source: Caselaw Access Project

author: MATTHEWS, Senior District Judge:

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text:
    H. Max AMMERMAN et al., Appellants, v. Lou MILLER.
    No. 71-2048.
    United States Court of Appeals, District of Columbia Circuit.
    Argued April 5, 1973.
    Decided Oct. 26, 1973.
    Rehearing Denied Nov. 21, 1973.

      J. Alan Galbraith, Brattleboro, Vt., for appellants.
    Bernard I. Nordlinger, Washington, D. C., for appellee.
    Before McGOWAN and MacKINNON, Circuit Judges, and BURNITA SHELTON MATTHEWS, Senior United States District Judge for the United States District Court for the District of Columbia.

       Sitting by designation pursuant to 28 U.S.C. § 294(c).

   MATTHEWS, Senior District Judge:

This is the second appeal in this case. Mr. and Mrs. Ammerman, plaintiffs-appellants, first appealed from a District Court judgment dismissing their complaint on the ground that it failed to state a claim upon which’relief could be granted. On that appeal this Court reversed, holding that the allegations of the complaint were sufficient to withstand defendant’s motion to dismiss. Ammerman v. Miller, 139 U.S.App.D.C. 188, 432 F.2d 621 (1970).

After a trial on the merits, the District Court found against the Ammermans on their complaint for recission of two promissory notes on grounds of mistake and lack of consideration, and rendered judgment for Louis Miller, defendant-appellee, on his counterclaim for the balance allegedly due on the second of these notes.

The present appeal by the Ammer-mans followed. They claim that the District Court, having found that Am-merman believed himself to be liable as a guarantor under pertinent documents, erred in not rescinding the Ammermans’ December 30 note on the ground of mistake. They also assert that the District Court erred in concluding that the Am-mermans, when they sold their interests in a joint venture, became liable to Miller, since the Ammermans received no money which belonged to Miller, and Miller had no contractual basis for interfering with the Ammermans’ right to alienate their own interests. Further, the Ammermans contend that if the court correctly held them liable to Miller, the court erred in failing to reduce their liability because of Miller’s usury.

THE BACKGROUND

In the main the facts are not in dispute. The controversy is as to the legal consequences which flow from the facts. Hence a factual recital is indicated.

Jerry Wolman, H. Max Ammerman, Daniel Melnick, Melvin A. Robinson, and their respective wives, were venturers in a Maryland real estate venture pursuant to a written instrument designated as the Grigsby Joint Venture Agreement. The venturers acquired land in Prince George’s County, Maryland, and built thereon the Dodge Park View Apartments. Their percentage participation was allocated as follows: the Ammer-mans, 42.5% ; the Wolmans, 32.5%; the Melnicks, 12.5%; and the Robinsons, 12.5%. .

In January 1966, Melnick and Robinson sought to borrow $125,000 from the defendant Louis Miller for personal purposes unrelated to the Grigsby Joint Venture. They offered Miller a “bonus” of $11,000 for the loan and an assignment of their ownership interests in the Grigsby Joint Venture as security. Miller indicated that he would make them the loan provided Ammerman and Wolman would agree to purchase the Grigsby ownership interest of the Mel-nicks and the Robinsons, to be assigned to Miller as security, in the event Mel-nick and Robinson defaulted on their promissory notes, and also provided Am-merman and Wolman would sign their notes.

At the request of Melnick and Robinson, Ammerman and Wolman consented to the assignment of the Melnicks’ and Robinsons’ ownership interest to Miller, and agreed that upon 30 days’ written notice from Miller they would purchase from him the Melnick and Robinson ownership interests in Grigsby for the face amount of the promissory notes of the Melnicks and Robinsons if they were not paid at maturity.

All the documents intended to express the loan deal were drawn up by an attorney for Melnick and Robinson. Two promissory notes were prepared for $68,000 each, payable to Miller’s order, dated January 24, 1966, with interest at the rate of 6% until paid, payable monthly, and the principal payable January 24, 1967, one note to be signed by Melnick and his wife, and the other by Robinson and his wife.

Two identical instruments headed COLLATERAL ASSIGNMENT, were also prepared. By each Collateral Assignment, the borrower and his wife were thereby to

“set over, assign and convey unto the Assignee, [Miller] as collateral and for security purposes, their twelve and one-half * * * percent ownership interest in the Grigsby Joint Venture, a Maryland Joint Venture, originally formed pursuant to a Joint Venture Agreement executed on the 15th day of April, 1963, which Joint Venture the Assignors * * * represent to be the owner of the Dodge Park View Apartments, Sections 1, 2 and 3, located in Prince George’s County, Maryland.”

Ammerman’s and Wolman’s commitment was set forth only in a writing known as Consent By Remaining Ven-turers (hereinafter Consent Agreement). At the end of the notarial ac-knowledgement of each of the above described COLLATERAL ASSIGNMENTS, the Consent Agreement appears as an appendage. In its entirety, it reads:

“We, the undersigned, being all of the remaining Venturers in the GRIGSBY JOINT VENTURE, DO HEREBY CONSENT to the foregoing Collateral Assignment and, in addition, agree that in the event the Promissory Note referred to in the Collateral Assignment is not paid at maturity, that upon thirty (30) days’ written notice from the Assignee [Miller], we will purchase the Joint Venture interest for the face amount of the note.”

After these documents had been executed by the necessary parties, a meeting took place between Melnick, Robinson, Miller, and Samuel B. Block, an attorney representing Miller. The documents were read by Miller and his attorney after which Miller took possession of them, and later passed $125,000 in checks over to Melnick and Robinson. The $11,000 difference between the $125,000 loaned and the combined face amount ($136,000) of the Melnick-Robinson promissory notes was regarded by Miller as his “profit” or “bonus” on the deal. Ammerman was unaware of this “bonus” at the time and believed that the value of the MelnickRobinson joint venture ownership interests was about $136,000.

Although Miller had possession of the executed Collateral Assignments of the twenty-five percent ownership interests of the Melnicks and Robinsons in the Grigsby Joint Venture, he did not record the Assignments. Because of such failure, the Melnicks and Robinsons continued to appear of record as the holders of the interests they had conveyed to Miller as collateral and for security purposes.

The United Community Bank recorded a judgment lien, effective August 31, 1966, against the Melnicks and Robin-sons in the amount of $123,200, plus costs and interest.

Wolman was a substantial builder of apartments and office buildings in different areas. Running into a very difficult money market in the summer of 1966 and a resultant diminution in real estate sales, and with construction commitments not fully met, Wolman desired to work out his problems by effecting sales of property in which he had an interest.

Wolman had a prospect, Investors Funding of New York, interested in acquiring several thousand apartment units. Hence Wolman sought to purchase all of the Ammerman interests in several separate ventures. This led to an agreement between the Wolmans and the Ammermans for the sale or trade or transfer to Wolman or his nominee of the Ammerman interests in four ventures, including Grigsby, the terms for the different venture interests being separately stated.

As to the Ammerman interests of 42% percent in Grigsby, such agreement dated September 20,1966, provided:

“[1.] For all of their interests in the Dodge View properties, Wolman shall make no payment to said Am-mermans, but the sum of $295,000.00 in cash shall be paid to the Grigsby Limited Partnership and Ammermans shall cause a conveyance of their interest to Wolman.” (Emphasis supplied.)
“[2.] Wolman will convey to sa^ Ammermans a one-half undivided interest in and to property described as Dodge View Park, subject to a mortgage secured thereon in the approximate balance sum of $200,000.00, said property being unimproved land.”

On October 16, 1966, Mr. and Mrs. Wolman entered into an agreement with Melnick and Robinson and their respective wives whereby the Melnicks and Robinsons agreed to sell and Mr. and Mrs. Wolman agreed to buy “all of the Sellers’ Joint Venture Ownership Interest” in the Grigsby Joint Venture. The purchase price was stated as $75,000 in cash. The “vacant land” was excluded from the contract.

Wolman knew that the Melnick-Robin-son joint venture interests were already pledged to Miller but was assured by Melnick and Robinson that Miller was no problem and that they would work out matters with him.

However, Melnick and Robinson did not advise Miller that they intended conveying their joint venture interests to the Wolmans. They did ask Miller to accept the $75,000 which they expected-to receive from Wolman under the last-mentioned agreement. In the promissory notes which the Melnicks and Robin-sons had given to Miller and which were not due until 1967, they had reserved “the right of prepayment of part or all of the principal sum, at any time and from time to time, without penalty.” But their proposal to Miller for prepayment of the $75,000 seems to have contemplated a refinancing of the rest of their indebtedness to him and it did not materialize.

While attempting to acquire all outstanding ownership interests in the Grigsby Joint Venture, Wolman learned of the recordation by the United Community Bank of its judgment lien in the amount of $123,200 against the Melnicks and Robinsons. Realizing that this judgment lien would have to be lifted before he could convey to his outside buyer a clear title to the Dodge Park View Apartments, Wolman obtained a release of the judgment lien by paying the United Community Bank $11,500, and personally guaranteeing the payment of an additional $40,000 which later was paid. The release of the judgment lien was filed November 25, 1966.

Wolman made settlement with the Ammermans under his agreement with them of September 20, 1966, and with the Melnicks and. Robinsons under the agreement with them dated October 16, 1966.

Having agreed to sell the land and premises constituting the Dodge Park View Apartments to an outside buyer and to avoid a series of conveyances, Wolman had a single deed prepared to convey said land and premises to CH #13, a Maryland corporation, acting as nominee for his outside buyer, the deed to be signed by all record title holders as grantors. Thereafter at Wolman’s request, the Ammermans executed the conveyance. The Melnieks and Robinsons along with the Wolmans collectively held all the remaining interests in the record title to the Dodge Park View Apartments. When they also executed the deed to CH #13, Miller lost his unrecorded security.

Miller learned of the conveyance. Early in January 1967, his attorney sent identical letters to the Melnieks, Robin-sons, Ammerman and Wolman demanding payment of the Melnieks’ and Robin-sons’ promissory notes on the ground that the collateral given to secure them had been disposed of.

Shortly thereafter the Melnieks and Robinsons defaulted on their notes, and Miller’s attorney made a further demand on Wolman, the Melnieks, Robinsons and Ammerman for payment. Believing they had unconditionally guaranteed the payment of these notes, Ammerman and Wolman deemed themselves obligated to respond to the demand made upon them by Miller’s attorney to pay.

However, because late in the year 1966 Ammerman had agreed to sell to Wolman all of the Ammermans’ ownership interests in the Joint Venture, both Ammerman and Wolman as between themselves regarded it as Wolman’s responsibility to satisfy the demands of Miller’s attorney.

Miller’s attorney discussed the obligation with both Wolman and Ammer-man. He then prepared a proposed note.

Accordingly, Wolman and his wife signed this note dated March 15, 1967, for $136,000 payable to Miller. Wolman sent the note to Ammerman along with a letter following which Ammerman also signed the note. It was for ninety days but was not paid at maturity. For some time the matter drifted along while Wolman assiduously worked on deals from which he expected to realize funds with which to take up the note of March 15, 1967, and to solve other financial problems. But on December 12, 1967, Wolman and his wife filed an application to declare bankruptcy under Chapter 11 of the Bankruptcy Act.

Thereafter on December 30, 1967, Am-merman gave Miller a new note, cosigned by his wife, in exchange for the note of March 15, 1967. This new note was for $142,460, taking into account accrued interest, this being the note on which Miller’s counterclaim is based.

Late in 1967 Ammerman engaged an attorney in an effort to collect the defaulted notes of the Melnieks and Robin-sons. Miller had endorsed these notes to Mr. and Mrs. Ammerman and delivered them after he had received the Ammer-man-Wolman note of March 15, 1967.

In Maryland litigation on the Mel-nick-Robinson notes, Ammerman’s attorney obtained a copy of the Consent Agreement. Following discovery of the content of the Consent Agreement, and in light of his attorney’s opinion that under that document Ammerman had no liability to Miller, Ammerman tendered to Miller the Melnick and Robinson notes in exchange for the Ammermans’ note of December 30. Miller refused the tender, and the instant action followed.

I

THE NATURE OF AMMERMAN’S OBLIGATION

In the complaint Ammerman asserts that he and Wolman believed that they had unconditionally guaranteed payment of the Melnick-Robinson notes until an attorney for Ammerman in mid-year 1968 obtained a copy of one of the Consent Agreements and advised Ammerman that in his opinion these documents did not make Ammerman a guarantor. Consequently in his complaint Ammerman asked for a declaration by the court that plaintiffs are under no financial obligation to defendant Miller.

The nature of Ammerman’s undertaking rests upon the Consent Agreements, read in the light of the surrounding circumstances. Myers v. Myers, 153 Md. 44, 137 A. 501 (1927).

Miller had known Melnick and Robinson many years and Mrs. Melnick is his cousin. Nevertheless, when Miller was propositioned by Melnick and Robinson about a loan, Miller made it plain that he wanted more protection than they were offering. At trial Miller testified that he told them he “wanted Jerry Wol-man and Max Ammerman’s name on that note and in case there were any problems, [he] wanted them to buy out [his] interest.” In a pretrial deposition Miller said he desired “that Jerry Wolman and Max Ammerman sign an agreement that in the event that [the Melnick-Robinson notes were] in default Jerry and Max would buy out [his] interest.” Ammerman and Wolman were not present at any of the negotiating sessions. With papers drawn up by their attorney, Melnick and Robinson went to Ammerman and Wolman and obtained their signatures on the Consent Agreements, but not on the Melnick-Robinson notes.

The trial court held that Am-merman’s obligation was “something less than an unconditional guaranty.” We agree. We think that Ammerman was a conditional guarantor in that he obligated himself in the event the Melnick-Robinson notes were not paid at maturity, and upon thirty days’ written notice from Miller, to purchase the joint venture interest assigned to Miller as security and to pay Miller therefor the face amount of the Melnick-Robinson notes.

A contract of guaranty is “a promise to pay or an assumption of performance of some duty upon failure of another who is primarily obligated in the first instance.” Pavlantos v. Garoufalis, 89 F.2d 203, 205-206 (10th Cir. 1937). See also 38 C.J.S. Guaranty § 1.

Contracts of guaranty are divided into two kinds. “One is absolute or unconditional and the other is conditional. An absolute guaranty is an unconditional undertaking on the part of the guarantor that the person primarily obligated will make payment or will perform, and such a guarantor is liable immediately upon default of the principal without notice. A conditional guaranty is an undertaking to pay or perform if payment or performance cannot be obtained from the principal obligor by reasonable diligence.” Pavlantos v. Garoufalis, supra, at p. 206. See also Hodgson v. Burroughs, 175 Md. 413, 2 A.2d 407 (1938).

Like every other contract, a contract of guaranty can only be made by the mutual assent of the parties. Since the guaranty by Ammerman and Wolman was made at the request of Miller, the guaranty became the answer of Am-merman and Wolman to Miller’s proposal, and its delivery to Miller or for his use completed the communication between them and constituted a conditional contract of guaranty. Davis v. Wells, 104 U.S. 159, 26 L.Ed. 686 (1881). The consideration to Ammerman and Wolman for this guaranty (the Consent Agreements) was the loan from Miller to the Melnicks and Robinsons. Lutz v. Porter, 206 Md. 595, 112 A.2d 480 (1954). But for this guaranty Miller would not have made the loan.

II

THE ABSENCE OF TENDER

It stands without contradiction that Miller made no tender to Ammerman of the Grigsby Joint Venture ownership interests assigned to him by the Melnicks and Robinsons. Ammerman’s position is that the Consent Agreements required a proper tender, a condition precedent Miller did not fulfill; that, therefore, Ammerman’s duty to pay for that which was to be tendered never arose; and hence that there was a failure of consideration for the note of March 15, and the note of December 30, 1967, entitling Ammerman to their cancellation.

We have already pointed out that Ammerman and Wolman received consideration for their guaranty, this being the loan made by Miller to the Melnicks and Robinsons. The Wolman-Ammerman note of March 15 was their response to Miller’s demand on them as guarantors. But this does not settle the question of Miller’s obligation to tender the security he received for the loan, i. e., the Melnick-Robinson interests in the Joint Venture.

The rationale of the District Court was that Miller’s failure to make tender to Ammerman of the Melnick-Robinson Joint Venture interests was excusable because brought about by actions in which Ammerman “participated and had the legal power to prevent.” These actions included the joinder of the Ammermans with all the other joint venturers as grantors in the deed whereby the total interests in the Dodge Park View Apartments — the main asset of the Grigsby Joint Venture — were transferred to a corporation with the result that the security theretofore conveyed to Miller by the (unrecorded) Collateral Assignments was put beyond Miller’s reach, and his power to tender such security to Ammerman in ease of default of the Melnicks and Robinsons was destroyed.

At the time the Dodge Park View Apartments were sold and transferred to the corporation the Melnick-Robinson notes held by Miller had not matured, and Ammerman knew or should have known, that the Collateral Assignments given with his consent to Miller by the Melnicks and Robinsons were outstanding.

The Grigsby Joint Venture Agreement contained a provision against the disposition by a venturer of all or any of his joint venture interest without the previous written consent of the other joint venturers. Ammerman might have utilized this provision to prevent the Mel-nicks and Robinsons from further disposition of their joint venture interests which were already assigned to Miller. By not preventing such transfer, Am-merman permitted it with the resultant destruction of the interests by which Miller was secured.

Deeply rooted in our jurisprudence is the rule applied by the District Court herein as enunciated in Coastal Oil Co. v. Eastern Tankers Seaways Corp., 29 N. J.Super. 565, 103 A.2d 26 (1954) as follows:

“It is well established as a principle of fundamental justice that if a prom-isor prevents or hinders the occurrence or fulfillment of a condition in a contract, and the condition would have occurred or would have been fulfilled except for such hindrance or prevention on the part of the promisor, then the performance of the condition is excused and the liability of the promi-sor is fixed regardless of failure to fulfill the condition.” 103 A.2d 32.

See also United States v. Peck, 102 U. S. 64, 26 L.Ed. 46 (1880); Gulf Oil Corporation v. American Louisiana Pipe Line Co., 282 F.2d 401 (6th Cir. 1960); Tradewell Foods v. New York Credit Men’s Adj. Bur., 179 F.2d 567 (2nd Cir. 1950); Restatement of Contracts §§ 294, 295 (1932); 5 S. Williston, Contracts § 677 (3rd ed. 1961); 17A C.J.S. Contracts § 468b (1963).

Furthermore, the record establishes that when Miller’s attorney demanded payment from Ammerman and Wolman of the Melnick-Robinson notes before their maturity, the demand was squarely grounded on the disposition of the Melnick-Robinson Joint Venture interests by which Miller had been secured. Ammerman and Wolman were fully cognizant of that disposition as they themselves had been parties to the instrument by which the disposition was accomplished. Prior to giving any promissory note to Miller, Ammerman and Wolman were on notice from Miller’s attorney that his demand on them for payment of the Melniek-Robinson notes rested on the disposition of the joint venture interests which, with their consent, had been assigned to Miller. Even assuming that Ammerman gave .his notes under a mistaken theory, still he would not be entitled to rescission or restitution if it were not inequitable for Miller to retain the benefit. See Restatement of Restitution § 61 (1937). Cf. Sawyer v. Mid-Continent Petroleum Corp., 236 F.2d 518, 521 (10th Cir. 1956).

The relief sought by the Ammermans — the rescission or cancellation of their promissory notes — is ordinarily considered to be exclusively equitable in nature. The allowance or denial of rescission rests in the sound discretion of the trial court. In determining whether rescission should be granted or refused in a particular case, the trial court exercises its discretionary power in light of what is just and reasonable under all the surrounding circumstances, and in the main proceeds on the general principles of equity jurisprudence. 12 C.J.S. Cancellation of Instruments §§ 2, 3.

We cannot say that the District Court abused its discretion in ruling that Miller was excused from making tender and that lack of tender did not entitle the Ammermans to cancellation of their notes.

Ill

DUTY OF CREDITOR TO RECORD ASSIGNMENTS

The Ammermans also assert that they had every right to convey their own interest in the Dodge Park View Apartments; that Miller lost his security, not because the Ammermans conveyed their interest, but because the Melnicks and Robinsons could and did convey their interests as Miller had failed to record his collateral assignments.

We read the trial court’s opinion as holding that Miller had no duty to record the Collateral Assignments. We cannot subscribe to that position.

The general rule is that if a creditor receives a mortgage, deed of trust, assignment, or similar conveyance of property of the debtor as security for the debt, knows of the guarantor’s obligation, and the recording of such conveyance is necessary so as to make it valid against subsequent judgment creditors and purchasers, it is the duty of the creditor to see that the instrument in his hands is properly recorded, and if he fails to act, the guarantor will be discharged to the extent of the loss thereby occasioned. D. W. Jaquays & Co. v. First Security Bank, 101 Ariz. 301, 419 P.2d 85 (1966); First Nat. Bank v. Kittle, 69 W.Va. 171, 71 S.E. 109 (1911); Sullivan v. State, 59 Ark. 47, 26 S.W. 194 (1894); 50 Am.Jur., Suretyship, § 118; Restatément of Security § 132, p. 358 (1941); A. Stearns, Suretyship § 99, p. 142 (4th ed. 1934); 1 G. Brandt, Suretyship and Guaranty, § 505 (3rd ed. 1905). Cf. Etelson v. Suburban Trust Company, 263 Md. 376, 283 A.2d 408 (1971).

It is undisputed that at all pertinent times the Collateral Assignments were in the exclusive custody and control of Miller. Therefore as to them he was bound to exercise good faith and reasonable care.

We think it was Miller’s duty to record the Collateral Assignments. Had he done so, likely this litigation would never have arisen. Recordation would have been constructive notice to all subsequent judgment creditors and purchasers, and this would have preserved the joint venture interests assigned to Miller.

We regard the Collateral Assignments here involved as qualifying for recordation under the Annotated Code of Maryland 1957, Art. 21, § 26 (1966 Replacement Volume). It provides :

“Every bond, writing obligatory or contract for the conveyance of real estate, or any interest or estate of, in, or relating to real estate, * * * may be executed, acknowledged and recorded in the same manner as deeds of real estate * *

Each Collateral Assignment given to Miller described the Dodge Park View Apartments owned by the Grigsby Joint Venture sufficiently for identification purposes, used language appropriate to conveyancing, and was executed by the assignors in the same manner as a deed, that is to say, each was signed, sealed, attested by one witness, and acknowledged before a Notary Publie. Ann.Code of Md.1957, Art. 21, §§ 5, 6, 12, 68, 82, 84, 85 (1966 Replacement Volume).

Notwithstanding Miller’s duty to record the Collateral Assignments, his failure to do so is of no consequence unless it occasioned injury or loss to Am-merman.

As already noted, the judgment obtained by the United Community Bank for $123,200 plus interest and costs against the Melnicks and Robinsons was recorded in August 1966. The evidence reveals, however, that due to efforts and expense by Wolman this judgment was released of record in November 1966, before the Melnick-Robinson notes fell due, and prior to any demand whatever on Ammerman under his conditional guaranty, i. e., the Consent Agreements.

We conclude that under the circumstances Miller’s failure to record the Collateral Assignments was not the cause of injury or loss to Ammerman.

IV

MILLER’S COUNTERCLAIM

The Subrogation Issue

In dispute here is the question of the subrogation right asserted by Ammer-man, and opposed by Miller.

Ammerman contends that he and Wol-man gave their note of March 15, 1967, for $136,000 to Miller in extinguishment of the instruments of guarantee which they then believed the Consent Agreements were, and that they thus became entitled by right of subrogation to the unpaid notes of the Melnicks and Robin-sons.

On the other hand, Miller claims that Ammerman and Wolman elected to purchase from him the defaulted Melnick-Robinson notes totaling $136,000 and that the Ammerman-Wolman note of March 15, 1967, for $136,000 was given to him for such purchase.

The District Court did not articulate its views on the claimed right of subro-gation. Indeed no mention is made in its opinion of the subrogation issue.

Early in its opinion the court found that Ammerman “regarded himself as a guarantor of the Melnick-Robinson notes in the amount of $136,000, and * * * when those notes were not paid at maturity and when demand was made upon him to pay, Ammerman gave his note to Miller in the amount of $136,000.” Yet later in the opinion the court concluded that Ammerman elected to purchase the Melnick-Robinson notes.

The record contains no testimony supportive of such an election. However, a letter in evidence dated March 25, 1967, from Wolman to Ammerman, contains the two following sentences:

“I am enclosing the note for Sam Block, which represents the purchase price for the Robinson and Melnick note.
“I would appreciate your treating this as if we are both liable and sending whatever should be sent to Robinson and Melnick on our behalf, plus whatever concentrated effort you can make on getting some money from them, as they do nothing more than ignore me.”

Referring to the last above mentioned letter, the court said:

“This communication represents a decision by Wolman to purchase the Melnick-Robinson notes.”

As to Ammerman, the court held:

“He * * * bought the notes for their face amount by giving his note in an even amount. * * * This election to purchase these notes by giving his own note does not make the defense of usury available to [Ammer-man] on'the counterclaim.” (Emphasis added.)

At the trial Wolman was asked what he meant when he wrote Ammerman that he was enclosing a note for Sam Block representing the purchase price for the Robinson and Melnick note. Wolman replied:

“Sam Block told me that he couldn’t get anywhere with Robinson and Mel-nick and that he would agree to take my note for their note, and that when I sent him my note back properly executed, he would return their notes to me.”

Wolman explained that he asked Ammer-man to sign the March 15, 1967, note with him because by that time Block was not willing to take his signature alone.

Ammerman in his testimony said:

“Well, Mr. Wolman is not an attorney. We were not purchasing Robinson and Melnick notes as I stated before. I believe[d] we had an obligation as guarantors and were entitled to the notes when we gave this note [for $136,000] for that obligation as a guarantor, we were entitled as a matter of law to these notes.
•x- x -x- x x x
“Once we paid the guarantee, we were entitled to whatever the guarantee was given for as a matter of law. That is why we got the [Melnick-Rob-inson] notes.
X X X X X X
“[W]e gave the note of March 15, 1967 in extinguishment of the guarantee of January, 1966, and we are entitled to the fruits of the guarantee, namely, the two notes [of] Melnick and Robinson, and we got them subsequently as I indicated to you before.”

The testimony of Mr. Block, Miller’s attorney, clearly manifests that after Melnick and Robinson defaulted on their notes, Block’s demands on Wolman and Ammerman were premised on their guaranty (the Consent Agreements). As in the case of other witnesses, the concept that Ammerman and Wolman elected to purchase the Melnick-Robinson notes, finds no support whatever in Block’s testimony.

Much has been written regarding the doctrine of subrogation. Mr. Justice Frankfurter for the Court in Amer. Surety Co. v. Bethlehem Bank, 314 U.S. 314, at pages 316 and 317, 62 S.Ct. 226, at page 228, 86 L.Ed. 241 (1941), referred to “familiar equitable doctrines evolved by the courts,” and said that among

“the oldest of these doctrines is the rule of subrogation whereby ‘one who has been compelled to pay a debt which ought to have been paid by another is entitled to exercise all the remedies which the creditor possessed against that other.’ Sheldon, Subro-gation (2d ed.) § 11.”

Judge Edgerton stated the rule of subrogation for this Court in Amalgamated Casualty Ins. Co. v. Winslow, 77 U.S.App.D.C. 382, 384, 135 F.2d 663, 665 (1943):

“One who is compelled to pay a claim which another ought in fairness to pay is subrogated to the creditor’s rights against him."

Since the guaranty agreement herein was made in Maryland, it is Maryland law that governs in determining a guarantor’s right to subrogation as to all the creditor’s rights against the debtor and the debtor’s collateral. It is appropriate that we turn to Orem v. Wrightson, a leading Maryland case and in the law generally on the right accorded the subrogee.

Judge Brent, speaking for the Court in Orem stated:

“The doctrine of subrogation, or substitution as it is also termed, is a peculiar feature of equity. It is not founded in contract, but has its origin in a sense of natural justice. So soon as a surety pays the debt of the principal debtor, equity subrogates him to the place of the creditor, and gives him every right, lien, and security, to which the creditor could have resorted for the payment of his debt.”

Recognizing the difficulty in laying down a general rule applicable to all cases in which subrogation is sought, the Maryland Court of Appeals has determined the essential elements of the legal right of subrogation to be: “(1) the existence of a debt or obligation for which a party, other than the subrogee, is primarily liable, which (2) the subrogee, who is neither a volunteer nor an inter-meddler, pays or discharges in order to protect his own rights and interests. See 50 Am.Jur., [Subrogation], § 10; 83 C.J.S. Subrogation, §§ 3, 5. If these requirements are met, legal subrogation exists by operation of law without the consent of the creditor.”

It is noteworthy that in Maryland rights to subrogation are given by statute. The Maryland Code provides:

"The surety in any bond or other obligation for the payment of money or promissory note, or the endorser of any protested bill of exchange, who shall pay or tender the money due thereon, whether the whole be due or part has been previously paid, shall be entitled to an assignment thereof; and may, by virtue of such assignment, maintain an action in his own name against the principal debtor.”

However, in Maryland a surety’s right to subrogation exists independently of statute, this Act (originally enacted in 1763) being merely declaratory of the common law. The surety’s right of subrogation is not limited to relations of a formal suretyship, but applies to all persons upon whom there is a fixed liability, whether surety, endorser, acceptor or guarantor, to pay a debt which was due, and which the principal debtor ought to pay.

The District Court held that the letter from Wolman to Ammerman dated March 25, 1967, represented a decision by Wolman to purchase the Melnick-Rob-inson notes. True, in the first sentence of that letter Wolman did say that the enclosed note represented the purchase price for the Melnick-Robinson notes. However, this communication was not addressed to Miller but was exclusively between Wolman and Ammerman. The record does not even disclose when or how Miller became aware of it.

It is not particularly unusual that Wolman, a layman, should have expressed the transaction in terms of “purchase” of the “notes” when, in fact, legal writers have described the right of subrogation as in the nature of a purchase. For example, in the annotation to the case of Dering v. Earl of Winchelsea, 1 Leading Cases in Eq., 60 (m,) it was said:

“Payment by one who stands in the relation of a surety, although it may extinguish the remedy or discharge the security, as respects the creditor, has not that effect as between the principal debtor and the surety. As between them it is in the nature of a purchase by the surety from the creditor-, it operates an assignment in equity of the debt and all legal proceedings upon it, and gives a right in equity to call for an assignment of all securities; and, in favor of the surety, the debt and all'its obligations and incidents, are considered as still subsisting.” (Emphasis added.)

Furthermore, in the second and last sentence of the same letter, Wolman requested that Ammerman treat the note as if they were both liable. Wolman’s speaking of liability here seems strangely inappropriate language for one exercising a free election to purchase. Rather, it reflects a purpose to honor his guaranty.

We think Ammerman is entitled to the Melnick-Robinson notes by right of subrogation as a matter of law. Had the court recognized that right, then it could not have found an election by Ammerman to purchase the notes. “The rule that an appellate court will not disturb findings of fact made by the trial judge unless they are clearly erroneous does not apply if he has committed an error of law which has manifestly influenced or controlled his findings of fact * * Owen v. Commercial Union Fire Ins. Co. of New York, 211 F.2d 488, 489 (4th Cir. 1954).

V

DEFENSE OF USURY TO COUNTERCLAIM

There is no question but that Miller’s loans to the Melnicks and Robinsons were usurious under either the laws of Maryland or those of the District of Columbia. Miller loaned them the sum of $125,000 but received promissory notes totaling $136,000 carrying interest at the rate of six percent per annum.

Since we have determined that Am-merman’s liability to Miller is not predicated upon an election to purchase the Melnick-Robinson notes but upon his guaranty, we must now consider the question of whether Ammerman, as a guarantor, may avail himself of the defense of usury.

The threshold legal question is whether the law of Maryland or the law of the District of Columbia applies. It is Ammerman’s position that since Miller counterclaimed on the Ammerman note of December 30, a note tainted by the usury of the Melnick-Robinson loan, and since the December 30 note was executed in the District of Columbia, the law of the District of Columbia applies. Ammerman relies upon Holcombe v. O’Sullivan, 93 A.2d 96 (D.C.Mun.App. 1952) as dispositive of the question.

In Holcombe, the lender, a resident of Ireland, sued the borrower-maker of a promissory note for the balance allegedly due on the note. The defendant denied owing anything and counterclaimed for the alleged usurious interest paid. Plaintiff raised the question as to whether the District of Columbia law applied, suggesting that the loan may have been made when both parties were in Ireland, although there was no evidence of record that the defendant had ever been in Ireland. The court stated:

“The note is dated at Washington, D. C., and the place of payment is blank. In the absence of evidence to the contrary, the presumption is that the note was made in the District and was payable at the place of making and it therefore is subject to the District of Columbia usury law.” 93 A.2d at 98.

We think Ammerman’s reliance on Holcombe is misplaced. While the Am-merman note of December 30 was executed in the District of Columbia, it is not that note which is the nexus of the usurious loan. The usury originated in the loans from Miller to the Melnicks and Robinsons. These loans were negotiated in Maryland; they are evidenced by the Melnick-Robinson promissory notes dated Silver Spring, Maryland, January 24, 1966. These notes provided that the interest be paid to Miller at a designated Maryland address. The notes were secured by an assignment of the Melnick-Robinson interests in a joint venture, which owned the Dodge Park View Apartments, located in Prince George’s County, Maryland. The assignment documents bear the seal and signature of a Maryland notary.

It is the majority rule that “[w]here all of the important elements of a loan transaction have their situs in the same state such transaction is governed by the usury laws of that state.” 91 C.J.S. Usury § 4(4), and eases cited therein. It seems evident that all of the important elements of the loan transaction between Miller and the Melnieks and the Robinsons have their situs in Maryland. Hence, it is Maryland law which is applicable in regard to the usury involved in the Melnick-Robinson notes.

The Ammermans’ December 30th note was given to extinguish Mr. Ammer-man’s liability as a guarantor of the Melnick-Robinson notes. Although the December 30th note was executed in the District of Columbia, this does not bring the case within the District of Columbia usury law. Since Maryland law controls the usurious transaction involved in the Melnick-Robinson notes, the right of a guarantor to plead usury must also be determined by Maryland law.

At the time of the MelnickRobinson loan from Miller, the Maryland legal rate of interest was six percent. Ann.Code of Md.1957, Art. 49, § 1 (1968 Replacement Volume). Miller concedes that the $11,000 difference between the amount of the loan and the face value of the notes was a “bonus.” This was in addition to the interest on the notes at six percent. It is the law in Maryland that “[w]here a creditor exacts of a debtor, as a condition of the loan, a sum in addition to the lawful interest, whether designated as a bonus, commission, or carrying charge, or by any other name, the transaction is tainted with usury, except where the sum so exacted, when added to the stipulated interest, does not exceed interest at the maximum lawful rate on the principal sum of the loan. Walter v. Foutz, 52 Md. 147; Bowdoin v. Hammond, 79 Md. 173, 28 A. 769; Glass v. Third National Building & Loan Ass’n of Baltimore City, 156 Md. 26, 143 A. 587.” Plitt v. Kaufman, 188 Md. 606, 611-612, 53 A.2d 673, 675-676 (1947). The loan from Miller was usurious, and Melnick and Robinson could have defended on this ground in a suit for collection of their notes.

Although usury is considered a defense personal to the borrower, “sureties, guarantors, and .accommodation in-dorsers may rely on the defense of usury whenever, in a similar case, the maker of an obligation could do so.” 70 A.L.R. 359, and annotated cases following. See also Sureties and Guarantors, 91 C.J.S. Usury § 132, b, and cases there cited. Under the Uniform Commercial Code “ ‘Surety’ includes guarantors.” Md. Laws of 1963, ch. 538, Ann.Code of Md. 1957, Art. 95B § 1-201(40) (1964 Replacement Volume).

The Maryland Court of Appeals has ruled that the defense of usury is available to a third person who has assumed the obligation with the consent of all parties concerned and who is merely substituted for the original debtor. In Plitt v. Kaufman, supra, the third party was an accommodation maker. “There is no question that the accommodation maker of a promissory note has the right to set up against the lender the defense of usury between the lender and the borrower. Rodecker v. Littauer, 8 Cir., 59 F. 857.” 188 Md. 613, 53 A.2d 676. Cf. Etelson v. Suburban Trust Company, 263 Md. 376, 283 A.2d 408 (1971) where the Maryland court stated that the liability of a guarantor of payment of a loan is indistinguishable from that of a co-maker.

In the instant case, the execution of the Consent Agreements by Am-merman and Wolman was not a separate transaction from the loan from Miller to the Melnicks and Robinsons. The money would not have been loaned by Miller except for a guaranty by Ammerman and Wolman to pay Miller the face amount of the Melnick-Robinson notes. Hence, the Consent Agreements were instruments deemed necessary to consummate the one deal — the loan. There being usury in that loan, all the instruments employed to carry it out are tainted.

It is our conclusion that pursuant to Maryland law, the defense of usury is available to Ammerman as a guarantor, and has been established.

The Maryland statute regarding forfeiture in the event of usury provides:

“Any person guilty of usury shall forfeit all the excess above the real sum or value of the goods and chattels actually lent or advanced and the legal interest on such sum or value, which forfeiture shall ensure to the benefit of any defendant who shall plead usury and prove the same.” Ann.Code of Md.1957, Art. 49, § 4 (1968 Replacement Volume).

Consequently, as to his counterclaim, Miller is entitled to recover the $125,000 loaned, plus six percent legal interest thereon, from January 24, 1966, to the date of judgment, less all monies heretofore paid relative to said loan by the Melnicks, Robinsons, Wolmans and Ammermans. In addition, Miller is entitled to “costs of suit and ten per cent (10%) attorneys’ fees” as provided in the note on which the counterclaim is based.

CONCLUSION

The judgment of the District Court is affirmed insofar as it relates to the complaint. With respect to the counterclaim, we vacate the judgment and remand the case to the District Court for disposition in accordance with this opinion.

It is so ordered.

       The court filed a Memorandum Opinion, constituting its findings and conclusions. Joint Appendix, Vol. 1, pp. 3a-18a.

      . Joint Appendix, Vol. 1, pp. 145a, 146a.

      . Under the venture agreement no venturer was to make disposition of his interest without the prior written consent of the other venturers or, in the absence of such consent, without first giving the other venturers an opportunity to purchase the interest on the same terms offered by the outside party. Plaintiffs’ Ex. 1, pp. 10-11, par. 15.

      . Plaintiffs’ Exs. 2 and 3.

      . Plaintiffs’ Exs. 2A and 3A. Each Collateral Assignment provided that the Assignors would do such things as the Assignee (Miller) might specify for further assurances and in order to perfect the Collateral Assignment, and that upon payment of the promissory note the Assignee (Miller) would deliver to the Assignors such evidence of dis- ■ charge of the aforesaid obligation and/or release thereof as the Assignors might require.

      . Plaintiffs’ Exs. 2A, p. 3 and 3A, p. 3.

      . Joint Appendix, Vol. 1, pp. 160a-161a.

      . Id. at pp. 165a, 205a, 206a.

      . Id. at p. 164a.

      . Id. at pp. 147a-148a.

      . Id.

      . Plaintiffs’ Exs. 16A, B and C.

      . Defendant’s Exs. 19 and 19A.

      . As of this time Ammerman had invested $100,000 of his own money in the Grigsby Joint Venture. And pursuant to the Grigsby Joint Venture Agreement of 1963 (Plaintiffs’ Ex. 1, par. 7) Ammerman had obtained for the venture a loan of $300,000 in cash from individuals who became limited partners in the Grigsby Limited Partnership. As such they were not subject to calls for contributions to the venture. The mentioned loan of $300,000 to the venture carried no interest. The principal was payable at the rate of $30,000 yearly, beginning April 30, 1964. For this loan of $300,000 to the venture a note was given in that amount signed by all venturers (the Ammermans, Wolmans, Melnicks and Robinsons). Under the Venture Agreement the $300,000 indebtedness was to be secured by a deed of trust on the apartment project land which trust by its terms was to be subordinate to the purchase money ground trust of $500,000 which had been put on the land in order to purchase the interest of Nick Basiliko in the contract to acquire the land, to provide purchase money funds and additional working capital to the venture. The $300,000 note and deed of trust to secure the same were executed by all record title holders (Plaintiffs’ Exs. 9 anfl O-Al. this being prior to the loan transaction between Miller and the Melnicks and Robinsons. Wolman and Ammerman individually guaranteed the payment of the $300,000 indebtedness while the liability of the Melnicks and Robinsons thereon was limited to recourse against the land and premises securing said indebtedness.

      . This provision seems to contemplate that after Wolman acquires all interests in this land (including the Ammerman interests) he will then convey one-half thereof to Ammer-man. At some time subsequent to the agreement between Wolman and the Ammer-mans a foreclosure took place under the $200,000 trust and the party secured bought the land in for $35,000.

      . Plaintiffs’ Ex. 15.

      . This vacant land is the same land which Wolman had agreed to convey to the extent of a one-half interest therein to Mr. and Mrs. Ammerman in his agreement with them.

      . Plaintiffs’ Exs. 2 and 3.

      . Plaintiffs’Ex. 17.

      . Joint Appendix, Yol. 1, p. 122a.

      . See “Order of Release” in Plaintiffs’ Ex. 16.

      . Defendant’s Ex. 1.

      . Defendant’s Exs. 2, 3, 4, 5.

      . Defendant’s Ex. 6.

      . Opinion of the Court, Joint Appendix, Vol. 1, p. 7a. See also the Joint Appendix, Vol. 1, at pp. 42a, 85a, 124a, 125a, 134a.

      . Joint Appendix, Vol. 1, pp. 125a, 126a.

      . Joint Appendix, Vol. 1, pp. 126a, 127a, 199a.

      . Defendant’s Ex. 9. The letter is hereinafter quoted.

      . Joint Appendix, Yol. 1, p. 145a. See also p. 156a.

      . Id. at p. 179a.

      . Id. at p. 9a.

      . Joint Appendix, Yol. 1, p. 11a.

      . Miller was aware of liis recording rights. When asked why he did not record the Collateral Assignment Miller responded: “I just didn’t record it.” After this answer the Court Reporter added: “(Witness laughs).” Joint Appendix, Yol. 1, pp. 186a, 187a.

      . The District Court cited Joe Heaston Tractor & Imp. Co. v. Securities Accept. Corp., 243 F.2d 196 (10th Cir. 1957), (hereinafter Heaston), and Nation Wide, Inc. v. Scullin, 256 F.Supp. 929 (D.N.J.1966), aff’d 377 F.2d 554 (3rd Cir. 1967), as cases rejecting the contention that a creditor impliedly agrees to record instruments conveying to him property of the debtor as security. Joint Appendix, Vol. 1, p. 11a. In the case at bar the guaranty was conditional but in each of the cited cases the guaranty was absolute and unconditional. Further, in the instant case neither Ammerman, Wolman nor the Grigsby Joint Venture shared in the money Miller loaned. Conversely, the guaranty contract in each of the cited cases was given as an inducement to a finance company to extend financing to an enterprise or entity as to which the guarantor himself had a financial involvement. For example, in Heaston, the principal bought Heas-ton’s store, assumed Heaston’s indebtedness of $35,000, but needed financing to swing this project, and thereupon, Heaston, as an integral part of same, gave an absolute guaranty to the company furnishing such financing. Sued on their guaranty, defendants in the cited cases relied upon the rule of law set forth in 50 Am.Jur., Suretyship, § 118, asserting that the failure of the creditors to record the lien of security released them to the extent of the loss thereby sustained. After considering the guaranty contract as a whole, the purpose for which it was given together with all the surrounding circumstances existing at the time the guaranty was executed, the court in each cited case concluded that the guaranty involved was an absolute and unconditional one, intended to be so by all the parties, and hence that the mentioned rule did not apply.

      . Assuming arguendo that the Collateral Assignments needed something further to qualify for recordation under Maryland law, the Assignments themselves obligated the assignors to do whatsoever Miller might request to perfect such assignments.

      . Judge Sobeloff for the court in Bourke v. Krick, 304 F.2d 501 (4th Cir. 1962), discussed the Maryland recordation statutes, including the one above quoted, stating in part at p. 503:
      “The design of these statutes * * * is that ‘all rights, incumbrances, or conveyances touching or in any wise concerning land should appear on the public records.’ (Citation omitted.)
      “Consistent with this broad purpose, the Maryland [C]ourt [of Appeals] has approved the recordation of easements, deeds of real property for the benefit of creditors, deeds of trust, leases, contracts of conveyance, restrictive covenants contained in deeds, drainage easements, option contracts pertaining to real property, as well as deeds of real property. In each instance, subsequent purchasers and creditors were held to have constructive notice of the recorded transaction.”

      . Ammerman claimed that the bank’s judgment exceeded the worth of the Melnicks’ and Robinsons’ interests of record in the Grigsby Joint Venture, and that such judgment, entitled to priority, destroyed the value of the unrecorded Assignments held by Miller.

      . Joint Appendix, Vol. 1, p. 7a.

      . Id. at p. 18a.

      . Defendant’s Ex. 9.

      . Joint Appendix, Yol. 1, p. 17a.

      . Id. at p. 18a.

      . Id. at p. 126a.

      . Id. at pp. 134a, 135a.

      . Id. at p. 85a.

      . Id. at pp. 199a, 210a.

      . The application of Maryland law is thoroughly discussed infra, in part V of this opinion.

      . Reconstruction Finance Corp. v. Maryland Casualty Co., 23 F.Supp. 1008 (D.Md.1938).

      . 51 Md. 34, 34 Am.Rep. 286 (1878).

      . Id. at 43, 34 Am.Rep. 288.

      . George L. Schnader, Jr., Inc. v. Cole Bldg. Co., 236 Md. 17, 23, 202 A.2d 326, 330 (1964).

      . Ann.Code of Md.1957, Art. 8, § 3 (1968 Replacement Volume).

      . Md.Laws of 1763, ch. 23, §§ 7, 8.

      . Watkins v. Worthington, 2 Bland 509 (1828).

      . Dinsmore v. Sachs, 133 Md. 434, 105 A. 524 (1919).

      . This language is also quoted in Orem v. Wrightson, 51 Md. 34, 43, 34 Am.Rep. 286, 288 (1878).

      . Ann.Code of Md.1957, Art. 49, §§ 1, 4 (1968 Replacement Volume) ; D.G.Code § 28-3303 (1967). These statutes set the annual legal rate at six percent and eight percent respectively.

      . Joint Appendix, Vol. 1, pp. 147a, 148a.

      . Under District of Columbia law, the lender in a usurious transaction forfeits all interests, and can recover only the principal sum, less all monies paid. Under Maryland law, a usurious lender can recover the principal sum plus legal interest from date of the loan, less all monies paid..

      . Miller has presented no counter-argument on this issue and argues that under District of Columbia law a guarantor may not avail himself of the defense of usury.

      . See Rhawn v. Grant, 8 D.C. 31, 1 MacArthur 31 (1873), where the Court held that a note given in the District of Columbia in part payment of the principal of a note made in Pennsylvania is to be governed by the usury laws of Pennsylvania — not the usury laws of the District of Columbia.

      . This Act became effective February 1, 1964, Md.Laws of 1963, ch. 538, § 3.

      . The parties should be allowed to produce additional evidence as to said payments if they so desire.


author: McGOWAN, Circuit Judge:

text:
    Oscar L. ALTMAN et al., Appellants, v. CENTRAL OF GEORGIA RAILWAY COMPANY.
    No. 72-1153.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Jan. 15, 1973.
    Decided Nov. 8, 1973.

      Victor A. Altman, Washington, D. C., for appellants.
    James Hamilton, Washington, D. C., with whom Charles A. Horsky, Washington, D. C., was on the brief, for appellee.
    Before BAZELON, Chief Judge, and McGOWAN and MacKINNON, Circuit Judges.

      . Appellant Victor Altman intervened and participated in the Commission proceeding, but did not seek either reconsideration by the Commission of its approval order or judicial review thereof.

   McGOWAN, Circuit Judge:

In an action to compel the payment of dividends, the District Court, on cross-motions for summary judgment, ruled that the claim was no longer maintainable because of the supervening circumstance of an Interstate Commerce Commission order approving a corporate consolidation and, as an incident thereof, providing compensation, as required by the Interstate Commerce Act, for the just and reasonable value of the minority shares. The District Court purported to follow authoritative doctrine heretofore formulated by the Supreme Court in this precise statutory context. We think it was correct in doing so; and we affirm.

I

In 1965 plaintiffs Oscar and Victor Altman, assertedly acting for themselves individually and for a class of preferred stockholders of Central of Georgia Railway Company, complained in the District Court of the Company’s failure to pay dividends on its preferred stock in certain years. Since Central’s charter provided that dividends on the preferred stock were payable in respect of each year only from Available Net Income accruing in respect of such year, it was alleged alternatively that the directors of Central had (a) wrongly interpreted the charter definition of Available Net Income, and (b) spent excessive amounts on property acquisition and maintenance, in either instance with the effect of showing no Available Net Income for dividend purposes. After defendants had filed an answer denying these allegations, plaintiffs filed a motion for summary judgment. Plaintiffs attempted to appeal the District Court’s denial of that motion, but the appeal was dismissed by this court (No. 23,332, November 12, 1969), and that ruling by the District Court is not now before us.

In 1970 plaintiffs sought summary judgment in respect of the years 1964-65, 1967, and 1969, on the allegation that a 1964 revision of Central’s by-laws required the payment of preferred dividends from earned surplus. Central asserted in opposition that the by-law was invalid as in conflict with the charter; and that, in any event, there were questions of fact which must be resolved before the directors could be found to have abused the discretion vested in them to manage Central's affairs, including determination of the levels of capital and maintenance expenditures.

This second plaintiffs’ motion for summary judgment was denied on the same day (December 16, 1971) that the District Court granted defendants’ motion for summary judgment; and both actions are the subjects of this appeal. The latter motion derived from the circumstance that, in December of 1969, Central, jointly with the Southern Railway Company and three other subsidiaries of Southern, applied to the Interstate Commerce Commission for authority to consolidate Central and the three other subsidiaries into a new corporation to be known as the Central of Georgia Railroad Company.

In January of 1971 the application was approved by the Commission. An intervenor’s petition for reconsideration was denied in April, and, on June 1, 1971, the consolidation was consummated, with the effect that Central of Georgia Railway Company disappeared and its former preferred shareholders retained the right under the Commission’s approval order to be paid $84 for each share formerly held, as representing the just and reasonable value thereof. As of the time of argument in this court, eight persons owning 232 preferred shares (.1% of the preferred in being when the consolidation was effective) had not elected to take payment for their shares. These persons did not include appellant Oscar Altman.

It is the principal contention of appel-lee Central in this court, as it was in the earlier proceedings involving the stay, that, under Schwabacher v. United States, 334 U.S. 182, 68 S.Ct. 958, 92 L. Ed. 1305 (1948), the federal statutory scheme for the regulation of railroad consolidations placed in the Commission the function of evaluating dividend claims of minority shareholders as part of the process of determining the compensation to be paid them upon the extinction of their shares. With this premise, it is asserted that appellants are in effect collaterally attacking in the courts an exercise of judgment confided exclusively by the Congress to the Commission in the first instance and subject only to direct challenge upon judicial review of the Commission’s action. Since this approach is rested so heavily upon Schwabacher, we look to see what was involved in that case.

Two interstate rail carriers sought, under Section 5 of the Interstate Corn-merce Act, the Commission’s approval and authorization of a plan for their merger. The Commission considered the terms and conditions of the plan, including the provisions made by it for the exchange of stock of the surviving corporation for the preferred stock of the merging corporation. The Commission found those terms and conditions just and reasonable, and approved the merger. The Commission’s action was challenged on judicial review of its order by some minority preferred stockholders who had contended that under Michigan law — the state of incorporation — they had a charter right to a liquidation value of at least $172.50 per share. They complained that the plan, as approved by the Commission, awarded an exchange value substantially lower than the liquidation figure, thereby depriving them of their contractual rights under Michigan law.

The Commission did not purport to resolve this contention. It said only that the exchange terms of the plan were proper under the standards of the Interstate Commerce Act, and that any claims of further entitlement under state law, such as those pressed by the preferred shareholders, were left for resolution “through negotiation and litigation in the courts.” No danger to the public interest would result, said the Commission, because the merged assets were so substantial, and the gross amount of the state law claims were, by comparison, so minor.

In the Supreme Court the complaining shareholders asserted that the Commission itself should have recognized the charter right under Michigan law, and directed that increased compensation in accordance therewith be made as a condition of merger approval. Contrarily, the Commission urged upon the Court that it had been correct in leaving that issue to future resolution by the parties through negotiation or litigation.

Both, said the Supreme Court, were wrong. The merger provisions of the Act were intended by the Congress to make the Commission, exercising federal power and applying federal law, the guardian in the first instance of the national interest in financially sound and viable railroad carriers. In achieving that end, the Commission was not bound by the provisions of state law but was, rather, “given complete control of the capital structure” resulting from a merger. Thus, the appellant shareholders misconceived the sweep of the Act in asserting that the Commission erred in not meticulously recognizing and implementing the rights to par value and accrued dividends allegedly conferred upon them by the charter and Michigan law. But so also did the Commission err in leaving it open for negotiation or litigation over these rights to thrust upon the surviving corporation a capital structure shaped by those rights instead of solely by the Commission’s determination of what was fair and reasonable in the light of all relevant factors. It was, concluded the Court, the Commission’s statutory duty to fix that capital structure finally in the merger proceeding, subject only to direct review by the courts of challenges to the propriety under the Act of the Commission’s determinations.

It would appear, thus, that Schwa-bacher is dispositive of the litigation before us. Appellants’ claim of right to additional dividends derives solely from state law, and it does not survive the final order of the Commission approving the consolidation, which order includes the provision of $84 in respect of each preferred share of Central. In discussing the attack on this figure made by intervening preferred shareholders, the Commission noted that the consolidation applicants, while contending that “inter-venor Altman’s lawsuit is without merit,” also conceded “that many of the issues involved in his claim are relevant to a determination of the fair value of Old Central’s preferred shares.” They' argued that the value of the corporate funds not paid out as dividends are reflected in the current financial statements and were taken into account in valuing the stock. Thus, said the Corn-mission, “[t]he preferred shareholders will receive the benefit of the earnings which the intervenor contended should have been paid out as dividends.”

In its resolution of the protest against the $84 figure, the Commission concluded, after remarking that dividend ar-rearages were taken by it to be the $15 per share accumulation figure provided in the charter, that (1) “the yield of the preferred, Old Central’s substantial negative working capital position, and the prevailing unfavorable investor attitude toward railroad securities in general all justify a cash consideration for Old Central’s preferred stock of an amount less than its par or redemption value,” and (2) the $84 was, under all the circumstances, fair and equitable.

It was argued to the Commission by intervenor Victor Altman that it was not proper for the Commission to value the preferred stock. The Commission rejected this contention, saying that “under the Act it is the duty of this Commission to consider all aspects of the transaction for which its approval is sought, including assurance that all minority shareholders are treated fairly and justly,” and that it had, in the course of its valuation, “considered all pertinent factors, including the fact that there is a shareholders’ law suit pending in Altman v. Central of Georgia R. Co. ”

The Commission then added this sentence: “Our action herein, however, has no bearing on the rights of the parties in that proceeding, and is not to be construed as being determinative of any issue therein.” Appellants’ contentions in this court rest mainly on this sentence, arguing that it exhibits the Commission’s purpose to leave open for judicial resolution the claim of right to additional dividends under state law.

It is not, however, the Commission’s purpose (assuming it for the moment to have been as contended by appellants) that is controlling, but, rather, that of Congress. And in Schtuabacher the Supreme Court held that latter purpose to be that state law claims of this character are to be taken into consideration by the Commission as a factor relevant to the determination of fair value, but they do not survive the valuation embodied in a final merger approval order. Thus, even if the Commission’s language was intended by it to operate as appellants assert, it could not have, in law, the effect claimed for it.

Although, as just indicated, the question of the Commission’s actual intent in using these words can be pretermitted, we think the District Court was probably correct in saying that “[t]he statement by the Commission that it has not made any determination of issues before and within the jurisdiction of this Court is merely one of comity.” The major issue before the District Court was, of course, the reach of Schwabacher to these facts — and that is a question which the Commission could not, and undoubtedly had no thought of trying to, foreclose the courts from deciding. It has now been decided by the District Court in the manner dictated by Schwabacher, and we uphold that decision.

It is so ordered.

      . This litigation had been before us earlier on a successful appeal from a District Court dismissal on the ground of forum non conveniens. Altman v. Central of Georgia Railway Company, 124 U.S.App.D.C. 155, 363 F.2d 284 (1966), cert. denied, 385 U.S. 920, 87 S.Ct. 231, 17 L.Ed.2d 144 (1966).

      . With the application filed, Central moved in the District Court to stay proceedings on the ground that the Commission now had exclusive jurisdiction to determine claims to preferred dividends as an incident to its statutory duty to fix just and reasonable compensation for the minority preferred shares. The District Court denied the stay, but allowed an interlocutory appeal, 28 U.S. C. 1292(b), which was accepted by this court. At oral argument of that appeal, the parties agreed to a suggestion by the court that the case be remanded to the District Court with instructions to stay the suit pending disposition by the Commission of the consolidation application; and such a remand was made.

      . Plaintiffs-appellants Oscar and Victor Altman sued as individual owners of preferred shares and on behalf of a class or classes of all persons owning preferred shares during the years when dividends were alleged to have been wrongfully withheld. At the time it dismissed the complaint in the order under appeal, the District Court also dismissed the action as a class suit. Its apparent reasoning on this point was that the class had become so small as to render class representation inappropriate. Although, in view of the disposition we make of this appeal, we need not reach this question, we note that Fed. R.Civ.P. 23(a)(1) contemplates that the class be “so numerous that joinder of all members is impracticable,” and that the cases appear to call for larger numbers than were involved here. See, e. g., Atwood v. National Bank of Lima, 115 F.2d 861, 863 (6th Cir. 1940), and Moscarelli v. Stamm, 288 F.Supp. 453, 463 (E.D.N.Y.1968).

      . See also Suffin v. Pennsylvania R.R. Co., 276 F.Supp. 549 (D.Del.1967), aff’d, 396 F. 2d 75 (3rd Cir. 1968), cert. denied, 393 U.S. 1062, 89 S.Ct. 713, 21 L.Ed.2d 705 (1969).

      . To the extent that it is now the position of appellant Victor Altman that the Commission should have taken the state law claims into account, but did not in fact do so, at least to an adequate degree, he would appear to be foreclosed by the fact that, although he actively participated in the Commission proceeding, he neither sought reconsideration by the Commission of its action nor direct judicial review thereof. Note 3 supra. The Commission’s responsibilities in this regard had long before been made known by the Supreme Court in 8chwabaeher.

      . A seemingly separate argument, at least as conceived by appellants, is that, since the approved consolidation plan contemplated that the “obligations and liabilities of the constituent corporations” continue as a charge upon the assets of the successor corporation emerging from the consolidation, their dividend claims survive on this basis. This District Court — correctly, we think — ■ concluded that claims for undeclared dividends are not external debts like those of corporate creditors, and that only liabilities and obligations of that nature are comprehended within the language in question used in the plan. See Federal United Corp. v. Havender, 24 Del.Ch. 318, 11 A.2d 331 (1940).

      . We see no need to address the issue of the effect of the by-law amendment in 1964, since Schwabacher stands in the way of relief on that theory as well. Appellants also assert that their efforts on behalf of the preferred stockholders resulted in the payment of a preferred dividend in 1969, and they complain here of the denial of their motion for allowance of expenses and attorney’s fees. This motion was initially denied by the District Court in an order entered January 29, 1970 (Matthews, D. J.), but “without prejudice to plaintiffs’ attorney to renew the motion at the conclusion of this litigation.” In the Memorandum Opinion and Order of December 16, 1971, immediately before us, the District Court (Smith, D. J.) explicitly recognized that this matter remains open in accordance with the earlier order.


author: MacKINNON, Circuit Judge:

text:
    UNITED STATES of America v. Daniel J. BOWLES, Appellant.
    No. 72-1427.
    United States Court of Appeals, District of Columbia Circuit.
    Argued April 6, 1973.
    Decided Nov. 9, 1973.
    As Amended Dec. 11, 1973.
    Certiorari Denied March 25, 1974.
    See 94 S.Ct. 1591.

      David Epstein, Washington, D. C. (appointed by this court), for appellant.
    Richard S. Vermeire, Asst. U. S. Atty., with whom Harold H. Titus, Jr., U. S. Atty., John A. Terry and Stephen W. Grafman, Asst. U. S. Attys., were on the brief, for appellee.
    Before McGOWAN and MacKINNON, Circuit Judges and WYZANSK1, Senior United States District Judge for the District of Massachusetts.

       Sitting by designation pursuant to 28 U.S.C. § 294(d).

      . These statements were delivered to appellant’s two counsel prior to (or on) October 8, 1969. They decided not to make any motion predicated on such statements because they considered “the possibilities for reversal of the conviction on [other] grounds . were . . . strong.” Affidavit of Isaac N. Groner of October 4, 1971; Affidavit of David Epstein of October 8, 1971.

   MacKINNON, Circuit Judge:

This post-conviction proceeding seeking a new trial or, alternatively, the dismissal of the indictment, follows our en banc decision in Bowles v. United States, 142 U.S.App.D.C. 26, 439 F.2d 536 (1970) (en banc), cert. denied, 401 U.S. 995, 91 S.Ct. 1240, 28 L.Ed.2d 533 (1971) , affirming appellant’s conviction of murder in the first degree (while attempting to perpetrate a robbery) and of assault with intent to rob.

The majority opinion in the en banc hearing sets forth the facts relevant to the conviction, which arose out of a fatal stabbing and attempted robbery of Donald Ingham, a soldier, on March 14, 1967 in an alley in the rear of the 1400 block of R Street Northwest, in Washington. The jury verdict followed a trial which ran from March 13 to 22, 1968, and the jury recommended a sentence of life imprisonment. On April 26, 1968 appellant was sentenced to concurrent prison terms of life imprisonment on the murder count and three to ten years for assault with intent to rob.

Then followed the appeal which resulted in the en banc decision, supra. That appeal was argued, en banc, on November 24, 1969, and the decision thereon was issued on November 20, 1970. In early October 1969, prior to the argument on November 24, 1969, counsel for appellant went to the office of the United States Attorney and informally discussed the issues with the Assistant United States Attorney assigned to the then pending appeal. During this discussion appellant’s counsel was shown two typed, signed statements contained in the Government’s file on the case. These statements, taken from two persons among the many who were interviewed in the broad investigation immediately undertaken in the area following the discovery of the murder, recited facts given to the Metropolitan Police on March 15, 1967, the day following the murder, by Rose Marie Bannister and Edith Mickins. The defense was not aware of the existence of these individuals or their statements at the time of trial. When appellant’s counsel received these statements in early October, 1969, he took no action with respect to them, though he had ample time to inject any issue raised by them into the forthcoming appeal, since oral argument was not scheduled until November 24, 1969, substantially more than a month away. However, approximately two years later on October 14, 1971, appellant filed the instant motions alleging that the circumstances surrounding the statements amounted to a violation of the principles enunciated in Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963). The instant motions for a new trial, or dismissal of the indictment followed and were grounded on the failure of the Government, notwithstanding requests prior to trial by defense counsel for such information, to provide defense counsel with alleged “exculpatory evidence” which was in its possession, and its “obligation by virtue of the decision in Brady v. Maryland to disclose to defense counsel anything that comes to their attention which would be helpful to the defense.” Appellant contends that the events recited in the Bannister and Mickins statements constituted “exculpatory evidence.”

Full hearings were held on the instant motions on January 31 and February 29, 1972, at which testimony was taken of Bannister, Mickins and one Samuel Floyd, the “Floyd” referred to in the Bannister statement. Thereafter on March 28, 1972 the trial court filed a Memorandum Opinion denying the motion for a new trial and the alternative motion for dismissal of the indictment. We affirm.

I

Appellant’s principal contention is that the failure of the Government prior to trial to inform him of the contents of the Bannister and Mickins statements, and the circumstances to which they refer, constitutes reversible error.

The principal fact that appellant relies on in the. Bannister statement (given at 11:32 A.M. on March 15, 1967) is a reference to a conversation at 1 o'clock in the afternoon of March 14, 1967 (following the murder in the early morning hours of that day) with one “Floyd,” an acquaintance of Bannister and Mickins, who was later identified as Floyd Harris :

On Tuesday, March 14th, 1967 about 1:00 p. m., while at 14th and S Street, N.W. I met a man that I know as Floyd who lives at 1703 or 1705 13th Street, N.W. I called him over to where me and Edith Mickens were and asxed him to go with us to the Charles Hotel. While at 14th and R street N.W. and on the way to the hotel I brought up the subject that wasn’t it a shame about that boy being killed at 14th and R Street N. W. At this time Floyd told me that he had been at 14th and R Street N. W. and that he saw a white boy being chased by some boys and the damn fool ran up the alley. He then caught a cab and left because he knew that there was going to be trouble. That was about all that was said and we were about at the hotel at this time. Statement of- Rose Marie Bannister, female, negro, 28 years of age.

Govt.Br. 13-14.

In the Mickins statement (given at 12 noon on March 15, 1967), appellánt seeks reliance upon the assertions that:

On . . . March 14th, 1967 . about 1:00 a. m. by the clock at Peoples Drug Store [at Thomas Circle she] left and walked on 14th Street N.W. heading towards R Street. .
While on 14th Street N.W. near the High’s store (R.I. and N Street N.W.) I was walking behind a white male, and I guess that I was walking loud or something and any way he jumped back. He looked back and said Hi to me and I said Hi. His exact words were “Hi how are you” and I said all right. He asked me where I was going, and I said no where special, just walking. He did not say anything so I asked him if he was sporting tonight and he said no.
Nothing else was said and I walked up 14th Street N.W. to R Street and he was behind me all the way. I knew that he was behind me as I would look back once in a while.

Govt. Br. 16. The statement goes on to say that Mickins went to the D.C. morgue on March 15, 1967 and viewed the body of Donald W. Ingham (the victim of the murder) and identified it as being the body of the same white male that she “met on 14th Street N.W. something after 1:00 a. m. Tuesday, March 14th, 1967 near the High’s store.”

Appellant also contends that had he been given the Bannister and Mickins statements he would have been led to “Floyd,” later identified as “Floyd— Hugh Harris, Jr.,” who would have given evidence that could have caused the jury to acquit appellant.

After they obtained the Bannister and Mickins statements on March 15, 1967, Detective J. C. Butler, No. 2 Precinct, and Joseph M. O’Brien of the Homicide Squad searched for and located “Floyd” and made the following contemporaneous written resume of their interview with him:

To 1703 and 5 13th Street N.W. and attempt to locate Floyd. Not known in the area. Checked with the girls and given a better description cruised 14th Street and outside of Browns at 14th and T Street N.W. a subject later identified as Floyd — Hugh Harris Jr., M-N-24 1415 17th Street N.W. # 2 was interviewed. This subject was wearing a black leather % length jacket and a blue tam and there are two front upper teeth missing. Stated that he read the story in the News on the afternoon of 3-14-67 and that when Rose Marie brought up the subject and blamed it on some young boys he agreed with her, and related what he had read in the paper. Stated that he lives with Ellen Matthews at 17th Street Address. Also with another girl named Ella Richardson who lives on Montello Ave. N.E.
On 3-1-4-67 he was home at 6:15 p m. 8:00 p. m. to the Spa. 11:30 p. m. he went home. Four white males in the Spa with two white and two negro females. Shown photo of deceased.

This subject was not one of the four. The foregoing statement is an exhibit from Government opposition to motion for new trial in Criminal Case No. 699-67, the murder trial, pp. 3-4.

“Floyd’s” testimony on January 31, 1972 in the instant proceeding substantially corroborated the officers’ resume of their March 15, 1967 interview with him which indicated that he had seen boys (not Bowles who was 35 years of age) chasing a person of light or white complexion at about 11:30 P.M. on November 13, 1967 across the street from the Spa and that they were headed in the direction of the alley where Ingham was later found dead. In an interview on January 13, 1972 (Tr. 14) Floyd stated he thought he could recognize the person being chased and after being shown pictures of Ingham said “No that was not the man” (Tr. 21-22). He also denied having made any statement about “seeing anybody being chased up an alley” (Tr. 32). Floyd also testified that it was “almost a daily occurrence” to see a white person being chased in that area and that he had seen about thirty similar occurrences — “not only whites. They chase blacks too.” A more extended resume of his testimony given in this proceeding is set forth in the margin.

When the Bannister, Mickins and Floyd testimony is considered together it establishes that Floyd never saw anybody being chased up an alley, and the chase he did see occurred at least an hour and a half prior to the time that Edith Mickins saw Ingham alive in the same general area where he was later found dead.

II

It is well established that it is a violation of due process for the prosecution to suppress “evidence favorable to an accused . . . Where the evidence is material either to guilt or to punishment, irrespective of the good faith or bad faith of the prosecution,” Brady v. Maryland, 373 U.S. 83, 87, 83 S.Ct. 1194, 1196, 10 L.Ed.2d 215 (1963), or to withhold “evidence on demand of an accused which, if made available, would tend to exculpate him. . . .” Id. at 87-88, 83 S.Ct. at 1197.

We also agree with appellant’s contention that “the prosecution may not suppress even the means of obtaining evidence.” Appellant’s Br. 24. Clearly, leads to relevant evidence cannot be withheld. As we said in Levin v. Katzenbach, 124 U.S.App.D.C. 158, 162, 363 F.2d 287, 291 (1966):

Thus [the defendant] would be entitled to relief in the present case if the government failed to disclose evidence which, in the context of this case, might have led the jury to entertain a reasonable doubt about [defendant’s] guilt.

We added, however, that the Government was not “required ... to disclose all its evidence, however insignificant, to the defense.” Id. Much less should the Government be required to disclose evidence which appears to be irrelevant. Later, in Levin v. Clark, 133 U.S.App.D.C. 6, 408 F.2d 1209 (1967) we remarked that, while the standard would not be applied “harshly or dogmatically,” it was to be applied in that case where the undisclosed evidence would have directly contradicted the testimony of two of the chief witnesses for the Government and “undermined seriously the prosecution’s case.” There are also two instances, which appellant points to, where federal convictions have been reversed “because of the Government’s failure to advise the defense that witnesses were available who had observed the crime and would testify that the Defendant was not one of the persons perpetrating the incident.” Appellant’s Br. 26, citing United States ex rel Meers v. Wilkins, 326 F.2d 135 (2d Cir. 1964) ; Jackson v. Wainwright, 390 F.2d 288 (5th Cir. 1968).

Finally, the Supreme Court in Moore v. Illinois, 408 U.S. 786, 92 S.Ct. 2562, 33 L.Ed.2d 706 (1972), in an opinion by Justice Blackmun, held that due process was not violated by the failure of the state to produce evidence that one witness had misidentified defendant where the misidentification was not material to the issue of guilt. In so deciding, the opinion prescribed the important criteria to a denial of due process:

(a) suppression by the prosecution after a request by the defense,
(b) the evidence’s favorable character for the defense, and (c) the materiality of the evidence.

Id. at 794-795, 92 S.Ct. at 2568.

Ill

It is appellant’s contention here that the man being pursued at 11:30 P.M. was Ingham and that had the appellant been given the Bannister and Mickins statements prior to trial he would have been able to introduce the testimony of Floyd to establish that contention and that he would have obtained:

the means for acquiring and establishing additional evidence which might have further buttressed the defense’s contentions regarding the Defendant’s lack of involvement with either the assault with intent to rob or the homicide.

Appellant’s Br. 24 (emphasis added).

However, the testimony at the hearing on the instant motions confirmed the evaluation the police made at the time of the original investigation that the Bannister and Mickins statements were not relevant to the case, that they were not serious witnesses and that Ingham was not the man Floyd saw being chased. Floyd was consistent in saying, both at the instant hearing and in his interview with Detective O’Brien the day after the slaying, that the man he told Bannister and Mickins he saw being chased was not the murder victim. Detective O’Brien on March IS, 1967 showed Floyd more than one photograph (Tr. 24), including a frontal photograph of Ingham taken before his death, and Floyd stated at that time that he did not recognize the person in the picture (Tr. 26-27). This frontal photograph of the victim, and the other photographs showed to Floyd, could be better, but on examination they do seem to be an adequate basis for identification. The record also contains Floyd’s statement that he observed the chase at 11:30 P. M. On this hearing the evidence indicates that the victim did not die until 1 A.M. or later. On this point, both Mick-ins’ 1967 statement and her testimony in the current proceedings clearly established that she had seen Ingham alive at 14th and R Streets, N.W., shortly after 1 A.M. on the 14th; and her identification of the body of the victim at the morgue was positive.

Under such circumstances the testimony supports the conclusion that the statements and testimony of Bannister, Mickins and Floyd did not include evidence that was relevant or material or that would be helpful to the defense or tend to exculpate Bowles and that the disclosure to appellant prior to trial of subject statements would not have led to evidence that was relevant or material or that would tend to be exculpatory. Following a full hearing at which the court had an opportunity to weigh the credibility of the witnesses, Judge Gaseh reached the same conclusion and we find his decision to be fully sustained by the record.

Affirmed.

      . D.C.Code § 22-2401 (1967).

      . Id. § 22-501.

      . Appellant’s Br. 1.

      . Id. at 1-2, citing Cohen affidavit and transcript.

      . The full Mickins statement follows:
      Office of the Homicide Squad Metropolitan Police Department Washington, D.C. Wednesday, March 15th, 1967 Statement started at 12 noon
      Re: Death of Donald W. Ingham, male, white, 20 years of age, pronounced dead at 3:50 a.m. Tuesday, March 14th, 1967 at the D.C. General Hospital by Dr. David Law of staff.
      Statement of [:] Edith Edmonia Nickins, female, negro, 23 years of age DOB 12-5-43. 941 M Street N.W. 2nd floor middle room. Also
      Charles Hotel room #310, 1300 block of R Street N.W.
      On Monday, March 13tli and Tuesday, March 14th, 1967 from about 10:00 p.m. to 3:30 a.m., I was on the street from Peoples Drug Store Thomas Circle on 14th Street N.W. to about R Street N.W. It was about 1:00 a.m. by the clock at Peoples Drug Store that I left and walked on 14th Street N.W. heading towards R Street on the East side of the street. The same side that Peoples is on.
      While on 14tli Street N.W. near the High’s store (R.I. and N Street N.W.) I was walking behind a white male, and I guess that I was walking loud or something and any way he jumped back. He looked back and said Hi to me, and I said Hi. His exact words were “Hi how are you” and I said all right. He asked me where I was going, and I said no where special, just walking. He did not say anything so I asked him if he was sporting tonight and he said no.
      Nothing else was said and I walked up 14th Street N.W. to R Street and he was behind me all the way. I knew that he was behind me as I would look back once in a while. While on 14th Street at R Street a Green and white ear was there, and a man motioned me over and he began to make a turn into R Street and I got in the car there. R Street was one way so then he backed out and we then went up 14tli Street N.W. The man in the car was white, and I stayed with him for about ten or fifteen minutes. On the way back to Peoples to meet Ross I met another car at N Street and I went to the Woodner Hotel with this man. This was about 1:45 a.m. It was about 2:45 a.m. that I left the Woodner. Later I went to 14th and U Street N.W. for a sandwich and met Ed Shannon and then he and I caught a cab and went home to N Street N.W.
      Questions by Det. Sgt. Joseph M. O’Brien.
      Q. Today you went to the D.C. Morgue and viewed the body of a white male identified to you as Donald W. Ingham and I ask you if this is the same white male that you met on 14th Street N.W. something after 1:00 a.m. Tuesday, March 14th, 1967 near the High’s store?
      A. Yes that is the same one.
      Q. Do you know of any one that takes the tricks to 14th R and Johnson Ave. N.W. ?
      A. There are two girls that works 14th and R, and they take the tricks down R that way, but I do not know where they go or who they are.
      Q. Do you know a girl named Margo ?
      A. Yes. I saw her Monday night and Tuesday morning. Before I picked up the trick for-the Woodner Hotel I saw her at 14th and U Street N.W. in the wings and she was wearing a blonde wig and slacks with checks. She was with her man then.
      Q. Were you with Rose Bannister on Tuesday at 1:00 p.m. when Floyd was telling Rose about seeing the boys chasing a white man at 14th and R Street N.W.?
      A. Yes.
      Statement given and typed by Det. Sgt. Joseph M. O’Bren [sic].
      /s/ Edmonia Nickins
      Govt. Br. at 16-17.

      . The story in the Washington Daily News (an afternoon paper) on March 14, 1967 under the headline “Ft. Meade Soldier Fatally Knifed in D.C. Alley” stated:
      A 20 year-old Ft. Meade soldier was found stabbed to death in a Northwest alley today, his pockets picked clean and ripped, District Police said. The body was found by two detectives who- drove into the alley behind the Gladstone Apartments, 1423 R St., N.W. while on a routine patrol at 2:15 a. m. Detectives said the soldier identified as Pfc. Donald Ingham, white of Dinwood, N. J., had been dead about an hour. Police said that scattered around the alley were his wallet, his car keys, several cigarettes, and some change. Ft. Meade officials said Pfc. Ingham had left the base where he is attached to a Signal Missile Company, after retreat yesterday afternoon. His ear was found some 12 blocks away at 10th and I Streets, N.W. Police feel that Pfc. Ingham was lured to the alley on one pretext or another. They said about an hour later, another man apparently also was lured to the same block and robbed of $21.00.
      From the “Government Opposition” (at 3 n. 3) to motion for new trial in Cr.No. 699-67 (the murder trial).

      . In Ills testimony given in this proceeding on January 31, 1972, Samuel D. Floyd testified substantially as follows:
      His true name is Samuel D. Floyd. He did not know the defendant Daniel Bowles but had seen him some years ago once or twice (Tr. 4). At “about 11:30 p. m.” on March 13, 1967 he came out of the ‘Spa,’ a place in the 1900 block of 14th Street and “saw three young guys chasing one guy up the street. . . . They were right in front of the store across the street from the Spa. They were running across 14th Street. . . . ” He was not able to identify any of the three boys except “that they were young.” He doubted that Bowles was “one of them. I wouldn’t say that he was. I would say that he is not one of them.” He was only able to identify the person who was being chased as “of a light complexion or white” (Tr. 6-7). He later crossed the street on T Street in the 1300 block and saw a “guy” holding up a paper bag with a soldier’s hat in it which he had picked up off the ground. He “didn’t notice anyone drop [the bag with the soldier’s hat in] it.” The man who was being chased had run from the direction of the bag and “possibly” could have dropped it. An overseas cap was in the bag (Tr. 8) and toilet articles. He saw five or six people standing by the bag inspecting it (Tr. 9) and “evidently” some of these people had been chasing the man up the street “but they wasn’t still chasing.” He saw them chasing the man until they turned right around the corner on S Street in the 1400 block. There is an alley that runs from Johnson Avenue to 15th Street (Tr. 10). He did not see the boys chase the man beyond 14th Street when they turned right on S Street (Tr. 12). After he saw the people inspecting the bag “he got in [a] car and went home” (Tr. 9) at 11:30 P.M. (Tr. 27, 40) and he was never on 14th and R. Street after he left the Spa (Tr. 28).
      When Floyd was interviewed by the Assistant United States Attorney on January 13, 1972 (Tr. 14) he stated he thought he could recognize the person who was being chased if he saw him again (Tr. 14, 16). He was at that time shown several pictures of Ingham (the victim) and he stated, “ . . . No, that was not the man [he saw being chased].” He was at that time shown the pictures a second time and he looked at them very carefully and was asked whether he was “sure about that.” His response was still, “No . . . that was not the man” (Tr. 21-22).
      Floyd was also shown more than one photograph of Ingham from the waist up on March 15, 1967 (Tr. 23, 24) and at that time he had also stated that he did not recognize him (Tr. 25, 27). He knew Bannister and Mickins (Tr. 30), he had a conversation with them within a day or so of the Ingham homicide (Tr. 31), but never made any statement about “seeing anybody being chased up an alley” (Tr. 31, 32). He was never taken to the morgue to see Ingham (Tr. 35).
      Floyd also testified that it “was a very common occurrence to see a white person being chased up there . . . [T]here [was] nothing unusual about that at all [a]t that time. ... [It was] [a]lmost a daily occurrence” (Tr. 40). He has seen about 30 similar occurrences in that same general vicinity. “Not only whites. They chase blacks, too.” Out of the 30, “[m]aybe 20” were whites (Tr. 41).

      . Cf. Xydas v. United States, 144 U.S.App.D.C. 184, 445 F.2d 660, cert. denied, 404 U. S. 826, 92 S.Ct. 57, 30 L.Ed.2d 54 (1971), where we remarked that the withholding of “information of ambiguous significance,” where counsel was aware of other facts, was not reversible error.

      . Floyd testified at the hearing as follows:
      Q You indicated back in 1967 that Lieutenant O’Brien and Officer Butler showed you a photograph?
      A Right.
      Q You also indicated you weren’t sure whether you could recognize that photograph or not. I ask you, if you would, sir, to look at Government’s Exhibit Number two. Does that look familiar to you?
      A This is the picture that they asked me about.
      Q And, you told them that you could not recognize that picture, is that right?
      A I did.
      Q And, is that a true statement?
      A It is a true statement.
      Q It was true when made?
      A It was true when made.
      Q And, it is true now, is that correct?
      A It is true now.
      Tr. of hearing of January 31, 1972, at 26-27. At one point Floyd had stated that he could not identify any or all of the photographs of Ingham as the person he saw being chased because the man was across the street and “I wasn’t that close to him” (Tr. 18).

      . Following the 11:30 chase a paper bag was found on the street which contained a soldier’s cap and some toilet articles. Floyd testified he never saw any person drop a bag. A bag was found on the ground by where the man being chased had run and Floyd went across the street and saw some people examining the bag. Floyd thought that some of those who were inspecting the bag “had . . . been chasing the man up the street. A. Evidentally [sic] they had, but they wasn’t still chasing” (Tr. 7-10). Appellant works this event into his conjecture about the case, but the time of its occurrence positively removes it from events which occurred an hour and a half later. The contention that the admission of evidence of such chase might have led to appellant’s acquittal is based on the further speculation that somehow irrelevant evidence might have been brought to the jury’s attention. To rely upon irrelevant evidence to support a particular verdict falls within the “sporting theory of justice,” which Justice Douglas in Brady v. Maryland, 373 U.S. 83, 90-91, 83 S.Ct. 1194, 1198, 10 L.Ed.2d 215 (1963), remarked “cannot [be] raise[d] . . . to the dignity of a constitutional right [that] denies him due process or violates the Equal Protection Clause of the Fourteenth Amendment.”

      . See note 6, supra.

      . The record and briefs also spell the name as “Mickens” and “Niekins.”

      . Appellant’s guilt was established at trial principally by the testimony of Mary Bur-well who lived with appellant’s mother, Alice Johnson. The testimony of Mary Burwell described a conversation she and Alice Johnson had with appellant on the evening of March 14, 1967, in which he stated: “I killed a man (Tr. 58) . ... [o]n R. Street ... in the back of an alley . . . it was a soldier” (Tr. 59). He showed a knife “like a dagger knife” (Tr. 60) and the police- took a knife from him when they arrested him (Tr. 66, 88). One of his hands was swollen and he showed it to them in recounting the events (Tr. 90-C). Alice Johnson corroborated this testimony in its principal features, i. e., Bowles’ statement that he had “killed a man last night” (Tr. 178). The testimony of these two women, and Mary Burwell in particular, includes a great deal of internal corroboration. The testimony corroborates the facts that were later proven, that it was a killing and not just a cutting, the exact place where the killing was committed, the general time of the killing (last night), the manner of the killing (knife), the identity of the victim (a soldier), and the ability of the appellant to kill in the manner described (the knife).