author: GEWIN, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Tarciso Antonio De ALBA-CONRADO, Defendant-Appellant.
    No. 72-3504.
    United States Court of Appeals, Fifth Circuit.
    Aug. 20, 1973.

      George Weires, Miami, Fla. (Court-appointed), for defendant-appellant.
    Robert W. Rust, U. S. Atty., Charles O. Farrar, Jr., Asst. U. S. Atty., Miami, Fla., for plaintiff-appellee.
    Before GEWIN, THORNBERRY and SIMPSON, Circuit Judges.
   GEWIN, Circuit Judge:

The appellant, a citizen of Columbia, was indicted for the importation and possession with the intent to distribute three pounds of cocaine in violation of 21 U.S.C. §§ 952(a) and 841(a). The jury returned a verdict of guilty on both counts. Accordingly, the court imposed a sentence of two years imprisonment to be followed by a three year special parole term on each count, the sentences to run concurrently. Appellant presents two issues for our review: (1) a constitutional attack on the method used in preparing the venire from which the jury was chosen which tried him and, (2) a challenge to the sufficiency of the evidence. Because we feel the second issue is without merit, our review is limited to appellant’s constitutional challenge.

Although appellant did challenge the jury selected to try the serious criminal charges pending against him, at no time during the voir dire examination of the panel did he assert any challenge to the panel’s make-up. Rather, he raised the issue during the following colloquy after the jury had been empaneled, sworn and had retired to the jury room:

WEIRES [counsel for appellant]: Can I at this time place a challenge against the jury of this panel and the manner of selection because there are no Latin names on the panel or on the selection list?
THE COURT: You have the newest jury selection challenge in the division.
It is amazing everybody here is from Broward County. The point is, they do not list them in order in which they are drawn on that list, they just draw out all they need for a week, put them down and then arrange them chronologically and put them on the list.
Is that correct, Mr. Clerk?
THE CLERK: Right. They then split the list up.
THE COURT: The reasons they do it — these numbers are they listed chronologically ?
THE CLERK: Yes, sir.
THE COURT: So it follows then, for ease of handling, they list them chronologically.
So the original problem arose, for ease of handling, they list them chronologically and what happened, if you go back to the beginning, they took these lists from various registers, the first one they put in there was Dade County, therefore they had the lowest numbers, then they went out and received one from Broward County and put them in second and gave them a higher number.
When they draw them out of the box ultimately for a two week service they put them in chronological order for ease of handling.
So in picking juries and calling numbers you can look down the list and come up with them, otherwise you would be fumbling through here all the time. It simply works out that for certain trials you have Dade County people and other trials you have Broward County people.
I have some thirty ones here and every one is from Broward County.
THE MARSHALL: Every two
weeks we have the duty of picking out numbers from prospective juries. It always follows that way. The same thing if we have a court in West Palm Beach.
MR. FARRAR: The only time the problem arises as to—
THE COURT: That is because it is a different division of the Court. You do not have Dade County people in West Palm Beach, but the problem is that Broward and Dade are in the same division of the Court, the Miami Division. I do not think it violates the law.
You are talking about a cross section of persons from whom these names are drawn, but it certainly is worthy of consideration.
MR. WEIRES: The difficulty comes in, as I attempted to explain to the Court, is that you are regionalizing.
THE COURT: I understand your thought. The question is is it violative of the Constitution ?
I have been around long enough to understand what you are saying. It may be a pretty good point. I have never had it raised before.
I am going to deny your motion and try the case and if your man is convicted you may want to argue this in detail. It is not unusual; I wonder why I did not notice it before. It does not always breakdown on that list, we have half and half some times.

Thus counsel for appellant raised his objection to the jury’s lack of individuals with “Latin names” after the jury was empaneled. The court denied appellant’s motion but invited him to renew his objection if the jury returned a verdict of guilty at the end of the trial. In his motion for a new trial, however, appellant asserted only that there was insufficient evidence to sustain his conviction and did not renew the jury challenge issue. The Government now argues that appellant’s original untimely presentation of his objection to the composition of the jury panel and his failure to assert such error in his motion for a new trial operated as a waiver of the jury composition issue.

The Government places reliance for its waiver argument on 28 U.S.C. § 1867(a) and (e) of the Jury Selection and Service Act of 1968. Subsection (a) delineates the procedures to be followed by one who wishes to challenge a jury plan because it contravenes the purposes and scope of the Act. That provision reads:

In criminal eases, before the voir dire examination begins, or within seven days after the defendant discovered or could have discovered by the exercise of diligence, the ground therefor, whichever is earlier, the defendant may move to dismiss the indictment or stay the proceedings against him on the ground of substantial failure to comply with the provisions of this title in selecting the grand or petit jury.

Further, subsection (e) provides in part:

The procedures prescribed by this section shall be the exclusive means by which a person accused of a Federal crime, the Attorney General of the United States or a party in a civil case may challenge on the ground that such jury was not selected in conformity with the provisions of this title.

The Government contends that by waiting until the day of trial and after the voir dire examination to object to the jury selection procedures, appellant’s challenge on statutory grounds was untimely.

The Government’s position is clearly the correct one. The appellant has failed to preserve any timely objection to the jury selection process on statutory grounds which is reviewable by this court. The House Committee which conducted hearings on the Act stated concerning § 1867 that:

First, the bill sets time limitations upon the availability of challenges. Subsections (a), (b), and (c) specify that challenges must be offered before the voir dire begins. And if the challenging party discovered, or in the exercise of diligence could have discovered, the grounds for the challenge earlier, the challenging motion must be made within 7 days of that earlier dates.

Thus, the critical point for determining the timeliness of statutory challenges to jury selection procedures is the voir dire examination. One who fails to assert challenges before or during voir dire is foreclosed from later tardy actions which attack the validity of the jury plan.

Although a statutory challenge is not now available to appellant, we cannot ignore the fact that his attack may have constitutional dimensions. Subsection (e) of § 1867 of the Jury Selection and Service Act contains the following provision:

Nothing in this section shall preclude any person or the United States from pursuing any other remedy, civil or criminal, which may be available for the vindication or enforcement of any law prohibiting discrimination on account of race, color, religion, sex, national origin or economic status in the selection of persons for service on grand or petit juries.

In his brief appellant argues forcefully that his challenge was a constitutional one. While not ruling on whether appellant has asserted a cognizable constitutional deprivation, we think his motion to the court below has sufficient constitutional implications to compel us to remand this case. Upon remand the court should conduct such proceedings as may be necessary to determine whether the jury selection plan of the Southern District of Florida for the Random Selection of Grand and Petit Jurors as applied in this case denied the appellant due process of law.

On remand, the burden will be on appellant to prove that the jury selection process utilized in his case systematically and arbitrarily excluded a cognizable class or ethnic group from jury service to his prejudice. His proof must demonstrate that such procedure defeated “a fair possibility for obtaining a representative cross-section of the community.” If the district court determines that appellant’s contentions have merit, then it should grant him a new trial and other appropriate relief which is necessary to afford him full constitutional protections under the fifth amendment.

The necessity for a remand arises from the total lack of development in the court below of the pertinent facts necessary to a resolution of the crucial issue asserted here. We cannot rule on a jury challenge based on assumptions, presumptions and factual assertions found only in appellant’s brief. Swain v. Alabama, 380 U.S. 202, 85 S.Ct. 824, 13 L.Ed.2d 759 (1965). If appellant has asserted meritorious constitutional deprivations, his rights should be vindicated and protected. However, until an ade- ■ quate and well-developed record is presented for review, this court cannot proceed to resolve the merit or lack of merit' of appellant’s serious allegations.

Remanded with directions.

      . Appellant’s contention that there was insufficient evidence presented on the element of “intent” to submit the issue of guilt to the jury is completely without merit. Viewing the evidence in the light most favorable to the Government, we believe the jury’s verdict is supported by substantial evidence, including reasonable inferences drawn therefrom. See, Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942); Peters v. United States, 376 F.2d 839 (5th Cir. 1967).

      . In his brief appellant “contends that Ms challenge is not a statutory one, but one of constitutional dimension; . . .” Supplemental Brief for Appellant at 2.

      . H.Rept. 1076, 90tli Cong., 2d Sess. p. 15, U.S.Code Cong. & Admin.News 1968, p. 1805.

      . The appellant states the Constitutional issue in his brief as follows:
      Whether the arbitrary and “artificial” method of dividing the random selected jurors into groups according to the county in which they reside, excludes a cognizable group and therefore is unconstitutional as to deny the Defendant due process of law?
      Brief for appellant at iv.

      . By its terms 28 TJ.S.C. § 1867 applies only to challenges under the Act. Since it appears that the challenge of appellant presents an alleged constitutional issue, section 1867 does not bar his presentation of the jury question. The House Committee which conducted hearings on the Act pointed out that section 1867 was not intended to “preclude any person or the United States from asserting rights created by other statutes or for enforcing constitutional rights.” H.Rept. 1076, 90th Cong., 2d Sess. p. 16, U.S.Code Cong. & Admin.News 1968, p. 1806. See also, United States v. Arnett, 342 F.Supp. 1255, 1258 (D.Mass. 1970) ; Rule 12(b)(2) of the Federal Rules of Criminal Procedure; Davis v. United States, 411 U.S. 233, 93 S.Ct. 1577, 36 L.Ed.2d 216, 224 (1973).

      . Turner v. Fouche, 396 U.S. 346, 90 S.Ct. 532, 24 L.Ed.2d 567 (1970); Whitus v. Georgia, 385 U.S. 545, 87 S.Ct. 643, 17 L.Ed.2d 599 (1967) ; Fay v. New York, 332 U.S. 261, 67 S.Ct. 1613, 91 L.Ed. 2043 (1947); United States v. Kuhn, 441 F.2d 179, 181 (5th Cir. 1971); Mobley v. United States, 379 F.2d 769, 771 (5th Cir. 1967).

      . Here appellant asserts that Batin Americans have been systematically and arbitrarily excluded. Appellant should establish by appropriate proof that Batin Americans are clearly a cognizable class or ethnic group in the Miami Division if such is the fact. See Hernandez v. Texas, 347 U.S. 476-479, 74 S.Ct. 667, 98 B.Ed. 866 (1954) ; Muniz v. Beto, 434 F.2d 697, 701 (5th Cir. 1970). See note 4, supra.

      . Williams v. Florida, 399 U.S. 78, 100, 90 S.Ct. 1893, 1906, 26 L.Ed.2d 446 (1970). See also, Smith v. Texas, 311 U.S. 128, 130, 61 S.Ct. 164, 85 L.Ed. 84 (1940); Thiel v. Southern Pacific Company, 328 U.S. 217, 220, 66 S.Ct. 984, 90 L.Ed. 1181 (1946); Scott v. Walker, 358 F.2d 561, 564 (5th Cir. 1966).

      . On remand appellant should be given ample opportunity to file whatever motions are necessary for a complete and fair review of his contentions. See Mobley v. United States, 379 F.2d 768, 773-774 (5th Cir. 1967).


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    DU GRO FROZEN FOODS, INC., et al., Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.
    No. 73-1344
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    July 23, 1973.
    Richard G. Tisinger, David H. Tisinger, Carrollton, Ga., for plaintiffs-appellants.
    Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Atty., Tax Div., U. S. Dept, of Justice, Washington, D. C., John W. Stokes, Jr., U. S. Atty., William D. Mallard, Jr., Asst. U. S. Atty., Atlanta, Ga., Jerome Fink, Lawrence R. Jones, Jr., U. S. Dept, of Justice, Washington, D. C., for defendant-appellee.
    Before WISDOM, AINSWORTH and CLARK, Circuit Judges.

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

   PER CURIAM:

In this tax refund suit the issue we must decide is the familiar one whether pro rata advances by three shareholders to their corporation, Du Gro Frozen Foods, Inc., were debt or equity. We agree with the reasoning of the district court, expressed in an opinion published in 73-1 U.S. Tax Cases ¶ 9164 (Commerce Clearing House), which denied the refunds by holding that the advances by the shareholders were contributions to capital (equity) and not loans (debt).

Several of the notes evidencing the alleged debt could not even be found by some of the shareholders. None of the notes specified a rate of interest. Instead, as one shareholder testified: “What we did — this was the agreement to start with, that we would pay whatever the prevailing rate was at that particular time . . . . ” It was unclear when the corporation was required to repay the principal on said notes.

The corporation was thinly capitalized. As the district court noted, the debt-to-equity ratio was approximately 12 to 1 at one time and then soon rose to 20.5 to 1.

Finally, another important factor, as we observed in Midland Distributors, Inc. v. United States, 5 Cir., 1973, 481 F.2d 730, is whether the advances were subject to the fortunes of the venture. In the present case the district court emphasized that the notes were unsecured, and the only customer of the corporation initially was another business owned by the shareholders. It is clear, therefore, that the notes would not likely be repaid unless the shareholders’ enterprises succeeded. Thus the advances were essentially equity investments.

Affirmed.


author: AINSWORTH, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. George Truett SETTLES, Jr., Defendant-Appellant.
    No. 73-1373
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    June 21, 1973.
    Patrick A. Robertson, Dallas, Tex., for defendant-appellant.
    Anthony J. P. Farris, U. S. Atty., James R. Gough, Asst. U. S. Atty., Houston, Tex., for plaintiff-appellee.
    Before WISDOM, AINSWORTH and CLARK, Circuit Judges.

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

   AINSWORTH, Circuit Judge:

Settles appeals his conviction for possession with intent to distribute 288 pounds of marijuana. He contends that border patrol agents have no authority to search for drugs, that the evidence against him obtained by such a search should have been excluded, and that statements he made after he was given Miranda warnings should have been excluded at trial. We affirm his conviction.

Border patrol agents in Laredo, Texas, observed brick-shaped objects inside burlap bags in the back of the pickup truck Settles was driving. They questioned Settles, inspected the burlap bags, found marijuana, arrested Settles, and gave him Miranda warnings. He then told them that he had purchased the approximately 300 pounds of marijuana contained in the burlap bags.

Settles’ argument that the border patrol agents had no authority to search for drugs was disposed of in United States v. Thompson, 5 Cir., 1973, 475 F.2d 1359. There we explained that “[b]y a series of proper delegations, border patrol officers have been designated by the Treasury Secretary as customs agents.” After setting forth those regulations, we continued:

By letter/order of the Assistant Commissioner of the Bureau of Customs, dated July 14, 1971, all special agents were required to designate all current border patrol officers and future appointees as acting customs patrol officers.
This Court has often recognized that a border patrol officer may be validly authorized to act simultaneously as a customs agent.

475 F.2d at 1362. See generally United States v. Wright, 5 Cir., 1973, 476 F.2d 1027; United States v. McDaniel, 5 Cir., 1972, 463 F.2d 129; United States v. Bird, 5 Cir., 1972, 456 F.2d 1023; United States v. Maggard, 5 Cir., 1971, 451 F.2d 502.

Border patrol agents are authorized to act as customs agents; thus, the officers here clearly acted within their authority. The district judge did not consider that their action constituted a search of the vehicle; rather, he reasoned that the officers saw what they believed to be the commission of a felony- — the transportation of contraband— and acted to prevent further violation of the law. We hold that under the circumstances the border patrol agents’ action was reasonable and the evidence they obtained was admissible at trial.

As counsel for the appellant says, the Miranda decision “speaks for itself.” Consequently, his allegation that Settles’ post-Miranda statements should have been excluded escapes our comprehension.

Affirmed.

      . Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966).


author: PER CURIAM: GOLDBERG, Circuit Judge CLARK, Circuit Judge

text:
    The WHITE CASTLE LUMBER AND SHINGLE COMPANY, LTD., Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee. BOWIE LUMBER COMPANY, LIMITED, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee. JEANERETTE LUMBER AND SHINGLE COMPANY, LTD., Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
    Nos. 73-1221 to 73-1223.
    United States Court of Appeals, Fifth Circuit.
    Aug. 1, 1973.
    Rehearing and Rehearing En Banc Denied Nov. 2, 1973.
    Malcolm L. Monroe, Benjamin R. Slater, Jr., Herman C. Hoffmann, Jr., Richard P. Wolfe, New Orleans, La., for plaintiff s-appellants.
    Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Murray S. Horwitz, Attys., Tax Div., U. S. Dept, of Justice, Washington, D. C., Gerald J. Galling-house, U. S. Atty., Joan Elaine Chauvin, Asst. U. S. Atty., New Orleans, La., Charles G. Barnett, Tax Div., Dept, of Justice, Fort Worth, Tex., for defendant-appellee.
    Before GOLDBERG, CLARK and RONEY, Circuit Judges.
   PER CURIAM:

The judgments of the District Court, 355 F.Supp. 1127, are affirmed. Houston Farms Development Co. v. United States, 5 Cir. 1943, 131 F.2d 577, rehearing denied, 132 F.2d 861.

Affirmed.

GOLDBERG, Circuit Judge

(specially concurring):

My brother, Clark, though disenchanted with Houston Farms, wouid affirm these three cases solely on the basis of its precedential command. Believing as I do in the tenets and teachings of Houston Farms, I feel compelled to explicate its holding and application to the cases at bar.

This is an appeal from a judgment of the District Court dismissing taxpayers’ consolidated suits for recovery of income taxes assessed and collected from them. The sole question before this Court is whether certain payments that taxpayers received as landowners and lessors of oil and gas rights constituted depletable “lease bonuses” or nondepletable “delay rentals.” Taxpayers seek to introduce yet another leprechaun into the mounting mythology of oil and gas taxation, but for the reasons stated herein, I feel that the District Court correctly found that the payments in question were nondepletable delay rentals.

I.

Taxpayers, The White Castle Lumber and Shingle Company, Ltd., Bowie Lumber Company, Ltd., and Jeanerette Lumber and Shingle Company, Ltd., are Louisiana corporations that leased their lands to various oil companies under oil and gas leases. For the purposes of this appeal, all of the leases may be considered as basically the same, providing for (1) a cash down payment for the lease, (2) a primary term of between three and five years, (3) a selection date occurring six months or one year from the commencement of the lease, at which point the lessee was required to pay taxpayers a “selection bonus” to continue the lease for an additional year, and (4) a delay rental payment due (a) at the end of the year extension caused by the selection bonus if drilling or production had not been commenced during that year and (b) at the end of any subsequent years when drilling or production had not been commenced. The leases all contained provisions similar to the following paragraphs:

“This lease shall terminate as to both parties twelve (12) months from the date hereof (hereinafter referred to as “selection date”), unless on or before said date Lessee has, in writing, elected to retain this lease in whole or in part. If Lessee should so elect to select and retain all or any part of the acreage covered hereby, Lessee shall pay or tender to Lessor or to the credit of Lessor in the depository named herein, the sum of $35.00 per acre on the lands originally covered by this lease, even though Lessee has elected to select and retain less than 100% of such acreage. Said payments shall be a selection bonus and shall be a prerequisite under all circumstances to the continuance of this lease in effect after the selection date, and shall extend the terms of this lease for twelve (12) months following the selection date. If operations for the drilling of a well be not commenced on or before one year from the selection date, this lease shall terminate as to both parties unless Lessee on or before that date, shall pay or tender to Lessor, or to the credit of Lessor in the depository named herein, a rental in an amount based upon $35.00 per acre for the lands originally covered by this lease, even though this lease then covers less than 100% of the acreage originally covered hereby, which payment shall cover the privilege of deferring the commencement of operation for the drilling of a well on such lands for twelve (12) months from such date. Thereafter, and during the primary term of this lease, the commencement of such operation may be further deferred for successive periods of twelve (12) months each by payments or tender, on or before the first day of any such period for which such operation are deferred, of a rental in an amount based upon $35.00 per acre for the lands originally covered by this lease, even though this lease then covers less than 100% of the acreage originally covered hereby. The down cash payment and selection bonus are consideration for this lease according to its terms and shall not be allocated to a mere rental for a period.
“The intent of the Lessor and Lessee is that during the primary term and in the absence of production, the Lessee may continue its rights under this lease in either one of two ways: (1st) at the expiration of any delay period, it may begin or be engaged in operations for the drilling of a well and continue same with due diligence; or (2nd) at the expiration of such delay period, it may pay the required delay rental.”

Unlike delay rentals, which could be avoided by drilling or production, the selection bonus payment had to be paid even if there had been drilling operations or production from the leased premises prior to the selection bonus date. The lessees could avoid paying the selection bonuses only by surrendering the leased premises prior to the dates on which the selection bonus payment became due.

On their returns for the tax years in question, taxpayers claimed depletion deductions on the selection bonuses they received under the lease. The Commissioner disallowed the deductions, treating the payments as nondepletable delay rentals, and assessed deficiencies, which taxpayers paid. After the Commissioner refused taxpayers’ claims for refunds, taxpayer brought these refund suits in the District Court. The District Court sustained the Commissioner’s position— ruling that the selection bonuses were nondepletable delay rentals, not lease bonuses that could be depleted — and this appeal followed,

II.

The customary form of oil and gas lease in wide use in the oil and gas industry provides for an initial payment, or “bonus”, upon the execution of the lease. “[A] true bonus is a payment which the lessee is obligated to make at all events, with or without production, which cannot be avoided by termination or abandonment of the leasing arrangement.” 4 Mertens, Law of Federal Income Taxation (Rev.1966) § 24.24 at p. 112 (emphasis added). See Lambert v. Jefferson Lake Sulphur Co., 5 Cir. 1956, 236 F.2d 542, 544-545. The bonus is depletabie income to the lessor, for it is a “return pro tanto of [the lessor’s] capital investment in the oil, in anticipation of its extraction . . . . ” Palmer v. Bender, 1933, 287 U.S. 551, 559, 53 S.Ct. 225, 227, 77 L.Ed. 489, 494; accord Murphy Oil Co. v. Burnet, 1932, 287 U. S. 299, 302, 53 S.Ct. 161, 162, 77 L.Ed. 318, 322; Burnet v. Harmel, 1932, 287 U.S. 103, 111, 53 S.Ct. 74, 77, 77 L.Ed. 199, 205, and is regarded as “payment in advance for oil and gas to be extracted.” Herring v. Commissioner, 1934, 293 U.S. 321, 324, 55 S.Ct. 179, 180, 79 L.Ed. 389, 391.

The normal oil and gas lease also provides for the optional payment of annual “delay rentals” during the primary term. Delay rentals are amounts paid for the privilege of deferring development of mineral properties. Delay rentals are nondepletable rents and:

“accrue by the mere lapse of time like any other rent. They do not depend on the finding or production of oil or gas and do not exhaust the substance of the land. While having some likeness to a bonus payment the delay rental is not paid directly or indirectly for oil to be produced, but is for additional time in which to utilize the land.”

Commissioner v. Wilson, 5 Cir. 1935, 76 F.2d 766, 769. See Treas.Reg. § 1.612-3(c)(2).

The Treasury Regulations recognize that unlike a true bonus, which cannot be avoided by the lessee, 4 Mertens, Law of Federal Income Taxation, supra, the delay rental can be avoided in a number of ways. The Regulations provide:

“A delay rental is an amount paid for the privilege of deferring development of the property and which could have been avoided by abandonment of the lease, or by the commencement of development operations, or by obtaining production.”

Treas.Reg. § 1.612-3(c)(1).

It is clear from the foregoing discussion that because the selection bonus payments received by taxpayers could be avoided by abandonment of the lease, those payments (1) do not qualify as true bonuses and (2) are delay rentals as defined by the Treasury Regulations. Taxpayers contend, however, that the selection bonus payments should not be treated as delay rentals because (1) delay rentals are paid “solely for the privilege of deferring development of production” and therefore the critical distinction between a selection bonus and the normal delay rental is that the selection bonus cannot be evaded either by prior drilling operation or by production, and (2) the selection bonus is much more like an initial bonus than a delay rental because by the terms of the lease both payments are consideration for the lease and both payments extend the time for commencement of operations by the lessee.

Taxpayers’ arguments are not persuasive. Whether a payment under a mineral lease is a delay rental or a true bonus is a question of fact that is best ascertained by analyzing the agreement of the parties, see Bayou Verret Land Co. v. Commissioner, 5 Cir. 1971, 450 F.2d 850, 856; Houston Farms Development Co. v. United States, 5 Cir. 1943, 131 F.2d 577, 579, rehearing denied, 132 F.2d 861; Maureen Fitzimmons v. Commissioner, 1961, 37 T.C. 179, 184. For tax purposes, courts should not exalt form over substance, and the mere terminology of the lease is not determinative. Maureen Fitzimmons v. Commissioner, swpra I do not think that the District Court was erroneous in determining that the selection bonus payments were actually delay rentals. I base this finding both upon the fact that the selection bonus payments in the agreement could be avoided by abandonment and upon the fact that these selection bonus payments served the same function as delay rentals.

In reaching this conclusion I am greatly influenced by the decision of this Circuit in Houston Farms Development Co. v. United States, 5 Cir. 1943, 131 F.2d 577, rehearing denied, 132 F.2d 861, and by the applicable Treasury Regulations.

In Houston Farms Development Co. v. United States, supra, the taxpayer-lessor received an initial bonus for executing an oil and gas lease for a primary term of five years and fifty-five days. The lease provided, however, that it would terminate in fifty-five days unless the lessee paid the lessor $12.50 per acre for all or such part of the leased land that it elected to retain. This retention payment, like the selection bonus under consideration, extended the lessee’s rights in the retained land for a period of twelve months without requiring any operations or further payments. Furthermore, like the instant selection bonuses, the retention payment in Houston Farms evidently could not be avoided by drilling and could be avoided only by abandonment, for the lease automatically terminated if the payment was not made. Finally, just as in the leases now before us, the lease in Houston Farms provided in another clause for the payment of a delay rental if the taxpayer had not commenced drilling before the end of the twelve-month extension period procured by the retention payment. This Circuit held in Houston Farms that the retention payment was not a bonus, but rather was a delay rental:

“We think it clear that the money was paid merely for holding the lease for a year without the necessity of drilling. It is in the nature of rental, involving no depletion of the oil reserve. This is made even clearer by the succeeding agreement to pay $5 per acre per year for succeeding years for the identical purpose, and this is expressly called rental. We see no difference at all in the purpose and effect of the payments. They are all in the nature of rentals, as respects depletion.”

Houston Farms Development Co. v. United States, supra, 131 F.2d at 579. The Houston Farms decision is four square with the case sub judice and mandates this panel’s affirmance of the District Court.

The Treasury Regulations, Treas.Reg. § 1.612-3(c) (1), also support the determination that the selection bonus is a delay rental. The Regulations provide that a delay rental is a payment for deferring development of mineral lands that can be avoided: (1) by abandonment of the lease, or (2) by the commencement of development operations, or (3) by obtaining production. Thus, the Regulations support the result reached in Houston Farms and which this panel reaches here, for like the retention payments in Houston Farms, the selection bonus could be avoided by abandonment.

Finally, the taxpayers’ argument that the selection bonus is more like an initial bonus than a delay rental is not at all convincing. The selection bonus payments, like delay rentals, gave taxpayers the privilege of deferring development of the property for almost a full year from the selection date. In the event that no drilling was commenced prior to the selection date, the selection bonus served precisely the same function as a delay rental, for it (1) reimbursed the lessor for the loss he suffered in the absence of production; and (2) allowed the lessee to maintain the lease and further delay the time during which drilling would be required to be commenced. The fact that production actually occurred prior to the date of the selection bonus payment in a number of transactions under consideration is inconsequential, for in analyzing the leases the function which the selection bonus played in the overall agreement must be evaluated, cf. Bayou Verret Land Co. v. Commissioner, supra; Houston Farms Development Co. v. United States, supra, and a selection bonus that is payable six months or one year after the commencing of a lease and that extends the time for commencing drilling or production for only one year plays the same function in an agreement as would be played by a delay rental.

III.

History, economics, politics and compromise are the timbers supporting present construction of the Code and Regulations dealing with oil and gas taxation. At times it seems that words are the demons of subsurface taxation, for the artificial artifacts of mineral taxation can beguile the unwary. However, in reaching the proper result, one must be guided by economic and functional geodetics, rather than the semantic eccentricities of taxpayers’ oil and gas leases. Viewing the leases from this economic and functional perspective, it is clear that only a misguided and misoriented lexicographer or philologist could be deceived into considering that the selection bonuses were payments for anything other than delay.

Generally speaking a bonus payment is a consensually bargained-for fixity for anticipated or hoped for production. To be depletable a bonus must be payable in all events with no conditions precedent or subsequent to subvert the payments. Conversely, a delay rental is an avoidable payment for deferring the development of mineral lands. Taxpayers would have this Court construe their lease instruments as divisible one year leases with a bonus payable before each year; however, the differences between the hybrids designated as selection bonuses in taxpayers’ leases and a pristine delay rental are insubstantial. These leases envisioned a term of a number of years, and the payments denominated “selection bonuses” served no purpose not served by the delay rentals. The selection bonuses were for delay, and were not payments for minerals in place, or based upon any theoretical or actual extraction of taxpayers’ oil and gas.

Bonus payments have justifiably or unjustifiably become a sanctified haven in our tax structure, but there is no reason to widen the haven’s dimensions to include payments functionally indifferentiable from delay rentals. The District Court was correct in treating the selection bonuses as delay rentals.

CLARK, Circuit Judge

(specially concurring) :

If I were free to do so I would follow Judge Hutcheson’s dissent in Houston Farms on rehearing. 132 F.2d 861. The government’s fiction of attaching taxable incidence to delay rentals can easily confuse related issues. Oil and gas leases are basically no different from other contractual agreements- — ■ each has its quid pro quo. The manner of expressing a payment should not control its economic substance. The “selection bonuses” in the eases at bar were much more akin to a tax depletable payment made to obtain an oil lease than to a nondepletable payment made to delay the production of oil. In fact, oil production and lease development were taking place on some of the leases in question at the time such selection bonuses were paid.

The touchstone of the government’s position both in appellate argument and in its own regulation is that these selection bonuses were delay rentals because they could be avoided by abandonment. However, abandonment as a characteristic which would, in and of itself, determine taxation is a poor criterion. It is not indigenous solely to delay rentals; it may also appertain to tax depletable royalty payments — even a fixed-sum per-barrel royalty proviso — so long as the payment is to be made at a future date.

These selection bonuses were essentially payments for exercising an option to make a new “unless” lease to replace the initial time-limited tenancy, which, unless so replaced, unconditionally expired twelve months from its date. Allowing substance to control over form would bring me out in favor of reversing these cases-.

      . The differences between the leases involve price, length of the primary term of the lease, and number of acres covered. One lease provided that the lessee must pay $25 per acre for 3,000 acres at the selection date, no matter how small the acreage selected, while all the other leases provided that the lessee must pay a sped fied amount per acre for the total original acreage covered by the lease, no matter how small the acreage selected.
      In some of the leases the delay rental payment was less than the selection bonus payment. For example, in one lease the selection bonus was $25 and the delay rental was $15, and in two other leases the selection bonus was $50 and the delay rental was $25.

      . Thus, it is not dispositive that taxpayers’ leases contained the following provision:
      “The down cash payment and selection bonus are consideration for this lease according to its terms and shall not be allocated to a mere rental for a period.”

      . The delay rental payment in Houston Warms was less than one-half of the retention payment and therefore there is no significance in tlie fact that in some of the leases here under consideration the delay rental was one-half of the selection bonus. Moreover, the fact that the delay rental in Houston Warms was less than one-half of the retention payment supports the finding with regard to those leases under consideration where the selection bonus was equal to the delay rental.

      . The emphasis placed on the fact that the selection bonuses were avoidable in determining that they are delay rentals is supported in prior Fifth Circuit decisions. In Lambert v. Jefferson Lake Sulphur Co., 5 Cir. 1956, 236 F.2d 542, the taxpayer entered into a sublease with the lessee of certain sulphur lands. The taxpayer agreed to conduct exploratory drilling operations and to pay the lessee, the taxpayer’s lessor, a royalty if sulphur were discovered and produced. Under the prime lease, the lessee was obligated to pay the landowner a $300,000 bonus in quarterly installments of $7,500. In the sublease, the taxpayer agreed to pay his lessor, the lessee in the prime lease, an amount equal to the $7,500 quarterly installments. This agreement, however, was avoidable by the taxpayer if any of these events occurred: (1) a failure to exercise certain exploratory rights; (2) a failure to erect a sulphur production plant before a requisite date; or (3) a failure to conduct sulphur production before the requisite date. The Commissioner contended that the taxpayer’s payments to his lessor under the sublease were bonus payments because under the lessor’s prime lease they constituted bonus payments. This Court held, however, that the critical relationship was that between the taxpayer and his lessor, and that the avoidable payments made pursuant to the sublease “were in the nature of delay rentals . . Lambert v. Jefferson Lake Sulphur Co., supra, 236 F.2d at 546. This analysis was approved in Shamrock Oil & Gas Corp. v. Commissioner, 5 Cir. 1965, 346 F.2d 377, 381.
      Maureen Fitzsimmons v. Commissioner, 1961, 37 T.C. 179, relied on by taxpayers also supports the result reached here, for the payments found to be bonuses in that case could not have been avoided by drilling or abandonment since they were mandatory payments for two years of the term of the lease. Similarly, in Cowden v. Commissioner, 5 Cir. 1961, 289 F.2d 20, this Circuit recognized the validity of a bonus payable in installments, at the same time taking note of the fact that the lessee was obligated to make the installment payments. Id. at 23.

      . Of course, this is not to say that every selection bonus is per se a delay rental. For instance, in Bennett v. Scofield, 5 Cir. 1948, 170 F.2d 887, this Court found that a $6 per acre payment for the selection of additional acreage that extended the lease on the additional acreage for fifteen years was a bonus payment.


text:
    Hubert BARBAREE, Plaintiff-Appellee, v. INDEPENDENT LIFE AND ACCIDENT INSURANCE COMPANY, Defendant-Appellant.
    No. 73-2014
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 15, 1973.
    Harry Cole, H. T. Fitzpatrick, Jr., Montgomery, Ala., for defendant-appellant.
    Theodore H. Hoffmann, Montgomery, Ala., Lynn W. Jinks, Jr., Union Springs, Ala., for plaintiff-appellee.
    Before WISDOM, AINSWORTH and CLARK, Circuit Judges.

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

   PER CURIAM:

This is a suit for declaratory relief to determine the plaintiff’s rights to disability benefits under an agreement between the plaintiff and the defendant, his former employer, and for the recovery of benefits withheld under that agreement. The district court found that the defendant’s determination that the plaintiff was ineligible for benefits was arbitrary, fraudulent, or made in bad faith, a finding which is necessary to establishing liability under a benefit plan of the kind in question here. See Mathews v. Swift & Co., 5 Cir. 1972, 465 F.2d 814. Upon a review of the record, we are unable to say that the district court’s findings were clearly erroneous, and accordingly we affirm the judgment for the plaintiff.

Affirmed.


text:
    James RIVER and Kanawha Canal Parks, Inc., Appellant, v. RICHMOND METROPOLITAN AUTHORITY et al., Appellees.
    No. 73-1841.
    United States Court of Appeals, Fourth Circuit.
    Argued Aug. 14, 1973.
    Decided Aug. 17, 1973.
    Bernard S. Cohen, Alexandria, Va. (Geoffrey Judd Vitt, James W. Spensley, Cohen & Rosenblum, LTD, Alexandria, Va., on brief), for appellant.
    R. Harvey Chappell, Jr., Richmond, Va. (Andrew J. Brent, Alexander Well-ford, James Edward Betts, Paul G. Turner, and Christian, Barton, Parker, Epps & Brent, Richmond, Va. on brief), for appellees, Richmond Metropolitan Authority and George W. Cheadle.
    Edward J. Shawaker, U. S. Dept, of Justice (Wallace H. Johnson, Asst. Atty. Gen., Brian P. Gettings, U. S. Atty., G. Rodney Sager, Asst. U. S. Atty., George R. Hyde and Irwin L. Schroeder, U. S. Dept, of Justice, on brief), for Federal appellees.
    Conard B. Mattox, Jr., City Atty., for the City of Richmond, James R. Saul, Asst. City Atty., for the City of Richmond, on brief, for appellees, Thomas J. Bliley, Jr., and William J. Leidinger.
    Andrew P. Miller, Atty. Gen., of Virginia, Stuart H. Dunn and Walter A. McFarlane, Asst. Attys. Gen. of Virginia, on brief, for appellee Douglas B. Fugate.
    George W. Warren, IV, and Hall, Hall & Warren, Richmond, Va., for appellees Carillon Civic Association.

      Before HAYNSWORTH, Chief Judge, and FIELD and WIDENER, Circuit Judges.
   PER CURIAM:

Noting that no question concerning the standing of the parties or the jurisdiction of the court has been raised on appeal, we affirm on the opinion of the district court, 359 F.Supp. 611 (E.D.Va. 1973).

In the event a petition for certiorari be filed more than thirty days after the date of filing of this opinion, plaintiff is required to give bond with sufficient corporate surety, to be approved by the Clerk of this court, in the sum of $500,000, to hold the defendants, any or all of them, harmless on account of any increase in project construction costs or increase in interest rates on bonds sold to finance the project, either or both, which may occur because of delay occasioned on account of the filing of such petition for certiorari should the judgment of this court be affirmed.

Let the mandate of the court issue forthwith.

Affirmed.


text:
    Jesse Lee GRIFFIN, Plaintiff-Appellant, v. CALIFORNIA ADULT AUTHORITY, L. S. Nelson, Warden, Defendants-Appellees.
    No. 72-1006.
    United States Court of Appeals, Ninth Circuit.
    July 23, 1973.
    Jesse Lee Griffin, in pro. per.
    Evelle J. Younger, Atty. Gen., Herbert T. Ashby, Chief Asst. Atty. Gen., Karl S. Mayer, Deputy Atty. Gen., Doris H. Maier, Asst. Atty. Gen., John T. Murphy, Deputy Atty. Gen., San Francisco, Cal., for defendants-appellees.
    Before CHAMBERS, BROWNING and HUFSTEDLER, Circuit Judges.
   ORDER

On petition for certiorari, the judgment of this court reported at 464 F.2d 602 was vacated and the cause remanded to this court for further consideration in light of Gagnon v. Scarpelli, 411 U.S. 778, 93 S.Ct. 1756, 36 L.Ed.2d 656 (1973).

Upon further consideration, it is ordered that the judgment of the district court be, and it is hereby, vacated; and the cause is remanded to the District Court for the Northern District of California for further consideration in light of Gagnon v. Scarpelli.


text:
    Charles G. M’CLARY, Petitioner-Appellant, v. CALIFORNIA ADULT AUTHORITY, CALIFORNIA DEPARTMENT OF CORRECTIONS, Respondent-Appellee.
    No. 72-1319.
    United States Court of Appeals, Ninth Circuit.
    July 23, 1973.
    Robert W. Peterson, University of Santa Clara Law School, Santa Clara, Cal., for petitioner-appellant.
    Evelle J. Younger, Atty. Gen., Karl J. Uebel, Deputy Atty. Gen., Herbert L. Ashby, Chief Asst. Atty. Gen., Doris H. Maier, Asst. Atty. Gen., Robert R. Granucci, Deputy Atty. Gen., San Francisco, Cal., for respondent-appellee.
    Before HAMLEY, BROWNING and CHOY, Circuit Judges.
   ORDER

On petition for certiorari the judgment of this court, reported at 466 F.2d 1122 (1972), was vacated and the cause remanded to this court for further consideration in the light of Gagnon v. Scarpelli, 411 U.S. 778, 93 S.Ct. 1756, 36 L.Ed.2d 656 (1973).

Upon further consideration it is ordered that the judgment of the district court be, and it is hereby, vacated; and the cause is remanded to the District Court for the Northern District of California for further consideration in the light of Gagnon v. Scarpelli.


author: KASHIWA, Judge: DAVIS, Judge

text:
    BALTIMORE BASEBALL CLUB, INC. v. The UNITED STATES.
    No. 92-72.
    United States Court of Claims.
    July 13, 1973.
    John B. Jones, Jr., Washington, D. C., attorney of record, for plaintiff. Andrew W. Singer and Covington & Bur-ling, Washington, D. C., of counsel.
    Kenneth R. Boiarsky, Washington, D. C., with whom was Asst. Atty. Gen., Scott P. Crampton, for defendant. Gilbert E. Andrews, Jr., Alexandria, Va., Theodore D. Peyser, Bethesda, Md., and Charles E. Auslander, Jr., Alexandria, Va., of counsel.
    Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
   ON PLAINTIFF’S MOTION AND DEFENDANT’S CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT

KASHIWA, Judge:

Plaintiff brought this suit to recover income taxes and assessed interest, plus interest as provided by law. We presently are called upon, by way of cross-motions for partial summary judgment, to rule on Count II of plaintiff’s petition. There is no genuine issue as to any material fact, which would prevent our granting partial summary judgment in this case. We hold for the defendant for reasons hereinafter stated, and therefore allow its cross-motion for partial summary judgment on Count II of the petition.

Plaintiff is a corporation which owns and operates a professional “major league” baseball team in Baltimore, Maryland, known as the “Baltimore Orioles,” a team which is a member of the American League of Baseball Clubs. It keeps its books and files its federal income tax returns on a fiscal year ending October 31 and uses the accrual method of accounting for ordinary items of income and expense.

At meetings held on November 29-30, 1967, the member clubs of the American League adopted an expansion program contemplating the addition of two new clubs, the Royals and the Pilots, to the League. On October 15, 1968, plaintiff sold six of its players under agreements of sale with the two expansion clubs.

The terms of the six agreements of sale were identical. Each provided for payment of the $175,000 purchase price “in full on November 15, 1968, but in no event shall any payment be made before November 1, 1968.” Plaintiff’s fiscal year ended for book and tax purposes on October 31,1968.

Plaintiff did not report gain on the October 15, 1968, sales of player contracts in its income tax return for its fiscal year ended October 31, 1968, but elected to report such gain on the installment method of accounting and submitted the information required by Treas.Reg. § 1.453-8 (b) with its return for that year. Gain on the sale of each contract was reported in plaintiff’s income tax return for its fiscal year ended October 31, 1969, the year in which the full purchase price for each contract was received by plaintiff.

Plaintiff reported a net operating loss on its income tax return for the fiscal year ended October 31, 1968, which loss was carried back to plaintiff’s fiscal years ended October 31, 1965, and 1966. The loss carryback to fiscal 1965 also resulted in the carryback of an unused investment credit from that year to plaintiff’s fiscal year ended October 31, 1962.

On November 19, 1971, the Internal Revenue Service assessed deficiencies in plaintiff’s income taxes for the fiscal years ended October 31, 1968, 1966, 1965, and 1962, in the following amounts:

Deficiency in
Fiscal Year Ended Income Tax
October 31, 1968 ................. $278,530.42
October 31, 1966 ................. 97,520.19
October 31, 1965 ................. 59,893.06
October 31, 1962 ................. 1,185.92

The deficiencies were based upon a determination by the Internal Revenue Service that plaintiff was not entitled to report gain on its October 15, 1968, sales of player contracts on the installment method, and that, as an accrual basis taxpayer, plaintiff was required to report the total gain ($1,028,556.70) in its fiscal year ended October 31, 1968. This determination eliminated the net operating loss in plaintiff’s fiscal year ended October 31, 1968, and carrybacks to plaintiff’s fiscal years ended October 31, 1966, 1965, and 1962, accounting for the deficiencies assessed for those years.

Plaintiff paid the aforementioned assessment of income taxes, plus the interest assessed thereon, and filed timely claims for refund of such payments with the Internal Revenue Service, which claims were denied. The assessed income taxes and interest described above were claimed by plaintiff under Count II of its petition to this court.

Two issues are raised for our resolution:

(1) Whether this plaintiff may take advantage of the installment method of accounting of section 453, Internal Revenue Code of 1954, on a casual sale of personalty when no payments were received during the year of sale and the entire purchase price was paid in a lump sum in the following fiscal year.

(2) Whether Treas.Reg. § 1.453-6, which, by its terms, applies only to deferred payments sales of real property not on the installment method, is applicable to plaintiff’s sales of personal property at issue in this case.

We shall first consider the issue of the applicability of the installment method. Absent the installment method provisions, it is clear that the plaintiff, an accrual basis taxpayer, would be required to recognize its gain on the sales in the year of sale; that is, in fiscal year ending October 31, 1968. See, generally, Treas.Reg. § 1.446-1 (c) (1) (ii); Treas.Reg. § 1.451-1 (a). The installment method provisions are relief provisions, the basic purposes of which are to defer payment of tax on gains until the proceeds of sale with which to pay the tax have been received and also to avoid what may be the difficult requirements of valuing the obligations of the purchaser in a closed transaction. However, since these relief provisions are exceptions to the general “timing” rules, they must be strictly construed. Cappel Home Furnishing Co. v. United States, 244 F.2d 525 (6th Cir. 1957). This is especially true when the consequence of the exceptional treatment is decidedly advantageous to the taxpayer.

The installment rules of section 453 provide a new method of reporting income for qualifying transactions. Section 453, for the taxable year involved, provided in pertinent part:

§ 453. Installment method.
(a) Dealers in Personal Property—
(1) In general. — Under regulations prescribed by the Secretary or his delegate, a person who regularly sells or otherwise disposes of personal property on the installment plan may return as income therefrom in any taxable year that proportion of the installment payments actually received in that year which the gross profit, realized or to be realized when payment is completed, bears to the total contract price.
(2) Total contract price. — For purposes of paragraph (1), the total contract price of all sales of personal property on the installment plan includes the amount of carrying charges or interest which is determined with respect to such sales and is added on the books of account of the seller to the established cash selling price of such property. This paragraph shall not apply with respect to sales of personal property under a revolving credit type plan or with respect to sales or other dispositions of property the income from which is, under subsection
(b) , returned on the basis and in the manner prescribed in paragraph (1).
(b) Sales of realty and casvul sales of personalty.—
(1) General rule. — Income from—
(A) a sale or other disposition of real property, or
(B) a casual sale or other casual disposition of personal property (other than property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year) for a price exceeding $1,000,

may (under regulations prescribed by the Secretary or his delegate) be returned on the basis and in the manner prescribed in subsection (a).

(2) Limitation. — Paragraph (1) shall apply—
(A) In the case of a sale or other disposition during a taxable year beginning after December 31, 1953 (whether or not such taxable year ends after the date of enactment of this title), only if in the taxable year of the sale or other disposition
(i) there are no payments, or
(ii) the payments (exclusive of evidences of indebtedness of the purchaser) do not exceed 30 percent of the selling price.
•X- * -X- * -X- -X-

There is no problem with respect to the sales price; it clearly exceeds $1,000. Further, the payments in the year of sale do not exceed 30 percent of the selling price; in fact, plaintiff clearly comes within the terms of section 453(b) (2) (A) (i) as no payments were received in the taxable year of sale. Finally, the Government now concedes that what is involved is a casual sale of personal property which is not inventory.

It is clear that the mere fact that a non-qualifying plaintiff may have a need for installment reporting similar to the need of a plaintiff safely within the four corners of the statute is not a sufficient reason to hold that the former plaintiff can take advantage of the installment method. The statute provides relief, i. e., installment treatment, for only a certain limited class of cases. The Senate Report to the original bill makes this clear:

Deferred-payment contracts other than installment contracts are not affected by the committee amendment. When the initial payment exceeds 25 percent of the price in the case of an isolated sale of personal property, or in the ease of sales of real property, the obligations that are received in addition to the initial payment are to be regarded as the equivalent of cash if such obligations have a fair market value. In consequence that portion of the initial payment and of the fair market value of such obligations which represents profit is to be returned as income as of the taxable year of the sale. [S.Rep.No.52, 69th Cong., 1st Sess., p. 19 (1939-1 Cum.Bull. (part 2) 332, 347 (1926).).] [Emphasis supplied.]

The basic failure of plaintiff’s argument is definitional. It is evident that “lump-sum” and “installment” are contradictory terms. We are asked, in effect, to approve the concept of a deferred “lump-sum installment.” We find that this oxymoron simply does not exist for purposes of the tax law. Webster’s Dictionary defines “installment” as an

* * * arrangement for payment by installments, * * * one of the portions into which a sum of money or a debt is divided for payment at set and usually regular intervals * * *.
* * * * * *
* * * relating to, based, on, or involving periodic payments of a fixed sum or of a pre-determined percentage of a total * * *.
installment plan, n: a plan that involves payment by installments. [Webster’s Third New International Dictionary, 1971.]

It is true in the tax law the word “installment” has become, to some extent, a term of art. The Government does not contend that the contracts must satisfy sophisticated formulae for periodic payment on the total. Rather, the Government urges that multiplicity is at the very heart of the definition of “installment.” For casual sales of personalty for a price exceeding $1,000 and for sales of realty, a minimum of two payments is the sine qua non for qualification as an installment. Any lessening of this very minimum requirement would amount to a holding that deferred lump-sum payment sales qualify as installments.

This very same issue has been recently decided by the United States Tax Court. In 10-42 Corp., 55 T.C. 593 (1971), the taxpayer sold to a corporation property consisting of land and a building for $500,000. Under the terms of the sale, the corporation would assume a $400,000 mortgage and execute a $100,000 purchase money mortgage due 11 years hence. Thus, no payment was made in the year of sale and the only payment called for was one some 11 years in the future for $100,000. On these facts, the Tax Court, in an opinion reviewed by the full court, held the petitioner therein could not take advantage of the installment method of section 453, which requires the receipt of at least two payments or installments. The Tax Court relied on its opinion in Thomas F. Prendergast, Executor, 22 B.T.A. 1259 (1931), which drew support from dictionary definitions for its concept of an installment sale. As we have noted, supra, these dictionary definitions, especially in the context of casual sales of personalty and sales of realty, are overly refined for application to a term of art in the tax context. Our holding is limited to the finding, which is all that is being urged by the Government, that the very nature of the term “installment” fairly implies that at least two payments be made.

The plaintiff misconstrues the Congressional purpose, in enacting the 1954 Code, of eliminating the so-called “initial payment” requirement of the 1939 Code. Prior to the 1954 Code revision, the Treasury had interpreted the applicable statutory provisions as required that at least one payment be made in the year of sale. This interpretation was sustained by the Tax Court in Frank H. Gilbert, 25 T.C. 81 (1955), with respect to a casual sale of personal property. The Tax Court was reversed, however, in Gilbert v. Commissioner, 241 F.2d 491 (9th Cir. 1957), holding, inter alia, the “initial payments” rule “intrinsically unreasonable.” The statutory solution to the problem arrived with the 1954 Code. Section 453(b) (2) (A) (i) provides, with respect to casual sales of personalty and sales of realty, that no payments need be made in the year of sale. The Senate Committee on Finance set forth the change being made in the following language :

C. Initial Payment Before Use of Installment Method (sec. 453(b))
(1) House changes accepted by committee. Under present law, in order to use the installment method of reporting income in the case of sales of real property or casual sales of personal property some payment must be made in the year in which the sale occurs. There have been many legitimate transactions which could not be reported under the installment method merely because there was no payment in the year of sale.
The House and your committee’s bill provide that in the future in the case of a sale of real property or a casual sale of personal property there need be no payment made in the taxable year in which the sale occurs.
(2) Change made by committee. The House bill required that in the year in which payments were first received, such payments could not exceed 30 percent of the selling price. This requirement would leave in doubt, for perhaps a number of years, the status of certain sales in which the initial payments are indefinite and are not payable until some time subsequent to the year of sale. Your committee’s bill, therefore, provides that sales of realty and casual sales of personalty, which otherwise qualify, may be reported under the installment method if in the year of sale either no payments are received, or the payments in that year do not exceed 30 percent of the selling price. [S.Rep. No.1622, 83rd Cong., 2d Sess., p. 64 (3 U.S.Code Cong. & Admin.News (1954) pp. 4621, 4695-4696).] [Emphasis supplied.]

We think it abundantly clear that the only change in the installment sales provisions made by section 453(b)(2)(A) was to eliminate the requirement, stated by the Treasury and agreed with by the Tax Court, of “initial payments” in the year of sale. There is no reference at all to the “multiple payments” requirement, an intrinsic aspect of the installment method provision itself. In fact, as stated by the Senate Committee on Finance, swpra, even though the taxpayer need no longer pass an “initial payments” test, the installment method can be elected only for transactions “which otherwise qualify.”

It was, of course, logically possible, prior to 1954, for a transaction not to qualify for installment method reporting because the sale failed to satisfy both the “initial payments” and also the “multiple payments” rules. However, the fact that Congress sought to extend installment method reporting to sales in which there were no payments made during the year of sale cannot be deemed evidence that Congress also intended to abrogate a far more fundamental rule, the requirement of multiple payments. It would even be more surprising to find that the rule of multiplicity should fall by inference.

Thus,' plaintiff cannot rely on the fact that the Treasury Regulation for the 1939 Code, set out in the margin, defining the term “initial payments,” was not carried into the 1954 Code regulations. This earlier regulation was directed specifically to the “initial payments” rule and thus it is perfectly clear that its deletion from the 1954 Code regulations was prompted by the change in the law with respect to the fact that payments in the year of sale were no longer a requirement for installment method treatment. The second sentence of the quoted portion of the Regulation is an example of the failure of the “initial payments” test. It also happens that the example fails the “multiple payments” test. However, this latter fact cannot be taken as an affirmative indication that a deferred “lump-sum installment” theory was being sanctioned.

The statute and regulations for the relevant period further confirm the necessity for something more than a deferred lump-sum sale transaction. Section 453(b)(1) states generally that the income from, inter alia, a casual sale of personal property—

* * * may (under regulations prescribed by the Secretary or his delegate) be returned on the basis and in the manner prescribed in subsection (a).

Plaintiff argues that only Treas.Reg. § 1.453- 2(b) (1) explicitly requires at least two payments and that this provision is applicable only to sales by dealers in personal property. Plaintiff further argues that the regulation prescribing special rules for casual sales of personalty. (Treas.Reg. § 1.453-3) does not explicitly require two payments.

During the year in issue, Treas.Reg. § 1.453- 3 read as follows:

§ 1.453-3. Special rules applicable to casual sales or casual dispositions
of personal property. Income shall be computed and reported separately for each casual sale or other casual disposition of personal property as installment payments are received in the year of sale and subsequent years. * * [Emphasis supplied.]

Paragraph (b) of Treas.Reg. § 1.453-1, relevant to sales by dealers, casual sales of personalty, and sales of realty, states:

(b) Income to be reported. (1) Persons permitted to use the installment method of accounting prescribed in section 453 may return as income from installment sales in any taxable year that proportion of the installment payments actually received in that year which the gross profit realized or to be realized when the property is paid for bears to the total contract price. * * * Gross profit, in the case of a sale of real estate by a person other than a dealer and a casual sale of personal property, is reduced by commissions and other selling expenses for purposes of determining the proportion of installment payments returnable as income. * * * [Emphasis supplied.]

We conclude that the many references to “payments” in regulations addressed, specifically or generally, to casual sales of personal property make it sufficiently clear that more than a single payment is required. The explicit reference of Treas.Reg. § 1.453-2(b) (1), set out in the margin, with respect to the qualification of a two-payment installment as a “plan,” equally serves another purpose, i. e., to resolve any doubt that, with respect to dealers, as few as two payments will satisfy the “plan” requirement.

Finally, the structure of the statute itself confirms our view that multiple payments are called for. Section 453(b) provides that certain casual sales of personalty and sales of realty “may (under regulations prescribed by the Secretary or his delegate) be returned on the basis and in the manner prescribed in subsection (a).” Thus, subsection (b) refers us to subsection (a) and to returning—

* * * as income * * * in any taxable year that proportion of the installment payments actually received in that year which the gross profit, realized or to be realized when payment is completed, bears to the total contract price. * * * [Emphasis supplied.]

We have already demonstrated, supra, that the regulations make it sufficiently clear that more than a single payment is required. Plaintiff has pointed out the theoretical possibility of applying the above formula to its case, 100 percent of the gross profit being reportable in the year of receipt of the full price. Thus, under plaintiff’s theory, the statute would have us apply a formula to a situation for which we need only determine gain. We deem it far more likely that the phrase “basis and in the manner,” supra, incorporates not only the mathematical formula of paragraph (a) but also the requirement therein of “installment payments.”

Plaintiff has also made the argument that the Government is attempting a retroactive application of Rev.Rul. 69-462, 1969-2 Cum.Bull. 107. In that ruling the Internal Revenue Service advised that a taxpayer could not elect the installment method for reporting income from the sale of realty, the total purchase price being payable in a lump sum in a year subsequent to the year of sale. The plaintiff has argued that in the Revenue Ruling the Service changed its position, of many years standing, that a lump-sum installment sale was possible with respect to casual sales of personal property and sales of real property. For the reasons outlined in this opinion, we disagree with plaintiff. The law has always been that “multiple payments” are a sine qua non for a qualification for the installment method. Further, no regulation or ruling by the Treasury or Revenue Service has sought to soften the rule, nor can any regulation or ruling fairly be interpreted as altering this intrinsic aspect of the installment provisions.

The remaining issue raised is the applicability of Treas.Reg. § 1.453-6 to a deferred payment sale of personal property. The plaintiff argues that, even if the installment method is not available for deferred lump-sum sales, it may nevertheless report gain from the sales of its player contracts on the “recovery of cost” method prescribed by Treas.Reg. § 1.453-6. This Regulation provides, in relevant part, as follows:

§ 1.453-6. Deferred-payment sale of real property not on installment method.
(a) Value of obligations. (1) In transactions included in paragraph (b)(2) of § 1.453-4, that is, sales of real property involving deferred payments in which the payments received during the year of sale exceed 30 percent of the selling price, the obligations of the purchaser received by the vendor are to be considered as an amount realized to the extent of their fair market value in ascertaining the profit or loss from the transaction. Such obligations, however, are not considered in determining whether the payments during the year of sale exceed 30 percent of the selling price.
(2) If the obligations received by the vendor have no fair market value, the payments in cash or other property having a fair market value shall be applied against and reduce the basis of the property sold and, if in excess of such basis, shall be taxable to the extent of the excess. Gain or loss is realized when the obligations are disposed of or satisfied, the amount thereof being the difference between the reduced basis as provided in the preceding sentence and the amount realized therefor. Only in rare and extraordinary cases does property have no fair market value.

It is the plaintiff’s contention that it received nothing from the Royals and Pilots in its fiscal year ended October 31, 1968, other than a bare promise to pay the purchase price of the player contracts in plaintiff’s next fiscal year, unsecured and evidenced only by the agreements of sale. Therefore, the plaintiff continues, it received no income from the player contract sales that it was required to return in fiscal 1968. Thus, the gain is only realized when the obligations of the Royals and Pilots were satisfied in fiscal 1969.

The Government contends that the Regulation does not apply to the instant state of facts since (1) the Regulation applies, by its very terms, only to sales of real property, (2) the plaintiff received one instead of two or more deferred payments; (3) the Regulation applies only to those situations in which the payments received during the year of sale exceed 30 percent of the selling price; and (4) the “recovery of cost” method is available only to cash basis, and not accrual basis, taxpayers. Finally, the Government argues that, even if the Regulation were to apply to the instant ease, plaintiff could not prevail in its motion for summary judgment because of its failure to establish that as of October 31, 1968, the payments due in 15 days were without fair market value.

We do not find it necessary to discuss each of the contentions of the parties as it is our view that Treas.Reg. § 1.453-6 unambiguously applies only to sales of real property. While the plaintiff has attempted to argue that the absence of a reference in the Regulation to casual sales of personal property was an “oversight” or an “historical accident, not conscious policy,” we have found no real indication that this is the case. In fact, not only does the title of the Regulation (“Deferred-payment sale of real property not on installment method”) specifically indicate that only real property sales qualify, but the body of the section itself refers specifically to “ * * * paragraph (b) (2) of § 1.453-4, that is, sales of real property involving deferred payments * *

Both the United States Tax Court and the Sixth Circuit Court of Appeals have decided the very issue before us adversely to the taxpayers there involved. In both George L. Castner Co., 30 T.C. 1061 (1958), and Jones Lumber Co. v. Commissioner, 26 CCH TCM 398 (1967), aff’d, 404 F.2d 764 (6th Cir. 1968), the courts held, inter alia, that Treas.Reg. § 1.453-6 and its predecessor provisions pertained only to deferred-payment sales of real property.

For the foregoing reasons, the Government’s position is correct. Plaintiff has not met the requirements for either the installment method of section 453 or the recovery of cost method under Treas.Reg. § 1.453-6. Therefore, the plaintiff, as an accrual basis taxpayer, must recognize its entire gain on the sales in fiscal year ended October 31, 1968, as properly computed by the Government. See, generally, Treas.Reg. § 1.446-l(c) (1) (ii) and Treas.Reg. § 1.-451-1 (a). Plaintiff’s motion for partial summary judgment is denied, defendant’s cross-motion for partial summary judgment is granted, and Count II of the petition is dismissed.

CONCLUSION

Upon the foregoing opinion, which contains the essential findings of fact, the court concludes as a matter of law that the plaintiff is not entitled to recover on Count II of its petition, and Count II of the petition is therefore dismissed.

DAVIS, Judge

(dissenting):

Section 453(b) [“Sales of realty and casual sales of personalty”], as enacted in the 1954 Code, is a murky piece of legislation which does not use the terms “installment method” or “installment plan” but harks back, in imprecise and uncertain fashion [“on the basis and in the manner prescribed in subsection (a)”], to subsection (a) which applies only to a dealer regularly selling on the “installment plan”. In addition, the relevant legislative history of subsection (b) is most unclear and subject to varying interpretation. This is the kind of statute which cries out for supplementation and clarification by regulation, and indeed Congress specifically provided, within the subsection, for just such regulations to be promulgated. New regulations were in fact issued under the 1954 Code provision, and to my mind this case depends, not on the statute itself, but on the content of those regulations as they existed in 1968 when plaintiff acted.

Accordingly, my two differences with the court concern, first, the minimum statutory requirements which Congress itself imposed in 453(b) as the rock-bottom preconditions (apart from what could permissibly be required by regulation), and, second, the extent to which the Treasury had properly added to those core Congressional requirements by the time of plaintiff’s disposition in the fall of 1968. My position on these questions is: (1) section 453(b) does not mandate, by its own statutory force, a multiple payments requirement; (2) the subsection does, however, authorize the Treasury to impose such a precondition if it wishes, or conversely to omit it; (3) until Rev.Rul. 69-462, 1969-2 Cum.Bull. 107 (adopted in 1969), the Treasury did not establish such a requirement; and (4) Rev.Rul. 69-462 cannot validly be applied, retroactively, to taxpayer’s 1968 transaction:—

(1). I do not read subsection (b) as imposing, of its own statutory force, the mandatory precondition of multiple payments. That element is certainly not one spelled out in the text of the provision; the only requirements Congress specifically mandated for casual dispositions of personal property are that (i) the price exceed $1,000, and (ii) either there be no payments in the year of disposition or those payments not exceed 30 percent. Nor, in the light of the wording and of the subsection’s history, is there need or warrant for implying the statutory condition that there must necessarily be more than one payment. The subsection, as I have noted, does not contain the word “installment”, and the reference back to subsection (a) can readily be understood as simply referring to the formula in (a) (2). Moreover, in the days before the 1954 Code the multiple payments requirement was twin, in birth and development, to the condition that the initial payment be in the year of sale. The latter was deliberately erased in 1954, and, though nothing express was said about its brother, the deletion of the “initial payments” language, to which both requirements were closely tied, seems to me to remove the ground for inferring an obligatory precondition of multiple payments from the mere fact that section 453 deals, in general, with “installment” transactions. The early official pronouncement in G.C.M. 12148, XII-2 Cum.Bull. 57, 58 (1933), had expressly equated “installment sales” and sales “on the installment plan” with the “initial payments” provision. See, also, E. M. Funsten, 44 B.T.A. 1166, 1169 (1941), acquiesced in, 1941-2 Cum.Bull. 5. With that part of. the legislation removed, the status of the multiple payments requirement was left at large.

(2). Although section 453(b) does not itself impose a mandatory requirement of multiple payments, it is broad and general enough to authorize the Treasury, in its discretion, to do so — or to decline to do so. The internal grant of power to issue regulations shows the width of the administrative discretion. Added to that authorization are the opaque terms of the subsection and its muddy legislative history, elements suggesting that Congress may well have been quite uncertain of the reach of the provision and therefore amenable to fuller administrative power which might, or might not, take account of past practices (other than the requirement of an “initial payment”). The very materials and points which the majority use to show that subsection (b) itself establishes a multiple payments requirement seem to me to demonstrate, rather, that Congress left that option wholly to the Treasury, not foreclosing either result. If, directly after the enactment in 1954 of subsection (b), the regulation-drafters had put the substance of Rev.Rul. 69-462 into regulatory form, I feel certain that would have been a valid exercise of authority. On the other hand, if the implementing regulations had explicitly declared that for the future a single deferred payment (within the statutory dimensions) was to be sufficient, that too would have been proper administrative action.

(3). What did the Treasury actually do? Taxpayer has a good case that, whatever the department may have subjectively intended, the regulations issued under the 1954 Code communicated the notion that a single deferred payment was now being covered under section 453(b) (if otherwise within the provision). First, the regulation (Treas.Reg. §§ 1.453-1, 1.453-2) recognizes throughout a clear distinction between dealer and non-dealer sales. As to the former, the directive refers to “the installment plan” and expressly requires that the sale be “paid for in two or more payments.” For non-dealers like plaintiff, there is no such stated condition of multiple payments; moreover, the references to “installment method”, “installment payments”, and “installment sales” — the words in the regulation which defendant stresses as incorporating a multiple payments precondition for non-dealers — are phrases which under the long-standing ruling in G.C.M. 12148, swpra note 1, are not to be defined by the dictionary but are, instead, simply technical short-hand expressions for sales meeting the specific statutory conditions relating to the magnitude of the payments. See 2 J. Mertens, The Law of Federal Income Taxation § 15.08, at 23-24 (1967 ed.).

Second, the Treasury deleted from the 1954 regulations a sentence, carried in the regulations from 1935 to 1954, which explicitly said: “If the entire purchase price is to be paid in a lump sum in a later year, there being no payment during the first year, the income may not be returned on the installment basis.” We are told that this was removed because of the excision of the “initial payments” requirement, but under the defendant’s present view the sentence would still be quite correct, despite the removal of the “initial payment” language, and I can see no good reason for leaving it out entirely if the multiple payments condition was being continued. A knowledgeable taxpayer would be bound to notice and give meaning to the deliberate omission of this old provision, especially since the former multiple payments condition was so closely connected with the “initial payment” phrasing now taken out of the statute.

Whatever the regulation-drafters may have intended, the language they actually used, the failure to be explicit, the significant distinctions they made between dealers and non-dealers (including the express multiple payments requirement for the former), the omission of the crucial sentence from the previous regulations, the continued existence of G.C.M. 12148, all combine to make the taxpayer’s reading, as of 1968, not only reasonable but preferred. Cf. Lewis M. Ludlow, 36 T.C. 102, 108 (1961), acquiesced in, 1961-2 Cum.Bull. 5.

The Treasury should bear the risk of making its demands clear. Cf. Fruehauf Corp. v. United States, 477 F.2d 568, 574, 201 Ct.Cl. -, - (1973) (concurring opinion). In this instance it wholly failed, until 1969, if its aim was to continue for non-dealers the requirement of multiple payments. Particularly with a mechanical and ritualistic obligation of this type — which serves no useful economic or tax purpose anyone can conjure up — should the Government be at pains to be exact and clear. A taxpayer planning a transaction should be adequately informed in advance of what i’s to dot and t’s to cross. The penalty for omitting a purely technical step is too drastic to allow the Treasury to slide by with unduly general, ambiguous, and misleading regulations which are then interpreted by the Service, after the event, to contain precise requirements a normal reader is unlikely to find in them.

(4). The Internal Revenue Service did finally make its position clear in 1969 in Rev.Rul. 69-462, but this came about a year after taxpayer’s transaction in October 1968. Since to me this was a decided change in the pre-existing administratively-imposed requirements, it is plain, on my view, that the new ruling could not fairly or validly be retroactively applied to plaintiff’s case. See Crespo v. United States, 399 F.2d 191, 185 Ct.Cl. 127 (1968); International Business Machines Corp. v. United States, 343 F.2d 914, 170 Ct.Cl. 357 (1965), cert. denied, 382 U.S. 1028, 86 S.Ct. 647, 15 L.Ed.2d 540 (1966); Chock Full O’Nuts Corp. v. United States, 453 F.2d 300, 302-303 (C.A.2, 1971), Future sellers would be appropriately alerted by the new ruling, but not plaintiff. It is entitled to have applied to it the regulations as they stood in 1968, and not as they were de facto amended in 1969 to add a significant additional requirement.

KUNZIG, Judge, joins in the foregoing dissenting opinion.

      . The Service determined that $1,003,608.33 of this amount was taxable as capital gain and $24,948.37 taxable as ordinary income (“depreciation recapture” under section 1245 of the Internal Revenue Code of 1954). Neither the amount nor the character of the gain are in dispute in these proceedings.

      . All statutory references are to the Internal Revenue Code of 1954 unless otherwise stated.

      . See, e. g., Regs. 86, Article 44-2 promulgated under the Revenue Act of 1934 and Regs. 118, § 39.44-2 promulgated under the Internal Revenue Code of 1939. See also G.C.M. 12148, XII-2 Cum.Bull. 57 (1933), the 1933 General Counsel’s Memorandum construing the term “initial payments,” which construction was effectively adopted by the Treasury in the regulations cited, supra.

      . Regs. 118, § 39.44-2, promulgated under the 1939 Code, read, in part, as follows:
      “ * * * The term ‘initial payments’ contemplates at least one other payment in addition to the initial payment. If the entire purchase price is to be paid in a lump sum in a later year, there being no payment during the first year, the income may not be returned on the installment basis. Income may not be returned on the installment basis where no payment in cash or property, other than evidences of indebtedness of tbe purchaser, is received during the first year, the purchaser having promised to make two or more payments in later years.”

      . The body of what was, during the period of the sale involved herein, Treas.Reg. § 1.453-3 has since been added to Treas.Reg. § 1.453-1 as subparagraph (c) (4). Paragraph (c) was and is entitled “Limitation on the use of the installment method.” See 37 Fed.Reg. 13531, July 11, 1972.

      . 5’! * * ❖ $ $ $ $ “(b) Definition, of sale on the installment plan. The term ‘sale on the installment plan’ means—
      “(1) A sale of personal property by the taxpayer under any plan for the sale or other disposition of personal property, which plan, by its terms and conditions, contemplates that each sale under the plan will be paid for in two or more payments, or”

      . “ * * * the regulations of the Bureau imply that the only test of whether a sale is ‘on the installment plan’ is whether the ‘initial payments’ exceed the percentage of the selling price specified in the statute. * * * Moreover, even if this implication were not in the regulations, there is no express requirement in [the 1926, 1928, or 1932 legislation] that casual sales of real property * * * [be] ‘installment sales’ in order to permit the return of income on the installment basis, the only requirement in the statutes being that the ‘initial payments’ must not exceed ta specified] percent of the selling price * * *_»

      . The scraps from the legislative history of section 453 on which defendant calls can be easily interpreted as referring either to the prior “initial payments” provision or to deferred-payment contracts failing to meet the statutory conditions as to magnitude — not to multiple payments por so. There is nothing in the history which points directly or clearly to maintenance of the multiple payments requirement, let alone the obligatory continuance of that condition.

      . The recent Tax Court decision in 10-42 Corporation, 55 T.C. 593 (1971) — upholding the Government’s stance — does not discuss the changes in the regulations from pre-1954 days, and we are told that these and other pertinent materials were probably not called to the court’s attention.

      . So far as I am aware, no real substantive purpose is served by the multiple payments requirement, limited as it is to two payments. Plaintiff could have met it, if it had been warned, by arranging for two payments, instead of one, in November 1968 or October-November 1968. Apparently one of the payments could even be a nominal one dollar. G.C.M. 12148, supra.

      . The report of the House Ways and Means Committee preceding the Tax Reform Act of 1969, 83 Stat. 487, says that the committee was concerned “with the uncertainty in present law as to the number of installment payments which are required in order for a transaction to be eligible for the installment sales method.” Although it decries the application of the installment provisions to such transactions, the report appears to recognize that under the then prevailing practice the method was being allowed “where there is only one installment payment [as here] or only a limited number of payments”, in-eluding “when the one installment payment is deferred for a long period of time.” H.R.Rep.No.91-413, Part 1, 91st Cong., 1st Sess. 108 (1969-3 Cum.Bull. 200, 267), U.S.Code Cong. & Admin.News 1969, p. 1756.