author: ALDISERT, Circuit Judge. ADAMS, Circuit Judge

text:
    UNITED STATES of America, Appellant, v. Eric Wesley VALEN.
    No. 72-2017.
    United States Court of Appeals, Third Circuit.
    Argued March 22,1973.
    Decided May 22, 1973.
    Adams, Circuit Judge, concurred and filed opinion.

      S. John Cottone, U. S. Atty., Laurence M. Kelly, Asst. U. S. Atty., Scranton, Pa., for appellant.
    David Rudovsky, Kairys & Rudovsky, Philadelphia, Pa., Frank G. Harrison, Rosenn, Jenkins & Greenwald, Wilkes-Barre, Pa., for appellee.
    Before SEITZ, Chief Judge, and ALDISERT and ADAMS, Circuit Judges.
   OPINION OF THE COURT

ALDISERT, Circuit Judge.

In this appeal by the government from a district court order suppressing the admission of two suitcases of marijuana in a prosecution under 21 U.S.C. § 841 (a)(1), we are called upon to decide whether a government agent, having probable cause to search the suitcases, nevertheless should have obtained a warrant before doing so. The district court held that the general principles of search and seizure applied and that the agent should have obtained the warrant. We are to determine whether “exigent circumstances” were present, United States v. Menke, 468 F.2d 20 (3d Cir. 1972), so as to obviate the necessity for the warrant.

Two suitcases were left at the Tucson, Arizona, offices of Emery Air Freight Corporation on the morning of May 25, 1971, to be shipped by Emery to Eric Valen, the appellee, in Scranton, Pennsylvania. Emery scheduled shipment of the suitcases on a flight leaving Tucson at approximately 12:30 p. m. that same day. Sometime between 11:30 a. m. and 12 o’clock, noon, an Emery employee, Dennis Thompson, detected an odor of marijuana emanating from this baggage. He immediately opened the suitcases and discovered them to be chock-full of the contraband weed.

Thompson notified the U. S. Customs office at Tucson International Airport, and thereafter delivered the suitcases to the airport and identified them to Special Agent Donald Clements. Thompson advised Agent Clements that he had smelled marijuana but did not tell him he had opened the suitcases and seen the contents.

Special Agent Clements learned that the suitcases were scheduled to be shipped to Scranton, Pennsylvania, on a flight departing within the hour and, upon examining the suitcases, he too detected the smell of marijuana. He, too, opened them and saw the marijuana. The suitcases were thereafter turned over to the Bureau of Narcotics and Dangerous Drugs (BNDD) for further investigation.

BNDD agents conducted a further search of the suitcases preliminary to arranging for a controlled delivery at Scranton, Pennsylvania. Twelve hours after their originally scheduled departure, the suitcases were shipped to Scranton via New York City by commercial airline under the surveillance of agents.

On May 27, 1971, Valen appeared at the Scranton-Wilkes-Barre Airport office of Emery, claimed the suitcases, left the airport building, placed the suitcases in the trunk of his car and began to drive away. He was arrested leaving the airport by BNDD agents who opened the trunk of Valen’s car, seized the suitcases and immediately opened them, verifying the contents to be forty-four pounds of marijuana.

Valen filed a motion to suppress, contending that the various openings of his suitcases were warrantless searches and, as such, offended the Fourth Amendment. The district court agreed, observing that the critical search was the examination by Agent Clements. The court specifically found that although Clements had probable cause to search, and “under the circumstances a search warrant could not have been obtained at the [Tucson] airport [, .. .he] could have notified government officials at either New York or Scranton and a warrant [could have been] obtained and the suitcases searched at either of these locations.” United States v. Valen, 348 F.Supp. 1163, 1167-1168 (M.D.Pa.1972).

At the suppression hearing, Thompson testified that on a previous occasion he had supplied Customs agents with similar information for which assistance he had been paid $375.00, and that he was told by Agent Clements to notify Customs officials if he came across anything suspicious in the future. For the information supplied in this case, Thompson was paid $100.00 by the government. Valen would have us conclude that this association with a government law enforcement agency was sufficient to render Thompson himself a government agent. Such a conclusion is essential to justify suppression on the theory that Thompson’s search was tantamount to that of a government agent. Activities of government agents, as distinguished from those of private persons, come within the ambit of the exclusionary rule if the conduct is violative of the Fourth Amendment. Burdeau v. McDowell, 256 U.S. 465, 41 S. Ct. 574, 65 L.Ed. 1048 (1921); United States v. Goldberg, 330 F.2d 30, 35 (3d Cir.), cert. denied, 377 U.S. 953, 84 S. Ct. 1630, 12 L.Ed.2d 497 (1964). We are satisfied that the minimal contacts between Thompson and the government do not make out a prima facie case of government participation in Thompson’s search.

Circumstances are not present here as existed in Corngold v. United States, 367 F.2d 1 (9th Cir. 1966) (en banc), in which a search by an airline employee was conducted at the request and under the supervision of government agents. Thompson was requested to do no more than report suspicious parcels; no attempt was made by the government to use him to do that which the agents themselves were forbidden to do. Thompson’s testimony fully supports the court’s conclusion that his search was conducted solely as a private party in order to protect himself and his employer, Emery. See Gold v. United States, 378 F.2d 588 (9th Cir. 1967).

Moreover, the district court found that the status of Thompson as a private party or a government agent was immaterial because Thompson had not told Clements that he had previously opened the suitcases; he had told him only that he had detected the odor of marijuana. We agree with the district court's conclusion that no activity on the part of Thompson tainted the subsequent activity of Agent Clements. We therefore do not have the problem of the fruit of the poisonous tree doctrine, Wong Sun v. United States, 371 U.S. 471, 487-488, 83 S.Ct. 407, 9 L.Ed.2d 441 (1963). As we said in United States v. Barrow, 363 F.2d 62, 66 (3d Cir. 1966), cert. denied, 385 U.S. 1001, 87 S.Ct. 703, 17 L.Ed.2d 541 (1967): “The doctrine ‘excludes evidence obtained from or as a consequence of lawless official acts, not evidence obtained from an “independent source.” ’ Costello v. United States, 365 U.S. 265, 280, 81 S. Ct. 534, 542, 5 L.Ed.2d 551 (1961).” In this case, Clements’ personal detection of the smell of marijuana is the independent basis of Clements’ search.

• This brings us to a consideration of what the district court properly characterized as the critical issue in the case, the Tucson Airport search by Agent Clements.

In the district court the government placed great dependence upon the “border search” doctrine as justification for Clements’ warrantless search. This contention is not pressed on appeal. Rather the government relies on the “exigent circumstances” exception to the warrant requirement announced in Carroll v. United States, 267 U.S. 132, 45 S.Ct. 280, 69 L.Ed. 543 (1925) and refined in Chambers v. Maroney, 399 U.S. 42, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970), Coolidge v. New Hampshire, 403 U.S. 443, 91 S.Ct. 2022, 29 L.Ed.2d 564 (1971), and United States v. Menke, supra. This exception to the warrant requirement, authorized for certain automobile searches, is premised on the theory that the mobility of the automobile presents a danger that contraband will move or disappear. Justice White put it succinctly: “But when there are exigent circumstances, and probable cause, then the search may be made without a warrant, reasonably.” Chimel v. California, 395 U.S. 752, 773, 89 S. Ct. 2034, 2046, 23 L.Ed.2d 685 (1969) (dissenting).

The “exigent circumstances” exception is not a per se rule to be applied indiscriminately to every automobile containing contraband, nor should it be applied to every object that has the capacity for movement. Rather, its application should depend upon an evaluation of attendant circumstances. At a very minimum there must be probable cause to make a search for contraband. In United States v. Menke, supra, 468 F.2d at 23, we noted that a critical “distinction [exists] between the holding in Coolidge with respect to non-contraband goods, and the holding in Carroll that ‘contraband goods concealed and transported in an automobile or other vehicle may be searched for without a warrant.’ 267 U.S. at 153, 45 S.Ct. at 285.” A further consideration is the reasonable possibility of the agent’s loss of dominion and control over the object to be searched and the consequential loss of the contraband contained therein. “Carroll, supra, holds a search warrant unnecessary where there is probable cause to search an automobile stopped on the highway; the car is movable, the occupants are alerted, and the car’s contents may never be found again if a warrant must be obtained.” Chambers v. Maroney, supra, 399 U.S. at 51, 90 S.Ct. at 1981. This consideration should be balanced with the time which would be required to obtain a search warrant after it has been determined there is probable cause to make the search.

Turning to the instant case, the government contended there was probable cause for Clements to make the search. The district court agreed. Additionally, the government emphasizes the extremely high mobility factor of the suitcases confronting Agent Clements. They were due to leave Tucson by air within the hour. They were destined for Scranton, Pennsylvania, with at least one plane change at New York. The agent did not know then whether the freight company was committed to shipping these bags on this particular flight. On the basis of these circumstances, considered at the time of Clements’ action, without the benefit of hindsight or later developments, it was reasonable for the agent to recognize the very real possibility that the contraband could disappear: an air freight handler could have removed the contraband in Tucson, New York, or Scranton. Thus, it was reasonable for him to conclude that a very real possibility existed that the government could lose the contraband, important evidence of a possible violation of federal laws. There was testimony that a minimum of six hours was required to obtain a search warrant. Under the totality of these circumstances, we hold that there were “exigent circumstances” to make the search without the warrant.

At oral argument, Valen contended that at best the government had the right to “seize” and detain for a reasonable time, United States v. Van Leeuwen, 397 U.S. 249, 90 S.Ct. 1029, 25 L.Ed.2d 282 (1970), but no right to “search.” However, as Chambers indicated with respect to temporary detention as an alternative to an immediate warrantless search, “[W]hich is the ‘greater’ and which the ‘lesser’ intrusion is itself a debatable question. . . .” 399 U.S. at 51, 90 S.Ct. at 1981. Applying the language of that case to the ease at bar:

For constitutional purposes, we see no difference between on the one hand seizing and holding a [suitcase] before presenting the probable cause issue to a magistrate and on the other hand carrying out an immediate search without a warrant. [Where there is the danger of disappearance of contraband] there is little to choose in terms of practical consequences between an immediate search without a warrant and the [suitcases’] immobilization until a warrant is obtained.

399 U.S. at 52, 90 S.Ct. at 1981.

Accordingly, we hold that Clements’ warrantless search of the suitcases was constitutionally permissible.

As to the activities of the BNDD agents, it would exalt form over substance to have required them to have obtained a warrant to conduct a confirmatory search of the suitcases. Valen has not indicated any manner in which the BNDD search is distinguishable from that of Clements’; we view the two searches as constitutionally indistinguishable. We may consider the suitcases as seized and searched by Agent Clements. Without belaboring the point, the mere closing of the suitcases by Clements for transport to the BNDD does not make each reopening of the suitcases a new search. See Westover v. United States, 394 F.2d 164 (9th Cir. 1968). Chambers makes clear that the right to search which attaches at the time of seizure, continues to exist for a reasonable time after the seizure. See also, United States v. Dento, 382 F.2d 361 (3d Cir.), cert. denied, 389 U.S. 944, 88 S.Ct. 307, 19 L.Ed.2d 299 (1967). We conclude, therefore, the search in Arizona by BNDD agents was not prohibited.

Unlike the BNDD search in Arizona, the Scranton search is distinguishable from Clements’ search. First, the suitcases must be viewed as no longer in the exclusive custody of the government at the time of the search. Although agents continued to observe the movement of the suitcases, Valen had asserted a possessory interest over them. Second, the suitcases were removed from the locked trunk of Valen’s automobile. The opening of the trunk, even though for the singular purpose of obtaining the suitcases, was a separate search; and we have concluded that this search is controlled by United States v. Menke, supra.

Having concluded that none of the searches here involved violated Valen’s constitutional rights, we do not consider Valen’s “fruit of the poisonous tree” arguments.

The order of the district court suppressing the marijuana evidence will be reversed.

ADAMS, Circuit Judge

(concurring).

If the issue presented in this appeal were one of first impression; I would be inclined to distinguish “searches” from “seizures” for the purpose of determining to what extent, if any, the government may properly (1) detain a person’s suitcase (seizure), and (2) examine its contents (search), without first obtaining a warrant before either step (1) or step (2).

The Court here holds that under the “exigent circumstances” doctrine both the warrantless seizure of appellant’s suitcase and the warrantless search of its contents squares with the requirements of the Fourth Amendment. My view, as applied to the present case, would be that while sufficient probable cause existed for the warrantless seizure of appellant’s luggage, the subsequent warrantless search of the suitcase’s contents by Agent Clements violated the Fourth Amendment.

As the majority so well states, the basis for the “exigent circumstances” doctrine is: “This exception to the warrant requirement, authorized for certain automobile searches, is premised on the theory that the mobility of the automobile presents a danger that contraband will move or disappear.” Bearing in mind that where the logic of a rule stops so should the application of the rule itself, my view, that in cases such as the present one a distinction should be made between warrantless seizures and warrantless searches, is bottomed upon the notion that the government’s valid interest in preventing the movement or disappearance of contraband is adequately and satisfactorily served by allowing the seizure of the property in question (here, a suitcase). At the same time, no legitimate interest in effective law enforcement would seem to justify the greater and further intrusion of a warrantless search of the already immobilized property, be it an automobile or a suitcase.

It appears, however, that the Supreme Court, in Chambers v. Maroney, 399 U. S. 42, 51-52, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970), has rejected any such proffered distinction between warrantless searches and warrantless seizures. And, since Chambers is not, in my judgment, sufficiently distinguishable from the present case to permit either a different analysis or result here, I am impelled to concur in the result reached by the majority opinion.

      . The Supreme Court not only rejected this distinction, but did so in the face of Justice Harlan’s dissenting opinion that suggested an analytical approach similar to the view advanced in this concurring opinion. See Chambers v. Maroney, 399 U.S. 42, 61-65, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970) (Harlan, J., dissenting).


source: Caselaw Access Project

author: CLARKSON S. FISHER, District Judge.

license: Public Domain

text:
    Chester KUBIK et al., Appellants, v. Morton GOLDFIELD and Albert Teller & Co., Inc., Appellees.
    No. 72-1039.
    United States Court of Appeals, Third Circuit.
    Argued Feb. 1, 1973.
    Decided May 30, 1973.

      Melvin Brookman, Joseph D. Shein, Shein, Mele & Brookman, Philadelphia, Pa., for appellants.
    Fred C. Aldridge, Jr., Andre L. Dennis, Stradley, Ronon, Stevens & Young, Philadelphia, Pa., for appellees.
    Before SEITZ, Chief Judge, ALDI-SERT, Circuit Judge, and FISHER, District Judge.
   OPINION OF THE COURT

CLARKSON S. FISHER, District Judge.

The issue presented by this appeal is whether a motion for summary judgment brought by appellees and granted by the district court was appropriate under Rule 56 of the Federal Rules of Civil Procedure which provides that summary judgment be granted only when there is “no genuine issue as to any material fact.”

This is an action by purchasers of securities against a securities dealer and one of its registered representatives to recover the purchase price of the stock and other damages. On May 8, 1967 appellants Marquez purchased 500 shares of Interamerican Industries, Ltd., a Canadian company, from appellee Albert Teller Company, Inc. through its salesman-representative appellee Goldfield. On the same date, appellant Kubik bought 300 shares of Interamerican Industries, Ltd. from these same appellees.

Interamerican Industries, Ltd. stock was first offered to the public in the United States by the issuer or by or through an underwriter in July, 1966. Lustgarten v. Albert Teller & Co., 304 F. Supp. 771, 772 (E.D.Pa.1969). On May 18, 1967 the Securities and Exchange Commission ordered the suspension of over-the-counter trading of this stock because no registration statement was effective as required by Section 5 of the Securities Act of 1933.

Appellants’ suit consisted of two claims against the appellees: (1) the sale to appellants of unregistered securities (Interamerican Industries, Ltd. stock) by the appellees in violation of Section 5 of the Securities Act of 1933, and (2) failure of appellees to disclose that such securities were unregistered and other facts to the appellants in violation of the fraud provisions of the Securities Act of 1933 (Sections 12(2) and 17(a)) and of the Securities and Exchange Act of 1934 (Section 10(b)). The court below granted summary judgment on its finding that the sales by the appellees were within the dealer’s exemption provided by Section 4(3) of the Securities Act of 1933. However, as to the alleged violation of the fraud provisions, the court below did not discuss this claim in its opinion and order which granted summary judgment for the ap-pellees.

VIOLATION OF SECTION 5

Appellees admitted that they sold shares of Interamerican Industries, Ltd. stock to the appellants and that this stock had no effective registration statement as required by Section 5. Although the stock was unregistered in violation of Section 5 requirements, the appellees raised the statutory defense of a dealer’s exemption provided by Section 4(3) of the Securities Act of 1933. Appellees claimed to be exempt from the registration requirements of Section 5 because they took the position that they were “dealers” as defined by Section 2 (12), and because the transactions complained of occurred subsequent to the expiration of forty days after the first date upon which the security was bona fide offered to the public by the issuer or by or through an underwriter. Lustgarten, supra.

Appellants, however, argued that no “bona fide” offer to the public had occurred even though the Interamerican Industries stock had been quoted since July, 1966 in the National Daily Quotation Service, commonly known as the “pink sheets,” because the Interamerican Industries stock was “unlawfully” distributed (i.e., without effective registration statement and without satisfying a security exclusion or a transaction exemption).

The court below properly held that the appellees were entitled to the dealer’s exemption under Section 4(3) of the Securities Act of 1933 because they were “dealers” as defined by that Act and because there had been a “bona fide” offering of the stock to the public for more than forty days prior to the disputed transaction since the stock had been quoted in the “pink sheets” since July, 1966. The district court correctly ruled that for the purposes of determining a dealer exemption under Section 4(3) of the Securities Act of 1933, a “bona fide” offer to the public may occur when a stock first appears in the “pink sheets,” even though the stock may be “illegally” unregistered. Securities and Exchange Commission v. North American Research & Development Corp., 280 F.Supp. 106, 125 (S.D.N.Y. 1968), aff’d in part, vacated in part, 424 F.2d 63, 81 n. 14 (2nd Cir. 1970); H.R. Rep. No. 1542, 83d Cong., 2d Sess. (1954), reported in U.S.Code Cong. & Admin.News, pp. 2973, 2995 (§ 6, ¶2) (1954).

North American Research, supra, involved a scheme by several confederates to acquire the stock of a shell corporation and vest that corporate shell with the kind of “assets” that would entice investors in speculative securities, thereby creating a market for this stock. When the Securities and Exchange Commission sought to enjoin these fraudulent activities, several defendant broker-dealers claimed Section 4(3) dealer transaction exemptions. North American Research, supra, 280 F.Supp. at 124. These claims were denied.

The stock was first quoted in the “pink sheets” on June 27, 1967. The collaborators had arranged for the quotations to appear and a block of 25,000 shares to be traded to one of their wives on that same day, June 27, 1967. However, prior to the expiration of forty days from that date, the S.E.C. suspended trading in the stock on July 20, 1967. Even though the opinion refers to a Section 4(3) “bona fide” offer occurring on the date that “trading commenced,” a close analysis of the facts reveals that, as the district court found, a “bona fide” offer occurs when the stock is first quoted in the “pink sheets.” Compare North American Research, supra, 424 F.2d at 81 n. 14 with North American Research, supra, 280 F.Supp. at 125. The court did not dispute the district court’s suggestion that had a defendant dealer waited until August 6, 1967, forty days after the first quotation of the North American Research stock in the “pink sheets,” the Section 4(3) exemption would have been available.

Therefore, we find that here the court below correctly determined that appel-lees were entitled to the dealer’s exemption under Section 4(3) of the Securities Act of 1933, and thus, the appellees in their sales to the appellants were not in violation of Section 5 of the Securities Act of 1933. If the appellants’ only claim was the alleged violation of Section 5, we would be compelled to affirm the grant of summary judgment.

VIOLATION OF FRAUD PROVISIONS

The appellants’ second claim concerning violation of fraud provisions of the 1933 and 1934 Acts — as best can be discerned from their inartfully drawn complaint — consisted of two basic allegations. First, appellants contend that the appellees knew or should have known that Interamerican Industries stock was unregistered. Appellants argue that registration, or lack of it, is a material fact, the omission of which gives rise to statutory liability. Second, appellants claim that appellee Goldfield fraudulently concealed facts regarding the risk involved in purchasing the stock and that he made further misrepresentations which appellants relied upon to their detriment.

Apparently the court below made no findings with reference to appellants’ allegations of fraud. There is no discussion of appellants’ claims of fraud in the district court’s opinion and order which granted summary judgment for the appellees. Therefore, summary judgment was inappropriate at this time. The case must be remanded for a determination concerning this fraud claim. We express no opinion as to whether summary judgment would be appropriate on the fraud claim once the district court considers the matter.

We note, however, Section 4 creates exemptions only from the registration requirements of Section 5 and not from the anti-fraud provisions of Section 17(a). Lawrence v. Securities and Exchange Commission, 398 F.2d 276, 280 n. 6 (1st Cir. 1968). There is no justification for interpreting Section .4 to destroy the plain meaning and efficacy of the anti-fraud provisions of the securities statutes. Newman v. Weinstein, 229 F.Supp. 440, 442 (N.D.Ill. 1964). Even though the appellees are entitled to exemption from the registration requirements under Section 4(3), they are not thereby exonerated from liability for fraudulent activities.

Accordingly, although we agree the district court correctly found the appel-lees within the dealer exemption as to the alleged Section 5 violation, we vacate the order granting summary judgment and remand the case for further proceedings with respect to the alleged violation of the fraud provisions.

      . 15 U.S.C. Sec. 77e (1971).

      . 15 U.S.C. Sec. 771(2) & 77q(a) (1971).

      . 15 U.S.C. Sec. 78j(b) (1971).

      . 15 U.S.C. Sec. 77d (1971) states:
      The provisions of section 77e of this title shall not apply to — .
      (3) transactions by a dealer (including an underwriter no longer acting as an underwriter in respect of the security involved in sucli transaction), except—
      (A) transactions taking place prior to the expiration of forty days after the first date upon which the security was bona fide offered to the public by the issuer or by or through 'an underwriter.

      . 15 U.S.C. Sec. 77b(12) (1971) states:
      The term “dealer” means any person who engages either for all or part of his time, directly or indirectly, as agent, broker, or principal, in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another person.

      . Under the securities statutes, fraud is not limited to the common law elements of deceit. S.E.C. v. Capital Gains Bureau, Inc., 375 U.S. 180, 192-195, 84 S.Ct. 275, 11 L.Ed.2tl 237 (1963); Hooper v. Mountain States Securities Corp., 282 F.2d 195, 201 (5th Cir. 1960); S.E.C. v. Gulf Intercontinental Finance Corp., 223 F.Supp. 987, 993 (S.D.Fla. 1963); Azalea Meats, Inc. v. Muscat, 246 F.Supp. 780, 782 (S.D.Fla.1965); Lerman v. Tenney, 295 F.Supp. 780, 783 (S.D.N.Y.1969)

      . The specific statutory basis for appellants’ claims of fraud are unclear from the complaint. Apparently the claims based upon failure to disclose the lack of registration are based upon Sections 12(2) and 17(a) of the Securities Act of 1933. Under Section 17 (a) the failure to state the whole truth with regard to a security is equally as unlawful as the statements of half-truths or deliberate falsehoods. It is the impression created by the statements which determines whether they are misleading. In re American Trailer Rentals Co., 325 F.2d 47, 53 (10th Cir. 1963). Those claims relating to the misrepresentations of the salesman are apparently based upon Section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. Sec. 78j(b) (1971), and Rule 10b-5 thereunder, 17 C.F.R. 240.10b-5. Under these provisions, activity which purveys false or deceptive information to a potential investor for the purpose of inducing investment is unlawful. See, e. g., Securities & Exchange Commission v. International Chemical Development Corp., 469 F.2d 20, 27 (10th Cir. 1972). It would be inappropriate at this stage of the proceedings for this court to discuss the merits of these claims, but it should be noted that each of these provisions contain different elements and are subject to different defenses.

      . A material fact is any information about which an average prudent investor ought reasonably to be informed before purchasing a security or if its existence or non-existence is a matter to which a reasonable man would attach importance in determining his choice of action in the transaction in question. Johns Hopkins University v. Hutton, 422 F.2d 1124, 1128-1129 (4th Cir. 1970); Gilbert v. Nixon, 429 F.2d 348, 355-356 (10th Cir. 1970).

      . Appellee Goldfield specifically denied these allegations in paragraphs three and four in his affidavit of May 1, 1970.

      . Professor Moore has suggested that summary judgment may be inappropriate if an action is based upon a complex scheme of fraud. In eases involving allegations of fraud, he has also stated:
      In ruling on the motion (for summary judgment), the court should remember that the movant has the burden of demonstrating clearly the absence of any genuine issue of material fact, that the court should not draw factual inferences in favor of the moving party, and should not resolve a genuine issue of credibility.
      6 Moore’s Federal Practice (2d ed.) ¶ 56.17(27) at 2554.

      . Compare Tennessee Valley Authority v. 9.6 Acres of Land, 456 F.2d 1116, 1117 (6th Cir. 1972) where the district court failed in its order and memorandum of summary judgment to refer to certain claims raised in the affidavits and other documents filed with the motion.

      . Appellees raise the defense of the statute of limitations provided in Section 13 of the 1933 Act. 15 U.S.C. Sec. 77m (1971). The parties disputed the facts as to when the statute commenced to run. We express no opinion on this issue without sufficient factual findings on the record. Since Section 13 requires a standard of reasonable diligence by the plaintiff, it is the function of the trier of the facts to determine when the statute commenced to run, especially when a jury is involved. Johns Hopkins University v. Hutton, 422 F.2d 1124, 1131 (4th Cir. 1970). The record before us reveals this factual dispute which we consider only to determine the propriety of summary judgment under Rule 56. It should be noted that Section 13 applies only to Section 12(2) liability. Claims under Section 17 (a) and Section 10(b) are governed by analogous state statutes of limitations. Premier Industries v. Delaware Valley Financial, 185 F.Supp. 694, 696 (E.D.Pa.1960).

      . 15 U.S.C. Sec. 77q (1971).


author: LIVELY, Circuit Judge.

text:
    SOUTHERN OHIO BANK, Executor under the will of Virgil A. DiPerna, Deceased, Plaintiff-Appellant, v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., et al., Defendants-Appellees.
    No. 72-1890.
    United States Court of Appeals, Sixth Circuit.
    Argued April 3, 1973.
    Decided June 7, 1973.

      Philip J. Schneider, Cincinnati, Ohio, on brief, for plaintiff-appellant; Waite, Schindel, Bayless & Schneider, Stanley M. Chesley, Cincinnati, Ohio, of counsel.
    William B. O’Neal, Robert T. Keeler, Richard J. Erickson, Cincinnati, Ohio, for appellees; Kilcoyne, O’Neal, Meier & Varnau, Cincinnati, Ohio, on brief.
    Before EDWARDS, CELEBREZZE and LIVELY, Circuit Judges.
   LIVELY, Circuit Judge.

Plaintiff-appellant is successor executor under the will of Virgil DiPerna who died in 1966, a resident of Ohio. This action was originally filed in the Ohio Court of Common Pleas and was removed by the defendant-appellee, Merrill Lynch, Pierce, Fenner & Smith, Inc., a Delaware corporation. The complaint and amended complaint stated that three days before the death of Virgil DiPerna, his wife, Althea Lowe DiPerna, delivered to the defendant stock certificates in eleven different corporations bearing the forged signature of Virgil DiPerna, together with a document directing transfer of the securities to Mrs. DiPerna. It was alleged that the signature on this document was also forged. It was further alleged that “[D]efendant acted without authority of law, carelessly and negligently, by guaranteeing said forged signatures, although it knew or in the exercise of ordinary care should have known that Virgil A. DiPerna was completely incapable of signing anything; caused the estate to be deprived of its assets . . The plaintiff sought damages for the value of the stock represented by the certificates, with interest; and its expenses in establishing the forgeries and unsuccessful efforts to recover from Althea. The defendant filed an answer in the form of a general denial of the material allegations, and a motion for judgment on the pleadings.

Before the district court acted upon the motion for judgment on the pleadings, the plaintiff added all the issurers of the stock and the transfer agents involved in transfer of the stocks to Althea as new parties defendant. This was followed by a second amended complaint in which breach of contract was alleged against the original defendant and the issuers, and breach of. express and implied warranties was charged to the transfer agents. One of the issuing corporations filed an answer admitting that it had transferred stock registered in the name of Virgil DiPerna to Althea DiPerna in reliance on the signature guarantee of Merrill Lynch. By a third party complaint it sought indemnification from Merrill Lynch. One of the transfer agents filed a motion to dismiss for improper venue.

The district court granted the motion for judgment on the pleadings, and judgment was entered dismissing the action against Merrill Lynch with prejudice. Thereafter an order was entered dismissing the issuing corporations as “satellites” whose primary action no longer existed and who “had no business in the case in the first place.” The transfer agents were dismissed because of the court’s doubt that either jurisdiction or proper venue existed as to them.

The judgment of dismissal as to the claims against Merrill Lynch was based on a holding that Chapter 1308 of the Ohio Revised Code (a portion of the Uniform Commercial Code) provides the exclusive remedy for one who claims to have been damaged by a signature guarantee. It was held that Sections 1308.22 and 1308.34 require that an aggrieved owner proceed against the issuing corporation which registers the transfer of a security on the basis of an unauthorized endorsement. In turn, the issuer may recover from the broker who guaranteed the owner’s signature if the signature is not genuine. Nowhere in the Code, the district court held, is there a provision for an action by the true owner against the guarantor of a forged signature.

Section 1308.23 of the Ohio Revised Code defines the warranties of one who guarantees a signature for purposes of transfer, in part as follows:

§ 1808.28 (ÜCC 8-312) Effect of guaranteeing signature or indorsement.
(A) Any person guaranteeing a signature of an indorser of a security warrants that at the time of signing:
(1) the signature was genuine; and
(2) the signer was an appropriate person to indorse, as provided in section 1308.19 of the Revised Code; and
(3) the signer had legal capacity to sign.
But the guarantor does not otherwise warrant the rightfullness of the particular transfer.
-X- * * -X- * -X-
(C) The foregoing warranties are made to any person taking or dealing with the security in reliance on the guarantee and the guarantor is liable to such person for any loss resulting from breach of the warranties.

These warranties were held by the district court to flow from the guarantor to the issuer, not to the owner of the stock. This construction is based on a finding that the owner is not a “person taking or dealing with the security in reliance on the guarantee. . . .” We find this construction of Section 1308.23 to be correct. This section manifestly is concerned with relations between issuers and those whose guarantees are relied upon in making transfers and issuing stock certificates. The term “such person” used in subection (C) of § 1308.23 cannot be held to include the true owner, since he has neither taken nor dealt with the security in reliance on the guarantee. Love v. Pennsylvania Railroad Company, 200 F.Supp. 561 (E.D.Pa. 1961).

On appeal it is the contention of appellant that its complaint as amended did state a valid cause of action against Merrill Lynch independent of the provisions of the Uniform Commercial Code. Allegations of negligence and breach of contract do appear in these pleadings. For purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment. 2A Moore, Federal Practice, para. 12.15 (1972).

The pleadings charged Merrill Lynch with two separate acts. One was guaranteeing the forged signature of Virgil A. DiPerna on the stock certificates. The other was honoring forged instructions to have the certificates transferred to Althea Lowe DiPerna. From the pleadings it appears that the certificates were endorsed in blank and the instructions for transfer were on a separate sheet, also containing a forged signature, which was filed by the appellant as an exhibit with the complaint. In its answer one of the issuers, General Motors Corporation, stated that it caused shares of its stock to be transferred to Althea at the request of Merrill Lynch.

Whereas § 1308.23 precludes appellant from proceeding on the warranty of the guarantor, §§ 1308.26 and 1308.34 give it the right to proceed against certain purchasers and the issuers for delivery of “a like security.” The question to be determined is whether this is an exclusive remedy. The remedy provided by § 1308.34 is equitable, being in the nature of specific performance. It is not difficult to conceive of a situation where a drastic reduction in the price of a security between the time of a wrongful transfer and its discovery would make delivery of a like security less than a complete remedy. In this case appellant chose to sue for damages rather than seek return of the stock.

One of the general provisions of the Uniform Commercial Code makes it clear that traditional rights and remedies remain in force unless eliminated by particular provisions of the Code. The general rule is that a broker who receives securities from a customer for sale or exchange stands in a relationship to the customer of agent or bailee. 12 Am.Jur.2d, Brokers § 113. The securities in this case were purportedly delivered to appellee on behalf of Virgil A. DiPerna and were received as his property with instructions to transfer them. Ohio recognizes rights of action by a principal against his agent for negligence, Salem v. De Witt-Jenkins Realty Co., 113 N.E.2d 918 (Ohio Ct.App. 1952); Archer v. Huntington National Bank, 92 Ohio App. 299, 109 N.E.2d 677 (1952); and by a bailor against his bailee, for negligence or breach of contract, Riggs v. Taylor, 168 Ohio St. 276, 154 N.E.2d 145 (1958); Agricultural Insurance Co. v. Constantine, 144 Ohio St. 275, 58 N.E.2d 658 (1944). There are no provisions of the Code which specifically displace these rights and they continue to supplement its provisions.

The existence of other remedies for the owner is borne out by Comment 2 to § 1308.26, Page’s Ohio Revised Code Annotated, Title 13, page 351, which reads as follows:

2. This section deals only with the owner’s right to reclaim possession of the security and is not intended to exclude any rights he may have for damages for conversion under the case law. But see RC § 1308.29 [UCC 8-318], which protects innocent brokers and other agents and bailees from liability for conversion.

The traditional rights of action referred to herein are limited, as noted in the Comment, by § 1308.29 which provides a broker with a defense in an action for conversion or for participation in breach of a fiduciary duty, if he acts in good faith, which includes observance of reasonable commercial standards. The actions of Althea Lowe DiPerna, as set forth in the complaint, were clearly a conversion of the property of her husband. Viewed in light of Rule 8(f), Federal Rules of Civil Procedure, the complaint as amended charges Merrill Lynch with participating in this conversion by reason of its negligence and breach of contract. Whether appellant can prove its> allegations can only be determined by developing the facts. Also, whether the defense provided by § 1308.-29 will relieve appellee of liability depends upon its satisfaction of the requirements of the section — and this, too, is a question of fact. We conclude that it was error to grant judgment on the pleadings.

Reversed and remanded for further proceedings consistent with the holdings herein.

      . § 1301.03 '(UCC 1-103) Supplementary general principles of law applicable.

      Unless displaced by the particular provisions of Chapters 1301., 1302., 1303., 1304., 1305., 1306., 1307., 1308., and 1309. of the Revised Code, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions.

      . § 1308.29 (UCC 8-318) No conversion by good faith delivery.

      An agent or bailee wlio in good faith, including observance of reasonable commercial standards if lie is in the business of buying, selling, or otherwise dealing with securities, has received securities and sold, pledged, or delivered them according to the instructions of his principal is not liable for conversion or for participation in breach of fiduciary duty although the principal liad no right to dispose of them.

      . (f) Construction of Pleadings. All pleadings shall be so construed as to do substantial justice.


author: CURTIS, District Judge:

text:
    Louise GENOSICK, Individually, and as Guardian ad litem for Roger Genosick, a minor, Individually and on behalf of all others similarly situated, Plaintiffs-Appellees, v. RICHMOND UNIFIED SCHOOL DISTRICT et al., Defendants-Appellants.
    No. 71-1456.
    United States Court of Appeals, Ninth Circuit.
    May 18, 1973.
    Silvano Marchesi, Deputy County Counsel (argued), John B. Clausen, County Counsel, Arthur W. Walenta, Jr., Deputy County Counsel, Martinez, Cal., for defendants-appellants.
    Peter E. Sherhan (argued), Paul Hal-vonik, Chas. C. Marson, San Francisco, Cal., Ramsey & Rosenthal, Point Richmond, Cal., for plaintiffs-appellees.
    Before GOODWIN and WALLACE, Circuit Judges, and CURTIS, District Judge.

       Honorable Jesse W. Curtis, United States District Judge, Central District of California, sitting by designation.

   CURTIS, District Judge:

This is an appeal from two orders of the district court, one being an order denying appellants’ motion to dismiss upon the grounds that the complaint fails to state facts upon which relief can be granted, and a second order issuing a preliminary injunction.

Jurisdiction is conferred on this court by Title 28 U.S.C. § 1292, which makes interlocutory orders issuing preliminary injunctions appealable. It is also established that an appeal from an order granting preliminary injunction supports a review of an order denying a motion to dismiss, even though standing alone the latter would not be appealable. 9 Moore Fed.Practice section 110.25 [1]; Gatliff Coal Company v. Cox, 142 F.2d 876 (6th Cir. 1944); Zwack v. Kraus Bros. & Co., 237 F.2d 255 (2nd Cir. 1956).

The appellees, a minor child and his mother, brought this action against the appellants, Richmond Unified School District, its superintendent and an assistant superintendent, contending that the district in which the child was a pupil had instituted a policy which violated the students’ First Amendment rights.

It appears from the record that the district assistant superintendent circulated a memorandum dealing with the wearing of pants suits by female staff and the displaying of ecology symbols. The memorandum read in part:

“Both the cause of peace and that of improved ecology can be furthered in our schools without resort to the current symbols used by some in our society.
“You are directed to see that both of these decisions are inforced [sic].”

The appellees alleged that because of the issuance of this memorandum, they are in “immediate peril of intimidation, threat, harassment, discrimination, and interference with their First Amendment rights of free speech, and Fourteenth Amendment rights of equal protection.”

Immediately after filing the complaint a second memorandum was issued to the elementary principals, reading as follows:

“The intent is to counsel teachers from overemphasizing abstract symbols. There is no reference to the right of an individual to wear a symbol on his person.”

Thereafter, the assistant superintendent filed herein an affidavit in opposition to the application for a preliminary injunction, which, among other things, included the following:

“It is not and never has been the policy of the Richmond Unified School District to prohibit, discourage by intimidation, threats of punishment or discipline, or otherwise discriminate against students who wear, display, or create commonly used peace or ecology symbols.”

After a hearing, the court issued an injunction prohibiting the defendants from “threatening, harassing, intimidating, discouraging, punishing, discriminating against or disciplining plaintiffs and the members of the class to which they belong for displaying, creating, or wearing of commonly used peace and ecology symbols until further order of this court.”

The appellants contend that the issuance of the preliminary injunction and the denial of the motion to dismiss were an abuse of the court’s discretion. We agree.

Although the federal courts stand ready to assure school students of full constitutional protection whenever the need arises, the record does not reveal that injunctive relief is necessary or proper in this case. While the first memorandum might conceivably be construed as a cryptic instruction to the principals to use the power of their office to inhibit a mode of expression, the subsequent memorandum eschewed such an interpretation. On the record before us, no policy of curtailing student expression has ever been implemented, and none is threatened.

■ Accordingly, the district court acted prematurely in granting an injunction. It is ordered that the injunction be dissolved and the action dismissed.

Reversed.


author: McWILLIAMS, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Roy A. BARTEE, Defendant-Appellant.
    No. 72-1759.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted Feb. 21, 1973.
    Decided May 22, 1973.
    Rehearing Denied June 14, 1973.
    Paul D. Cooper, Asst. U. S. Atty. (James L. Treece, U. S. Atty., on the brief), for plaintiff-appellee.
    Hugh J. McClearn, Denver, Colo. (Gregory A. Thomas, Boulder, Colo., and Van Cise, Freeman, Tooley & MeClearn, Denver, Colo., on the brief), for defendant-appellant.
    Samuel P. Guyton and Eugene F. McGuire, Denver, Colo., and Holland & Hart, Denver, Colo., of counsel, for The Denver Medical Society, as amicus curiae..
    Before SETH, McWILLIAMS and DOYLE, Circuit Judges.
   McWILLIAMS, Circuit Judge.

Dr. Roy A. Bartee, a licensed doctor of medicine, was convicted on two counts of dispensing a controlled substance in violation of 21 U.S.C. § 841(a)(1). In one count, Dr. Bartee was convicted of knowingly and intentionally dispensing Percodan on February 29, 1972, to Ronald Baker, a special agent with the Federal Bureau of Narcotics and Dangerous Drugs, which agency will hereinafter be referred to as BNDD. In another count, Dr. Bartee was convicted of knowingly and intentionally dispensing Seconal on March 2, 1972, to William Coller, also a special agent for BNDD. Dr. Bartee was acquitted on a third count involving a Denver policewoman who visited him and for whom he had allegedly prescribed Percobarb and Dexamyl.

Dr. Bartee now appeals his conviction and in our view his principal assignment of error relates to the sufficiency of the evidence. Accordingly, we will summarize the evidence in some detail, keeping in mind that, Dr. Bartee having been convicted, we must on appeal view the evidence, together with all the reasonable inferences that can be drawn therefrom, in a light most favorable to the Government. United States v. Frazier, 434 F.2d 238 (10th Cir. 1970).

On February 14, 1972, agent Ronald Baker first visited Dr. Bartee in the latter’s office located at 811 South Pearl Street in Denver, Colorado. Baker, using a cover name of Tony Morris, complained to the doctor of a persistent backache. The doctor, without conducting any physical examination, as such, though he did take a short history, wrote out a prescription for Parafon-forte, which is not a controlled substance.

On February 29, 1972, Baker returned to Dr. Bartee, advising him on that occasion that he needed something stronger than Parafon Forte. As concerns the Parafon Forte previously prescribed, Baker informed the doctor that he had traded some of it for some Tuinal, which is a controlled substance. Dr. Bartee then advised Baker that he would prescribe something stronger and began writing out a prescription for twenty-four tablets of Percodan, which is a controlled substance. Baker asked for a larger prescription and the doctor accordingly gave Baker three separate prescriptions, each calling for twenty-four Percodan tablets, with two of the prescriptions being postdated, one to March 4, 1972, and another to March 8, 1972.

On March 7, 1972, Baker returned to Dr. Bartee’s office for a third time; On this occasion, Baker told the doctor that he had been selling the Percodan previously prescribed, whereupon Dr. Bar-tee stated that he would not do any further business with Baker and walked out of the office. The foregoing summarizes the contacts between Baker and Dr. Bartee. As stated above, one count was based on Dr. Bartee’s prescribing Perco-dan for Baker on February 29, 1972. Let us now turn to agent Coller’s visitations to Dr. Bartee’s office.

On February 4, 1972, agent William Coller, using the cover name of Bill Conan, first visited Dr. Bartee, complaining of nervousness and inability to sleep. After taking a brief history and making no physical examination, the doctor prescribed Librium, which is said to be a noneontrolled substance.

On February 28, 1972, Coller returned to Dr. Bartee and told him that he (Coll-er) had traded the Librium for Seconal, which he called “reds,” because the Librium hadn’t helped him any. On this occasion, Dr. Bartee gave Coller a quantity of the drug Triavil, as opposed to writing out a prescription.

On March 2, 1972, Coller again visited Dr. Bartee and insisted on being given some “reds,” a slang term for Seconal. As concerns the Triavil, Coller told the doctor that he had used some, and sold the rest. Dr. Bartee on this occasion told Coller that Seconal was a powerful narcotic and wasn’t normally prescribed for simple nervousness. Coller insisted and the doctor wrote out a prescription for Seconal, with Coller paying for the office call with a radio.

On March 9, 1972, Coller next visited Dr. Bartee, asking for more “reds.” Dr. Bartee indicated he had given Coller plenty of Seconal on the earlier visit and asked what Coller had done with the Seconal thus prescribed. Coller informed the doctor that he had used some, and gave the rest to his roommate. Dr. Bartee said he had to be “careful” since the BNDD from time to time checked the records of drugstores to determine which doctors were prescribing drugs. In response thereto, Coller stated that he would get the prescriptions filled out of Denver, if that would help, to which the doctor replied that such wasn’t necessary, with the further admonition that “if you’ll just take the prescriptions to different drugstores each time, that should be all right.” On this occasion, Dr. Bartee gave Coller one prescription for twenty-four Seconal tablets, and a second prescription, postdated, for twenty-four more Seconal tablets.

On March 21, 1972, Coller made his final visit to Dr. Bartee and said he needed some more “reds.” Coller informed the doctor that he had traded some of the Seconal for other drugs. On this occasion, Coller got another prescription for twenty-four Seconal tablets. He also got a second prescription, bearing the same date as the first, for an additional twenty-four Seconal tablets, on the pretext that he was leaving town and needed a larger prescription.

As concerns this second prescription given Coller by Dr. Bartee on March 21, 1972, there was a dispute between Coller and Dr. Bartee as to the reason for such. Dr. Bartee testified that Coller came back in the afternoon claiming that he had lost the prescription given him during the morning of that day and that this precipitated the giving of a second prescription on the same day. As indicated, Coller testified that he got both prescriptions at the same time. Coller’s version was pretty well corroborated by another agent of BNDD and by the druggist who filled both prescriptions, to the end that Dr. Bartee on surrebuttal testified that the “lost” prescription episode might well have not occurred on March 21, 1972, but possibly on March 9, 1972.

The foregoing summarizes the extent of Coller’s contacts with Dr. Bartee. As indicated, one count was based on the prescription given Coller by Dr. Bartee on March 2, 1972, for Seconal. However, Coller’s testimony regarding his visits to Dr. Bartee of February 4, 28, and March 9 and 21 was admitted on the basis that evidence of such other transactions was admissible for the purpose of proving a common plan, scheme or design on the part of Dr. Bartee to commit the offense charged, or for the purpose of proving motive, opportunity, intent, knowledge, or absence of mistake. United States v. Burkhart, 458 F.2d 201 (10th Cir. 1972). For like reason, Baker’s testimony as to each of his several visits to Dr. Bartee was received into evidence. Before considering Dr. Bar-tee’s argument as to why his convictions should be reversed, reference will first be made to various statutes which bear on the controversy.

Section 841(a)(1), 21 U.S.C. provides that it is unlawful for any person to knowingly and intentionally dispense a controlled substance, except as authorized by the subchapter. Section 802(10), 21 U.S.C. defines the word “dispense” as follows:

“The term 'dispense’ means to deliver a controlled substance to an ultimate user or research subject by, or pursuant to the lawful order of, a practitioner, including the prescribing and administering of a controlled substance and the packaging, labeling, or compounding necessary to prepare the substance for such delivery. * * *” (Emphasis added.)

The italicized portions of the foregoing will be discussed, infra.

The word “administer” is defined in 21 U.S.C. § 802(2) as follows:

“The term ‘administer’ refers to the direct application of a controlled substance to the body of a patient * * * by_-
(A) a practitioner (or, in his presence, by his authorized agent), or
(B) the patient * * * at the direction and in the presence of the practitioner,
whether such application be by injection, inhalation, ingestion, or any other means.”

The term “ultimate user” is defined in 21 U.S.C. § 802(25) as follows:

“The term ‘ultimate user’ means a person who has lawfully obtained, and who possesses, a controlled substance for his own use or for the use of a member of his household or for an animal owned by him or by a member of his household.”

Section 829(a) and (b), 21 U.S.C., and 21 C.F.R. § 306.04(a) exempt medical practitioners from the prohibitions of 21 U.S.C. § 841(a)(1) whenever such a practitioner issues a prescription for a legitimate medical purpose and in the usual course of his professional practice.

Viewing the evidence then in the light of the foregoing statutes, it is agreed that Percodan and Seconal are controlled substances. It is undisputed that Dr. Bartee prescribed Percodan and Seconal for Baker and Coller respectively. It is further agreed that the prescriptions thus given Baker and Coller were filled by a druggist, but were never used by either Baker or Coller, and, on the contrary, were turned over to BNDD as evidence. Finally, it is agreed that Dr. Bartee only prescribed, and did not himself administer to either Baker or Coller.

Dr. Bartee first contends that even though the evidence be viewed in a light most favorable to the Government, the facts and circumstances of the instant case do not measure up to the requirements of the statute in two particulars: (1) Baker and Coller were not “ultimate users” as that term is used in the statute; and (2) Dr. Bartee did not “prescribe” and “administer” as is said to be required by the statute. We do not agree.

It is true that 21 U.S.C. § 802 requires that the controlled substance be dispensed to an “ultimate user,” as the statutory definition of “ultimate user” has been set forth above. Counsel argues that Baker and Coller were not ultimate users because neither used nor ever intended to use the controlled substance, but, on the contrary, merely turned over the prescription, and the controlled substance issued pursuant thereto, to the BNDD for evidence. In this connection it is further asserted that this requirement that the controlled substance be given to one for his own use is a built-in protection against the use of Government agents to “set-up” unsuspecting medical practitioners. In our view, if Congress desired to outlaw the use of Government agents in drug cases, it would have done so in clear and understandable language and not in this oblique way. We do not agree that in order for one to be deemed an ultimate user he must in fact ingest the drug, or that there must be an intent to use the drug when it is obtained. The statute only requires that he obtain the drug for his own use, and not that he must in fact use it.

Nor do we agree with the argument that the statute requires that a medical practitioner, such as Dr. Bartee, not only “prescribe,” but also “administer,” if he is to be deemed in violation of the statute. As indicated above, 21 U.S.C. § 802(10), as it defines the word “dispense,” states that dispensing means to deliver a controlled substance, which includes “the prescribing and administering of a controlled substance.” Counsel argues that the omission of the article “the” before the word “administering” indicates that the phrase is not to be construed in the disjunctive and that a doctor who merely prescribes, and does not thereafter administer, does not violate the statute, even though the prescription given is filled by the druggist, as is true in the instant case. We do not agree with this reasoning. Any doubt as to legislative intent in this regard is cleared up, we believe, by 21 U. S.C. § 829(a) and (b) and 21 C.F.R. § 306.04.

In the first place, 21 U.S.C. § 841(a)(1) makes it unlawful for anyone to dispense a controlled substance unless specifically authorized by other provisions in the subchapter. Both sides agree that the provisions exempting medical practitioners are found in 21 U. S.C. § 829(a) and (b) and 21 C.F.R. § 306.04. And counsel for Bartee concedes in his brief that under that particular statute and regulation medical practitioners are exempt from the prohibition against dispensing controlled substances, “whenever such a practitioner issues a prescription for a legitimate medical purpose and in the usual course of his professional practice.” We agree with this analysis. And the converse of that proposition is equally clear and inescapable, namely, that when a medical practitioner issues a prescription which is not for a legitimate medical purpose and is not in the usual course of his professional practice, then he does violate the statute. In the instant case, Dr. Bartee prescribed, the prescription was filled, and the fact that the doctor did not thereafter administer we deem to be of no moment. By prescribing, the doctor set in motion the chain of events which culminated in a controlled substance being actually dispensed by the druggist. In this regard, see the somewhat analogous cases where it was held that the fact that a physician merely wrote prescriptions for patients did not prevent conviction of the physician for illegal selling of narcotics. Jin Fuey Moy v. United States, 254 U.S. 189, 41 S.Ct. 98, 65 L. Ed. 214 (1920); United States v. Bloom, 164 F.2d 556 (2d Cir. 1947), cert. denied, 333 U.S. 857, 68 S.Ct. 726, 92 L. Ed. 1137 (1948); United States v. Brandenburg, 155 F.2d 110 (3d Cir. 1946), cert. denied, 332 U.S. 769, 68 S. Ct. 80, 92 L.Ed. 354 (1947); and United States v. Abdallah, 149 F.2d 219 (2d Cir. 1945), cert. denied, 326 U.S. 724, 66 S.Ct. 29, 90 L.Ed. 429 (1945).

To us, the real issue in the case relates to the sufficiency of the evidence. The summary set forth above of course puts the Government’s evidence in its best light. Dr. Bartee’s version of his various encounters with Baker and Coll-er differed from their version in substantial particulars. Of course such only posed a factual dispute to be resolved by the jury, not us.

Dr. Bartee called several fellow doctors who testified that in their expert opinion Dr. Bartee in prescribing Percodan for Baker and Seconal for Coller was, under the circumstances described, acting for a legitimate medical purpose and in the usual course of his professional practice. The Government in its case in chief also called a medical doctor who, though a bit reluctant, gave his opinion on this matter. In the course of his testimony this witness testified, for example, that he knew of no legitimate medical purpose for issuing two prescriptions, instead of one, and that doctors were not supposed in any event to recommend where their patients should get their prescriptions filled. Expert testimony from medical practitioners is of course admissible as bearing on the issue as to whether a doctor in prescribing a controlled substance is acting for a legitimate medical purpose, and the expert testimony in the instant case was to some degree, at least, in conflict. However, the jury is not bound by such expert testimony and may of course consider all of the facts and circumstances surrounding the prescribing as related by lay witnesses. In this connection, we regard certain of the utterances attributed to Dr. Bartee by Baker and Coller to be particularly damning and the overall facts and circumstances of the case are such as in our view permit the inference that Dr. Bartee in thus prescribing was not acting for a legitimate medical purpose and such was not within the usual course of his professional practice.

In the first place, Dr. Bartee made no physical examination, as such, before prescribing a controlled substance. Additionally, Dr. Bartee knew that both Baker and Coller were prone to trade or otherwise dispose of the drugs prescribed for them by the doctor. In this setting, Dr. Bartee then prescribed inordinately large quantities of controlled substances, and tried to “spread” them out by writing two or three separate prescriptions in place of one, and by postdating the additional prescriptions. In this connection, there was evidence that within one twenty-day period up. to 120 days’ worth of Seconal was prescribed for agent Coller. The fact that agent Coller used a slang term for Seconal, namely “reds,” in his conversations with Dr. Bartee would tend to put him on notice that this was perhaps not the normal patient-physician relationship. Perhaps the most damning evidentiary matter was the testimony by agent Coller that Dr. Bartee said that he had to be careful since the BNDD cheeked the drugstores for prescriptions issued, to which Coller volunteered to get his prescriptions filled out of Denver; the doctor then responded that such wouldn’t be necessary if the prescriptions were taken to different drugstores, and not all filled at the same one. Without going into further detail, the totality of the evidence is such as to permit the jury’s determination that Dr. Bartee in prescribing Percodan for agent Baker and Seconal for agent Coll-er was not acting for a legitimate medical purpose and was not acting in the usual course of his professional practice. For cases where drug convictions of medical doctors have been upheld involving certain of the factors listed above, see United States v. Warren, 453 F.2d 738 (2d Cir. 1972), cert. denied, 406 U. S. 944, 92 S.Ct. 2040, 32 L.Ed.2d 331 (1972); White v. United States, 399 F. 2d 813 (8th Cir. 1968); and Brown v. United States, 250 F.2d 745 (5th Cir. 1958), cert. denied, 356 U.S. 938, 78 S. Ct. 779, 2 L.Ed.2d 812 (1958).

Judgment affirmed.