author: MOORE, Circuit Judge:

text:
    UNITED STATES of America, Appellee, v. Steven Paul VALOT, Defendant-Appellant.
    No. 1110, Docket 72-2025.
    United States Court of Appeals, Second Circuit.
    Argued Dec. 20, 1972.
    Submitted May 17, 1973.
    Decided June 27, 1973.

      Pierce Gerety, New York City (Robert Kasanof, Phylis Skloot Bamberger, The Legal Aid Society, New York City, of counsel), for defendant-appellant.
    Howard J. Stechel, Asst. U. S. Atty. (Robert A. Morse, U. S. Atty., L. Kevin Sheridan, Asst. U. S. Atty., E. D. New York, of counsel), for appellee.
    Before MOORE, MULLIGAN and TIMBERS, Circuit Judges.

      . “Tlie penalties for * * * violations of the bill are, in general, less severe, depending upon whether the offense involves distribution to minors, other illicit transactions involving ‘pushing’ or incidental thereto, more or less technical violations, or possession for personal use, which involves the least severe penalties of all.” Id. at p. 4576.

   MOORE, Circuit Judge:

This is an appeal from a judgment of the United States District Court for the Eastern District of New York, Mark A. Costantino, Judge, sitting without a jury, which convicted appellant on three counts of an indictment arising out of the attempted importation of approximately sixteen pounds of a marijuana derivative, hashish. Appellant was sentenced to four years imprisonment on each count, sentences to run consecutively. Appellant was also sentenced to a special parole term of two years and was fined $2500.

Although appellant does not challenge the sufficiency of the evidence used to convict him, he does raise two points on appeal. First, he claims to have been denied a speedy trial because he was allegedly not tried in accordance with this Circuit’s “Rules Regarding Prompt Disposition of Criminal Cases” (28 U.S.C.A. (Supp.1972)). Appellant also asserts that his sentence of three consecutive four year terms is unlawful.

After oral argument on this appeal we remanded this case to the district court “for a further hearing on the motion to dismiss the indictment for failure to comply with the Second Circuit Rules, supra, * * * ” (473 F.2d 667, 668 (2d Cir. 1973)). We directed the district court to make findings of fact on this issue and, if required, to take additional evidence as relevant. We specifically reserved decision on the propriety of the consecutive sentences and retained jurisdiction over the case.

Upon remand, the late Judge Rosling, who had conducted the pretrial proceedings in this case, and Judge Costantino, who had presided at the trial, agreed that Judge Rosling would consider the speedy trial issue. After affidavits had been received from both appellant and the Assistant United States Attorney and after several hearings had been held, Judge Rosling, in an opinion filed March 8, 1973, held that there had been no violation of the Speedy Trial Rules. Appellant subsequently submitted a Supplemental Brief claiming further errors in the conduct of the hearings on remand.

On November 21, 1971, Valot was arrested at John F. Kennedy Airport by United States Customs Agents when he was discovered attempting to smuggle 7.1 kilograms of hashish into the United States in the false bottom of a suitcase. After his arrest Valot admitted that he had previously smuggled hashish into the country on four previous occasions and he offered to cooperate with Customs officials if it would help him. At his arraignment on November 22, 1971, after consulting with his court appointed counsel, Valot conferred with an Assistant United States Attorney. Valot again offered to cooperate with Customs Agents in California where he lived and where he had intended to deliver the hashish. The Assistant United States Attorney informed Valot that if he did cooperate, the charges against him might be reduced or dismissed. Valot agreed to cooperate and was released on personal bond.

Valot then proceeded to California where he was met by a Customs Agent. Between December, 1971, and April, 1972, Valot supplied the Customs Agent with some information, none of which was of any value. In mid-April, the Los Angeles police advised the Customs Agent with whom Valot was supposedly cooperating that Valot was once again trafficking in drugs. Ultimately, the United States Attorney’s office in the Eastern District of New York advised Valot’s New York counsel that the government would no longer refrain from presenting its case to the grand jury. The instant indictment was returned on May 9, 1972. On May 13th, Valot was arrested at San Francisco International Airport while attempting to smuggle approximately twenty-two pounds of hashish into the United States. On May 15th, the government filed its Notice of Readiness for trial on the indictment which had arisen out of Valot’s November, 1971, activities.

Rule 4 of the Second Circuit’s Rules Regarding Prompt Disposition of Criminal Cases provides:

In all cases the government must be ready for trial within six months from the date of the arrest * * *. If the government is not ready for trial within such time, or within the periods as extended by the district court for good cause under rule 5, and if the defendant is charged only with non-capital offenses, then, upon application of the defendant or upon motion of the district court, after opportunity for argument, the charge shall be dismissed.

Rule 5 enumerates several periods of time which shall be excluded from the computation of the time specified in Rule 4. One of these, Paragraph 5(h), provides that in computing the time within which the government should be ready for trial under Rule 4,

[there shall be excluded o]ther periods of delay occasioned by exceptional circumstances.

Valot stresses in his briefs on appeal that although the government did file a Notice of Readiness on May 15, 1972, six days after the grand jury had returned the indictment and five months and twenty-four days after he was first arrested, he did not plead to these charges until May 26, six months and five days after his arrest.

The government claims that there was no delay in this case which is properly chargeable to the United States. The government states that, in order to secure Valot’s cooperation, it did not arrange for Valot to plead to the charges against him since it was possible that, for the final disposition of his ease, no such action would have been required.

In his affidavit prepared for the proceedings on remand, Valot did not contest that he had agreed to cooperate with the government in exchange for possible lenient treatment.

No extended discussion of this aspect of Valot’s appeal is required. Appellant’s offer of cooperation and the government’s acceptance of this offer led to Valot’s release on November 24, 1971. From that time until just before the case was presented to the grand jury, the government believed that Valot was cooperating in its efforts to enforce the drug laws. This period of time must be excluded from the computation of the six month period specified in Rule 4. No interest properly protected by Rule 4 would be served by permitting appellant to invoke that Rule in this case. In addition, the possibility of the government’s accepting a defendant’s offer of cooperation must be protected. This Court will not permit the perversion of the Rules which Valot here attempts.

In the Supplemental Brief for Appellant served after the remand proceedings, Valot endeavors to turn this proceeding into a contract case, claiming that the “quid”, delay in prosecution, was for the “quo”, the promise to cooperate, and that Judge Rosling held that there were mutual promises to cooperate and, for such consideration, to withhold indictment.

The criminal law is not to be enforced on the basis of contracts drawn between the accused and the government. Appellant has conceded his promise of cooperation. This is the only relevant fact. To give him an opportunity to fulfill his promise, he was released on his own recognizance. He had a mission, namely, to assist the government in enforcing the drug laws. This might have taken a week, a month, or a year to accomplish. For the appellant even to claim that the period of cooperation applies to the Speedy Trial Rules offends reason; to use his own unconscionable perfidy as a basis for such a claim is even worse.

We hold that the situation presented by the facts of this case comes within the meaning of “exceptional circumstances” as that phrase is used in Rule 5(h).

As to the claim that the Assistant United States Attorney should have been called for cross-examination, there was no disputed fact on which he could have thrown any light, nor was it necessary to transport appellant from his California jail to the Eastern District of New York to testify as to what he had already conceded in his affidavit.

The denial of the motion to recuse is affirmed. The speedy trial motion must be decided on the facts, and those here relevant are not capable of dispute. The comments exchanged between court and counsel cannot alter the facts basic to the decision.

Valot also appeals the imposition of multiple consecutive sentences which were imposed for his convictions on the three counts of the indictment which arose out of what Valot calls a “single transaction.” The indictment was made up of the following counts: Count I— knowing and intentional importation into the United States of approximately 7.1 kilograms of hashish, in violation of 21 U.S.C. § 952(a); Count II — possession of hashish aboard an aircraft arriving in the United States, in violation of 21 U.S.C. § 955; and Count III — possession of hashish with intent to distribute it, in violation of 21 U.S.C. § 841(a). Each of the statutes Valot was convicted of violating is found in the Comprehensive Drug Abuse Prevention and Control Act of 1970 (the Act) (21 U.S.C. § 801 et seq.).

Appellant argues that in determining whether consecutive sentences are appropriate, it is the intent of Congress which is controlling. See e. g., Prince v. United States, 352 U.S. 322, 327, 77 S.Ct. 403, 1 L.Ed.2d 370 (1957); Gore v. United States, 357 U.S. 386, 393, 78 S. Ct. 1280, 2 L.Ed.2d 1405 (1958). He further argues that the legislative history of the Act shows that Congress intended that first offenders convicted of violations involving hashish would be sentenced to a maximum of five years, and that, in reorganizing the drug laws as it did, Congress did not intend that three separate convictions should be obtained for which the defendant could be given consecutive sentences totalling twelve years.

It is true, as Valot states, that in some respects the Act contains penalty provisions which are more lenient than prior laws. For instance, the Act eliminates mandatory minimum sentences (except in one instance, not relevant here), it provides for shorter sentences for marijuana violations than for those involving heroin, and it prescribes lesser penalties for “mere possession” than for “trafficking.” (See 21 U.S.C. §§ 841, 844; House Comm, on Interstate and Foreign Commerce, H.R.Rep. No. 1444, 91st Cong., 2d Sess. to accompany H.R. 18583 in 1970 U.S.Code Cong. & Admin. News pp. 4566, 4614, 4616 (hereinafter cited as House Report 1444).

Scrutiny of the legislative history and an analysis of the Act itself provide no evidence that Congress intended to limit sentencing under the Act to concurrent sentences only. It is true that as to each of the sections under which Valot was convicted and sentenced House Report 1444 includes the statement

a violation with respect to [such section] * * * will be punished * * -x- ^ imprisonment of not more than five years * * *. 1970 U.S.Code Cong. & Admin.News at p. 4645;

See also, id. at p. 4614. However, we believe that rather than evidencing an intent to eliminate consecutive sentences for violations of the Act, the legislative history indicates that the Act’s

sentencing procedures give maximum flexibility to judges, permitting them to tailor the period of imprisonment, * * * to the circumstances involved in the individual case. 1970 U.S.Code Cong. & Admin.News at p. 4576 (emphasis added).

At another point the House Report stated that the elimination of mandatory mínimums was also designed to make the

penalty structure in the law more flexible * * *. Id. (emphasis added)

All of this convinces us that in “revis[ing] the entire structure of criminal penalties involving controlled drugs” (Id. at p. 4570) Congress did not intend to eliminate the possibility of consecutive sentences where the trial judge deemed them appropriate. We think that the elimination of such a basic procedure as consecutive sentencing should be accomplished only by the clearest indication from the Congress.

Having concluded that consecutive terms of imprisonment may be imposed for convictions obtained under the Act, we now turn to the question of whether consecutive sentences were appropriate in this case.

Appellant was convicted of violating the following statutes:

It shall be unlawful to * * * import into the United States from any place outside thereof, any controlled substance in schedule I or II of subchapter I of this chapter * * 21 U.S.C. § 952(a) (Count I)
[It was undisputed that Valot was arrested while attempting to import such a substance.]
It shall be unlawful for any person to bring or possess on board any vessel or aircraft, or on board any vehicle of a carrier, arriving in or departing from the United States or the customs territory of the United States, a controlled substance in schedule I or II or a narcotic drug in schedule III or IV, unless such substance or drug is a part of the cargo entered in the manifest or part of the official supplies of the vessel, aircraft, or vehicle. 21 U. S.C. § 955 (Count II)
Except as authorized by this sub-chapter, it shall be unlawful for any person knowingly or intentionally— (1) to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance; * * * 21 U. S.C. § 841(a) (Count III).

Appellant notes the close relationship between 21 U.S.C. § 952(a) and 21 U.S. C. § 955. While Section 952 prohibits importing hashish, Section 955 makes unlawful the possession of such substance aboard an aircraft or any vehicle of a carrier arriving in the United States. Valot claims that Section 955 was enacted to cover the situation where hashish or other controlled substance is detected before the party attempting to smuggle it into the United States has consummated the importation. This section might also be used to prosecute the possession of hashish by one who had landed in the United States but who claimed to be proceeding on to another country without actually entering this country. It is abundantly clear that any instance of illegal importation of hashish by airplane must necessarily include the offense of possession of hashish aboard an aircraft. If both of these offenses are separately and cumulatively punished, then the maximum penalty for such importation would be ten years imprisonment, while the maximum penalty for one who imported such substances by private vehicle or on foot would be only five years.

The Supreme Court has often dealt with the question of consecutive sentences for single acts which violate several related statutes. A most instructive case is Prince v. United States, supra which involved consecutive sentences imposed for “bank robbery” and for “entry into a bank with intent to commit robbery.” In holding that consecutive sentences were not appropriate for these offenses, the Court said that if Congress had intended to punish separately both entry into a bank and robbery of that bank and to permit the sentences for each offense to be served consecutively, that “result could have been accomplished easily with certainty rather than by indirection.” 352 U.S. at 328, 77 S. Ct. at 407. (footnote omitted).

We find nothing in the Act or in its legislative history to indicate that Congress believed that importation by carrier is a more serious offense than importation by private vehicle or on foot. Indeed, it would seem that the only reason Congress enacted Section 955 was to cover cases involving the unconsummated importation of a controlled substance. We find that the offense of possession on board an aircraft merges with the offense of illegal importation once the latter offense has been committed. See United States v. Tonarelli, 55 F.R.D. 423 (D.P.R.1972). We therefore believe, under the authority of Prince v. United States, supra, that consecutive sentences for violations of Sections 955 and 952(a) are unlawful.

Valot further argues that the sentence for his conviction under 21 U. S.C. § 841(a) for possession with intent to distribute should not run consecutively to his sentence for illegal importation, since “it is obvious that in the great majority of cases the illegal importer has that intent [to distribute].” (Brief at 19).

The Supreme Court has held that a bank robber may not be sentenced to consecutive terms of imprisonment for bank robbery and for possessing the proceeds of a bank robbery. Heflin v. United States, 358 U.S. 415, 79 S.Ct. 451, 3 L.Ed.2d 407 (1959). This, Valot claims, is authority for us to hold invalid the consecutive sentence imposed on the possession with intent to distribute count.

We disagree. Unlike Heflin, or the relationship between Sections 952(a) and 955, the relationship between importing (Section 952(a)) and possession with intent to distribute (Section 841(a)) is not one as to which there can be said to be a merger of the elements of one crime with the other. There is neither necessary nor close relation between the two crimes. In addition, the legislative history to which Valot points quite clearly indicates that Congress specifically intended that distributors of drugs should be severely dealt with. We believe that Congress quite plainly intended that the offense of importation and that of possession with intent to distribute should be punished separately, and, in an appropriate case, with consecutive sentences.

Sentencing is properly a matter for the careful exercise of discretion by the district court. By differentiating the crimes of illegal importation and possession with intent to distribute, Congress has provided that where a defendant stands convicted of both offenses, consecutive sentences may be imposed, if the court deems them necessary.

While one might conjure up situations for which consecutive sentences for these offenses might seem harsh, this case poses no such problem.

We therefore affirm the decision of the district court that there was no violation of the Speedy Trial Rule and we remand for sentencing in accordance with this opinion.

It is so ordered.

      . This Circuit’s Rules Regarding Prompt Disposition of Criminal Cases (the Speedy Trial Rules) became effective in July, 1971. By vote of the Second Circuit Judicial Council on February 28, 1978, the Second Circuit’s plan for the Prompt Disposition of Criminal Cases, which effectively repeals these Rules, was adopted pursuant to Rule 50(b), F.R.Gr.P., effective April 1, 1978.

      . See, e. g., Gore v. United States, 357 U.S. 386, 78 S.Ct. 1280, 2 L.Ed.2d 1405 (1958) ; Heflin v. United States, 358 U.S. 415, 79 S.Ct. 451, 3 L.Ed.2d 407 (1959) ; Milanovich v. United States, 365 U.S. 551, 81 S.Ct. 728, 5 L.Ed.2d 773 (1961).


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    UNITED STATES of America, Appellee, v. Jerome DALY, Appellant.
    No. 73-1059.
    United States Court of Appeals, Eighth Circuit.
    Submitted June 14, 1973.
    Decided July 20, 1973.
    Rehearing Denied Aug 9, 1973.

      Jerome Daly, pro se.
    Robert G. Renner, U. S. Atty., Minneapolis, Minn., for appellee.
    Before VOGEL and VAN QOSTER-HOUT, Senior Circuit Judges, and ROSS, Circuit Judge.
   PER CURIAM.

This is an appeal from a jury verdict finding the defendant Daly guilty of wilfully failing to file an income tax return for the years 1967 and 1968, in violation of 26 U.S.C.A. § 7203.

It is stipulated that defendant, formerly an attorney, received over $6,000.-00 in legal fees in 1967 and more than $10,000.00 in 1968.

Defendant filed what he contends are tax returns for each of the years involved. On the return blanks he supplied his name, address, occupation and signature and a notification “See exhibit A attached hereto.” Exhibit A objects to the income tax law as being unconstitutional and states that the taxpayer cannot fill out any of the information sought by the return without waiving his constitutional right against self-incrimination. The purported returns were returned to him because they were found not to be returns required by the law and the regulations in that they were not filled out to include any information as to income or expenses. Purported amended returns were filed substantially the same as the originals which again failed to set out any information with respect to income or expenses, and again asserted defendant’s constitutional right to protection against self-incrimination. Defendant for a reversal relies upon the following points:

1. Defendant’s filing of returns containing no information relating to income or expenses was nonetheless sufficient to comply with the § 7203 requirement that he “make a return”.

2. The Fifth Amendment excuses defendant from answering all questions on the return relating to income and expenses.

3. A subpoena directed against the IRS was erroneously quashed.

4. The district court erroneously refused to instruct the jury on the definition of a dollar.

5. Defendant’s criminal prosecution was illegal because it should have been preceded by some form of administrative action.

We find all of defendant’s contentions lack merit for the reasons hereinafter stated, and affirm the conviction.

Defendant’s first contention is answered by United States v. Porth, 426 F.2d 519 (10th Cir. 1970), where the court held:

“A taxpayer’s return which does not contain any information relating to the taxpayer’s income from which the tax can be computed is not a return within the meaning of the Internal Revenue Code or the regulations adopted by the Commissioner. 10 Mertens, the Law of Federal Income Taxation, § 55.22 (1964 Revision); Florsheim Bros. Dry Goods Co. v. United States, 280 U.S. 453, 462, 50 S.Ct. 215, 74 L.Ed. 542 (1930); Sanders v. Commissioner of Internal Revenue, 225 F.2d 629 (10th Cir. 1955), cert. denied, 350 U.S. 967, 76 S.Ct. 435, 100 L.Ed. 839 (1956); National Contracting Co. v. Commissioner of Int. Rev., 105 F.2d 488 (8th Cir. 1939).” 426 F.2d at 523. See also Virginia L. Reiman, T.C.Memo 1968-117.

Defendant’s second contention involves the scope of his Fifth Amendment protection against self-incrimination. Defendant sees himself in a cruel trilemma: If he filed and answered questions truthfully he would be incriminating himself; if he filed and answered questions untruthfully he would be subjecting himself to a perjury charge; if he failed to file returns he would be committing a crime. Cf. United States v. Egan, 459 F.2d 997 (2d Cir. 1972). The chief error in defendant’s position is his blanket refusal to answer any questions on the returns relating to his income or expenses for the years in question. “[E]ven [if a particular] question was incriminating, since the government has a substantial interest in its tax revenues, appellant’s privilege would relate only to his refusal to respond to the question, not to a total failure to file the return.” United States v. Egan, supra at 998. As previously suggested, defendant’s conduct in this case amounts to “a total failure to file.” If the return called “for answers that the defendant was privileged from making he [may raise] the objection in the return, but could not on that account refuse to make any return at all.” United States v. Sullivan, 274 U.S. 259, 263, 47 S.Ct. 607, 71 L.Ed. 1037 (1927). In an analogous situation involving this same defendant’s “blanket Fifth Amendment objection to an inquiry and interrogation by the Internal Revenue Service” this court held “that the taxpayer, ‘cannot assert the privilege to every question asked by the examiner, most of which are innocuous on their face.’ ” Heligman v. United States, 407 F.2d 448, 450 (8th Cir. 1969), citing Daly v. United States, 393 F.2d 873 (8th Cir. 1968).

In Heligman v. United States, supra, this court stated:

“[T]he taxpayer is not the final arbiter of the privilege. The privilege must be specifically claimed on a particular question and the subject matter submitted to the court for its determination as to the validity of the claim.
“The defendant here, however, claims a blanket privilege against the mere making or filing of the return.
* * * * -x-
“The public need for requiring voluntary disclosures of income transcends any personal right to thwart national objectives by allowing an undisclosed self-determination of possible incrimination, thus excusing compliance with the income tax laws. We, therefore, hold that the Fifth Amendment privilege against incrimination does not extend to defendant’s failure to file. . . .” 407 F.2d 450-451, 452 (emphasis added). See also California v. Byers, 402 U.S. 424, 91 S.Ct. 1535, 29 L.Ed.2d 9 (1971); United States v. MacLeod, 436 F.2d 947 (8th Cir. 1971).

Defendant has made no reasonable showing with respect to how the disclosure of the amount of legal fees he received during the years in question, as shown by the stipulation made at the trial, could possibly incriminate him.

Defendant’s third contention is wholly without merit. The subpoena in question was clearly overbroad, unreasonable, oppressive, and lacking in particularity and relevance.

Defendant’s fourth contention involves his seemingly incessant attack against the federal reserve and monetary system of the United States. His apparent thesis is that the only “Legal Tender Dollars” are those which contain a mixture of gold and silver and that only those dollars may be constitutionally taxed. This contention is clearly frivolous. See Koll v. Wayzata State Bank, 397 F.2d 124 (8th Cir. 1968).

Defendant’s fifth contention is that his criminal prosecution is illegal because it was not preceded by some form of administrative action. Defendant cites no apposite authority for this proposition. We are unable to discover any authority to support this proposition.

The judgment appealed from is affirmed.


author: DYER, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Joe Don LOONEY, Defendant-Appellee.
    No. 73-1171.
    United States Court of Appeals, Fifth Circuit.
    July 6, 1973.
    Rehearing Denied July 31, 1973.
    Roby Hadden, U. S. Atty., Dennis R. Lewis, Asst. U. S. Atty., Tyler, Tex., for plaintiff-appellant.
    Michael Thornell, Houston, Tex., for defendant-appellee.
    Before JOHN R. BROWN, Chief Judge, and COLEMAN and DYER, Circuit Judges.
   DYER, Circuit Judge:

Looney was indicted for possession of an unregistered sub-machine gun within the definition of 26 U.S.C.A. § 5845(a) in violation of 26 U.S.C.A. §§ 5861(d) and 5871. From an order of the district court granting Looney’s motion to suppress the gun as evidence because it was seized as a result of an illegal search the Government appeals. We reverse.

About 2:15 in the morning of April 5, 1972, five agents of the Bureau of Narcotics and Dangerous Drugs, for the purpose of executing an arrest warrant for Ronald Frick, went to the home of Don Looney, father of appellant Joe Don Looney. The house is located in a rural area in Diana, Texas. Based upon information Frick had given one of the arresting agents while the agent was acting in an undercover capacity, Frick was believed to be at the Looney residence. The agents neither had an arrest warrant for Joe Looney nor a search warrant for the residence.

The agents had previously been investigating Frick because of his discussion with two of them, acting undercover, about cocaine smuggling. They knew him to be an international smuggler and had reason to believe that Frick possessed cocaine because he offered to give the agents a substantial discount on the purchase price. More importantly, he had agreed to pay them five thousand dollars to assassinate Federal Chief Judge Connally to keep him from sentencing Frick’s girl friend for possession of cocaine. Frick thought that his girl friend would fare better before another judge. Frick had “cased Judge Connally’s home” and knew of the Judge’s comings and goings, as well as those of the gardener and maid. The arrest warrant for Frick had been obtained from a United States Magistrate for obstructing justice.

The agents believed Frick to be a very dangerous person. Coombs, who was in charge of the detail, advised the other four agents to be extremely careful. Two agents were sent to the rear of the house while Coombs and two other agents proceeded to the front door. Joe Looney answered a knock on the door. The agents identified themselves and asked Looney if Frick was there. After getting a negative response they entered the house and found Frick in a small study off the living room, hiding behind a book-shelf, next to which there were two loaded rifles. Frick was arrested, advised of his constitutional rights, and handcuffed. The agents saw a partially burned cigarette believed to be marihuana on the floor. As a result they arrested Looney, advised him of his constitutional rights and handcuffed him. In response to an agent’s question whether there were any more narcotics in the house Looney said that there was some grass in the back bedroom and for the agents to help themselves.

Coombs felt precautionary measures were dictated for the personal safety of the agents because of their unfamiliarity with the house located in a rural area, the heinous nature of the crime for which Frick was arrested, Frick’s known propensity for using confederates, and the lateness of the hour. He therefore directed that the house be cleared and thus prevent any possible harm to the agents by making sure that the agents knew who was in the house and, if someone was found, whether he was armed. Accordingly, agent Bullard was directed to remain in the living room with Frick and Looney and agents Alexander and Clagg were sent to secure the two bedrooms and baths while Coombs and Harper went to the master bedroom portion to secure it. While proceeding with caution so that no one in the bedroom could cause the agents physical harm, Clagg looked through an open doorway from the hall into the front bedroom and saw, in plain view, the sub-machine gun on the floor under the bed. It was later established that the gun belonged to Joe Looney.

After finding the weapon and finding no one else in the house, a process which took no more than fifteen minutes from the time of entry, the house was then searched thoroughly without a warrant for about three hours. The Government does not assert that evidence seized after the termination of the cursory security search is admissible.

The district court in granting Looney’s motion to suppress pointed out in its findings of fact that:

The premises was [sic] immediately secured by the agents, that is, there were no weapons within the reach of Frick or Looney.
The bedroom was out of the immediate control of both Frick and Looney, (emphasis supplied).

Relying on Chimel v. California, 1969, 395 U.S. 752, 89 S.Ct. 2034, 23 L.Ed.2d 685, the court in its conclusions of law found the search and seizure to be unlawful and unjustified:

The weapon in question was found after both Frick and Defendant Looney were secured and a cursory search had been made in the area subject to Frick’s and Looney’s immediate control. (emphasis supplied).

Upon a careful consideration of the record, we are of the view that neither the revered principles of the Fourth Amendment nor the limitations of Chi mel are traduced by allowing officers to make a cursory security search to protect their lives under the circumstances here present. The district court dwelt on the fact that the area subject to Frick’s and Looney’s immediate control was secure. This misses the point. The important thing is that after Frick and Looney were made immobile the agents were instructed to look through the house for people that might be in hiding and be a danger to the safety of the agents, and not to look for things. Of course, once this security precaution had been taken, any further search without a warrant was prohibited.

It is manifest that here the agents were not “routinely searching any room other than that in which [the] arrest occurs;” Chimel, supra at 763, 89 S.Ct. at 2040. Indeed, the agents were not engaged in a Fourth Amendment search at all.

On almost parallel facts the Eighth Circuit recently found that there had been no unlawful seizure of a sawed-off shotgun found in plain view during a security search. United States v. Briddle, 8 Cir. 1970, 436 F.2d 4, cert. denied, 404 U.S. 942, 92 S.Ct. 291, 30 L.Ed.2d 256. We are in complete agreement with and adopt the views there expressed:

The distinguishing and controlling fact, as we view the case before us, is that the shotgun was not discovered as a result of any search whatsoever. Rather, it was discovered by being in plain view in the bedroom which Special Agent Hancock entered in the exercise of his conceded right to conduct a quick and cursory viewing of the apartment area for the presence of other persons who might present a security risk. As stated in Harris v. United States, 390 U.S. 234, 236, 88 S.Ct. 992, 993, 19 L.Ed.2d 1067, “It has long been settled that objects falling in the plain view of an officer who has a right to be in the position to have that view are subject to seizure and may be introduced in evidence.” Thus, when Special Agent Hancock observed in plain view an illegally possessed sawed-off shotgun (contraband) he had the right to seize it, and in so doing he did not violate any fourth amendment right of Briddle. See, United States v. Baca, 417 F.2d 103 (10th Cir. 1969); Harris v. United States, supra.
The policy reasons that support the application of an exclusionary rule as to evidence obtained in violation of fourth amendment rights by an illegal search and seizure are not present where the evidence is obtained without any search by being observed in plain view by an officer who concededly had a right to be where the observation occurred. Nor do we deem it to be necessary, advisable or in the public interest to declare that an unreasonable search occurring thereafter either under an invalid search warrant or by way of overbreadth and incidental to a lawful arrest taints and brings under the exclusionary rule contraband type evidence discovered and seized under the circumstances present in this case.
. Apparently the Court in Chimel did not have before it any contention that separate consideration should be given to items seized solely and properly incident to the arrest as distinguished from other items seized. More to the point, Chimel, is readily distinguishable on the facts. In Chimel, armed with an arrest warrant, the officers with Chimel’s wife were waiting for him to come home. When he arrived home he was arrested under circumstances that did not occasion the officers to conduct a cursory viewing of the house premises concurrently with the arrest as a security measure. Nor is there any indication in Chimel that any of the challenged items had been in the plain view of any officer who at the time he saw the item was in a place where he had a right to be as a part of a concededly proper security check of the area where the arrest occurred.

Id. at 7, 8 (footnotes omitted).

Under the circumstances of this case the agents’ search, not to discover evidence of crime, but to allow them to carry out the arrests of Frick and Looney without fear of violence, constituted a limited reasonable intrusion to insure their safety. See Adams v. Williams, 1972, 407 U.S. 143, 92 S.Ct. 1921, 32 L.Ed.2d 612. The sub-machine gun that was in plain view and seized as a result of this intrusion was therefore admissible, and Looney’s motion to suppress it as evidence at his trial should have been denied.

REVERSED and REMANDED for further proceedings consistent with this opinion.


author: BARRETT, Circuit Judge.

text:
    Marguerite IRWIN et al., Plaintiffs-Appellees, v. WEST END DEVELOPMENT COMPANY, a Colorado corporation, et al., Defendants-Appellants.
    Nos. 72-1755, 72-1825.
    United States Court of Appeals, Tenth Circuit.
    June 29, 1973.
    As Amended in Denial of Rehearing Aug. 17, 1973.

      William J. Carney, Aspen, Colo. (J. D. Muller, Aspen, Colo., on the brief), for plaintiffs-appellees.
    Frederic K. Conover, II, Denver, Colo., for defendants-appellants.
    Before PICKETT, McWILLIAMS, and BARRETT, Circuit Judges.
   BARRETT, Circuit Judge.

Roy Vroom appeals from the District Court’s judgment, 342 F.Supp. 687, impressing a constructive trust in favor of the appellees on 30.76 shares of West End Development Company stock sold to him by the Taylors, together with the Order directing him to pay West End Development Company $15,048.75 of salry and $3,128.24 of interest which he was held to have wrongfully received. Vroom also appeals from the $5,000 attorneys’ fees awarded appellees’ counsel.

The appellees are four registered nurses who served in the U.S. Army Nurses’ Corps and/or the Veterans’ Administration. They were transferred every year or two to stations around the world. Some of them were stationed in Colorado at various times.

In 1957 Marguerite Irwin and Ada Rock, who is not a party to this suit inasmuch as she is now a resident of Colorado and has a similar suit pending in State court against Vroom, went to Aspen, Colorado, to inquire about purchasing a small lodge to operate after their retirement. They visited Vroom Realty. Roy Vroom interested them in joining in the purchase of 30 acres of undeveloped land just outside of Aspen for $45,000. One-half of the $18,000 down payment was tendered by Rock, Irwin and Lease, and the other half by Vroom Realty and Theodore Gordon. Lease, Irwin and Rock then held 20% interest, Vroom Realty, 40% and Gordon, 40%. Vroom Realty and Gordon sold 5% of their interests to Julia Crowley and Lois McCaleb, also registered nurses serving as the other appellees.

A syndicate agreement was entered into in late 1957. It was prepared by Vroom’s attorneys, mailed to the nurses and executed by them. In 1963 the syndicate was abandoned and a Colorado corporation known as the West End Development Company was organized by Vroom at the suggestion of his attorneys in Aspen. The nurses consented to the incorporation; however, they were not sent copies of the Articles of Incorporation and, in fact, they did not see them until shortly before trial. Upon incorporation Vroom served as President, Treasurer and Chairman of the Board. Until 1968, the other two directors were Mr. Petre and Mr. Zimmerman, Vroom’s attorneys. They also served as secretary and vice-president, respectively. After that time the Board consisted of Vroom and two of his employees. Prior to the closing of the purchase of the property, Vroom assigned 10% of his investment in the syndicate to Mr. and Mrs. Taylor for $10,000 for a loan the Taylors had made to him. He did not inform the other syndicate interest holders of this transaction. In 1958 the syndicate interests and investments were as follows:

Total Interest in Syndicate Initial Cash Investment
Five Nurses 30% $ 16,500
Gordon 35% 750
Taylors 10% 10,000
Vroom 25% 9,250
After Incorporation, the stock was owned as follows:
Roy Vroom 23.08 shares
Ann Taylor 15.38 shares
Ewing Taylor 15.38 shares
Marguerite Irwin 10.253 shares
June Lease 10.253 shares
Ada Rock 10.253 shares
Lois McCaleb 7.69 shares

In 1961, Gordon, as a result of a partition, received ten acres of the land for his 35 % interest in the syndicate.

In September, 1965, the Taylors sold their 30.76 shares to Vroom at $1,025 per share. That same year Vroom offered to buy the five nurses’ stock for $600 per share. In 1966 and 1969 Vroom mailed the nurses financial statements reflecting his purchase of the Taylors’ stock.

The land appreciated in value due to the development of the Buttermilk Ski Area nearby. Vroom continually requested the nurses to sell their stock at prices substantially lower than their known value; he did not disclose to the nurses the price he paid for the Taylors’ stock; he did not state to them that he was personally interested in buying their shares; and he failed to disclose to them the price surrounding land was selling for. In 1968 a site across the street from the subject land sold for $15,000 per acre. At that valuation, attributable to the West End Development Company acreage, each share of stock would have been worth $3,000. That year Vroom stated in a letter to the nurses that they could sell their stock for $800 per share. It is conceded that Vroom is knowledgeable and experienced in land values, land development and land planning.

Vroom’s alleged efforts to sell the land did not materialize. He decided to build a Swim and Racket Club in 1969. Although the shareholders did not consent to the construction of the tennis courts, Vroom proceeded with the construction based upon the approval of the project by the Board of Directors consisting of Vroom and two of his employees. The Board of Directors voted to accept Vroom’s loan to the corporation of $39,216.91 with interest at the rate of 9% to construct the courts. Vroom wrote to the nurses about the construction plans. Miss Rock and Miss Irwin went to Aspen to consult with a lawyer. Vroom suggested that they contact the corporation’s lawyer, Mr. Helmick. They did so and thereafter executed their powers of attorney relating to their stock to Mr. Helmick.

Also in 1969 Vroom and Powers, Secretary of the Board of Directors, authorized the corporation to borrow $75,000 from the Bank of Aspen to repay Vroom his loan plus interest and to pay a retroactive salary to Vroom of $15,000. Certain of the corporate property was mortgaged to secure the loan. At no time did Vroom inform the shareholders of the salary he had received from the corporation, of the Bank of Aspen’s loan to the corporation, or of the interest paid to him. In 1969 the financial statement simply disclosed Vroom’s loan to the corporation. The tennis courts lost money in 1970 and 1971.

Vroom contends that: (1) it was error for the trial court to impose a constructive trust on the 30.76 shares which he acquired from the Taylors because Article IV, Paragraph 6 of the Articles of Incorporation is not enforceable; (2) the provisions of Section 15 of the Uniform Stock Transfer Act barred the trial court’s impression of a constructive trust; (3) the imposition of a constructive trust is barred by the statute of limitations and the doctrine of laches; (4) the trial court’s application of estoppel was in error; (5) the constructive trust has been released by the expiration of 30 days from the date the judgment became final; (6) the trial court erred in granting judgment against Vroom for salary and interest paid to him; and (7) the trial court’s award of attorneys’ fees was in error.

I.

Vroom contends that the Court erred in impressing a constructive trust on his stock purchased from the Taylors because Article IV, Paragraph 6 of the Articles of Incorporation is not enforceable. It states:

No shareholder shall sell or transfer any outstanding shares of the capital stock issued by the corporation to such shareholder, excepting to the other shareholders, in the proportion which the number of shares owned by each bears to the total shares outstanding, without the prior consent of the owners or at least two-thirds (%) of the shares entitled to vote at the shareholders’ meeting .

Vroom alleges that the provision is unintelligible, unworkable, and too uncertain in its terms to be enforced or to give the appellees their pro-rata rights to the purchase of stock sold to Vroom by the Taylors. Substantially the same proviso was incorporated in the Syndicate Agreement. Vroom argues that it is also an unreasonable restraint on the alienation of the corporation stock.

The appellees did not seek to have the Articles of Incorporation specifically enforced, but rather to effectuate the intent of the Articles as a matter of equity in order to prevent fraud. The trial court did not enforce the Articles of Incorporation, but rather the fiduciary duty which the Court found Vroom owed the nurses. The law prohibits an absolute restriction against transferability, but if a restriction does not amount to an effective prohibition against transferability, then the test is reasonableness. Thus, a “first refusal” provision is valid in Colorado. Sterling Loan & Investment Co. v. Litel, 75 Colo. 34, 223 P. 753 (1924). The trial court recognized that the provision contained ambiguities but it construed them against the drafter and gave the provision a reasonable meaning according to Vroom’s intent that the Articles should provide a workable and equitable result. The trial court stated that instead of stating “in proportion which the number of shares owned by each bears to the total shares outstanding”, the draftsman meant to state, “in the proportion which the number of shares owned by each bears to the total shares not offered for sale.” Vroom was, or should have been, well aware of the provisions contained in the Articles of Incorporation. He should have offered the Taylors’ stock to the nurses on a pro-rata basis before purchasing it entirely for himself. The nurses were not aware of their right to purchase the Taylor stock until they saw the Articles in 1970. They relied on Vroom’s judgment, honesty and fair dealing. Vroom owed a fiduciary duty to them. He breached this duty in not offering them their proportion of the Taylor stock. A constructive trust was imposed by the trial court because Vroom would be unjustly enriched by being permitted to keep the 30.76 shares. The trust arose because of unconscionable conduct by Vroom in obtaining the shares from the Taylors for his sole benefit. McConnell v. Dixon, 68 Wyo. 301, 233 P.2d 877 (1951).

II.

Vroom contends that the provisions of Section 15 of the Uniform Stock Transfer Act barred the trial court’s impression of a constructive trust upon the Taylor stock. It states:

There shall be no lien in favor of a corporation upon the shares represented by a certificate issued by such corporation and there shall be no restriction upon the transfer of shares so represented by virtue of any bylaw of such corporation, or otherwise, unless the right of the corporation to such a lien or the restriction is stated upon the certificate. 1963 C.R.S. 31-11-14.

Vroom alleges that the effect of the statute is to render ineffective the restrictive provisions of Article IV, Paragraph 6 of the Articles of Incorporation because the restrictions were not set forth upon the stock certificates sold by Taylors to Vroom.

Section 15 of the Uniform Stock Transfer Act was superseded by 1963 C.R.S. 155-8-204 which states:

Unless noted conspicuously on the security, a restriction on transfer imposed by the issuer even though otherwise lawful is ineffective except against a person with actual knowledge of it.

The purpose of Section 31-11-14 was to make ineffective restrictions on transfers to persons without notice. Sankin v. 5410 Connecticut Avenue Corporation, 281 F.Supp. 524 (D.D.C.1968), aff’d, 133 U.S.App.D.C. 361, 410 F.2d 1060 (1969), cert. denied 396 U.S. 1041, 90 S.Ct. 681, 24 L.Ed.2d 685 (1970). The failure to note the restriction on the certificates is no bar to its enforcement against Vroom who had actual notice of it. The trial court went further and stated that in any event, Vroom is estopped from setting up the absence of the restriction from the face of the stock certificate as a defense, inasmuch as he owed a fiduciary duty to the other stockholders. Vroom breached his contractual and fiduciary duties to the appellees when he purchased the Taylor stock without honoring the agreement he had previously made to permit the other stockholders to share in the purchase. The only equitable solution is the one the trial court arrived at, i. e., the imposition of a constructive trust on the 30.76 shares of stock purchased by Vroom from the Taylors. In this regard, we note that Vroom will share on a pro-rata basis, notwithstanding his breach.

III.

Vroom alleges that the statute of limitations and the doctrine of laches bar this action. All parties agree that 1963 C.R.S. 87-1-15 applies, which is a five-year limitation on bills of relief. Vroom alleges that since the Taylor sale of stock occurred no later than September 15, 1965, the five-year limitation expired on September 15, 1970, some five months before the suit was filed. Vroom further alleges that even if the appellees are not barred by the statute of limitations, they are barred by the doctrine of laches, because they took no interest in the project for five years while Vroom was devoting substantial time to the development of the property.

The actual sale of the Taylor stock to Vroom was concealed from the stockholders until Vroom sent the 1965 financial statement on March 7, 1966, within the five-year statute of limitations. Even so, when the nurses learned of the sale of Taylors’ stock to Vroom they had no reason to object because they were unaware of the restriction on its sale. They had no knowledge of the restriction until they received copies of the Articles of Incorporation in 1970. Thus the statute of limitations could not begin to run until the appellees knew in 1970 of the trust which Vroom violated. Cliff v. Cliff, 23 Colo.App. 183, 128 P. 860 (1912). There is no distinction between resulting trusts and constructive trusts as far as laches and the statute of limitations is concerned. Vandewiele v. Vandewiele, 110 Colo. 556, 136 P.2d 523 (1943). Laches is not a valid defense. The nurses brought the action soon after learning of Vroom’s breach of trust. The elements of laches are full knowledge of the facts, unreasonable delay in asserting an available remedy, and intervening reliance by and prejudice to another. Herald Company v. Seawell, 472 F.2d 1081 (10th Cir. 1972). The elements are not present here.

IV.

Vroom next asserts that the trial court’s attempts to avoid the effects of the statute of limitations and the Uniform Stock Transfer Act by invoking the doctrine of estoppel was in error. Vroom contends that since the issue of estoppel was not raised in the pleadings or the pretrial order, and must be pleaded specially, the Court could not rule or rely thereon.

Estoppel arises here not as an affirmative defense, but as a reply to an affirmative defense. It need not be pleaded specially. The trial court is obligated to determine the issues presented by the evidence properly before it. Issues will be treated as if they had been raised by the pleadings when they are tried by the implied consent of the parties. Knudson v. Boren, 261 F.2d 15 (10th Cir. 1958). Since Vroom introduced the evidence forming the basis for the estoppel, he cannot now complain.

V.

Vroom alleges that the constructive trust has been terminated by the expiration of 30 days from the date the judgment became final because appellees did not tender payment of their pro-rata share of the Taylor stock as required by the judgment. Vroom contends that the judgment became final ten days after the entry of the trial court’s judgment.

The general rule is that an appeal suspends the time allowed by the judgment for the performance of a condition affecting the substantive rights of the parties, so the party who is to perform the condition has the specified time starting from the time that the appellate court judgment becomes effective to perform the condition. 4 Am.Jur.2d, Appeal & Error § 363. This court recognized the rule in First National Bank in Dodge City v. Johnson County National Bank and Trust Company, 331 F.2d 325 (10th Cir. 1964), where we said that a final and appealable order is one which terminates the litigation between the parties on the merits of the case and on affirmance the trial court will have nothing to do but execute the judgment it originally entered. See Weingartner v. Union Oil Company of California, 431 F.2d 26 (9th Cir. 1970), cert. denied 400 U.S. 1000, 91 S.Ct. 459, 27 L.Ed.2d 451 (1970); Rule 62(a), Fed.R.Civ.P., 28 U.S.C.A.; 28 U.S.C.A. §§ 1291-1294. Thus the appeal suspended the time for performance by the nurses of tendering payment for the shares of stock available to them through the imposition of the constructive trust on the Taylor stock. They must tender payment only after the judgment from this court becomes effective.

VI.

Vroom next contends that the trial court erred in granting judgment against him for salary and loan interest paid to him. Vroom alleges that his salary and the interest paid to him are authorized under the “business judgment” rule and were also permitted under the provisions of Article VIII, Paragraph 1 of the Articles of Incorporation.

The Articles of Incorporation do not authorize salaries to be paid to the directors or officers. Vroom’s salary was paid by a loan from the Bank of Aspen at a time when the corporation had no operating funds. The directors, in fixing their salaries, must consider the financial condition of the corporation. Glenmore Distilleries Company v. Seideman, 267 F.Supp. 915 (E.D.N.Y. 1967). Retroactive salaries are voidable where no extraordinary services are performed. Vroom’s compensation was already set at $14 per regular meeting, $25 per special meeting; no further compensation was authorized without shareholder approval. His salary was approved by a resolution signed by himself and his secretary who was on the Board of Directors. Since Vroom’s presence and vote were necessary to provide a quorum of directors, the transaction is voidable; he cannot vote for his own salary. Steele v. Gold Fissure Gold Mining Co., 42 Colo. 529, 95 P. 349 (1908). Vroom’s loan to the corporation and the interest he received, together with the retroactive salary, constituted a breach of his fiduciary duty; he could not profit at the expense of other stockholders. Wilshire Oil Company of Texas v. Riffe, 381 F.2d 646 (10th Cir. 1967), cert. denied 389 U.S. 822, 88 S.Ct. 50, 19 L.Ed.2d 75 (1967). He had assured the shareholders that the tennis courts would cost nothing to the corporation. Such, of course, was not the case.

VII.

Vroom argues that the trial court’s award of attorneys’ fees of $5,000 by West End Development Company to appellees’ counsel was in error because the appellees had not requested attorneys' fees and because there was no evidence presented as to the incurring or reasonableness of the fees. Attorneys’ fees may be granted only if evidence is introduced establishing the value of the services performed. Del Rey Air v. Expressway Airpark, Inc., 468 F.2d 187 (10th Cir. 1972). No evidence was introduced regarding the value of the attorneys’ services. Accordingly, the award must be set aside.

The judgment awarding attorneys’ fees is reversed; the judgment is otherwise affirmed.

      . The Agreement to Form a Syndicate contained the following language in Article X:

        No party may sell or assign his interest herein or any fractional portion thereof without first offering his interest or fractional portion to the other parties, in writing, and allowing them, or any one of them, 15 days to meet his price, in cash, the name of the proposed purchaser being disclosed. No party shall thereafter sell his interest or any fractional portion thereof to anyone at less than the above offered price. Otherwise the intersts or any fractional portion thereof shall be freely assignable.