author: WALLACE, Circuit Judge:

text:
    HUGHES AIR CORPORATION, d/b/a Air West, Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent.
    Nos. 26411, 26412.
    United States Court of Appeals, Ninth Circuit.
    May 29, 1973.
    William C. Burt (argued), Leon M. Kestenbaum, of Roteen & Burt, Washington, D. C., Arthur M. Taylor, San Francisco, Cal., for petitioner.
    Warren L. Sharfman, Associate Gen. Counsel (argued), Litigation and Research, C. A. B., Richard W. McLaren, Asst. Atty. Gen., Dept, of Justice, Howard E. Shapiro, Chief, Appellate Section, Antitrust Div., Dept, of Justice, Postmaster General, U.S. Post Office Dept., R. Tenney Johnson, Gen. Counsel, O. D. Ozment, Deputy Gen. Counsel, Robert L. Toomey, Alan R. Demby, C. A. B., Gregory B. Hovendon, Harry First, Dept, of Justice, Washington, D. C., for respondent.
    Before ELY, WRIGHT and WALLACE, Circuit Judges.
   WALLACE, Circuit Judge:

Hughes Air Corporation, d/b/a Air West, seeks review of the orders of the Civil Aeronautics Board (CAB) which require it, as successor in interest to three airlines (Bonanza, Pacific and West Coast), to refund to the government over $1 million of the subsidies its predecessors received for the years 1964-1966. We have jurisdiction to review the orders. 49 U.S.C. § 1486. Applying the standards of 5 U.S.C. § 701 et seq. (formerly the Administrative Procedure Act), we find the orders arbitrary and set them aside.

The basic issue in this case is whether the CAB can require Hughes to carry back tax losses incurred by its predecessors in 1967 and 1968 to the years 1964-1966 to reduce the allowable subsidy for those years. The issue is critical because the particular subsidy plans in effect during the two periods differed sharply in their treatment of tax losses and resulted in unequal treatment of carriers.

Air carriers who transport mail can receive two forms of pay. 49 U.S.C. § 1376. The first, service pay pursuant to § 1376(c), represents compensation for actual transportation costs and it is not involved in this case. The second, subsidy pay, is fixed by the CAB and is intended to benefit those carriers whose revenues from commercial operations and postal service payments do not allow them to be self-sustaining. The result is that air postal and carrier service is provided to places commercially infeasible. The basis for this subsidy is “the need of each such carrier. . . . ” § 1376(b).

Prior to 1961, the local service carriers, e. g., Bonanza, received subsidies which were determined on an individual basis. However, in 1961, the CAB first adopted a class rate plan applicable generally to all the local service airlines. During the years 1964 through 1966, Class Rates III or III-A provided a basic subsidy to the carrier with a possible rebate of a certain part of profits earned to the government. The rebate procedure was designed primarily to recapture that part of the subsidy which resulted in excessive profits and taxes paid were considered in calculating the profits to be shared. Starting with 1967, the new class rate plan (IV) shifted emphasis to the growth in passenger revenue. Under this plan, the subsidy rebate to the government was based entirely on revenue growth and was unaffected by taxes or net income or loss.

In comparison with prior plans, the new plan was a failure. The Air West companies received a subsidy of about $10 million in 1967 and again in 1968, yet they had net losses totaling d!>me $16 million for those years. They were not alone. During the first three years (1967-1969) of Class Rate IV, the local air service industry had total losses of $113 million despite subsidies amounting to approximately $128 million.

Final, subsidy determinations under the various plans would often take years to complete. In fact, the calculations for 1964 through 1966 for the Air West companies were not final when their tax losses for 1967 and 1968 were reported. Under Class Rate IV, these losses had no effect on the subsidies for 1967 and 1968. However, Class Rate III contained a provision requiring that the losses be carried back against the fiscal results of prior years, reducing the credit for taxes paid and increasing net income after taxes and, therefore, ordinarily resulting in a subsidy rebate payable to the government.

During the years involved, some twelve local airlines received subsidies under these class rate plans. Obviously, the CAB could not process final subsidy determinations for all carriers simultaneously. Consequently, some airlines would receive their final rulings before their tax losses in a subsequent year were reported and there would be no loss carryback; others, without final rulings, would have these later losses considered in determining the final 'amount of their subsidies for a particular past year, resulting in a carryback. This seeming disparity of treatment was equalized under Class Rate III because tax losses reported after the final determination and not carried back would be treated as an income item in the later year. Thus, all airlines would be treated approximately the same, if not in one year, then in the next. The effect of a tax loss would ultimately have a fairly equal impact on the profit sharing of each airline. Over a period of years, the end result was reasonably fair and equitable.

When the CAB shifted to Class Rate IV (revenue growth sharing), tax considerations were no longer important. Thus, if an airline reported a tax loss after January 1, 1967, which might have been carried back to a Class Rate III year and there was a final determination for the prior year, no rebate would be necessary. On the other hand, if the subsequent year's loss had been reported before the earlier determination was final, that airline would be ordered to pay back some of the subsidies previously received. Pacific and West Coast were two of the airlines in the latter group. Hughes, on their behalf, argues that this differing treatment violates the CAB’s statutory mandate and arbitrarily discriminates against them.

We are not the first to be confronted with these arguments. See Allegheny Airlines, Inc. v. CAB, 465 F.2d 778 (4th Cir. 1972); Texas International Airlines, Inc. v. CAB, 147 U.S.App.D.C. 363, 458 F.2d 782 (1971); Ozark Air Lines, Inc. v. CAB, 441 F.2d 892 (8th Cir. 1971), cert. denied, 404 U.S. 1039, 92 S.Ct. 714, 30 L.Ed.2d 730 (1972). The District of Columbia and the Eighth Circuits rejected the airlines’ contentions and affirmed the CAB’s order. Only the Fourth Circuit set aside an order, holding “that after abandoning profits as the basis for and the measure of subsidy recapture, profits and losses in subsequent years became irrelevant for all purposes, and tax refunds attributable to losses in subsequent years should not have been used to increase profits in prior years.” 465 F.2d at 784. That court found the CAB’s treatment to be arbitrary and unreasonable.

We agree with the Fourth Circuit’s conclusion. However, though we are impressed by the court’s approach, we find the CAB’s actions to be arbitrary and unenforceable for a different reason. We would have no difficulty affirming an even-handed order directing all the local airlines with later tax losses to rebate appropriate amounts of earlier subsidies. However, under the facts of this case, we will not order these airlines to pay back their subsidies merely because their tax losses of subsequent years had been reported prior to final determination.

When the CAB shifted from profit sharing to revenue growth sharing, it knew that reported taxes would have no application to future subsidy determination. But surely it was also aware that future tax results would still have a significant impact on Class Rate III computations which were not yet final. It could have provided for an orderly termination of the effects upon prior years’ subsidies. Instead, it chose to rely upon a procedure which arbitrarily began to discriminate against some local service carriers. No effort was made to make the new plan compatible with obvious overlapping implications from the prior plan. The equalizing feature of the prior plan was stripped away. Whether a carrier would be forced to return or allowed to keep hundreds of thousands of dollars would turn on fortuitous circumstances, including the order in which the CAB decided to process paperwork and the dispatch with which it was processed. The facts of this case fail to demonstrate any reasonable justification for continued adherence to a procedure which did not treat all members of a class equally.

Admittedly the scope of our review is narrow. See S U.S.C. § 706. However, we may set aside agency action which is arbitrary or an abuse of discretion if “this court should be of opinion that [the] action was clearly wrong.” Bates & Guild Co. v. Payne, 194 U.S. 106, 109, 24 S.Ct. 595, 597, 48 L.Ed. 894 (1904). We are convinced that these orders were clearly wrong and therefore they are unenforceable.

Orders set aside.

      . Orders 70-7-73 and 70-7-74 (July 15, 1970).

      . Hughes acquired Air West, Inc.’s certificate of public convenience and necessity on April 3, 1970. Order 70-4-15. Air West, Inc. was the result of the merger of the Bonanza, Pacific and West Coast airlines on April 17, 1968. Order E-26665. On June 3, 1970, the CAB authorized Hughes to do business under the name “Air West.” Order 70-6-27.

      . The earlier class rates were III and III-A. See Local Service Class Subsidy Rate, 41 C.A.B. 138 (1964); Orders E-23697 (May 18, 1966) and E-23850 (June 23, 1966). In 1967, the CAB adopted Class Rate IV. Order E-25162 (January 1, 1967).

      . Local Service Class Subsidy Rate Investigation, 34 C.A.B. 416 (1961) (Class Rate I).

      . Although these plans differed in certain respects, there were no significant differences relevant to the issues in this case. Hence, we will refer to them collectively as Class Rate III.

      . However, the D.C. Circuit noted its discomfort with the situation presented. 458 F.2d at 785.


source: Caselaw Access Project

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Roscoe LAKE, Defendant-Appellant.
    No. 72-1942.
    United States Court of Appeals, Ninth Circuit.
    May 29, 1973.

      Gail M. Title, Deputy Federal Public Defender (argued), John K. Van De Kamp, Federal Public Defender, Martin Levine, Deputy Public Defender, Los Angeles, Cal., for defendant-appellant.
    Paul H. Sweeney, Asst. U. S. Atty. (argued), William D. Keller, U. S. Atty., Eric A. Nobles, Asst. U. S. Atty., Chief, Criminal Division, Los Angeles, Cal., for plaintiff-appellee.
    Before WRIGHT and WALLACE, Circuit Judges, and EAST, District Judge.

       Honorable William G. East, Senior United States District Judge, Eugene, Oregon, sitting by designation.

   WALLACE, Circuit Judge:

A jury found Roscoe Lake guilty of failing to report for a physical examination and failing to report for induction, both in violation of 50 U.S.C.App. § 462. He appeals on three grounds. We deal only with Lake’s contention that the instructions to the jury were erroneous and, on that basis, reverse.

On June 17, 1970, the local board mailed Lake an order to report for a physical examination on July 10, 1970. He failed to report. On January 6, 1971, the local board mailed him an order to report for induction on January 21, 1971. Again he failed to report.

Lake specifically testified that he received neither the June nor the January letter. His mother testified that she personally picked up the mail at their San Francisco address every day during the month of January, 1971, and that no official letters came for her son that month.

The trial judge instructed the jury on the issue of receipt of the letters as follows:

You may further presume that a letter mailed is delivered in due course. However, there has been evidence presented in this case that these notices in at least two instances were not in fact received by the defendant. If you believe this evidence, then the presumption of due delivery has been dispelled and no longer exists.
However, if this evidence is not believed by you, then the presumption would control. You must bear in mind, however, that you may not convict the defendant unless you are convinced beyond a reasonable doubt of the defendant’s guilt, considering all the evidence in this case and considering also my instructions.

This instruction is erroneous. But it is easier to criticize than to correct. The nature and effect of presumptions and inferences have been a battle ground of legal controversy for decades. It is difficult to fault a trial court for error in a no man’s land with so few clearly chartered paths provided by our appellate courts.

Substantial help was provided in United States v. Gainey, 380 U.S. 63, 85 S.Ct. 754, 13 L.Ed.2d 658 (1965) where the Court upheld a statutory presumption that the mere presence of the defendant at the site of an illegal still was sufficient evidence to authorize conviction, unless the defendant explained his presence to the satisfaction of the jury. See 26 U.S.C. § 5601(b)(2). Scrutiny of the instructions approved by the Supreme Court in Gainey offers significant guidance on how properly to instruct a jury in a criminal case when a presumption is involved. The instruction in that case: (1) did not mention the word presumption; (2) indicated that though the defendant might produce evidence to disprove the inference, he had no burden to do so; (3) specifically explained to the jury that it was not compelled in any way to accept the inference — it might draw it or reject it based on the evidence as a whole; and (4) unequivocally placed and maintained the burden of proof on the government.

The challenged instruction is critically different from the one approved in Gainey. First, it uses the word presumption. While that in and of itself does not warrant reversal, the use of the term frequently creates confusion in a criminal case. An evidentiary presumption differs from the presumption of innocence; yet they were treated identically by the single definition given the jury. This difficulty is obviated by one suggested instruction on the mailing of a draft notice which does not use the term presumption.

Second, the jury could easily conclude from the instruction that Lake had the burden to produce evidence to dispel the presumption. In fact, Lake need not present any evidence. The burden of going forward is not cast upon him. Lake has the right to rebut the government’s evidence and the inferences which may be drawn from it or to remain silent and allow the jury to consider that evidence alone. A criminal defendant, as distinguished from a civil defendant, cannot be compelled to produce evidence by the threat that a permissible inference will amount to a directed verdict.

Third, the phrasing of the instruction indicates that the presumption is mandatory. In criminal cases an evidentiary presumption can be no more than a permissible inference. In United States v. Lee, 458 F.2d 32 (9th Cir. 1972), a Selective Service registrant denied receipt of his induction order. In affirming the conviction, we held that:

[T]he trier of fact eould infer “that it reached its destination in usual time and was actually received by the person to whom it was addressed.”

Id. at 33 (citation omitted; emphasis added). The failure to inform Lake’s jury clearly that it could accept or reject the presumption might have removed an important element from its consideration and may have violated Lake’s right to a jury trial on that issue.

Fourth, the instruction erroneously places the burden of proof upon the defendant to prove his non-receipt of the notices. It requires that the jury believe the evidence of Lake and his mother before the “presumption” is “dispelled.” This error was compounded by the court’s instruction that:

A presumption continues to exist only as long as it is not overcome or outweighed by evidence in the case to the contrary. But unless and until the presumption is so outweighed, the jury are bound to find in accordance with the presumption.

While there may be some controversy as to if and how a presumption can shift the burden of going forward with evidence in a criminal case, it cannot shift the burden of proof. The government must prove beyond a reasonable doubt every element necessary for conviction. Johnson v. Florida, 391 U.S. 596, 598, 88 S.Ct. 1713, 20 L.Ed.2d 838 (1968); McAbee v. United States, 434 F.2d 361, 363 (9th Cir. 1970). In this ease, proof of receipt of the notices, hence, knowledge, was essential to the crime charged.

In Notaro v. United States, 363 F.2d 169 (9th Cir. 1966), we considered an instruction which effectively shifted the burden of proof. In reversing, we held:

When a party has the burden of proof as to a factual issue, it cannot be proper that instructions pertaining to the ■ issue are so vague or ambiguous as to permit of misinterpretation by the jury of the standard which is to be applied.

Id. at 175. The government contends No-taro is distinguishable because (1) it was an entrapment case and has been cited only in other entrapment cases, and (2) the instruction uses the term “find” where here the instruction uses “believe.” We find neither argument persuasive.

The only remaining question is whether the erroneous instruction requires reversal. While the court did instruct that the burden is always on the government to prove guilt beyond a reasonable doubt and that this burden never shifts to the defendant, we cannot say that cured the specific defects in this case. Whether Lake received the notices was the pivotal factual question in determining whether Lake knowingly failed to report for his physical and his induction. Under the circumstances, he is entitled to a new trial. See Notaro, supra, 363 F.2d at 176.

Reversed and remanded.

      . The government contends Lake did not properly preserve his claim of error because he failed to use the word “object.” The trial judge understood the thrust of the discussion about this instruction and concluded, “Well, the objection will be overruled.”

      . Presumptions have been applied in at least eight different ways by courts. See Lauglilin, In Support of the Thayer Theory of Presumptions, 52 Mich.L.Rev. 195, 196-207 (1953).

      . At first glance, the language “unless the defendant explains” in § 5601(b) (2) appears to shift either the burden of proof or of going forward from the government to the defendant. The burden of proof in a criminal case is never on the defendant. See Johnson v. Florida, 391 U.S. 596, 598, 88 S.Ct. 1713, 20 L.Ed.2d 838 (1968); McAbee v. United States, 434 F.2d 361, 363 (9th Cir. 1970). But see Morrison v. California, 291 U.S. 82, 88-89, 54 S.Ct. 281, 78 L.Ed. 664 (1934). No doubt this, in part, prompted the Court to suggest alternative jury instruction language instead of the statutory “unless the defendant explains such presence to tire satisfaction of the jury.” Gainey, supra, 380 U.S. at 71 n. 7, 85 S.Ct. at 760.

      . One writer lias rejected the phrase presumption of innocence in favor of assumption of innocence. C. McCormick, Evidence § 342, at 805-806 (2d ed. 1972). The proposed federal rule concerning presumptions does not apply to the presumption of innocence. See Advisory Committee’s Note, Proposed Fed.R.Evid. 303 (a), 56 F.R.P. 183, 213.

      . 2 E. Devitt & C. Blackmar, Federal Jury Practice and Instructions § 5106 (2d ed. 1970). The instruction also treats the effect of the mailing as an inference. The importance of this fact will be indicated infra.

      . Volumes have been written concerning the nature and effect of presumptions. Of particular concern lias been the status of a presumption in the face of evidence contrary to the presumed fact. Most follow the “bursting bubble” or Thayer theory which holds that the presumption disappears if the adversary produces sufficient evidence to support the converse of the presumed fact. See Thayer, Preliminary Treatise on Evidence 314, 336 (1898). See also 9 J. Wigmore, Evidence § 2491(2) (3d ed. 1940); Model Code of Evidence rule 704(2) (1942).
      Contrary theories modify the rigidity of the Thayer doctrine and stress the policy value of presumptions. See Cal.Evid. Code §§ 603-606 (1966); Uniform Rules of Evidence rule 14 (1953); Morgan, Some Observations Concerning Presumptions, 44 Harv.L.Rev. 906 (1931). In fact, the proposed federal rules specifically reject the “bursting bubble” theory. Advisory Committee’s Note, Proposed Fed.R.Evid. 301, 56 F.R.D. 183, 208. Thus, under the proposed rules, the presumption may be followed despite evidence to the contrary.
      However, in the context of this case, we need not choose between the conflicting theories, for our decision rests on other grounds.

      . The mail-receipt doctrine is different in a civil case. See C. McCormick, Evidence § 345, at 820 (2d ed. 1972).

      . There frequently appears language indicating a shifting of the burden of going forward when a presumption applies. See, e. g., Proposed Fed.R.Evid. 301; Cal.Evid.Code §§ 603-604. But applying this literally in a criminal case produces constitutional problems:
      A true shifting of the burden of producing evidence to the defendant in a criminal case would mean that the court would be compelled to direct the jury to find against him with regard to the presumed fact if he fails to introduce sufficient proof on the issue.
      C. McCormick, Evidence § 342, at 804 (2d ed. 1972). Such a rule may well do violence to basic concepts of due process. It eould deprive a defendant of his right to a jury trial on the issue involved and the right to have the prosecution prove each element of the offense charged. But see Hagner v. United States, 285 U.S. 427, 430-431, 52 S.Ct. 417, 76 L.Ed. 861 (1932).

      . This is not inconsistent with cases referring to this presumption as a rebut-table presumption. United States v. Deans, 436 F.2d 596, 601 n. 5 (3rd Cir.), cert. denied, 403 U.S. 911, 91 S.Ct. 2211, 29 L.Ed.2d 688 (1971); United States v. Bowen, 414 F.2d 1268 (3rd Cir. 1969). However, those cases did not explicitly decide whether the presumption was permissive or mandatory in the absence of rebuttal.

      . See note 8, supra.


author: ALDISERT, Circuit Judge. HASTIE, Circuit Judge

text:
    ABKCO INDUSTRIES, INC., Appellant, v. COMMISSIONER OF INTERNAL REVENUE.
    No. 72-1181.
    United States Court of Appeals, Third Circuit.
    Argued Feb. 26, 1973.
    Decided June 29, 1973.
    As Amended Aug. 14, 1973.
    Dissenting Opinion Aug. 21, 1973.
    See 486 F.2d 1371.
    Leonard J. Schwartz, Selwyn A. Hor-vitz, Philadelphia, Pa., for appellant; Fox, Rothschild, O’Brien & Frankel, Philadelphia, Pa., of counsel.
    Scott P. Crampton, Asst. Atty. Gen., Gilbert E. Andrews, Elmer J. Kelsey, Bruce I. Kogan, Dept, of Justice, Tax Div., Washington, D. C., for appellee.

      Before HASTIE and ALDISERT, Circuit Judges, and DITTER, District Judge.
   OPINION OF THE COURT

ALDISERT, Circuit Judge.

This appeal by an accrual basis taxpayer from an adverse decision of the United States Tax Court, 56 T.C. 1083, requires that we decide whether the court erred in disallowing as deductions for business expenses certain liabilities accrued but not actually paid during 1962 and 1963. The Tax Court sustained the contention of the Commissioner of Internal Revenue that certain accrued royalties due an artist under contract to a recording company were contingent liabilities for which no deduction was permissible.

ABKCO Industries, Inc., is engaged in the business of recording and selling phonograph records of the performances of a number of popular musical artists. In 1961, through a statutory merger, taxpayer succeeded to the business of Bernard Lowe Enterprises, Inc., and Parkway Records, Inc. As a result of this merger, taxpayer assumed the obligation of these companies to pay royalties to recording artist Ernest Evans, popularly known as “Chubby Checker,” under a pre-existing contract between Evans and the merged corporations.

Appellant reported as income the sale price of all “records shipped less records returned,” and accrued for purposes of deducting as cost of sales all royalties payable on “records' shipped less records returned.” During 1962 and 1963, the taxpayer deducted royalties payable to Evans in the amount of $433,712 and $187,065 respectively. Under the contract only $95,000 and $120,000 were actually paid to the artist during these years. The Commissioner disallowed taxpayer’s deductions for royalties accrued in excess of the amounts actually paid. His contention was sustained by the Tax Court.

Sections 446(a) and (c) of the Internal Revenue Code of 1954 authorize an accrual basis taxpayer to deduct an obligation in the taxable year in which all the events have occurred which are necessary to establish the fact of liability and the amount thereof with reasonable accuracy. See Treas.Reg. § 1.446-1 (c) (1) (ii). The Commissioner and the Tax Court rely upon the settled principle that a taxpayer using the accrual method of accounting may not deduct any liability until the contingencies relating to such liability are removed. Security Mills Co. v. Commissioner, 321 U.S. 281, 284, 64 S.Ct. 596, 88 L.Ed. 725 (1944); Dixie Pine Co. v. Commissioner, 320 U.S. 516, 518-519, 64 S.Ct. 364, 88 L.Ed. 270 (1944); Lucas v. American Code Co., 280 U.S. 445, 449-451, 50 S.Ct. 202, 74 L.Ed. 538 (1930); American National Co. v. United States, 274 U.S. 99, 104-105, 47 S.Ct. 520, 71 L.Ed. 946 (1927); United States v. Anderson, 269 U.S. 422, 440-441, 46 S.Ct. 131, 70 L.Ed. 347 (1926); Lustman v. Commissioner, 322 F.2d 253, 258 (3d Cir. 1963); Noxon Chemical Products Co. v. Commissioner, 78 F.2d 871 (3d Cir. 1935). These cases hold that if all the events necessary to establish the fact of liability have not occurred, the liability is “contingent” and may not be accrued for purposes of deduction. The Commissioner argues that the accrued royalties deducted in this case fit into the classic mold of contingent liabilities. The taxpayer contends that all the events necessary to establish the fact of liability and the amount thereof with reasonable accuracy in fact occurred during the years in question.

The conflicting contentions of the Commissioner and the taxpayer result from divergent interpretations of the contract between taxpayer and Evans set forth in the margin.

Without implying any substantive characterization to the forms of compensation provided by these contractual provisions, we will label, for the purpose of this discussion, the compensation provided in paragraph 5 as “monthly payments”; the compensation provided by paragraph 6, as “royalties”; and the amended figure of $575,000, as “aggregate of the monthly payments.”

The taxpayer contends paragraph 6(a) should be read as establishing liabilities in the form of royalties at the rate of five percent of the suggested retail price per record on ninety percent of all records “paid for and not subject to return.” It urges us to view paragraph 5 as merely providing a method of payment by which the liabilities created by paragraph 6(a) may be discharged. In accord with this construction of the contract, the taxpayer views unlettered paragraph 6 as merely an accounting expedient by which taxpayer would be given credit for the monthly payments at the time specified in unlettered paragraph 6 and paragraph 7 for an accounting and payment of royalties. From this analysis of the contract, taxpayer concludes that all the events necessary to establish the fact of liability had occurred during the years in question. Stated differently, the taxpayer construes the contract as establishing a liability for royalties under paragraph 6(a) directly proportional to the number of records sold; and that only in the event that the sum of the monthly payments exceeded the liability for royalties would the taxpayer begin to accrue the monthly payments for purposes of deduction, for only then would these payments operate as a form of minimum compensation.

The Commissioner argues that it is paragraph 5 which establishes a form of compensation at the rate of $7,500 per month and, as amended, at the rate of $10,000 per month. He views the royalties as “additional compensation” payable March-1, 1967, only “[i]n the event the Artist shall have fulfilled all his obligations under this Agreement until December 28, 1966, the expiration date hereof.” He contends that this additional compensation is not payable until the liability for royalties exceeds the aggregate of the monthly payments. The Commissioner concludes, therefore, that royalties are a contingent liability which may not be accrued until the liability for royalties exceeds the aggregate of the monthly payments.

It should be observed that the Commissioner recognizes the then existing possibility that record sales could decline and no royalties would be payable as additional compensation. In that event, the monthly compensation alone would have been payable. So construed, the accrued liability for royalties was indeed contingent.

The taxpayer counters this analysis by emphasizing that the royalties computed under paragraph 6 were at all times substantially in excess of the compensation made in the form of monthly payments. Alternatively, the taxpayer suggests that in the event of a sudden decrease in sales, initially the liability for royalties would be discharged via the monthly payments. Finally, addressing itself to the realities of this contract, taxpayer points to the increase of the monthly payments and the aggregate of those payments from $7,500 per month and $450,000, to $10,000 per month and $575,000. Taxpayer contends that this modification is indicative of the realization of the parties that the monthly payments would have to be increased in order to discharge the liability for royalties which were accruing more rapidly than anticipated.

The Tax Court construed the contract in accord with the view of the Commissioner. The court ruled that no royalties were payable until the liability for royalties exceeded the aggregate of the monthly payments, making the aggregate in effect a $575,000 guaranteed compensation. So construing the contract, the court disallowed royalties accrued in 1962 in excess of the sum of the monthly payments made in that year because by December 31, 1962, the liability for accrued royalties was still $123,000 below the $575,000 aggregate. The same treatment was accorded that portion of the royalties accrued in 1963 which did not raise total accrued royalties above the $575,000 minimum. That portion of the royalties accrued in 1963 which did exceed the $575,000 figure amounted to $64,000. The Tax Court disallowed deductions of this excess, stating that it too was a contingent liability for two reasons. First, under the contract, royalties were payable only on “records paid for and not subject to return,” but were accrued on the basis of “records shipped less records returned.” To the extent that “records shipped less records returned” might not be paid for or subsequently might be returned, the taxpayer had overstated its liability. Second, returns of Evans’ records in subsequent years required the taxpayer to include as income some $113,000 of previously accrued royalty deductions, an occurrence which indicates the contingent nature of this $64,000 excess at the time it was accrued.

Both the position of the taxpayer and that of the Commissioner present reasonable interpretations of a complex legal document. Were we called upon to interpret this contract as a court of first instance, we cannot say that we would not agree with the position advocated by the taxpayer. However, we approach resolution of this issue, not as a trial court, but fully aware of our role as an appellate tribunal.

Although there is room for disagreement, we are persuaded that the determination of whether the events necessary to establish the fact of liability have occurred is more a question of law than a finding of fact. If the latter, we would have no hesitation in affirming the Tax Court under the clearly erroneous rule. See Krasnov v. Dinan, 465 F.2d 1298 (3d Cir. 1972). We are constrained, however, to view the problem as one sounding in law rather than in fact.

We have previously held that interpretation and construction of a contract is a question of law and that the interpretation by the Tax Court is reviewable by this court. Welsbach Engineering & Management Corp. v. Commissioner, 140 F.2d 584, 586 (3d Cir.), cert. denied, 322 U.S. 751, 64 S.Ct. 1261, 88 L.Ed. 1581 (1944). In addressing itself to this issue, in Union Planters National Bank v. United States, 426 F.2d 115, 117 (6th Cir.), cert. denied, 400 U.S. 827, 91 S.Ct. 53, 27 L.Ed.2d 56 (1970), the Court of Appeals for the Sixth Circuit stated:

The intent of the parties [to the contract] may be important in determining just what their contractual relations inter sese were, but there is little dispute here about what obligations and rights the parties expected their agreement to confer. This case hinges, rather, on the legal characterization, for federal income tax purposes, of the transactions between the parties [to the contract]. That characterization is not a question of fact, but rather one of law. Cf. Cordovan Associates, Inc. v. Dayton Rubber Co., 290 F.2d 858 (6th Cir. 1961).

We conclude, therefore, that the determination of the tax consequences of this contract presents a legal issue fully reviewable by this court.

This is not to say, however, that we should approach the determination of this question unmindful of the expertise of the Tax Court in application of the tax laws. In considering the scope of appellate review of the determinations of the Tax Court, the Supreme Court instructs us: “In deciding law questions courts may properly attach weight to the decisions of points of law by an administrative body having special competence to deal with the subject matter.” Dobson v. Commissioner, 320 U.S. 489, 502, 64 S.Ct. 239, 247, 88 L.Ed. 248 (1943). The Court clearly indicated that the Tax Court is such an expert administrative body and suggested that for the sake of uniformity the Tax Court’s resolutions of legal issues should be followed wherever possible. Thus, while recognizing that the “appellate courts have always had the unqualified power to review and reverse decisions of law by the Tax Court,” 9 Mertens, Law of Federal Income Taxation, § 51.25, we also must recognize that the Tax Court’s resolutions of questions of law are persuasive and that it is desirable for the reviewing court to have the benefit of the Tax Court’s expertise in these matters. Hormel v. Helvering, 312 U.S. 552, 61 S.Ct. 719, 85 L.Ed. 1037 (1941). See Bradley v. Commissioner, 324 F.2d 610, 612 (4th Cir. 1963).

Strictly speaking, it may not be proper to refer to “burden of proof” in reference to the resolution of a question of law. However, it would appear that an appellate court should not reverse the Tax Court’s construction of a contract where no more has been shown than that the construction urged by the taxpayer is as reasonable as that adopted by the Commissioner and sustained by the Tax Court. More than mere equivalency must be shown by the taxpayer, for notwithstanding the reasonableness of a proffered construction, the taxpayer must show that the construction supporting the Tax Court’s deficiency determination is incorrect. We find that the taxpayer did not make such a showing here.

The decision of the Tax Court will be affirmed.

DITTER, District Judge, dissents.

HASTIE, Circuit Judge

(concurring).

I concur, although to me the technical problem presented is somewhat simpler than Judge Aldisert’s opinion indicates. In summary, my analysis is this.

The language' of the several interrelated provisions of the contract between the taxpayer and the recording artist is apt to convey the meaning that the Commissioner and the Tax Court have attributed to it. On the other hand, to support its conclusion that, for tax deduction purposes during the taxable years, certain royalty obligations were no longer “contingent,” the taxpayer has had to labor to extract from a formal writing meaning that its terms do not readily convey. Therefore, as a matter of law, the taxpayer’s interpretation of the contract cannot properly prevail in a judicial tribunal, whether in a court of first instance or on appeal.

Once the Tax Court’s construction of the contract is accepted as legally correct, the undisputed facts clearly establish, as Judge Aldisert’s opinion shows, that the items deducted by the taxpayer as fixed accrued liabilities of the taxable years were only contingent obligations of undeterminable amount until some subsequent time.

      . Under the contract Evans agreed to record a minimum of eight record “sides.” In return, taxpayer agreed to the following terms:
      5. For the rights herein granted and services to be rendered during the term of this agreement, we shall pay the following compensation so long as Artist is performing his obligations under this agreement as of each payment date:
      $90,000.00 per annum, at the rate of $7,500.00 per month, on the 28th day of each month, commencing January 28, 1962 and ending December 28, 1966,
      making a total of $450,000.00.
      The aforesaid payments shall be paid regardless of whether or not royalties computed under Paragraph 6 hereof equal such payments as of said payment dates. No portion thereof shall be refundable to us. After October 3, 1962, when Artist shall attain age twenty-one (21), payments shall be made directly to him.
      6. In the event that Artist shall have fulfilled all his obligations under this Agreement until December 28, 1966, the expiration date hereof, and in the event that the royalties, as hereinafter computed for the entire term of this agreement [including royalties pursuant to Prior Agreements as per sub-paragraph (f) hereof], exceed the total of $450,000.00 paid as aforesaid, we shall pay to Artist on March 1, 1967, as additional compensation, such excess; otherwise no royalties shall be payable; However, in the event that royalties computable after December 28, 1966, when added to the said total as of December 28, 1966, exceed $450,000.00, then the excess shall be payable to Artist on each subsequent accounting, as provided in Paragraph 7 hereof. Said royalties shall bo computed as follows ;
      (a). A royalty of five percent (5%) of the suggested retail list price per record (exclusive of all sales and excise taxes and duties, and less costs of containers and packaging not exceeding 50 cents per container or package), for ninety percent (90%) of all double-faced records manufactured hereunder and sold by us in the United States and paid for and not subject to return, on both faces of which are embodied any of the selections recorded hereunder, and one-half (%) of such royalty for ninety percent (90%) of all double-faced records manufactured hereunder and sold by us in all other countries and paid for, and not subject to return, on both faces of which are embodied any of the selections recorded hereunder; and one-half (%) of the respective amounts of such royalty for ninety percent (90%) of all records manufactured and sold by us on only one face of which is embodied a selection recorded hereunder. * * *
      (d) . No royalties shall be payable on any professional copies or free records given or sent for sales promotion purposes, it being further understood, however, that such professional copies and free records, except as hereinafter provided in sub-paragraph (e), shall not exceed ten percent (10%) in quantity of the records manufactured and sold by us and upon ninety percent (90%) of which you receive the agreed royalties.
      (e) . With respect to records sold through any plan or device commonly referred to in the trade as a “record club,” the royalties payable shall be equal to one-half (%) of the royalty otherwise payable hereunder, provided, however, that no royalty shall be payable with respect to records which are distributed to members of such record club either as a result of joining the club or as the result of the purchase of the required number of records, including records distributed as “bonus” and/or “free” records. However, such bonus or free records shall not exceed the number of records that are sold by the record club upon which royalties are paid by us pursuant hereto.
      (f) . Any royalties due under said Prior Agreements dated April 6, 1960 and April 27, 1961, for records released prior to the term of this agreement, shall be added to and calculated as part of the total royalties to be computed for the entire term of this' agreement under Paragraph 6 hereof. No other payment shall be made upon said royalties other than as provided in Paragraph 6 hereof.
      7. An accounting with respect to royalties computed pursuant to Paragraph 6 hereof shall be made by us to you and/or Artists semi-annually on the 1st day of May for records sold and paid for during the period ending the preceding February 28, and on the 1st day of November for the period ending the preceding August 31st in each year, and on March 1, 1967, for the period ending December 28, 1966. Similar accountings shall be made semiannually after the expiration of the term of this agreement. The accounting on March 1, 1967, and the account-ings thereafter shall be accompanied by payment of accrued royalties earned by Artist in excess of the $450,000.00 paid as set forth in Paragraph 5 hereof. All royalty statements and all other accounts rendered by us to you and/or Artist shall be binding upon the Artist and you, and not subject to objection for any reason unless specific objection in writing, stating the basis thereof, is given to us within one (1) year from the date rendered. However, we shall have the right to take from the amount of royalties due any advance royalties previously paid.
      On November 23, 1962, Evans and taxpayer executed an instrument (“Supplemental Agreement”) amending the original letter agreement (“Principal Agreement”). Under the Supplemental Agreement, paragraph 5 of the Principal Agreement was amended to increase the total amount to be paid under that provision from $450,000 to $575,000 as follows:
      1. Paragraph 5 of Principal Agreement is hereby amended to read as follows :
      “For the rights herein granted and services to be rendered during the term of this Agreement, we shall pay the following compensation so long as Artist is performing his obligations under this Agreement as of each payment date: $95,000.00 for the annual period commencing on the date hereof and ending on December 28, 1962 in ten (10) consecutive monthly payments of $7,500.00 each commencing on January 28, 1962 and two (2) monthly payments of $10,-000.00 each payable on November 28, 1962 and December 28, 1962 and thereafter for the balance of the term of this Agreement $120,000.00 per annum payable at the rate of $10,000.00 per month commencing on November 2S, 1962 for a period of forty-eight (48) consecutive months making a total of $575,-000.00.
      * * * * * *
      2. The amount of “$450,000.00” which appears in lines 6 and 11 of paragraph 6 and line 11 of paragraph 7 of Principal Agreement is hereby in each such three instances amended to read “$575,000.00.”

      . Parallel arguments are made by the taxpayer with respect to paragraphs 6(d), (e) and (f), it being the contention of the taxpayer that these paragraphs likewise (1) establish royalties for records distributed through “record clubs,” (2) exempt from royalty payments professionally distributed promotional records, and (3) control computation of royalties payable under pre-existing contracts. Paragraph 6(a) is economically the most significant provision and for sake of simplicity it alone is referred to in the text.

      . Historically, appellate review of determinations of the Tax Court has been the subject of an evolutionary process. At one time, the findings of the Tax Court were merely “prima facie evidence” of the facts found. Revenue Act of 1924, § 900 (g), 43 Stat. 253, 336. Congress greatly limited the broad scope of review permitted by this rule when it enacted the Revenue Act of 1926, § 1003(b), 44 Stat. 9, 110, under which appellate review of decisions of the Tax Court was limited to “questions of law.” Interpreting the effect of the 1926 Act upon appellate review of the factual determinations of the Tax Court, the Supreme Court indicated such determinations were not subject to review if they were found to have “warrant in the record” and “a reasonable basis in the law.” Dobson, supra, 320 U.S. at 501, 64 S.Ct. at 246. The decision required affirmance of Tax Court determinations of mixed questions of fact and law if the elements of the determination could not be separated on appeal so as to reveal a “clear-cut mistake of law.” 320 U.S. at 502, 64 S.Ct. 239. Congress interpreted Dotson as rendering unre-viewable Tax Court determinations of questions of fact supported by any evidence in the record. Sen.Rep.No.1559, 80th Cong., 2d Sess. (1948). Believing this interpretation of the Revenue Act of 1926 placed too narrow a limitation upon appellate review of Tax Court determinations, the Congress enacted section 1141(a) of the Internal Revenue Code of 1939, P.L. 773, § 36, 80th Cong., 2d Sess., which is presently codified as 26 U.S.C. § 7482(a). This statute placed review of Tax Court determinations by the courts of appeals on the same footing as appellate review of the decisions of the United States district courts in non-jury civil cases. We have interpreted the statute as making Federal Rule of Civil Procedure 52(a) applicable to appeals from decisions of the Tax Court so that findings of fact by the Tax Court may not be disturbed unless clearly erroneous. Commissioner v. Penn Athletic Club Bldg., 176 F.2d 939, 943 (3d Cir. 1949).
      While the standard of review of factual determinations of the Tax Court has changed markedly over the years, review of questions of law has not fluctuated in the same manner. Although 26 U.S.C. § 7482(a) had as its express purpose the modification of Dobson with respect to review of findings of fact by the Tax Court, the statute does not profess to affect that portion of Dobson which discusses appellate review of questions of law.


author: ALDRICH, Senior Circuit Judge.

text:
    Jane DOE et al., Plaintiffs, Appellees, v. Richard J. ISRAEL, Attorney General, State of Rhode Island, Defendant, Appellant. Jane DOE et al., Plaintiffs, Appellees, v. Richard J. ISRAEL, Attorney General, State of Rhode Island, Defendant, Appellant, The Constitutional Right to Life Committee, Intervenor, Appellant.
    Nos. 73-1177, 73-1178.
    United States Court of Appeals, First Circuit..
    Heard June 5, 1973.
    Decided June 6, 1973.

      W. Slater Allen, Jr., Asst. Atty. Gen., on motion for stay and memorandum in support thereof for Richard J. Israel, Atty. Gen., State of R. I.
    Joseph P. Witherspoon, Austin, Tex., with whom Francis J. Boyle, Newport, R. I., was on motion for stay for The Constitutional Right to Life Committee.
    Nancy Stearns, New York City, with whom Janice Goodman, New York City, Richard W. Zacks and Charles H. Edwards, Providence, R. I., were on memorandum in opposition to the stay for plaintiffs, appellees.
   ON MOTION FOR STAY PENDING APPEAL

Before COFFIN, Chief Judge, AL-DRICH and CAMPBELL, Circuit Judges.

ALDRICH, Senior Circuit Judge.

Although the question presently before the court is the interlocutory one of whether a declaratory judgment of unconstitutionality of a state statute should be stayed pending defendant’s appeal, we find ourselves inevitably faced with an appraisal of the ultimate substantive constitutional question. Plaintiffs Doe and Roe, alleging themselves to be a few weeks pregnant, and desirous of obtaining abortions in their home state of Rhode Island, brought this action in the district court seeking a declaratory judgment to the effect that Rhode Island Gen.Laws §§ 11-3-1; 11-3-2; 11-3-3; 11-3-4; and 11-3-5 (73-S 287 Substitute A), passed by the legislature after the decision in Roe v. Wade (1973), 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147, holding the Texas anti-abortion statute unconstitutional, was similarly unconstitutional. The district court so held, Doe v. Israel, D.R.I., 1973, 358 F.Supp. 1193, and defendant, the Attorney General of the State of Rhode Island, appeals. The district court denied a stay pending appeal. Because we thought fairness to the state required a hearing, we granted a brief stay, ex parte, forthwith. The matter has now been heard.

The first question is one of jurisdiction. No three-judge court has been sought, no injunction having been asked for. 28 U.S.C. §§ 2281, 2283. On the other hand, the defendant stipulated that the state would recognize and abide by the judgment of the district court. Both parties seek to draw certain conclusions from this. We will assume for present purposes the correctness of defendant’s claim that the statutory requirement of a three-judge court was thereby activated, and that the single judge came under the ordinary duty to request such a court. Even this assumption leaves an exception, however, for that duty is not total; no three-judge court need be requested if there is no substantiality to the claim that a state statute on its face is not unconstitutional. Bailey v. Patterson, 1962, 369 U.S. 31, 33, 82 S.Ct. 549, 7 L.Ed.2d 512; see United Low Income, Inc. v. Fisher, 1 Cir., 1972, 470 F.2d 1074.

We may add that in making the assumption that by virtue of his stipulation the defendant converted this case into a three-judge one we are giving defendant an interpretation the validity of which we gravely doubt. It is elementary that defendant was not obliged to stipulate. It is, at best, singular, for a defendant voluntarily to say that he will respect a judge’s order, and then to turn around and say that by his agreeing to do this he has deprived the judge of the power to make the order.

This discussion is perhaps of no present relevancy, any more than the argued question whether this was properly determined to be, and correctly treated as, a class suit. We mention it only to reach two arguments of immediate importance. First, defendant says that he has a probability of succeeding on the merits because plaintiffs’ case is moot due to the fact that after its commencement plaintiffs voluntarily obtained abortions in New York. The fact that a plaintiff had other available relief does not moot the case, Hathaway v. Worcester City Hospital, 1 Cir., 1973, 475 F.2d 701, and defendant does not so claim. Nor, of course, does defendant dispute the basic Roe rule that the necessarily short duration of a pregnancy does not, in normal circumstances, create mootness when pregnancy ceases. Defendant claims that this lack of mootness is limited to involuntary cessation. We see no reason why, if pregnancy may safely (from a mootness standpoint) terminate before final judgment, it makes any difference how it terminates. In response to questioning defendant essentially suggests only one: that plaintiffs, no longer being pregnant, have no sufficient interest or standing. In the light of Roe, this argument proves too much.

We consider that defendant’s claim of mootness is a will-o’-the-wisp and assumes the very question at issue. If a plaintiff has a right to terminate her pregnancy — -which is the legal question before us — -the sooner she succeeds in doing so, the better. We have in mind the trimester trilogy, on which defendant relies in another connection, and its effect on viability and the pregnant plaintiff’s health. See Roe v. Wade, 410 U.S. at 149-150, 93 S.Ct. at 725. It seems not only illogical but, to use a polite word, harsh, to argue that in order to establish her right to an abortion a woman must decline to have it.

We come, then, to defendant’s claim that the Rhode Island statute differs sufficiently from the Texas statute constitutionally invalidated in Roe v. Wade to present a justiciable question on appeal. In this, defendant relies principally on the fact that the Rhode Island legislature had made a conclusive finding that life begins with conception. In Roe v. Wade the Court specifically stated that it was irrelevant, in determining the validity of Texas’ statute, that Texas adopted the theory that life begins at conception. “[W]e do not agree that, by adopting one theory of life, Texas may overide the rights of the pregnant woman that are at stake.” Id. at 162, 93 S.Ct. at 731. Defendant nevertheless would argue that the Rhode Island legislature’s “conclusive presumption or finding of fact” that life begins at conception requires this court to find that Rhode Island’s interest in preventing abortions should be weighed more heavily than the Supreme Court weighed Texas’ interest in Roe v. Wade.

The Court in Wade, and in Doe v. Bolton, 1973, 410 U.S. 179, 93 S.Ct. 739, 35 L.Ed.2d 201, balanced against the woman’s interests two state interests, in the mother’s health and in potential human life, but concluded in unmistakable terms that the state’s interest is in no sense compelling prior to “approximately the end of the first trimester.” Roe v. Wade, 401 U.S. at p. 163, 93 S.Ct. at p. 731; see also id. at pp. 163-164, 93 S.Ct. at p. 732. Rhode Island can choose to assert or not to assert its interest in fetal life, but it cannot by enacting a legal presumption make its interest any more constitutionally robust and bind the Supreme Court or this court, to accord it more constitutional significance. Looked at in its most favorable light, regardless of the mechanism used by the statute the state’s interest has not changed, and is no different from the state interest which the Court has found not to be compelling in Roe v. Wade.

It is true that the Court in Wade and Bolton did not attempt to decide the point “when human life begins.” No reading of the opinions, however, can be thought to empower the Rhode Island legislature to “defin[e] some creature as an unborn child, to be a human being and a person from the moment of its conception.” If the Rhode Island statute dealt only with the part of the term of the pregnancy as to which the Court had left open to the state the capacity to create rights and remedies enforceable against the pregnant woman, we might have another question, but in making the statute all-inclusive the legislature entered into areas foreclosed by the Court from state interference.

We regard plaintiffs’ expectation of prevailing on the merits so clear that we see no purpose in discussing other issues sought to be raised by the defendant.

The stay entered May 23rd is terminated forthwith, and the motions for a stay pending appeal are denied.

      . We disregard .Smith, a third i>laintiff, who failed to appear.

      . By the term defendant we include, for convenience, intervenor The Constitutional Right To Life Committee.

      . In this abbreviated statement we are not passing on the broad and sometimes equitable aspects of declaratory judgments which might arguably trigger 28 U.S.C. § 2281. See Kennedy v. Mendoza Martinez, 1963, 372 U.S. 144, 152-155, 83 S.Ct. 554, 9 L.Ed.2d 644; Merced Rosa v. Herrero, 1 Cir., 1970, 423 F.2d 591.

      . Reply brief for Intervenor, p. 15.


author: WILSON, District Judge.

text:
    CITY OF LOUISVILLE, Defendant-Appellant, v. ROCKWELL MANUFACTURING CO., Plaintiff-Appellee.
    No. 72-1612.
    United States Court of Appeals, Sixth Circuit.
    Argued Feb. 12, 1973.
    Decided June 27, 1973.

      James E. Thornberry, Director of Law, Herbert Van Arsdale, II, Asst. Director of Law, Bert T. Combs, Richard W. Iler, Louisville, Ky., for defendant-appellant ; Tarrant, Combs, Blackwell & Bullitt, Louisville, Ky., of counsel.
    Joseph E. Stopher, Edward H. Sto-pher, Boehl, Stopher, Graves & Dein-doerfer, Louisville, Ky., for plaintiff-ap-pellee.
    Before EDWARDS and PECK, Circuit Judges, and WILSON, District Judge.

       The Honorable Frank W. Wilson, Chief Judge, United States District Court for the Eastern District of Tennessee, sitting by designation.

   WILSON, District Judge.

The City of Louisville, Kentucky, has appealed from the decision of the District Court awarding damages to Rockwell Manufacturing Co. for breach of a contract to purchase parking meters. The appellant contends that the trial court was in error both in finding that an enforcible agreement existed between the parties and in excluding evidence relevant to this finding. Further, the trial court misconstrued the nature and provisions of the agreement, so it is contended. Finally, errors are complained of in the award of damages.

This case was tried to the District Court sitting without a jury. It is before this Court upon the findings of fact and conclusions of law of the trial court and upon the trial record made in that court. Accordingly, the appellate review of the trial court’s findings of fact must be governed by the rule that such findings shall not be set aside unless clearly erroneous (Rule 52, F.R.Civ.P.). The trial court’s conclusions of law, including the interpretation of written contracts, are, of course, subject to independent appellate determination. Cordovan Associates, Inc. v. Dayton Rubber Co., 290 F.2d 858 (6th Cir. 1961); University Hills, Inc. v. Patton, 427 F.2d 1094 (6th Cir. 1970).

I

Although, as reflected in the trial record, considerable testimony was devoted to matters in the nature of detail background and interpretation, the essential facts to this litigation may be summarized as follows. Motivated by a need for revenue to finance a municipal redevelopment program known as the Riverfront Development Project, the City of Louisville solicited bids in September of 1969 for the purchase and installation of approximately 7650 parking meters. The solicitation followed a survey that recommended the installation of approximately 7425 parking meters in designated areas as a means of providing the needed revenues. Two bids were submitted, one by Rockwell Manufacturing Co., the plaintiff below, and the other by a competing manufacturer, Duncan Industries, Inc. The Rockwell bid in addition to meeting the details of the bid solicitation, quoted a price of $54.20 per meter, plus a price of $8.48 for installation of each meter. The Duncan bid quoted a price of $48.62 per meter, but omitted any quotation for installation. It appears that the Duncan bid also failed to meet the bid specification in at least one other respect. Upon evaluation of the bids by the appropriate municipal authorities, it was determined to award a contract to Rockwell as the only bidder meeting the specifications. Upon November 29, 1969, an agreement was duly entered into between the City and Rockwell for the purchase of parking meters, the terms of the agreement insofar as essential to the issues in this lawsuit being as follows:

“Annual Contract thru June 30, 1970 to furnish part of the City's requirements of parking meters, coin boxes and repair parts, in accordance with the following and specifications which were attached to Proposal P-41-58 and which are made a part thereof. APPROXIMATELY:
7650 Parking Meters and Coin Boxes to be installed in accordance with the aforementioned specifications. UNIT PRICES AS FOLLOWS:
Parking Meter, per each, including one (1) Security locked coin box and time wipe off lock----$54.20 Installation of Parking Meter, per each--------------------------8.48
* * * * * *
RENEWAL OPTION:
The Louisville-Jefferson County Purchasing Director will reserve the right to renew this Contract for one (1) year, and from year-to-year thereafter, if he considers such renewal to be to the City’s and/or County’s advantage and if same is agreeable to the Contractor.
* * * * * *
Delivery to be in accordance with schedule “E” which was made a part of bid Proposal P-4158, and which is made a part hereof.”

The delivery schedule “E” referred to above was as follows:

“Installation will be made in accordance with the following schedule:
“First 1,000 meters to be installed within 30 days from date of receipt of City’s purchase order, complete specifications for the meters and detailed locations where each meter is to be installed.
“Balance of meters to be installed at the approximate rate of 1,000 meters every two weeks until completion.
“Final installation to be completed within 128 days after receipt of purchase order” (A. 429-430).”

Upon December 8, 1969, the Director of Traffic Engineering for the City, acting under the above agreement, submitted an order to Rockwell for delivery to the City of 1,000 meters “not installed”. By letter of December 15, 1969, an official of Rockwell acknowledged receipt of the order. In this letter he returned certain specification sheets forwarded with the order and requested that they be authenticated by signature and that this practice of authentication be followed in the future. He further stated that he would not consider the 30 day delivery period called for in Schedule E to commence until receipt of the specifications complete. [In the same letter he also acknowledged that an understanding had been reached with the City that the delivery schedule “as originally called for in Schedule E will not be adhered to” on future orders]

' In the meanwhile, a change of administration occurred in Louisville with a new mayor taking office two days after the execution of the November 29 agreement with Rockwell. Under date of December 22, 1969, the new Director of Traffic Engineering wrote to a sales representative of Rockwell “to temporarily hold up delivery of our initial order of 1,000 meters”. There appears to have been some delay in this correspondence reaching the appropriate official in Rockwell, but its receipt was acknowledged on January 5, 1970. By letter on this date the City was advised that Rockwell had completed the manufacture of the initial order of 1,000 meters and that they were packaged, ready for shipment, but that Rockwell would hold up on delivery of these meters pending further instructions.

Further delivery instructions were never issued by the City. On the contrary, soon after the above correspondence the new City Law Director advised Rockwell’s attorney that he considered the agreement with Rockwell null and void and had so advised the appropriate city officials. He gave as his reasons for this conclusion that (a) the City-County Purchasing Agent was without authority to solicit the bid, (b) that Rockwell was not the “lowest and best bidder” as required by Kentucky law, and (c) that the agreement was “executory” and as such unenforcible. Acting upon this advice the City repudiated its agreement with Rockwell and proceeded upon May 8, 1970, to solicit new bids for “approximately 6,000” parking meters. Duncan Industries, Inc. was the successful bidder upon this solicitation and upon June 4, 1970, a contract was awarded to Duncan for “approximately 6,000” meters at $46.92 per meter, with the installation to be performed by the City. The contract with Duncan provided that it was an “annual contract to furnish part of the City’s requirement of parking meters For the period from July 1, 1970, through June 30, 1971. Approximately 6,000 parking meters . . .” The City proceeded to order parking meters from Duncan in accordance with the following schedule:

July 17, 1970 — 2,000 meters
August 19, 1970 _ 1,000 meters
December 10, 1970 — 1,000 meters
January 25, 1971 — 450 meters
April 5, 1971 — 800 meters

Of the foregoing meters purchased from Duncan, a total of 4362 were installed by August 1971 to complete the City’s parking meter project and 888 were retained in the municipal warehouse.

In the meanwhile, the City having repudiated its contract with Rockwell, this lawsuit was filed upon May 5, 1970, seeking damages for breach of contract. Upon the trial Rockwell’s manager testified that the 1,000 meters manufactured pursuant to the City’s December 1969 order remained unsold and unsalable as of the time of the trial and that Rockwell was claiming the full sales price of $54.20 upon each of these meters. With regard to the meters not manufactured, Rockwell’s cost accountant testified that on the bid price of $54.20 per meter Rockwell’s labor, materials and freight costs totaled $26.25 per meter, leaving a loss of profit (including overhead) of $27.95 per meter. No evidence to the contrary was introduced as to any of these damage claims.

Upon this state of the record, the District Court concluded that the November 29, 1969 agreement constituted an enfor-cible contract, that the City had breached the contract and that Rockwell was entitled to recover the purchase price of $54,200 (1,000 meters x $54.20) upon the 1,000 meters manufactured by it and to recover the further sum of $118,787.50 (4250 meters x $27.95) upon the remaining number of meters ordered by the City from Duncan during a one year period under that contract. (Additionally, the District Court awarded Rockwell interest in the sum of $535.60 upon monies deposited with the City to assure performance by Rockwell. This item is not in dispute upon this appeal.)

II

The initial contention of the City upon this appeal is that the trial court was in error in concluding that an en-foreible agreement ever arose between the parties. Rather, it is contended that the agreement was so unreasonable and unconscionable as to be unenforcible against a municipal corporation. Further, it is contended that the agreement is ambiguous and uncertain and that when it is properly construed it is only an open end offer by Rockwell to sell parking meters to the City at a stated price for a stated time. As regards the 1,000 meters for which an order was placed, it is contended that no effective order was placed as the specification documents were returned by Rockwell and never resubmitted by the City.

Before consideration is given to these contentions, one other matter should be noticed and disposed of. ' That is the contention by Louisville that the trial court improperly precluded it from examining a witness upon the relevant merits of Rockwell’s meter as compared with the Duncan meter. Presumably the City sought to introduce this evidence in support of its contention that the Rockwell bid was not the “lowest and best” bid, at least pricewise if not otherwise. The fallacy of the appellant’s position in this regard is readily apparent, however, when it is recalled that the undisputed evidence shows that the Duncan bid failed to meet all terms of the specifications and that the Rockwell was the only bid to meet the specifications. In fact, in seeking to introduce the testimony now complained of as having been excluded, the City conceded that the Duncan meter did not meet the specifications. No relevant purpose could have been served by comparing a meter that met specifications with one that did not meet specifications.

Returning to the contention of Louisville that the agreement of November 29, 1969, was so unreasonable and unconscionable as to be unenforcible against a municipal corporation, it is significant to note that the trial court specifically found that there was no evidence in the record of any fraud or malfeasance on the part of anyone either in the solicitation of bids, the bidding, or the awarding of the contract. This finding would appear to be in accord with the record. It is certainly not clearly erroneous. Apart from the contention of the City that the contract was negotiated just prior to a change in city administrations, a matter the City apparently contends is a badge of fraud, the City’s principal contention is that the high rate of profit claimed as damages by Rockwell renders the agreement unreasonable and unconscionable. Apart from the fact that the profit referred to ($27.95 per meter) is a gross profit figure and not a net profit figure, and apart from the fact that the Rockwell bid was the only bid to meet the City’s specifications, it appears settled law in Kentucky that the courts will intercede in the letting of municipal contracts to the “lowest and best bidder” only where the resulting agreement is shown to have been arbitrarily, corruptly or fraudulently let. See Trapp v. City of Newport, 115 Ky. 840, 74 S.W. 1109 (1903); Campbell v. Southern Bit. Co. and City of Ashland, 32 Ky.L.R. 799, 106 S.W. 1189; Groover v. City of Irvine, 222 Ky. 366, 30 S.W. 904; Baskett v. Davis, 311 Ky. 13, 223 S.W.2d 168 (1949). As noted by the trial court, and as supported by the trial record, “The record is void of any evidence tending to suggest . . . ” fraud or malfeasance on the part of either party in this case.

The principal thrust of the appellant’s argument appears to be directed to the wording of the agreement itself, and to the contention that the agreement, properly construed, commits the City to no purchase obligation, but is rather in the nature of an option, committing Rockwell to an “open end offer” to sell at a stated price for a stated time. In support of this contention it is emphasized that the agreement dated November 29, 1969, provides that it is an “annual contract through June 30, 1970,” that Rockwell is to furnish only “part of the City’s requirement for parking meters”, the number to be furnished being “approximately 7650 parking meters” and that delivery is to be made only “after receipt of a purchase order” from the City. While it does appear that these matters create a degree of indefiniteness and ambiguity in the agreement, in the light of the full record in this case it does not appear that they render the agreement only an option or an “open end offer”, leaving the City wholly uncommitted until such time as it may elect to place an order. While such an argument could- better have been advanced prior to the adoption of the Uniform Commercial Code in Kentucky, it would appear to have no merit subsequent to the adoption of that code. For the Uniform Commercial Code, adopted in Kentucky effective as of July 1, 1960, is more liberal than prior law in permitting open terms in a sales contract and in not requiring complete certainty or definiteness. Under the code, even though one or more terms are left open, a contract for sale does not fail for indefiniteness or lack of mutuality if the parties have intended to make a contract and there is a reasonably certain basis for granting appropriate relief. [K.R.S. 355.2-204(3)] Moreover, Section 2-306(1) of the Uniform Commercial Code [K.R.S. 355.2-306(1)] provides in pertinent part:

“A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith . . . ”

Under this provision municipal “requirements” is not too indefinite a term, since it is held to mean the actual good faith requirements of the City when dealing according to commercial standards of fairness. The further provision for furnishing “part” of the City’s requirements likewise does not render the agreement illusory or lacking in mutuality, both in light of the full record upon the trial and in light of the further provision in the agreement for furnishing “approximately 7650” parking meters. The word “approximately” when used in this context merely indicates that precision in quantity is not intended, but rather a margin is intended either for excess or deficiency in the quantity stated. The degree of variation thus made permissible depends upon the facts of the particular case. See Harten v. Loffler, 212 U.S. 397, 29 S.Ct. 351, 53 L.Ed. 568 (1909). See also Section 2-306(1) of the Uniform Commercial Code [K.R. S. 355.2-306(1)] wherein it is provided that in a requirements contract no quantity unreasonably disproportionate to a stated estimate may be tendered or demanded.

Although this Court cannot concur in the conclusion of the trial court that the subject agreement is without ambiguity, it is the opinion of this Court that such ambiguity as exists in the agreement, in the light of the record, must be resolved in favor of the conclusion that the City contracted to purchase of Rockwell such parking meters as would be required by it during the contract term if the City acted in good faith to carry out its contemplated parking meter installation project. The good faith and commercial fairness standards of the Uniform Commercial Code hereinabove referred to require this result. In this regard it is appropriate to note that each Kentucky case cited by the appellant in support of its contentions for a different conclusion predates the adoption of the Uniform Commercial Code in that state.

Before turning to the damage issues in this lawsuit, there remains to consider the appellant’s contention that the 1,000 meter order placed by the City in December of 1969 was ineffective as the specification documents included therewith were returned by Rockwell for signature authentication and were never resubmitted by the City. The trial judge concluded that Rockwell was justified in relying upon the order and in proceeding promptly to manufacture the meters for delivery in accordance with its 30 day delivery schedule. He further concluded that the return of the specifications for signing did not constitute a repudiation of the order by Rockwell. Suffice it to say that to the extent these conclusions constitute findings of fact, they are supported by the trial record. To the extent that they constitute conclusion of law, we are in accord with them.

Turning to the damage issues in the lawsuit, the initial claim for damage is with respect to the 1,000 meters hereinabove just referred to. The record reflects that these meters were manufactured pursuant to order, but delivery was declined when the contract was repudiated by the City. They remain unsold and unsalable, according to the only testimony in the record. Upon this state of the record, Rockwell claims as damage the contract price of $54.20 per meter. The trial court found in favor of this claim and it appears rightfully so. The Uniform Commercial Code permits the seller to recover the price of goods identified in the contract if the seller is unable after reasonable effort to resell them at a reasonable price, or the circumstances reasonably indicate that such an effort will be unavailing [K.R.S. 355.2-709(1) (b)]. A matter unnoticed in the record below, however, is that where the seller sues for the price, he must hold for the buyer any goods that have been identified to the contract and are still in his control, except that if resale at a reasonable price becomes possible, he may resell them at any time prior to collection of the judgment and the net proceeds of the sale must be credited to the buyer. Payment of the judgment entitles the buyer to delivery of any goods not resold and credited as stated above [K.R.S. 355.2-709(2)].

The final element of damage here in dispute is the trial court’s award of damages in the further sum of $118,787.50, representing Rockwell’s claim for profits of $27.95 per meter upon 4250 meters.

The figure $27.95 is the evidence offered by Rockwell as the gross profit (including overhead) it would have made upon each meter sold under its contract with the City. It is the only evidence in the record upon this claim. While $27.95 does not purport to be a net profit figure, a requirement sometimes followed prior to the Uniform Commercial Code, it is a correct figure to use in determining a loss of profits claim under the Uniform Commercial Code. With regard to a damage claim for loss of profits, Section 2-708(2) of the Uniform Commercial Code [K.R.S. 355.2-708(2)] permits recovery of the profit, including reasonable overhead, which the seller would have made from a full performance by the buyer.

The figure of 4250 used as a multiplier by the trial court represents 1,000 less than the number of meters purchased in the succeeding one year period by the City under the Duncan contract, the total of such purchases being in the sum of 5250 meters. The figure of 5250 meters was accepted by the trial court as the good faith annual parking meter requirements of the City, that is, the number of meters the City would have required under the Rockwell contract had the City performed in good faith under that contract.

With but one exception this conclusion would appear to be correct. Having found that the City breached its contract with Rockwell by failing to purchase its good faith parking meter requirements during the period of that contract, it is appropriate to look to the City’s parking meter purchases from any other source during some relevant and comparable time period as a method of establishing the City’s good faith requirements under the Rockwell contract. That is, upon it appearing that the City withheld from purchasing its good faith meter requirements during the period of the Rockwell contract, it would be proper in establishing such meter requirements to look to a comparable succeeding period in which the City was purchasing its meter requirements in good faith. The only error committed by the trial court in this regard was that it failed to look to a period of time comparable to that covered in the Rockwell contract. Whereas the Rockwell contract was in fact a seven month contract (although stated at one point to be an “annual contract”), in establishing the City’s good faith meter requirements under the Rockwell contract the trial court looked to the meter purchases made by the City over the succeeding twelve month period. During the first seven month period under the Duncan contract (July 1, 1970 thru January 31, 1971) the City purchased a total of 4450 meters (800 additional meters having been purchased on April 5, 1971, to accomplish a twelve month total of 5250 meters).

The correct calculation of Rockwell’s loss of profits claim would accordingly be in the sum of $96,427.50 ($27.95 x 3450 meters), rather than the sum of $118,787.50 ($27.95 x 4250 meters).

The decision of the trial court will be affirmed in part and reversed in part. This case will be remanded for the entry of a judgment in accordance with this opinion.


author: WALLACE, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Allen John BAMBERGER, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Barry SHIPLEY, Defendant-Appellant.
    Nos. 71-2381, 71-3052.
    United States Court of Appeals, Ninth Circuit.
    May 29, 1973.
    Rehearings Denied July 5, 1973.
    Certiorari Denied Nov. 19, 1973.
    See 94 S.Ct. 543.

      T. Roger Duncan (argued), Los An-geles, Cal., David M. Rothman, Beverly Hills, Gal., for defendants-appellants.
    Gregory C. Glynn, Asst. U. S. Atty. (argued), William D. Keller, U. S. Atty., Eric A. Nobles, Asst. U. S. Atty., Los Angeles, Cal., for plaintiff-appellee.
    Before BROWNING, HUFSTEDLER and WALLACE, Circuit Judges.
   WALLACE, Circuit Judge.

Bamberger and Shipley appeal their conviction of bank robbery in violation of 18 U.S.C. § 2113(a) and (d) asserting numerous errors. We affirm.

On the morning of June 20, 1969, three armed men entered a bank on South Western Avenue in Los Angeles. They wore dark clothes, gloves, and white motorcycle helmets with visors. People in the bank were able to give only general descriptions of the bandits.

The robbers left the bank three or four minutes after they had entered, having fired approximately five shots and taken about $2,075.00. Raymond Lawson, a construction worker who was outside the bank at the time of the robbery, saw three men wearing white motorcycle helmets and gloves exit the bank carrying guns and a money sack. The three men joined a fourth man who was in the driver’s seat of a waiting automobile. Lawson could neither see their faces nor tell their race or ethnic origin, but he testified that he could recognize the three men by their height, weight and build. Lawson later identified Bam-berger and Shipley in lineups and at trial as two of the three men he had seen at the scene of the robbery.

Sergeant McAlpine of the Los Angeles Police Department was stopped at a red light on South Western Avenue in an unmarked police vehicle when the three men wearing white motorcycle helmets exited the bank. McAlpine pursued the getaway vehicle. He observed the occupants of the automobile take off their helmets. During the chase, one of the men leaned out of the right side of the vehicle and fired a small-caliber revolver five or six times at the police officer from a distance of approximately 100 feet. McAlpine saw his face and subsequently identified him as Shipley.

The getaway car came to a sudden stop ' at an alleyway and a man leaned out of the left side, firing a .45 caliber automatic hand gun. McAlpine, who was two car lengths away, identified this man as Bamberger. After a brief exchange of shots, the getaway car started down the alley at a high rate of speed. McAlpine’s chase was frustrated when his car became inoperable.

I. The Right to Free Transcripts.

Clifford Northern, the driver of the getaway car, was indicted and tried separately for the same bank robbery. His first trial ended in a hung jury. He was then retried and found guilty. See Northern v. United States, 455 F.2d 427 (9th Cir. 1972). Lawson and McAlpine testified at both trials. During the second Northern trial, both identified Bam-berger and Shipley. The record does not disclose whether they did so in the first Northern trial.

Bamberger and Shipley were in possession of transcripts of the first Northern trial. Twenty days before his trial, Shipley moved for a transcript of the testimony given in the second Northern trial by Lawson, McAlpine, and a third witness. The motion was denied. Bamberger and Shipley are indigents and claim that the denial of the right to the free transcript violates their rights to equal protection and due process. Because only Shipley moved for a free transcript, Bamberger is precluded from alleging that denial of the motion constituted error as to him.

The Supreme Court has held that equal protection requires that an indigent be provided “with the basic tools of an adequate defense when those tools are available for a price to other [defendants].” Britt v. North Carolina, 404 U.S. 226, 227, 92 S.Ct. 431, 433, 30 L.Ed.2d 400 (1971) (emphasis added). The Court has allowed indigents transcripts of their own prior proceedings in some cases yet has indicated that even that right is not absolute. Further, in Britt, the Court noted that the outer limits of the right were not clear. 404 U.S. at 227, 92 S.Ct. 431. Shipley’s contention — that he has a constitutional right to a free transcript of testimony at a third party’s trial by witnesses who would also testify against him — would require a delineation of those outer limits. However, any definition must await another challenge because even if Shipley had the right, any error in its denial was harmless beyond a reasonable doubt. Chapman v. California, 386 U.S. 18, 24, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967).

Shipley wanted a transcription of the testimony of Lawson and McAlpine in order to impeach them if they testified at his own trial. He had a transcript of the testimony they gave in the first Northern trial which he used for that very purpose.

The government’s primary eyewitness was McAlpine, not Lawson. McAlpine was the only witness who saw the robbers’ faces and made a positive identification. Shipley’s attorney effectively cross-examined McAlpine, citing inconsistencies with his statements in an FBI report, with the Los Angeles Police Department report on this robbery and with his testimony in the first Northern trial. Shipley could neither reasonably hope for, nor realistically gain, more telling or damaging impeachment tools from the transcript he was denied. Moreover, there was circumstantial evidence introduced against Shipley which significantly decreased the government’s absolute need for the eyewitness testimony.

II. The Search Warrant.

A red gun box and pictures were obtained from Shipley’s apartment pursuant to a search warrant. He attacks the validity of that warrant. Only Shipley has standing to raise the question since only his room was searched. Alderman v. United States, 394 U.S. 165, 171-72, 89 S.Ct. 961, 22 L.Ed.2d 176 (1969).

Shipley trisects the affidavit upon which the warrant was based and systematically finds each section insufficient to support the warrant. His approach is incorrect. “[T]he magistrate is obligated to render a judgment based upon a common-sense reading of the entire affidavit.” Spinelli v. United States, 393 U.S. 410, 415, 89 S.Ct. 584, 588, 21 L.Ed.2d 637 (1969) (emphasis added). See United States v. Ventresca, 380 U.S. 102, 108, 85 S.Ct. 741, 13 L.Ed. 2d 684 (1965).

In Spinelli, the informant’s tip alone was insufficient as a basis for a finding of probable cause. 393 U.S. at 415-16, 89 S.Ct. 584. Further, the tip, even when corroborated by FBI information, was still inadequate. 393 U.S. at 418.

The affidavit in this case is a different matter. Although this tip alone, as in Spinelli, may be inadequate, the question is whether the tip, when corroborated by other information, is as reliable as one which meets the requirements of Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723 (1964). See Spinelli, supra, 393 U.S. at 415-416, 89 S.Ct. 584.

Here the affidavit recited that Bam-berger and Shipley were wanted for a New Jeresy bank robbery involving $69,-531.00; that Bamberger had been arrested that day and that a lawful search of his apartment produced $1,805.00; that Shipley’s roommate had observed Shipley with a large amount of cash while in company with Bamberger and while alone in their apartment; that Bamberger had visited that apartment several times during the past month, most recently, the previous night; and that a paid, previously reliable FBI informant had stated that Bamberger and Shipley were holding the shares of four others already arrested for the New Jersey robbery.

Taken together, the tip and the corroboration provide a magistrate with the required information that matter which may be seized lawfully is probably at the place described and that the information supplied by the informant is reliable. The FBI agent’s “affidavit should not be judged as an entry in an essay contest.” Spinelli, supra, 393 U.S. at 438, 89 S.Ct. at 600 (Fortas, J., dissenting). It must be “interpreted . . . in a commonsense and realistic fashion.” United States v. Ventresca, supra, 380 U.S. at 108, 85 S.Ct. at 746. We hold that this affidavit provided sufficient bases for the magistrate’s finding of probable cause.

The other allegations of error are un-meritorious.

Affirmed.

      . The third witness whose testimony was sought did not ultimately testify against Bamberger and Shipley. Therefore, as to the testimony of this witness, no prejudice is claimed.

      . See Williams v. Oklahoma City, 395 U.S. 458, 89 S.Ct. 1818, 23 L.Ed.2d 440 (1969); Gardner v. California, 393 U.S. 367, 89 S.Ct. 580, 21 L.Ed.2d 601 (1969); Roberts v. LaVallee, 389 U.S. 40, 88 S.Ct. 194, 19 L.Ed.2d 41 (1967); Long v. District Court, 385 U.S. 192, 87 S.Ct. 362, 17 L.Ed.2d 290 (1966); Griffin v. Illinois, 351 U.S. 12, 76 S.Ct. 585, 100 L.Ed. 891 (1956).

      . Britt v. North Carolina, 404 U.S. 226, 227, 92 S.Ct. 431, 30 L.Ed.2d 400 (1971); Griffin v. Illinois, supra note 2, at 20 of 351 U.S., 76 S.Ct. 585, 100 L.Ed. 891.

      . The value of Lawson’s testimony was much less. Though he gave a detailed description at this trial, he was impeached by the inadequate description he gave to the FBI on the' day of the robbery as well as by his statement that he could not perceive the robbers’ race or ethnic origin. Lawson even testified on cross-examination that he could not identify Shipley, merely that he resembled the man he saw coming out of the bank.

      . Shipley’s attorney confronted McAlpine with an FBI report which stated :
      “McAlpine concluded by advising that duo to the distance between himself and the suspects he did not feel that he would be in a position to effect an identification of them at a later date.”
      McAlpine denied he made that statement. Shipley’s attorney then read to the jury a part of McAlpine’s testimony from the first Northern trial in which McAlpine testified that he did not remember whether or not he had made the statement to the FBI.
      Cross-examination also demonstrated that McAlpine’s identification of Shipley was less definite when he saw a photograph earlier and, as reported by the FBI,
      “McAlpine stated that although not positive he feels that the identification order photograph of Barry Shipley strongly resembles the individual who was firing at him . . . from the right rear window . . . .”
      Shipley’s attorney also questioned Mc-Alpine about a Los Angeles police report which stated that the driver of the vehicle was a male Negro who wore a white motorcycle helmet but provided no further description. McAlpine stated that he had positively identified the driver to the reporting officers. The defense rebutted that statement by calling Officer Fuentes, the author of the police report, who testified that he did not recall McAlpine giving him a description.

      . Shipley contends that the value of the transcript of the second Northern trial rests on the following testimony:
      a) Lawson identified Northern as one of the three men running from the bank. (However, Lawson was not asked that question in this case. McAlpine consistently identified Northern as the driver. Shipley argues that this discrepancy would have discredited both witnesses.)
      b) Lawson made the statement that an unnamed laborer was present. (But, there was no showing that this man had anything to offer as a witness.)
      c) Lawson testified that he identified Shipley at a photospread and then at a lineup. (In the present case, he did not mention the photospread.)
      d) McAlpine mentioned that Officer Shelburn was also at the scene of the robbery. (But Shelburn testified in the second Northern trial and indicated he could not identify the robbers.)
      e) There were various unspecified parts of McAlpine’s testimony which Shipley claims were in conflict with his testimony in the Bamberger-Shipley trial. (A comparison of his testimony at each trial shows no significant differences. The discrepancies are especially insignificant in view of the impeachment already discussed. Bee note 5, supra.)

      What little value which might be gained from the second Northern transcript was essentially directed against Lawson, the less valuable and already impeached eyewitness. Bee note 4, supra.

      . Shipley and Northern rented the apartment in which they were living in September, 1969. Both men used aliases. Northern gave Bamberger’s address as his last address and Shipley gave a former address in Dania, Florida.
      Bamberger’s apartment was located six or seven blocks from where the abandoned getaway car was found. Shipley and Bamberger were seen at the apartment together.
      The Florida residence was searched by the FBI pursuant to a warrant in a separate case. The FBI found a photograph of Bamberger, Shipley, Euther Presha and a fourth man. Euther Presha was identified by McAlpine as the man riding in the front passenger seat of the getaway car.
      Among the other items discovered at the Florida address were three white motorcycle helmets and one .45 caliber Lama automatic pistol. An expert witness linked the .45 caliber cartridges found in tlie abandoned vehicle to this weapon. A red gun box was found during the search of Shipley’s bedroom in Los Angeles. That box had the same serial number as the .45 caliber automatic found in Florida.