


author: BUTZNER, Circuit Judge: CRAVEN, Circuit Judge

text:
    UNITED STATES of America, Appellee, v. James Ronald MOORE, Appellant.
    No. 72-2322.
    United States Court of Appeals, Fourth Circuit.
    Argued May 8, 1973.
    Decided Sept. 26, 1973.

      James J. Gitomer, Baltimore, Md. (Howard L. Cardin, Baltimore, Md., on brief), for appellant.
    Paul M. Rosenberg, Asst. U. S. Atty. (George Beall, U. S. Atty., D. Md., and James M. Kramon, Asst. U. S. Atty., on brief), for appellee.
    Before HAYNSWORTH, Chief Judge, and CRAVEN and BUTZNER, Circuit Judges.
   BUTZNER, Circuit Judge:

James Ronald Moore appeals from a judgment of conviction, entered upon a jury verdict, for knowingly receiving a stolen motor vehicle. He contends that the admission of certain testimony violated his fifth amendment privilege against self-incrimination and that the district court abused its discretion in sentencing him to a four year term of imprisonment. We affirm.

I.

FBI agents arrested Moore on June 20, 1972. After the agents advised him of his Miranda rights, Moore voluntarily agreed to answer their questions. At trial, Agent Nelson’s version of this interrogation was substantially as follows. Moore told Nelson that he had owned the stolen automobile for four months, that he had driven it approximately twelve thousand miles, and that he obtained it from a man named Ronald Harris in exchange for a $4500 gambling debt. Moore also said that Harris occasionally lived at 3401 Wakefield Avenue in Baltimore, the same address, found on Moore’s driver’s license. He described Harris, whom he had met in New York City, as approximately thirty-two years old, and he explained that Harris was actually an alias used by a man named James Bryant. In response to other questions, Moore said that he had obtained the registration card for the auto from Harris, that he had personally checked the car’s registration with employees at the Maryland Division of Motor Vehicles, and that he expected to see Harris in Baltimore in about a week.

The agent testified that Moore failed to provide details of his story when the interrogation got more specific. Moore did not answer questions asking (1) why he felt it necessary to check the registration with the Division of Motor Vehicles, (2) whether he could give a more specific description of Harris, (3) why Harris would pay a $4500 debt with a car worth more than $4500, and (4) when he had last seen Harris. The district court, holding that Moore never invoked the fifth amendment, admitted the agent’s testimony that Moore failed to respond to these questions, but he would not permit the agent to interpret Moore’s lack of response. Moore contends that the admission of this testimony violated his fifth amendment privilege against self-incrimination because it allowed the government to introduce into evidence his refusal to make a statement to the FBI.

Federal courts have long excluded any prosecutorial comment on a defendant’s failure to testify in his own behalf. Wilson v. United States, 149 U. S. 60, 13 S.Ct. 765, 37 L.Ed. 650 (1893); see also Griffin v. California, 380 U.S. 609, 85 S.Ct. 1229, 14 L.Ed.2d 106 (1965). More recent cases have extended this ban to exclude evidence of, or prosecutorial comment on, a defendant’s failure to explain his conduct to police officials. Miranda v. Arizona, 384 U.S. 436, 468 n.37, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966); accord United States v. Nolan, 416 F.2d 588, 594 (10th Cir.), cert. denied, 396 U.S. 912, 90 S.Ct. 227, 24 L.Ed.2d 187 (1969); State v. Griffin, 120 N.J.Super. 13, 293 A.2d 217, 219 (App. Div.), pet. for certification denied, 63 N.J. 73, 299 A.2d 71 (1972). Therefore, if Moore had remained altogether silent, or if in declining to answer certain questions he had invoked his fifth amendment privilege, or if in any other way he had indicated he was relying on his understanding of the Miranda warning, evidence of his silence or of his refusal to answer specific questions would have been inadmissible.

Moore, however, chose not to remain silent, and he never invoked his fifth amendment privilege to any question. Instead, he gave a voluntary statement to FBI agents. His statement, whether exculpatory or incriminating, was admissible as a verbal act explaining the reasons for his possession of recently stolen property. Cf. United States v. Sharpe, 452 F.2d 1117, 1120 (1st Cir. 1971); 6 Wigmore, Evidence §§ 1772, 1781 (3d ed. 1940). The statement was not offered to prove the truth of the assertions in it. To the contrary, the government introduced it on the theory that the vague and improbable story raised an inference that Moore knew the vehicle was a stolen automobile. The government argues that Moore’s failure to respond to questions asking for details of his story was an integral part of his statement and could properly be considered by the jury in assaying Moore’s explanation of how he acquired the stolen car. Moore urges us to treat each question separately and to hold that his silence when he was asked a specific question was sufficient to invoke his fifth amendment privilege as to that question.

We are not persuaded by Moore’s argument. Moore, waiving his fifth amendment privilege, agreed to answer the agent’s questions, but several times in a continuing interrogation, he did not respond when pressed for details of his story. He never gave any indication that he desired to invoke the fifth amendment with respect to the questions which he did not answer, and in no way did he link his silence to the Miranda warning. His omission of details, in the face of questions that he had voluntarily agreed to answer, was an indicia of the reliability of the information he was offering, and evidence of his silence was, therefore, relevant to that issue. Because the only reasonable explanation of Moore’s silence was inability to supply the requested details, the statements implicit in the agent’s questions and Moore’s silence were tacit admissions that Moore could not give a better description of Harris, or expand on his story of how he acquired the car. See 4 Wigmore, Evidence §§ 1071, 1072 (Chadbourn Rev. 1972). We hold, therefore, that the district court did not err in admitting the agent’s testimony that Moore failed to respond to certain questions.

II.

Before sentencing Moore, the district judge made the following observation:

“The jury was out for less than an hour and a half yesterday, Mr. Moore, and found you guilty as charged. I would agree completely with the jury verdict. Were it only a case of your being convicted of this offense, I would impose some sort of a sentence but not a very long one. But we have more than that here. You took the stand in your own defense, as you have every right to do, but you testified falsely under oath in an attempt to exculpate yourself from this crime. The Court should take that into account in deciding what is the proper sentence in a case of this sort.”

The judge also noted that Moore was 29 years old, that he had served honorably in the air force for five years, and that he had worked for a charitable agency in Baltimore. On the other hand, the court observed, Moore apparently was involved in the drug traffic and he moved with a “fast crowd.” He had no criminal record except for a pending state charge which he expected would be dismissed. Considering all these factors, the district court decided that Moore should have a considerable prison sentence but less than the statutory maximum, and it sentenced him to a four year term of imprisonment.

Moore claims that the district court abused its discretion by increasing his sentence because of its belief that he had testified falsely in his own behalf. He argues that the court’s comments indicate that it was sentencing him for the crime of perjury as well as the offense for which he had been convicted. His assignment of error requires us to reconsider Peterson v. United States, 246 F. 118 (4th Cir. 1917), cert, denied, 246 U.S. 661, 38 S.Ct. 332, 62 L.Ed. 927 (1918), where a similar argument was rejected. There the sentencing judge imposed a severe sentence mainly because he was convinced that Peterson had suborned perjury. On appeal, we held that the judge could take this conduct into account when fixing a penalty suitable to the offense.

A sentencing court has broad discretion so long as the sentence it imposes is within the statutory maximum. United States v. King, 420 F.2d 946, 947 (4th Cir.), cert, denied, 347 U.S. 1017, 90 S.Ct. 1253, 25 L.Ed.2d 432 (1970). To enable it to make an informed decision on punishment, the court “may appropriately conduct an inquiry broad in scope, largely unlimited either as to the kind of information [it] may consider, or the source from which it may come.” United States v. Tucker, 404 U.S. 443, 446, 92 S.Ct. 589, 591, 30 L.Ed.2d 592 (1972) (dictum). The court, however, may not rely on evidence that was obtained by unconstitutional means, Arm-priester v. United States, 256 F.2d 294, 297 (4th Cir.), cert, denied, 358 U.S. 856, 79 S.Ct. 88, 3 L.Ed.2d 90 (1958) (dictum), or prior convictions that have been vacated because they were constitur tionally defective. United States v. Tucker, supra,

The rule that a sentencing court may consider the defendant’s credibility as a witness has been rejected by the District of Columbia Circuit and has been criticized by some commentators. See Scott v. United States, 136 U.S. App.D.C. 377, 419 F.2d 264, 268 (1969); Note, The Influence of the Defendant’s Plea on Judicial Determination of Sentence, 66 Yale L.J. 204, 211-17 (1956). Two other circuits, however, recently have affirmed that the sentencing judge may properly take into consideration, when deciding the severity of punishment, his finding that the defendant testified untruthfully. United States v. Cluchette, 465 F.2d 749, 754 (9th Cir. 1972); United States v. Wallace, 418 F. 2d 876, 878 (6th Cir. 1969). The latter conclusion is consistent with Williams v. New York, 337 U.S. 241, 244, 69 S.Ct. 1079, 93 L.Ed. 1337 (1949), in which the Court held that a sentencing judge may consider evidence of crimes for which the defendant has not been convicted. Having reexamined the reasons for and against the rule and the record in this case, we decline to hold that the district court erred in sentencing Moore.

We caution, however, that sentencing judges should not indiscriminately treat as a perjurer every convicted defendant who has testified in his own defense. Witnesses induced by sordid motives or fear have been known to fabricate accusations with such guile that even conscientious triers of fact have been misled. Moreover, some essential elements of proof of criminal conduct, such as knowledge, intent, malice, and premeditation are sometimes so subjective that testimony about them cannot be readily categorized as true or false. Judges must constantly bear in mind that neither they nor jurors are infallible. A verdict of guilty means only that guilt has been proved beyond a reasonable doubt, not that the defendant has lied in maintaining his innocence. It is better in the usual case for the trial judge who suspects perjury to request an investigation. Then, if the facts warrant it, the United States Attorney may institute prosecution for this separate and distinct crime.

Affirmed.

CRAVEN, Circuit Judge

(concurring) :

I join Judge Haynsworth and Judge Butzner as to Part I without reservation. I would dissent from Part II but for Peterson v. United States, 246 F. 118 (4th Cir. 1917), cert, denied, 246 U. S. 661, 38 S.Ct. 332, 62 L.Ed. 927 (1918). I think this outmoded decision, decided wrongly before I was born, is binding upon a panel of our court. I would en banc the case, overrule Peterson, vacate the sentence, and remand for resentencing.

I am very strongly of the opinion that a trial judge may not properly impose a harsher sentence upon a defendant because he thinks the defendant lied on the witness stand. Such a practice will inevitably chill and hamper, if not ultimately destroy, the right to testify in one’s own defense. It seems to me unconscionable that a defendant must run the risk of conviction of the offense charged and at the same time run the gauntlet of disbelief.

Two so-called justifications for imposing a lengthier sentence when the trial judge believes that the defendant lied on the witness stand' are urged: (1) as punishment for committing the substantive offense of perjury; (2) because the commission of perjury adversely reflects upon the defendant’s character and, therefore, dims his prospects for rehabilitation. See Note, The Influence of the Defendant’s Plea on Judicial Determination of Sentence, 66 Yale L.J. 204, 212 (1956). I find neither persuasive.

The first justification is, I believe, contrary to basic concepts of the administration of justice. Since the offense of perjury is properly punishable in a separate criminal proceeding, to allow a summary adjudication of guilt by the court denies the defendant every constitutional and procedural safeguard to which he is entitled and which is inherent in indictment and trial. This is judgment by hunch — without accusation and without opportunity to defend. I fully agree with the District of Columbia Circuit’s conclusion that this argument “deserves emphatic rejection.” Scott v. United States, 136 U.S.App.D.C. 377, 419 F.2d 264 (1969).

As for the second justification, which is the one enunciated in Peterson, I find it unpersuasive. Implicit in the majority opinion, and in the conduct of the district judge, is the assumption that one who lies under stress has less capacity for rehabilitation than does one who pleads not guilty and fails to testify. I think that is a better question for psychiatrists than it is for judges and that a practice which rests upon such an assumption is a questionable one. To lawyers there is a vast difference between pleading not guilty and actually so testifying, but laymen have some difficulty making the distinction. See generally, Note, supra, 66 Yale L.J. at 216.

Judge Bazelon thinks that a guilty man may sincerely repent his crime and yet protest his innocence. He suggests that prosecutors very rarely institute perjury prosecutions because of their understanding of this paradox. See Scott, supra, at 269.

I suggest one more reason why a trial judge should never impose additional punishment because of his belief that a defendant lied in his own defense: he may be wrong. Even juries are sometimes wrong. Truth is, indéed, stranger than fiction, and every one of us knows of at least one cock-and-bull story, believed by no one, that turned out to be true.

“The Government argues that the appellant ‘has no constitutional right to lie.’ ... Of course a defendant has no constitutional right to lie, however much we may sympathize with his too human temptation. But the defendant does have a right to testify in his own defense. In doing so, he risks the jury’s disbelief. If he in fact fails to convince the jurors, conviction and punishment will follow. If the Government for whatever reason concludes that prosecution for perjury is appropriate, he risks punishment for that as well. To allow the trial judge to impose still further punishment because he too disbelieves the defendant would needlessly discourage the accused from testifying in his own behalf.” Scott, supra, at 269.

      . Moore testified in his own defense, but he did not claim that he failed to respond to some of the questions because he was relying on the Miranda warning or the fifth amendment. Instead, he disputed the accuracy of the agent’s account. He testified that he had talked with the agent because he “had nothing to hide.”