author: SWYGERT, Chief Judge.

text:
    NORTHERN PETROCHEMICAL COMPANY, Plaintiff-Appellant, v. William F. TOMLINSON et al., Defendants-Appellees.
    No. 72-1032.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 24, 1973.
    Decided Aug. 28, 1973.
    Charles J. Merriam, Edward M. O’Toole, Chicago, 111., for plaintiff-appellant.
    Kenneth J. Burns, Jr., Robert E. Pfaff, Chicago, 111., for defendants-ap-pellees.
    Before SWYGERT, Chief Judge, DUFFY, Senior Circuit Judge, and STEVENS, Circuit Judge.
   SWYGERT, Chief Judge.

Northern Petrochemical Company brought this diversity action against William F. Tomlinson, William A. Oswald and Surfact-Co., Inc., to obtain redress for their theft of trade secrets and other confidential information. As part of its relief, Northern moved for an injunction pendente lite restraining the defendants from use or disclosure of the stolen matter. This appeal was taken from the decision of the district court to deny injunctive relief prior to trial. Primarily at issue is whether the district judge was correct in his conclusion that Northern had failed to establish a likelihood that it would prevail upon a trial of the cause.

In early 1963 the Varney Chemical Company and the Culver Chemical Company Division of the Alberto-Culver Company separately began experimentation aimed at the development of a commercially feasible process for the manufacture of a tallow imidazolinium metho-sulfate, or TIM, fabric softener. Although Varney arrived at a moderately successful process by trial and error some two years later, it was not until early 1968 that Varney had developed an operation capable of producing a TIM type softener of sufficiently high quality to satisfy its most demanding customers. Culver was more successful. By the middle of 1966 it had developed a fully acceptable process of manufacture, apparently the only one in existence at the time. Northern now stands in the shoes of both Culver and Varney, having purchased the manufacturing assets, technical information, and inventory of each in 1970 and 1967, respectively. When, in 1970, Northern compared the newly-obtained Culver process with the process it had purchased from Varney, it allegedly discovered that the two were substantially identical.

Tomlinson and Surfact came into the picture as early as January, 1965, when Tomlinson, the president of Surfact, accepted an offer of a Herbert Frank to sell a commercial process for the manufacture of TIM type softener. Before his offer, Frank had been an employee of Culver. Northern complains that the process obtained from Frank is identical to that acquired by Northern by its purchase of Culver in 1970, and that the disclosure of Frank was in violation of a contractual obligation of silence he owed Culver.

Apparently not satisfied with the information he obtained from Frank, Tomlinson set about obtaining the services of Oswald in utilizing the Frank disclosure. Oswald had been a vice president of Varney and had been responsible for the production of TIM type softener by that firm. As a condition of his employment, Oswald had agreed not to disclose secret or confidential information of Varney nor to take employment with a business in substantial competition with Varney for two years after termination of his employment. When Northern acquired Varney, and after Oswald decided to stay on, he signed an agreement in which he reaffirmed these conditions as an employee of Northern. Nevertheless, Oswald accepted employment with Surfact as its vice president of. manufacturing in December, 1970, and submitted to Northern at that time a letter of resignation, effective January 30, 1971. Since joining Surfact, Oswald has been engaged in the efforts of that firm to place a TIM type fabric softener on the market.

Despite all the efforts of Tomlinson, Surfact has not to date manufactured TIM type softener. Its ongoing effort to do so was greatly hampered by a recent explosion, which apparently placed Surfact back where it had started insofar as large-scale commercial manufacture of TIM type softener is concerned.

The instant lawsuit was filed in late 1971, after Tomlinson had announced to the trade that Surfact planned to manufacture and sell a TIM type softener in competition with Northern. The complaint sought relief in the form of a preliminary injunction restraining the defendants from receiving or disclosing confidential information belonging to Northern, from using the same confidential information in any manner, and from inducing the breach of Oswald’s contractual obligations. A permanent injunction to the same effect was also sought, as were costs, damages, an accounting of profits, and the return to Northern of all documents bearing its confidential information.

Although the trial judge found that the process used by Northern in the manufacture of TIM type softener qualified as a trade secret under Illinois law, he denied the preliminary injunction largely because Northern had failed to establish a likelihood that it would prevail upon the merits of its case at trial. Northern, the judge thought, had shown no use or disclosure of its trade secrets and had failed to prove a breach of contract on the part of Oswald. He also found that Northern was not in danger of irreparable injury. This appeal followed.

II

Citing ILG Industries, Inc. v. Scott, 49 Ill.2d 88, 273 N.E.2d 393 (1971), Northern argues that Illinois law entitles it to an injunction restraining the defendants from the manufacture of a TIM type fabric softener for so long as it would have taken them independently to develop the secret process at issue by legal means. At oral argument, Northern conceded that this period would encompass no more than three to five years.

This contention is fraught with problems. Accepting Northern’s argument that Surfact illegally acquired the Frank process early in 1965, it is apparent that more than five years had elapsed before Northern filed this lawsuit. More than eight years had elapsed by the time this appeal was argued. Whether Northern is now entitled to a lengthy restraint of Surfact is a troublesome aspect of this case. Moreover^ we cannot be sure that Northern’s claim dealing with disclosure by Oswald can stand separate and apart from its claim of disclosure by Frank. If Oswald knows no more than the Varney process, if the Varney and Culver processes are substantially identical, and if the process disclosed by Frank was in fact the Culver process, it follows that present disclosures by Oswald, if any, add nothing to the knowledge gained by Surfact from Frank in 1965 and do Northern no harm other than to stand as technical violations of its employment contract with Oswald. If, however, Oswald possesses knowledge in addition to the Varney process which qualifies as a trade secret of Northern or which Oswald is otherwise required by his employment contract to hold secret, or if the Frank and Varney processes are substantially dissimilar, Northern may deserve an injunction even if Surfact is free to use the Frank process by virtue of the passage of time.

Is Northern now possessed of the right to exclusive use of the Frank process for three to five years, when more than eight have passed since it was the victim of a presumably illegal acquisition of that process? At oral argument, counsel for Northern laid great stress on ILG Industries, Inc. v. Scott, 49 Ill.2d 88, 273 N.E.2d 393 (1971), as support for the proposition that the period of time for which a wrongdoer is to be restrained from the use of a trade secret is always equal to the period which would have been necessary to develop the secret by independent means, even if the thief has not employed the secret in manufacture for a period of time equal to or greater than that required for an independent development of the secret.

We cannot accept this argument and conform to the rationale of ILG. Northern is correct in its notation that ILG approved an injunction the term of which was equivalent to the time necessary independently to arrive at the stolen secret. The same may be said of Schulenburg v. Signatrol, Inc., 33 Ill.2d 379, 212 N.E.2d 865 (1965), a landmark case in Illinois on the topic of trade secrets and a foundation case of ILG. Nevertheless, both cases are critically different from this one on their facts. In ILG and Schulenburg, secrets were stolen from the plaintiff firms by former employees, each group of whom immediately utilized the secrets to actively compete with their former employer. That is, a use of the secrets in commercial manufacture was undertaken directly after their theft. As undisputed testimony reveals, nothing of the sort occurred in this case. Surfact has never manufactured TIM type softener. After the explosion of its plant in 1972, Surfact stood as though it had just then acquired the trade secret insofar as its use for commercial manufacture was concerned.

Had Surfact put the Frank process into commercial use in 1965, and had Northern discovered the theft at that time and obtained an injunction against its use, Northern could have obtained a respite from competition by Surfact for no longer than the interval it has actually enjoyed by virtue of Sur-fact’s inactivity. In this connection, it bears repeating that a trade secret, unlike a patent or a copyright, has no proprietary dimension. A suit to redress the theft of a secret is one grounded in tort, with the act of theft comprising the misfeasance against which the law protects. And only in exceptional cases does the law of tort authorize a remedy which more than compensates a plaintiff for his loss. As Schulenburg made manifest, the theft of a trade secret is not such an exceptional case. In the words of the Illinois Supreme Court:

The bothersome aspect of the trial and appellate court decisions is the scope of the injunction that has been issued. It does not restrict its application as to time or geographical area. Defendants have, in effect, been put out of business for all time, everywhere. This clearly is not necessary to make plaintiffs whole as it is conceded by them that their products may legally be copied by competitors. Since defendants might have reproduced plaintiffs’ flasher in this fashion, it is difficult to justify prohibition of such reproduction for a period of time longer than that required to duplicate the product by lawful means. 33 Ill.2d at 388, 212 N.E.2d at 869 (emphasis supplied).

In support of this compensatory attitude, the ILG court noted that “ [i] n many cases the question of whether a specific matter is a trade secret is an extremely close one, often not readily predictable until a court has announced its ruling.” 49 Ill.2d at 97, 273 N.E.2d at 398. Moreover, the entity whose secrets are stolen often may have a cause of action for exemplary or punitive damages against the persons who perpetrated the theft. Macdonald v. Winfield Corp., 191 F.2d 32, 38 (3rd Cir. 1951); R. Ellis, Trade Secrets, §§ 304-05 (1953). Finally, it is significant that Illinois independently provides a punitive sanction in its criminal statutes. Ill.Rev.Stats., Ch. 38, § 15-1 et seq.; see ILG Industries, Inc. v. Scott, 49 Ill.2d 88, 97, 273 N.E.2d 343, 348 (1971).

By the rationale of Schulenburg and ILG, Northern is as well compensated for the allegedly tortious activity of Frank and Tomlinson by having Surfact voluntarily abstain from competition as by having Surfact ordered to abstain therefrom, and this is true no matter what reason the tortfeasors may have had for failing to go into production.

The unwillingness of Northern to distinguish between cases where the thief uses the secret and cases where he does not has no logical foundation, even if it is assumed that some punitive remedial element is permissible in correcting a theft of trade secrets in Illinois. In both cases the thief is equally guilty of his theft. Yet the one who is unable to make a speedy utilization of the fruits of his crime and who takes the chance or suffers the risk that his secret will become valueless in the wake of advancing technology is, by Northern’s contention, made to suffer a far greater restriction than the thief who immediately goes into competition with the victim of the theft. We cannot condone this result. Nor are we persuaded by an argument that the thief who goes into immediate production confers upon his victim the benefit of an early notice that a theft of secrets has occurred. As Northern admits, chemical analysis of the end product in this case yields no information on the means by which it was produced.

We conclude that Surfact is free to use the process which Tomlinson obtained from Frank, and that Northern has failed to show a likelihood that it will prevail at trial on its quest for an injunction against the use of that process by Tomlinson and Surfact. We are not sure, however, whether Oswald possesses confidential information — as defined by the law of trade secrets or by his employment contract — in addition to that disclosed by Frank. If Oswald does, authorities such as Allis-Chalmers Mfg. Co. v. Continental Aviation & Eng. Corp., 255 F.Supp. 645 (E.D.Mich.1966), and B. F. Goodrich Co. v. Wohlgemuth, 117 Ohio App. 493, 192 N.E.2d 99 (1963), provide ample support to prevent him from working for Surfact in aid of its competitive entry into the market for TIM type fabric softener.

The case is remanded to the district court for a finding on this point and the issuance of a preliminary injunction if appropriate. In all other respects, we affirm the decision of the district court.

      . His employment agreement with Northern requires that Oswald be silent about more than trade secrets. The agreement reads, in part:
      I agree not to disclose at any time, either during or subsequent to my employment by Company, directly or indirectly, to anyone not an officer, or employee of Company, and not to use at any time, either during or subsequent to said employment, except in the course thereof, any information, knowledge or data of Company (whether or not developed by me) which is not freely available to persons not employed by Company unless the written consent of Company is first secured (emphasis supplied).
      Thus, Oswald may have technical know-how and expertise relating to commercial implementation of the Varney process which, though not trade secrets, he has agreed not to disclose. The trial judge did not make a specific finding on this point.

      . It makes no difference that the process Surfact intends to employ is, as the trial judge found, substantially “different” from the Frank process. In cases like this, the test of illegality is whether a supposedly different process contemplated for use was derived from a wrongfully obtained secret process. Restatement of Torts § 757, comment c, at 9 (1939) ; Forest Laboratories, Inc. v. Pillsbury Co., 452 F.2d 621 (7th Cir. 1971). We have no doubt that this describes the instant case; the evidence is clear that the process obtained from Frank in 1965 served as the cornerstone for any modified process which Surfact intends to use.

      . This policy was emphatically reinforced in ILG:
      “What in reality is protected in cases of this nature is not the product or process, but the secrecy of it. (Jones v. Ulrich, 342 Ill.App. 16, 30-32, 95 N.E.2d 113.) Contrary to the plaintiff’s assertion, we believe commercial morality is preserved by preventing one from wrongfully using secret information for a period of time no longer than that required to discover or reproduce that information by lawful means. Where that period can be ascertained, the defendant should be put out of business only for that length of time and, thus, be prevented from obtaining any advantage by the wrongful use of trade secrets. Schulenburg v. Signatrol, Inc., 33 Ill.2d 379, 387, 388, 212 N.E.2d 865.” 49 Ill.2d at 97-98, 273 N.E.2d at 398.

      . We should emphasize that our discussion of the compensatory stance of Illinois law is directed solely toward injunctive relief. What little authority exists on the topic of damages suggests that punitive or deterrent considerations may be taken into account when this form of relief is granted.

      . It is instructive to note that the Schulen-burg rule was vigorously attacked by ILG Industries in the ILG case on the ground that if the court “was correct in Schulen-burg . . . the result is that the defendant Scott, by biding his time, becomes entitled to what he took.” Brief for ILG Industries at 37 (emphasis supplied). Two pagos earlier, the brief is more emphatic still:
      The Defendant Scott was not in the position of the general public. He accepted a higher obligation with respect to the information in question. To permit him to use that information . . . permits him to evade his trust by simply wanting IS months [the period for independent discovery] (emphasis supplied).
      Lastly, after Schulenburg was reaffirmed in ILG, counsel for ILG Industries argued as follows in support of a rehearing:
      [T]he application of Schulenburg to the case of ILG v. Scott appears to authorize, for the future, the violation of trust so long as the transgressor waits the required length of time. It gives him the secret without the toil and expense; moreover, by relieving him of the duty of his trust, it gives him the power to destroy the secrecy, and thus also the law’s protection of the secret (emphasis supplied).
      ILG Industries, then, did not agree with Northern’s present reading of ILG and Sehulenburg,

      . Indeed, had the plaintiff in Schulenburg or ILG not known that the source of his competitor’s information was the mouth of his former employee, we cannot imagine that a lawsuit would ever have been brought. This ease is strikingly similar. Northern found out about the Frank transaction only after Oswald had gone to work for Surfact and discovery was undertaken in the resulting lawsuit.


source: Caselaw Access Project

license: Public Domain

text:
    ARMOUR & COMPANY, Plaintiff-Appellant, v. ST. PAUL FIRE & MARINE INSURANCE COMPANY, Defendant-Appellee.
    No. 71-1855.
    United States Court of Appeals, Seventh Circuit.
    Argued Nov. 3, 1972.
    Decided Aug. 20, 1973.
    Peter B. Stewart, James J. Stewart, Indianapolis, Ind., for plaintiff-appellant.
    Geoffrey Segar, G. Daniel Kelley, Jr., Indianapolis, Ind., for defendant-appel-lee.
    Before SWYGERT, Chief Judge, HASTINGS, Senior Circuit Judge, and PELL, Circuit Judge.
   SWYGERT, Chief Judge.

Appellant Armour & Company brought this diversity action in the district court against the appellee, St. Paul Fire & Marine Insurance Company. The action was founded on a contract of insurance which Thomas Thompson, doing business as T & R Trucking Company, had entered into with St. Paul. Armour alleged that T&R owed it $16,154.00 in connection with a shipment of frozen poultry which had disappeared after T&R had taken it pursuant to a shipping contract with Armour, and that the same loss had caused St. Paul to become liable to T&R under its insurance contract with T&R. Armour sought— evidently as a third party beneficiary of the insurance contract between T&R and St. Paul — to enforce the obligation of St. Paul on that contract to pay T&R for the missing shipment. The district judge gave St. Paul a summary judgment, holding that the suit was barred by a contractual time limitation on claims made under the insurance policy. Armour appeals that ruling.

The crucial provision of the policy is this:

Any claim under this Policy shall be void unless action be commenced thereon within one year from the happening of the loss or damage, unless such limitation is void under the laws of the state within which this Policy is issued, in which case any claim under this Policy shall be void unless action be commenced thereon within the shortest period of time within which an insurance company can limit the right of bringing suit under the laws of such state.

The shipment at issue was physically lost on or about February 17, 1968. Armour obtained judgment against T&R on July 27, 1970 (this judgment was never paid), and instituted its action against St. Paul on January 18, 1971, more than a year after the physical loss of its goods but less than a year after its judgment against T&R. We must decide whether the “loss or damage” to which the time limit in the policy makes reference includes as a matter of contract the “loss” to T&R occasioned by the July 27 judgment against it.

At the outset, we note that Armour does not question the validity of the claim limit provision however it is interpreted. Nor can it. No Indiana statute is violated by the provision, and “a provision in an insurance policy limiting the time in which suit may be brought thereon to a period less than that fixed by statute of limitations is binding, unless it contravenes a statute.” Caywood v. Supreme Lodge, 171 Ind. 410, 86 N.E. 482 (1908). This conclusion disposes of Armour’s reliance on cases like Olds v. General Acc. Fire & Life Assur. Corp., 67 Cal.App.2d 812, 155 P.2d 676 (1945), Eber Bros. Wine & Liquor Corp. v. Firemen’s Ins. Co., 30 F.Supp. 412 (S.D.N.Y.1939), and Trust Co. of Chicago v. Iroquois Auto Ins. Underwriters, Inc., 285 Ill.App. 317, 2 N. E.2d 338 (1936), where policy time limits on suit were found to be in conflict with a state statute. The issue before us is solely a matter of contractual interpretation.

Generally speaking, insurance policies of the broad type at issue may be separated into three categories, each characterized by a different set of prerequisites to recovery under the policy. There are, first, contracts of indemnity, where the insured is repaid only for losses which he has actually suffered, as, for example, by the payment of a judgment. This is to be distinguished from a form of liability policy, where the insured need only have had a judgment rendered against him to recover on his policy.

“The main difference between an insurance contract of indemnity and one to pay legal liability is that, upon the former, an action cannot be brought and a recovery had until the liability is discharged; whereas, upon the latter, the cause of action is complete when the liability attaches. If, in the instant case, the policy issued to Garner is one to indemnify against loss, it is necessary to show an actual loss or damage before there can be a recovery; but, if the policy is a contract to protect the assured against liability merely, then an action may be maintained as soon as the liability is legally imposed, regardless of the question as to whether any actual loss or damage has been suffered. Campbell, Receiver v. Maryland Casualty Company of Baltimore, Maryland (1912), 52 Ind.App. 228, 97 N.E. 1026, 1027.” Iroquois Underwriters v. State, 211 Ind. 463, 5 N.E.2d 908 (1937).

The third category of policy is, again, a liability policy, but one wherein the insured need show only'the happening of a contingency insured against, not the entry or monetary recovery of a judgment against him. It is not anomalous that policies of this sort speak in terms of the “liability” of the insured to another: “If the facts out of which the liability grows exist, the liability exists, irrespective of whether the party injured has sought to enforce it.” Eberhard v. Aet-na Ins. Co., 134 Mise. 386, 235 N.Y.S. 445 (1928).

The importance of this categorization becomes apparent upon examination of Rogers v. Aetna Ins. Co., 95 F. 103 (2d Cir. 1899), which Armour strenuously relies upon to support reversal. That case involved insurance issued to the owner of a steam tug to protect him against liability arising out of the operation of the vessel. The contract of insurance provided (1) “that all claims under this policy shall be void, unless prosecuted by suit at law within twelve months after the date of the loss,” and (2) that the company was not liable on the policy “unless the liability of the said steam tug for such loss or damage is determined by a suit at law, or otherwise, as this company may elect.” 95 F. at 106. The company cited the former provision as a defense to an action brought by the tug owner, who had been adjudged liable for damage caused by the tug more than twelve inonths after the date of the accident. The court rejected the defense .•

The condition requiring suit to be brought within one year must, of course, be read with the other conditions, and it is to be so construed, if possible, as to render all of them consistent and harmonious. By one of them no cause of action can arise under the policy until the assured has established, by legal proceedings, the liability of his vessel for the damage caused by the collision. This he might be unable to do within a year, as in the ordinary course of legal proceedings, prosecuted with due promptness and vigor, it is frequently impossible for a party to procure an adjudication in a litigated controversy within that period. Does the policy mean that, in the event he is unable to do so, the assured is to bear the loss, and the company is not to be liable at all? It can only be given this meaning that it was devised by the company as a trap for the unwary, for no sane man would understandingly accept such a policy. Common sense and common decency forbid a construction which would permit the limitation to be operative during the period before the cause of action arises. 95 F. at 106.

In sum, the holding was that the contract between the insured and the insurer would have been impaired by reading “loss” to refer to the physical occurrence of an accident rather than the judicial ascertainment of loss.

This case does not present a need for a similar analysis. The policy provides, in part:

The Insured shall report to the Company or to an Agent of the Company, every loss or damages which may become a claim under this Policy, immediately such loss or damage comes to his knowledge. Within sixty (60) days after loss or damage the Insured shall make a written statement to the Company, signed and sworn to by him stating the place, time and cause of loss or damage, the interest of the Insured and all others in the property, cost price of each article lost or damaged, from whom purchased, or obtained, their value at time of loss, the amount of loss or damage claimed, the total amount of insurance carried on the property covered by this Policy, the total value of all property covered by this Policy on the date the loss occurred, and the value of the property-in the specific location where the loss occurred.
* * -x- -X* >X* -X-
This Company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such actual cash value with proper deduction for depreciation, however caused, and shall in no event exceed- what it would then cost to repair or replace the same with material of like kind and quality nor the invoice value whichever may be lesser; said ascertainment or estimate shall be made by the Insured and this Company, or if they differ, then by appraisers, as hereinafter provided, and; the amount of loss or damage having been thus determined the sum for which this Company is liable pursuant to this Policy shall be payable sixty days after due notice, ascertainment, estimate, and satisfactory proof of loss have been received by this Company in accordance with the terms of this Policy.

Clearly, then, the insured need not have had a judgment against .him to recover on the policy. The insured will know within approximately 120 days whether the insurance company intends to pay him or whether he or a third party beneficiary will have to bring suit to enforce his contractual rights. The value of his contract is in no way impaired by the time limitation on claims set by the policy, and the Rogers decision is not applicable to the facts of this case. Accord, Tubize Chatillon Corp. v. White Transportation Co., 11 F.Supp. 91, 96-97 (D.Md.1935). Further, the policy provisions just cited leave no room for argument that the terms “loss or damage” refer to a loss by judgment or to a liability established by judgment. Plainly, the terms refer to physical loss.

The judgment is affirmed.

       By its citation of Olds, Armour also suggests that its rights as a third party beneficiary of the Thompson-St. Paul contract are impaired by the view we have taken of “loss or damage”. In Olds, however, the insurance contract at issue made specific reference to the interests of injured third parties. We note, too, that authority exists for the proposition that Armour has no right to sue on the instant contract. Tubize Chatillon Corp. v. White Transportation Co., 11 F.Supp. 91, 97-99 (D.Md.1935) ; Eberhard v. Aetna Ins. Co., 134 Misc. 386, 235 N.Y.S. 445 (1928).


author: BREITENSTEIN, Circuit Judge. MANSFIELD, Circuit Judge

text:
    Nikolaos BASSIS et al., Plaintiffs, v. UNIVERSAL LINE, S.A., and Universal Cruise Lines, Inc., Defendants-Appellees, and S. S. CARIBIA, her Engines, Boilers, Tackle, etc. the City of New York, Claimant-Appellant.
    No. 734, Docket 73-1035.
    United States Court of Appeals, Second Circuit.
    Argued April 26, 1973.
    Decided June 8, 1973.

      Judah Dick, New York City (Norman Redlich, Corp. Counsel of the City of New York, R. Harcourt Dodds and Edward J. McLaughlin, New York City, of counsel), for claimant-appellant City of New York.
    John S. Rogers, New York City (Bur-lingham, Underwood & Lord, New York City, of counsel), for defendants-appel-lees.
    Terence Gargan, New York City (Harlington Wood, Jr., Asst. Atty. Gen., Robert A. Morse, U. S. Atty., E. D. N. Y., Gilbert S. Fleischer, Atty. in Charge, Admiralty and Shipping Section, New York, and Philip A. Berns, Atty., Admiralty and Shipping Section, Dept, of Justice, New York City, of counsel), for the U. S. Marshal for the Eastern District of New York.
    Before KAUFMAN, Chief Judge, and BREITENSTEIN  and MANSFIELD, Circuit Judges.

       Of the United States Court of Appeals for the Tenth Circuit, sitting by designation.

   BREITENSTEIN, Circuit Judge.

We have here another episode in the woeful tale of the S.S. CARIBIA. For prior installments see Bassis v. S.S. CARIBIA, E.D.N.Y., 309 F.Supp. 989, and Bassis v. Universal Line, S.A., 2 Cir., 436 F.2d 64. The present dispute relates to wharfage charges of the City of New York and the issue is City’s right to have the reasonable cost of wharfage taxed as administrative expense. The appeal by City is from the district court’s denial of its claim. No libellant has appeared in this appeal. The marshal seeks a determination of whether the City’s claim is an administrative expense. Jurisdiction lies under 28 U.S.C. § 1292(a)(3); see also In re Wills Lines, 2 Cir., 227 F.2d 509, 510, cert, denied 351 U.S. 917, 76 S.Ct. 709, 100 L.Ed. 1450.

The 32,000-ton passenger liner CARI-BIA, owned by Universal Line, S.A., was arrested by the United States Marshal for the Eastern District of New York on April 21, 1969, under a warrant of attachment. Later at the behest of other creditors successive arrests were made and the various actions consolidated. The peregrinations of CARIBIA around New York harbor must be noted.

1— Arrested at Todd shipyards.

2— Moved to a Gravesend Bay anchorage under a June 13, 1969, court order.

3— —Moved to 33rd Street pier under a July 22,1969, court order.

4— Moved to an anchorage under a May 13,1970, court order.

5— Moved on an unstated date in the summer of 1970 to pier 86 without court order or permission of City.

6— Moved to pier 56 on June 1, 1971, under a May 27, 1971, court order recognizing an agreement between Owner and City.

The 33rd Street pier and piers 86 and 56 are all City facilities. A dispute to be noted later arose between Owner and City over the use of pier 86. This dispute was resolved by a settlement agreement dated October 30, 1970, but apparently not executed by City until December 3, 1970. We are concerned with City’s claim for pier 86 wharfage between December 4, 1970, when City says the vessel should have been moved to pier 56 under the settlement agreement and June 1, 1971, when it was so moved. The City claim does not cover any whar-fage at pier 56. So far as the record shows, those charges have been paid by Owner to City.

On December 13, 1971, City made demand on the marshal for payment of wharfage charges at pier 86 for the period noted above, amounting to $250 a day for 180 days, or a total of $45,000, as an administrative expense under 28 U.S.C. § 1921 and Rule E(4)(b), (d), and (e) of the Admiralty Rules. The demand was refused. City then moved on February 10, 1972, for an order that (1) the marshal pay the reasonable value of the wharfage, and '(2) plaintiffs be required to deposit “such costs on a pro-rata basis,” or (3) “such expense be taxed as costs * * * and that the ship be sold to pay such expenses.” The court, on October 31, 1972, denied the motion holding that City had dealt with Owner and, hence, was not entitled to recover wharfage charges as an administrative expense under 28 U.S.C. § 1921. This appeal followed.

At all pertinent times the vessel had been and, so far as the record shows, now is in custodia legis, and has not been sold. The law as to whether custodial claimants have priority over pre-custodial claimants asserting liens “has reached a high point of confusion.” Gilmore and Black, The Law of Admiralty, p. 497.

City relies on New York Dock Company v. S.S. Poznan, 274 U.S. 117, 47 S.Ct. 482, 71 L.Ed. 955, which concerned a custodial claim for wharfage when there had been no authorizing court order. Poznan recognizes the rule that “there can be no maritime lien for services furnished a vessel while in custodia legis.” 274 U.S. at 120, 47 S.Ct. at 484. The district court had denied a petition to remove the vessel from the 'custodial claimant’s wharf. The Supreme Court commented that the denial was with the consent or knowledge of the libellant and those united in interest, who “appear to have acquiesced” in the denial. 274 U.S. at 122, 47 S.Ct. 482. The Court said that the custodial charges were for the common benefit and “in equity and good conscience, should be satisfied before the libellants may enjoy the fruits of their liens.” 274 U.S. at 122, 47 S.Ct. at 484.

Owner counters with Larsen v. New York Dock Co., 2 Cir., 166 F.2d 687, which also involved a preferential claim for wharfage of a ship in custodia legis. Two periods were in question. The court found that during the first the dock company “relied solely” on the credit of the libellant which caused the ship to be moved to the wharf of the custodial claimant and during the second period it did not. After observing that the decision in Poznan rested on the doctrine of unjust enrichment, see 166 F.2d 689, and particularly n.2, the court cited as authority Restatement of the Law, Restitution, § 110, p. 455, which states that “A person who has conferred a benefit upon another as the performance of a contract with a third person is not entitled to restitution from the other merely because of the failure of performance by the third person.” Thus, although New York Dock Co. may have conferred a benefit upon the parties claiming an interest in the ship, the court held that its arrangements with a specific party for payment of its whar-fage claims precluded reliance upon the Poznan doctrine for recovery when this source proved unavailing. Accordingly, wharfage claims for the first period were denied. As for the second period, when there was no reliance, the court held that “its claim for wharfage comes within the ruling in Poznan,” 166 F.2d 689, and allowed the claim to be taxed as an administrative expense.

The present state of the law appears to be that under Poznan, wharfage claims arising while a ship is in custodia legis may be allowed a preference over pre-custodial claimants, by means of taxation as an administrative expense, on the basis of “equity and good conscience.” No preference will be allowed under Larsen, however, where the custodial claimant relied not on the fund represented by the ship but on the credit of the party which caused the wharfage to be incurred. As stated in Gilmore and Black, The Law of Admiralty, p. 497, the result is that those furnishing custodial services to a ship in custodia legis “are gambling on a wholly unpredictable result unless they take the precaution of having their services authorized in advance by an order of the custodial court.”

With this background, we turn to the pertinent facts and court orders.- The June 13, 1969, order permitting the removal of CARIBIA from the Todd pier to Gravesend Bay anchorage provided that the wharfage claims would be borne by Owner and would not be an administrative expense and that the vessel must be kept within the Eastern or Southern disti’icts of New York. The transfer to the 33rd Street pier was under an order conditioned upon payment by Owner of all expenses and payment of 30-days wharfage in advance. The advance payment was made and wharfage was paid for two more months but was discontinued after a dispute arose between Owner and City. On May 13, 1970, the court ordered that the ship be removed to an anchorage.

Then the trouble began. Owner became concerned over the approaching hurricane season and sought a permit from City to tie up the vessel. No agreement was reached and without permission from either City or the court, Owner moved the vessel to pier 86. Owner then commenced a state court action to compel City to issue a permit on what Owner considered reasonable terms. The action was dismissed and Owner appealed. Owner also filed a complaint with the Federal Maritime Commission alleging that City was bound to provide space at the $100 a day rate in its published tariff rather than the $250 a day rate which City proposed to charge. City retaliated by filing various criminal charges.

On August 26, 1970, City obtained an order from the court for cause to be shown why the vessel should not be moved from pier 86. A hearing was held, and on September 4, the court filed a memorandum decision which said:

“It is accordingly apparent that an order must be forthwith settled on the initiative of any interested claimant directing the marshal to resume custody and providing for immediately advancing or securing the expense of his doing so or else providing for immediate sale.”

City submitted a proposed order which among other things provided that on nonpayment of costs the marshal was directed to sell CARIBIA at auction. At the October 6 hearing which was held on City’s proposal, it was shown that the state court action brought by Owner to compel City to issue a permit had not been finally decided. A suggestion was made that the matter be held in abeyance to await state court action. A decision favorable to Owner would conceivably moot the controversy because Owner had consistently taken the position that it would pay City reasonable wharfage charges. The court took the matter under advisement.

Owner and City then made the aforementioned settlement agreement whereby there was a mutual release of claims to that date and City’s proposed order was withdrawn. The agreement provided for the issuance of a permit for pier 56 at $100 a day for a 90-day period commencing when necessary dredging was completed. Disputes arose over dredging and other matters. At City’s request the court entered a May 27, 1971, order for the removal of the vessel from pier 86 to pier 56. The order provided that the removal should be in accordance with the settlement agreement between City and Owner. Dredging was never completed but CARIBIA was nonetheless moved to pier 56 on June 1, 1971. After a dispute over the furnishing of certain services by City, payment at the agreed rate began on July 8 and has apparently continued.

Our only concern is with the pier 86 charges between the time when the settlement agreement required the ship to be moved from that pier until the time when it was so moved. City says that in equity and good conscience it is entitled to have these charges allowed as an administrative expense. Owner says that it is not because City relied solely on Owner for the payment of the charges.

In support of its equitable claim, City says that the court accepted responsibility for all custodial costs when it allowed attachment without prepayment of expenses by libellants. Overlooked are the facts that the vessel was moved from the Todd pier to an anchorage, from there to the 33rd Street pier, and from there back to an anchorage under court orders requiring payment of costs by Owner. The nine-month stay at 33rd Street was under an arrangement between City and Owner whereby Owner paid City $7,500 for 30 days advance wharfage and made similar payments for two more months. Nonpayment thereafter resulted, among other things, from a dispute between City and Owner over the rate charged. Thus, City allowed 33rd Street wharfage with full knowledge that the expense was that of the Owner and not an administrative cost.

City says that if the ship had not been in custodia, legis, City would have removed it from pier 86 and sold it under the authority of city ordinances. The difficulty is that City failed to seek in a timely manner the relief which it might have received from the admiralty court. After the hearing on the August 26, 1970, show cause order and the September 4 memorandum of the court, City on September 8 did submit a proposed order directing the marshal to sell the CARIBIA upon nonpayment of whar-fage charges. But before a decision was rendered, the settlement agreement was made, and the proposed order withdrawn by City. The motion for payment of wharfage charges with which we are now concerned was not made until more than a year after the CARIBIA was first moved to pier 86 and after six months of wharfage charges had been allowed to accumulate. In its order from which this appeal was taken the court said City could have made an early move to oust the ship or require payment of wharfage and had it done so “the consequence would not have been the accumulation of charges but a sale of the vessel willynilly, if the [Owner] had failed to discharge the claim without incurring a lien of any kind.”

City says that the settlement should not be given conclusive effect because it was forced into the settlement. It is a little difficult to comprehend how the great City of New York could be forced by a shipowner to settle a wharfage dispute. City insists that haste was essential because of a contemplated lease of pier 86 to the Port Authority of New York. The record shows that the lease was made on April 2, 1971, substantially after the settlement date, and began May 14 before the June 1 removal of the ship. In any event, the settlement agreement and its attendant circumstances were not brought to the attention of the court until the May 14 motion was filed.

Finally, City’s equity and good conscience argument collides head-on with the trial court’s holding that City dealt with Owner and no one else. The facts sustaining this conclusion have been outlined. The arrangements for the 33rd Street pier and the settlement of the dispute over the charges for pier 86 are most persuasive. City relied on Owner and, having done so, is in no position to now assert a belated preferential claim. Under Larsen v. New York Dock Co., 2 Cir., 166 F.2d 687, City is not entitled to recover the pier 86 whar-fage charges in dispute as an administrative expense.

Affirmed.

MANSFIELD, Circuit Judge

(dissenting) :

I respectfully dissent.

In my view the majority’s decision rewards the owner and creditors of a trespassing ship for the owner’s misconduct, which was permitted to continue with resulting benefit to the ship because the ship was in the district court’s custody. The effect is unjustly to enrich the shipowner and other creditors at the expense of the party wronged, in this case the City of New York. I believe the proper rule to be that where a ship in custodia, legis trespasses upon another’s wharf in order to gain resulting benefits, including protection from hurricanes, the failure of the admiralty court promptly to order removal of the ship, once removal has been requested and the court is aware of the benefits being realized by the ship from its continued trespass, entitles the wharf owner to preferential payment for resulting wharfage charges. The inaction of the court having custody of the ship amounts to permission for or acquiescence in the provision of whar-fage services beneficial to the vessel’s preservation. New York Dock Co. v. S.S. Poznan, 274 U.S. 117, 122-123, 47 S.Ct. 482, 71 L.Ed. 955 (1927).

Though the S.S. Caribia had trespassed upon a City-owned pier, the district court failed for a period of several months to order the removal or sale of the vessel, which was in its custody, despite prompt application by the City for relief and the court’s recognition at the outset that the City was entitled to such relief. Frustrated in its efforts to obtain relief and unable, because the ship was in federal custodia legis, to use self-help or to take remedial action under its own Administrative Code without being held in contempt, the City finally capitulated and entered into a wharfage agreement with the shipowner. As a result, the shipowner and creditors received substantial benefits which they would not have realized if the district court had granted the relief to which the City was clearly entitled. Under the circumstances a wooden-like and literal application of the rule that in the absence of a specific court order a custodial claim will not normally be allowed as an administrative expense strikes me as unconscionable. In my view the district court’s failure for almost three months to sign the order submitted to it by the City amounted to an acquiescence in or approval of the City’s claim as an administrative expense entitled to preferential payment.

The essential facts are simple and undisputed. On August 15, 1970, the S.S. Caribia, then in custody of the United States District Court for the Eastern District of New York pursuant to creditors’ attachments, and requiring shelter in the face of the imminent hurricane season, trespassed upon Pier 86, owned by the City of New York, by mooring to the bollards along the bulkhead of the pier. The City, acting pursuant to § 704-2.0 of its Administrative Code, which authorizes it to remove and sell such a squatting ship at auction, immediately ordered the vessel to vacate the pier, which normally rented at $250 per day. However, the shipowner refused to comply, the ship being in federal court custody.

On August 26, 1970, the City promptly applied to the district court for an order directing that the vessel in the court’s custody be removed from the pier or be required to pay the regular wharfage rate of $250 per day. Under 28 U.S.C. § 1921 the U.S. Marshal, who had legal custody of the ship pursuant to the district court’s order dated April 21, 1969, was required to obtain from the libellants a deposit in advance to cover expenses, including wharfage, which would become administrative expenses entitled to preferential payment. In this case, however, the Marshal sought to avoid responsibility in the matter on the grounds that (1) although the ship was in his custody pursuant to Supplemental Admiralty Rule E(4)(b), the shipowner had agreed to pay all expenses, and (2) that the Marshal was unable to pay for wharfage because adequate funds had not been provided by the parties to meet such expenses. The creditors were apparently content with the status quo as long as the wharfage fees would not become a first charge against the ship, which was the asset relied upon by them to satisfy their claims.

On September 4, 1970, the district court denied the City’s motion for removal of the ship, pointing out that removal would leave the vessel without a berth. At the same time, recognizing that the ship was trespassing on the City’s waterfront, Judge Dooling stated that if the parties could not reach an agreement with respect to wharfage charges,

“[t]he only practical order is one that will terminate the present arrangement in favor of the marshal’s resumption of custody in usual form. If the parties are unwilling to advance the expense of the marshal’s custody, it will not be possible to stave off sale.
“It is accordingly apparent that an order must be forthwith settled on the initiative of any interested claimant directing the marshal to resume custody and providing for immediately advancing or securing the expense of his doing so or else providing for immediate sale.”

When the parties failed to reach agreement, the City, on September 8, 1970, acting in accordance with the court’s September 4 decision, submitted a proposed order along the lines directed by the court, which would have required the Marshal to lease a different pier from the City at $250 a day to be paid out of funds to be advanced by the owner and creditors, failing which the Marshal would sell the vessel. Instead of signing the order, however, the court held a hearing on October 6, 1970, attended by the City and various creditors but not by the shipowner. At this hearing the City made crystal clear its demand that the S.S. Caribia be removed from Pier 86 and that past and any future wharfage charges be treated as an administrative expense entitled to priority over the liens of the mortgagees. Mr. Dick, counsel for the City, stated to the court:

“I meant we want the boat out of pier 86 immediately. We want it in the Brooklyn pier, we want a permit issued to the marshal so that eventually if the owner does not pay, we have a first administrative claim on this vessel, or at least equal with other people who have administrative claims.”

Although the court indicated that in the absence of a court Order directing that the Marshal “be put in funds” to satisfy such charges or that the vessel be sold, the wharfage charges probably could not be treated as administrative expenses, the record reveals that the court clearly understood the City’s position in the matter. This, therefore, is not a case where the City looked only to the credit of the shipowner. Cf. Larsen v. New York Dock Co., 166 F.2d 687, 689 (2d Cir. 1948). Notwithstanding the fact that more than one month had elapsed since the City had moved for relief and nearly a month had passed since the City had submitted an order pursuant to the court’s decision of September 4, the court, apparently desirous of avoiding a forced sale of the vessel to satisfy custody charges, took no action other than to announce that it would “take [the City’s proposed] order under advisement.”

Thus the City in its effort to gain the relief to which it was clearly entitled was frustrated by the court’s inaction. There followed several more weeks without any action on the part of the court. Meanwhile the trespassing vessel remained as a squatter at Pier 86, realizing benefits for its owner and creditors to which they were not entitled. The City was anxious to enter into a lease with the Port Authority for rehabilitation of Pier 86 but was prevented from doing so by the presence of the vessel. By October 30, 1970, approximately two months had elapsed since the court’s decision and the City’s submission of the proposed order. With no alternative but to wait indefinitely, the City finally negotiated a settlement with the shipowner under which the City would waive its rent claims on condition that the owner would move the vessel to Pier 56 and do the dredging required to enable the ship to be berthed at that pier. The agreements embodying the settlement, however, were not signed until December 3, 1970. Finally, no order having been signed by the district court for over three months, the parties on December 8, 1970, filed a stipulation withdrawing the City’s proposed order.

Upon the foregoing record I cannot agree with the majority’s conclusion that the “City failed to seek in a timely manner the relief which it might have received from the admiralty court.” On the contrary, the record reveals that the City acted promptly, but was frustrated by months of delay on the court’s part in failing to sign an order granting it the relief to which it was entitled. While I concur in the majority’s characterization of the City of New York as “great,” I do not share its difficulty in apprehending how the City was forced, notwithstanding its greatness, to settle the dispute. The City simply had no alternative. The district court had sole and exclusive custody of the S.S. Cari-bia. If the City had attempted to move the ship from Pier 86 without the district court’s approval, the City would have been in contempt.

The linch-pin of the majority opinion is its reliance upon the rule that charges for services rendered to a ship in custo-dia legis may not ordinarily be treated as an administrative expense in the absence of permission from the custodial court. Gilmore & Black, The Law of Admiralty 497 (1957). However, this rule is subject to the equitable principle that where a court permits a vessel to receive the benefit of essential services with knowledge that the party rendering them looks to the court for preferential payment, the charges may be treated as administrative expenses. New York Dock Co. v. S.S. Poznan, 274 U.S. 117, 47 S.Ct. 482, 71 L.Ed. 955 (1927); Pyne v. Oil Screw Fishing Vessel Chrisway, 298 F.Supp. 1160 (S.D.Ga.1969); Roy v. MV Kateri Tek, 238 F.Supp. 813 (E. D.La.1965).

The present case is on all fours with S.S. Poznan, supra, where the Supreme Court held that, notwithstanding the lack of any prior judicial authorization or contractual arrangement for whar-fage, the New York Dock Co. was entitled to allowance of its claim for whar-fage provided to a vessel in custodia leg-is as an administrative expense. The Court of Appeals had denied the claim on the same ground as that adopted by a majority here, namely, that the whar-fage agreement had been made with the owner and not with the custodian of the ship, 9 F.2d 838, 844 (2 Cir. 1925). In reversing the Court of Appeals the Supreme Court expressly affirmed the decision of district judge Learned Hand, 297 F. 345, at page 346 (S.D.N.Y.1923), where in he stated:

“The ship is in the custody of the court, and the court alone can pledge her upon such a lien; there must be some one authorized to create consensual liens. The marshal cannot, and obviously the owner cannot. Hence the Polish-American Navigation Company by its contract could not create any lien after the marshal once took charge. The contract did not at once create a lien for the whole period; that arose de die in diem, and ceased on December 2 [the date when the ship was arrested by the marshal], if it ever began at all. Hence, in so far as this bill depends upon a maritime lien, it must fail.
“However, it is not necessary to deny the libelant all relief under the libel, if it has any against the fund in court. If the lienors, who are entitled to the whole of that fund, have in fact enjoyed the benefit of the wharfage service, to the extent of that benefit they may be called on to respond, upon familiar principles. This was the course pursued in The St. Paul, 271 F. 265 (C.C.A. 2). The Poznan required wharfage while under arrest; she required the wharfage which she got, or at least the creditors’ committee of lienors, or a majority of them, thought so.”

Thereafter Judge Augustus N. Hand, in allowing the full claim of New York Dock Co. as an administrative expense, stated:

“The ship was at the libellant’s pier and the cargo owners kept her there. They received the benefit of shelter and discharge from use of libellant’s property. I can conceive of no reasonable measure of this benefit except the reasonable value of the particular wharfage enjoyed and the incidental services rendered.” (See Record on Appeal, Vol. 116, October 1926 Term, Library of the Assn, of Bar of the City of New York).

The foregoing principles were expressly approved by the Supreme Court in New York Dock Co. v. S.S. Poznan, supra, 274 U,S. at 120-121, 122-123; 47 S.Ct. at 484:

“[W]e think petitioner’s right of recovery depends, as the district court ruled, not upon the existence of a maritime lien, but upon principles of general application which should govern whenever a court undertakes the administration of property or a fund brought into its custody for the benefit of suitors.
“The libellants in the consolidated cause were not only concerned as owners in securing delivery of the cargo, but as lienors they were interested in the ship and, as eventually appeared, in the whole of her proceeds. Service rendered to the ship after arrest, in aid of the discharge of cargo, and afterward pending the sale, necessarily inured to their benefit, for it contributed to the creation of the fund now available to them.
* * * •* * *
“But in the present case [the court below] thought that The St. Paul case was to be distinguished on the ground that there the wharfage service was furnished and the obligation incurred in accordance with an order made by the court and with the consent of the libellants. But here the court denied a motion to remove the ship from petitioner’s wharf with the consent of some of the libellants and with full knowledge of all concerned that the wharfage was then being furnished. The libellants in the consolidated cause, who are united in interest with respondent in the present case, thus appear to have acquiesced in this determination. . . It is enough if the court approves the service rendered or permits it to be rendered, and it inures to the benefit of the property or funds in its custody.” (Emphasis supplied).

Here, as in S.S. Poznan, the district court, shipowner and creditors were all concerned, because of the dangers of the hurricane season, with the safety of the vessel, which represented the asset in the court’s custody to which the creditors had to look as security for their claims. As in the S.S. Poznan all parties except the City stood to benefit from the vessel’s continued berthage at the City’s pier. Although there was nothing to prevent it from doing so, the district court declined for a period of three months to order the removal of the vessel from Pier 86, thus permitting it to remain at the pier with full knowledge that the City was demanding that the wharfarge, which was being unilaterally exacted for the benefit of the owner and creditors, be paid for as an administrative expense. As the Supreme Court stated in S.S. Poznan, where the court thus “permits it [whar-fage] to be rendered, and it inures to the benefit of the property or funds in its custody,” the wharf owner is entitled to preferential payment from the proceeds of the vessel. This principle was later applied by us in Larsen v. New York Dock Co., 166 F.2d 687, 690 (2d Cir. 1948), where Judge Frank stated:

“In the instant case, the court, before the ship’s sale, had made no order approving the service rendered or permitting it to be rendered. Neverthe- • less, we think that, as the ship had to be wharfed somewhere, and since the other parties knew of the wharfage, were ‘enriched’ by it, and took no steps, after September 6, to provide wharfage elsewhere, the Dock Company is entitled to a preferred claim for the period from September 6, to November 22,1946.”

In my opinion the record before us mandates the identical disposition of this appeal.

      . “§ 1921. United States marshals’ fees “Only the following fees of United States marshals shall be collected and taxed as costs, except as otherwise provided :
      ... * * * 3:
      “For the keeping of property attached (including boats, vessels, or other property attached or libeled) actual expenses incurred, such as storage, moving, boat hire, or other special transportation, watchmen’s or keepers’ fees, insurance, and $3 per hour for each deputy marshal required for special services, such as guarding, inventorying, moving, and so forth. The marshals shall collect, in advance a deposit to cover the initial expenses for such services and periodically thereafter such amounts as may be necessary to pay such expenses until the litigation is concluded; . . . ”

      . “Rule E. Actions in Rem and Quasi in Rem; General Provisions

      % }{: Hs $ N:
      “(4) Execution of Process; Marshal’s Return; Custody of Property.

      >¡í
      “ (b) Tangible Property. If tangible property is to' be attached or arrested, the marshal shall take it into his possession for safe custody. If the character or situation of the property is such that the taking of actual possession is impracticable, the marshal shall execute the process by affixing a copy thereof to the property in a conspicuous place and by leaving a copy of the complaint and process with the person having possession or his agent. In furtherance of his custody of any vessel the marshal is authorized to make a written request to the collector of customs not to grant clearance to such vessel until notified by the marshal or his deputy or by the clerk that the vessel has been released in accordance with these rules.”

      . Counsel for Todd Shipyard, a creditor as a result of providing wharfage for the vessel at an earlier date, summarized the situation as follows:
      “Most of the mortgagees have little or nothing to be gained by anything but cooperating with the owner. They are perfectly willing for a year and a half to have the ship resting at anybody’s expense; are unwilling to see that the bills are paid, are unwilling to have them treated as a maritime lien and unwilling to have them treated as an administrative expense. Nor are they willing to put up any money to protect the ship while its in custody under their attachments. They want the best of all sides of the coin. They don’t care that the owner has run up bills of 50 or 60 thousand dollars with the city and forty thousand dollars with Todd. That’s one hundred thousand dollars.”

      . The court’s clear understanding of the City’s position may be gathered from the following, among other colloquys:
      “The Court: No, the part that concerns me and I suppose the rest of you is Mr. Dick’s suggestion that the city is so situated that it now could, if not otherwise satisfied, present a claim in the amount of $41,750 in prior time to all other claims other than administrative ones, is that you said? [sic]
      “Mr. Dick: I think it would be an administrative claim equal with all other administrative claims.
      * m, * * *
      “Mr. Dick: Well, your Honor, the city never waived any lien which it had. It at all times knew that the vessel was around and it was hoping that this would be repaired and be put back into operation as soon as possible. Over the —Every time the ship owner came in, he came in for a permit or an extension or something, for a month, after this lie was going to be back in operation. The city never perhaps billed the marshal or came to this Court asking for relief, which it plans to do now; however it never surrendered its lien, it has never foregone it, it knew that it had a lien or a possible lien against the vessel, and since the prospects for refinancing have become dimmer, it is interested in securing both as to the past and certainly as to any future bills which are going to be run up, because it does not see very much prospect of collecting it from Universal Lines.
      “The Court: Well, the future is quite another matter.
      * * Mí M: *
      “The Court: No, in the city’s contention they will make the argument that it’s an administrative expense.”


author: DUNIWAY, Circuit Judge: RENFREW, District Judge

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Gary Donald MINER, Defendant-Appellant.
    No. 72-3204.
    United States Court of Appeals, Ninth Circuit.
    Aug. 1, 1973.
    Land Wayland, Deputy Federal Public Defender (argued), John K. Van De Kamp, Federal Public Defender, Michael J. Lightfoot, Deputy Federal Public Defender, Los Angeles, Cal., for defendant-appellant.

      William John Rathje, Asst. U. S. Atty. (argued), William D. Keller, U. S. Atty., Eric A. Nobles, Asst. U. S. Atty., Los Angeles, Cal., for plaintiff-appellee.
    Before DUNIWAY and WRIGHT, Circuit Judges, and RENFREW, District Judge.

       The Honorable Charles B. Renfrew, United States District Judge for the Northern District of California, sitting by designation.

   OPINION

DUNIWAY, Circuit Judge:

Miner appeals from his conviction for possessing amphetamine pills with intent to distribute them, 21 U.S.C. § 841(a) (1). He challenges only the denial of his motion to suppress the pills as the fruit of an improper search. We remand for further proceedings.

On April 28, 1972, at Los Angeles International Airport, Miner approached the counter- to cheek in for a United Air Lines flight from Los Angeles to Portland, Oregon. He was in a hurry, seemed nervous, and was determined by one of the ticket agents on duty to fit the Federal Aviation Administration’s “profile” of possible airline highjackers. Two airline employees thereupon escorted Miner to a different area of the airport and asked him to walk through a magnetometer, a gadget designed to detect the presence of metal on boarding passengers. Miner complied, but the machine did not register. A third airline employee joined the group. Miner was then asked to open a small suitcase which he was carrying, but refused to do so.

The evidence conflicts at this point. The airline employees testified that, after Miner’s refusal to open the suitcase, they told him that he could leave if he wished, but that if he wanted to board the plane he would have to submit to a search of his luggage. Miner said that he was told nothing regarding his right to terminate the search by electing not to board the plane. The witnesses agreed that, following further requests, Miner opened the suitcase and the amphetamine pills were discovered. The district court denied the motion to suppress without making findings of fact.

Our decision in United States v. Davis, 9 Cir., 1973, 482 F.2d 893, settles the basic validity of the airport search program. It also establishes that the program is so much a governmental one that the Fourth Amendment applies, even though, as in this case, the search is by airline employees.

We think that, as suggested in Davis, Miner’s approaching the counter with the obvious intention of boarding a plane amounted to an implied “consent” within the meaning of Davis. The search took place when concern over the problem of airplane hijacking was at its peak, see generally Davis, supra, 482 F. 2d at 897-9Ó2, and some three months after the FAA had ordered the airlines to screen all potential passengers. Id. 482 F.2d at 899-901. Moreover, Miner admitted that he had flown six or seven-times before, that he had seen signs warning that all passengers and their baggage were subject to search, and that he knew what they meant. He still sought to board the plane.

However, it is undisputed that when the airline employees attempted to extend the search to Miner’s suitcase, he responded by saying, “No, it’s personal.” At the least, this was an apparent withdrawal of the implied “consent.” At that point, the airline employees would have been justified in refusing to permit him to fly, but they could not compel him to submit to further search. See, Davis, supra, 482 F.2d at 910-912, 914. Asking Miner to open his suitcase could be justified only if he continued to manifest an intention to board the plane, or if he otherwise consented to the search. If Miner’s version of the events is true, his acquiescence appears to have been similar to that of the defendant in United States v. Ruiz-Estrella, 2 Cir., 1973, 481 F.2d 723, who submitted to a search of his bag in response to the request of a sky marshal. The Second Circuit stated:

“The ‘request’ took place after the agent, attired in a uniform and badge, took Ruiz-Estrella away from the boarding area, into a stairwell, and closed the door behind them. The fact that a suspect, who has not been warned of his right to refuse the search, silently hands over his bag in such circumstances will not support the inference of freely given consent.” 481 F.2d at 728.

So here, Miner had been segregated from the normal boarding area, and was confronted by three uniformed airline employees. If he is to be believed, he opened his suitcase - only after repeated demands that he do so, and was never warned of his right to refuse further search. Rather than sustaining the Government’s burden on this issue, these facts would show no more than submission to apparently lawful authority. See United States v. Ruiz-Estrella, supra; United States v. Kramer Grocery Co., 8 Cir., 1969, 418 F.2d 987, 989. Thus, disposition of this case requires resolution of the conflict between Miner’s testimony and that of the airline employees. We do not hold that the law requires that Miner be told that he had a right not to be searched if he chose not to board the plane. Whether he was so told or not is only one bit of evidence to be considered. The question is whether, under all the circumstances, he voluntarily consented to the search. See Schneckloth v. Busta-monte, 1973, 412 U.S. 218, 93 S.Ct. 2041, 36 L.Ed.2d 854; Davis, supra, 482 F.2d at 913.

Ordinarily, when a motion to suppress has been denied, we view the evidence in the light most favorable to the Government. See, e. g., United States v. Sherman, 9 Cir., 1970, 430 F.2d 1402, 1404. Moreover, where no findings of fact have been made, and in the absence of a request for such findings, we will uphold the result if there is a reasonable view of the evidence that will sustain it. See United States v. Montos, 5 Cir., 1970, 421 F.2d 215, 219 n. 1; Scarbeck v. United States, 1963, 115 U. S.App.D.C. 135, 317 F.2d 546, 562. However, we think that we should not apply these principles here.

From the beginning, the primary issue in the district court was whether “airport searches” are subject to the Fourth Amendment when conducted by airline employees with no assistance from government officials. This was the only point argued by the Government in its points and authorities in opposition to Miner’s motion to suppress, and the bulk of the testimony at the hearing was directed to that issue. At the time that this case arose the question of whether such searches were “private,” and hence not subject to the Fourth Amendment, was very much an open one, both in this Circuit and elsewhere. It was not until our decision in Davis, supra, that we held that all airport screening procedures must pass the constitutional test of reasonableness.

On such a record it is going far to assume that the district court resolved the evidentiary conflict in the Government’s favor. It is at least equally likely — perhaps more so — that the trial judge concluded that this was a private search, and felt it was unnecessary to decide whether Miner was compelled to open his luggage, or voluntarily consented to do so. We have no basis upon which to judge the credibility of the witnesses; it is therefore necessary to remand the case for further proceedings with respect to this issue.

Remanded.

RENFREW, District Judge

(dissenting) :

I respectfully dissent. Viewing the evidence in the light most favorable to the Government, which is the standard to be applied on appeal, the record supports the conclusion that Miner voluntarily consented to the search of his suitcase. The judgment below should be affirmed.