author:
TUTTLE, Circuit Judge:
      SIMPSON, Circuit Judge

text:
    Mrs. Annie Laurie REWIS, as Temporary Administratrix of the Estate of Jo-Ann Rewis, Deceased, and Mrs. Annie Laurie Rewis and Joseph Sidney Rewis, Individually, Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.
    No. 73-2340.
    United States Court of Appeals, Fifth Circuit.
    Nov. 18, 1974.
    Rehearing Denied Jan. 27, 1975.
    See 506 F.2d 1386.
    Simpson, Circuit Judge, filed dissenting opinion.

      Joseph B. Bergen, Savannah, Ga., for plaintiffs-appellants.
    R. Jackson B. Smith, Jr., U. S. Atty., Henry L. Whisenhunt, Jr., Asst. U. S. Atty., Augusta, Ga., Tom Young, Atty. U. S. Dept, of Justice, Civil Div.-Tort Section, Washington, D. C., for defendant-appellee.
    Before BROWN, Chief Judge, and TUTTLE and SIMPSON, Circuit Judges.
   TUTTLE, Circuit Judge:

This is the third appeal of this case to this Court. It is a Federal Tort Claims Act suit brought under 28 U.S.C.A. §§ 1346(b), 2671-2680. The action is brought by the parents of their fifteen months old child, JoAnn Rewis, both in their representative and individual capacities. The gist of the action is the failure of the Medical Officer of the Day at Walker Air Force Base, New Mexico to diagnose and treat the child for aspirin poisoning from which she later died. The undisputed facts are: at a time estimated to be 3:30 p. m., September 4, 1963, while her mother was ill, JoAnn swallowed an unknown quantity of adult aspirin. Without knowledge of this fact, Sergeant Rewis took his wife to the base hospital at about dinner time, leaving the children with a neighbor who gave them their meal. Upon Sergeant Rewis’ return home he was told that JoAnn had eaten her supper, but then immediately after that she started vomiting severely and had a very bad case of diarrhea. He also saw that “she was blue around the eyes and lips” and he noted her “deep breathing.” He then took her to the Air Force hospital, a distance of about ten miles, where after some delay, he saw the same doctor at 10:00 p. m. who had treated Mrs. Rewis. The doctor noted the symptoms except for the “blueness” and made an entry to the effect that the child was “hyperventilating”; her temperature was normal; he made an inspection of her throat, ears and chest, but took no chemical tests. In light of the fact that the child’s mother had been found previously to have a viral infection, the doctor diagnosed the child’s condition as a viral infection. He thereupon prescribed a “decongestant, acti-fied, one teaspoon four times a day, children’s aspirin, and one baby aspirin every four to six hours a dose, which was one and a quarter grain tablet, liquid diet, a cough syrup, benedryl expectorant cough syrup, one teaspoonful four times a day, and Coca Cola syrup for the nausea, one teaspoon as often as need ed.” The father then took the child home and administered the dosages prescribed during the night, during which the child was extremely restless and crying. He took the child back to the base hospital the next morning where, after some delay, Jo Ann was seen by a doctor who immediately called a pediatrician, who thereafter took a blood sample which showed a blood salicylate level of 87.5 miligrams percent. After this discovery was reported to the pediatrician he set in force heroic measures in an effort to save the child, including a transfer by aircraft to San Antonio, Texas, where it was hoped that the presence of an artificial kidney might save her life. The discovery of the salicylate poisoning was too late to save the child and she died at approximately 7:00 on the evening of September 5, after having been taken from the plane in a moribund condition.

Plaintiffs charge that the failure to diagnose the salicylate poisoning at the time of the first examination at approximately 10:00 p. m. on September 4 was negligent and the direct cause of the death of the child.

The United States defended on the double ground that the conduct of the Medical Officer of the Day on the evening of September 4 fully comported with proper medical practice for the time and place involved and that, moreover, the ingestion of the aspirin was of such a large amount as would have been fatal in any event, so that even had there been negligent conduct by the doctor, there was a lack of legal causation of the death.

On the first two appeals to this Court we dealt with the problems of negligence, first concluding in Rewis v. United States, 369 F.2d 595, that the trial court erred in receiving in evidence answers to hypothetical questions which were based on assumed facts which had not been proved in the record, and in the second, that on the proof developed on the trial in the form of expert testimony the trial court's conclusion that there was no negligence was clearly erroneous, and that in fact the Medical Officer of the Day was negligent in failing to diagnose and treat little Jo Ann Rewis for the illness from which she subsequently died. Rewis v. United States, 5 Cir., 445 F.2d 1303. As pointed out in the second decision, since the trial court had not reached the question of causation at the trial level because of its finding that there was no negligence, the case was remanded to the district court for further proceedings, which all parties understood to mean a hearing and determination of the question of causation.

Because this is a non-jury case, and the trial court is the fact finder', it is of course essential that we ascertain from the statement, findings of fact and conclusions of law that the trial court applied the proper legal standard to the evidence dealing with the issue of causation. While it is not at all clear that the trial court did not have the proper standard before it, one statement contained in the first conclusion of law gives us concern lest too strict a standard may inadvertently have been applied to the proof of the plaintiff in this case.

The court stated, concerning the standard or burden of proof of causation: “This burden was formulated by the Court of Appeals for the Fifth Circuit as a requirement that the plaintiff prove to a reasonable degree of medical certainty that this child’s life could have been saved if Dr. Finley had correctly diagnosed her condition on September 4, 1963. Rewis v. United States, 369 F.2d 595, 599 (5th Cir. 1966). To show that the patient could be saved, the plaintiff need not exclude every possible hypothesis that the child would have died, but need only establish by a fair preponderance of the evidence the reasonable medical probability that it would not have died. Rewis, 369 F.2d 603.”

In this Rewis opinion we correctly stated the standard. “The Court, upon the record as a whole, including the testimony of all the witnesses bearing on the subject, is, as the fact finder, required to determine for itself whether a proper diagnosis and treatment on the evening of September 23 (sic) would likely have prevented the loss of this life. See Sentilles v. Inter-Carribbean Shipping Corp., 361 U.S. 107 [80 S.Ct. 173, 4 L.Ed.2d 142].” (Emphasis added). We then pointed out that on this record in the Rewis case the trial court might have found more than a “likelihood” ; that it might even find causation “to a reasonable degree of medical certainty”. It is unfortunate that this dictum was added, but it did not change the standard for proving causation from “likelihood” of survival to “one of reasonable degree of medical certainty”.

In any event, we emphasize that in an action for damages resulting from negligence in performance of health services there is no requirement “that the plaintiff prove to a reasonable degree of medical certainty that this child’s life could have been saved”, but for the negligent conduct of the physician.

Under the laws of New Mexico which control here, the burden rests upon the plaintiff “to introduce evidence to remove the cause from the realm of speculation and to give it a solid foundation upon facts.” Sanders v. Atchison, Topeka and Santa Fe Railway Co., 65 N.M. 286, 336 P.2d 324 (1959).

The trial court concluded that “the plaintiffs have not carried the burden imposed on them. This Court finds that six hours after ingestion it is more probable that JoAnn would have died than that she could have been saved.”

Because we conclude that the government expert witnesses based their opinions on unproved assumptions and on statements of fact in conflict with their own documentary evidence, both with respect to the salicylate level that should be used in estimating the peak level in Jo Ann’s system and because of the fact that the misdiagnosis prevented the initiation of even conservative methods of reducing the salicylate content of the blood, all of which were readily available to the physician, we conclude that the judgment for the United States cannot stand. Moreover, because, as found by the trial court itself, there was competent expert testimony that “if the diagnosis was properly made and certain procedures were followed, I would think that the child could be saved”, we conclude that the judgment must once again be reversed, this time for the entry of a judgment finding causation of death from the misdiagnosis and failure to treat the Rewis child.

In a unique sense the government’s case here depended almost totally on a highly qualified pediatrician who had specialized in the diagnosis and treatment of poisoning, the author of a great many articles, thirteen of which were solely on the subject of salicylate poisoning, Dr. Allen K. Done. Because of the use on the third trial of all of the testimony presented on the two earlier trials, it has not been easy to pinpoint the fatal error in the disposition of this case. However, it is clear that the error arises because of the failure of the trial court to relate the basis of the expert testimony to the hypothesis on which it was based. What must be borne in mind is the fact that the failure of the Medical Officer of the Day on the night of September 4 to diagnose JoAnn Rew-is’ illness as aspirin poisoning, meant that nothing was done, either then, or for more than twelve hours thereafter, to eliminate the salicylate either from the stomach and other organs of the child or from her blood into which it was later absorbed.

Dr. Done’s opinion that JoAnn would have been unlikely to survive was bolstered by his presentation of a curve or graph which, as he explained to the Court, enables one skilled in the art who has ascertained the salicylate level in the blood by the simple taking of a blood sample at a known time following ingestion to compute “a rough guide” to the peak level in a patient following ingestion and absorption into the blood. This chart showed that when the blood sample was taken from JoAnn Rewis between 11 and 12 o’clock on September 5 the salicylate level was 87.5 miligrams percent. By using the equation, which neither appellant nor we fault when used for the purpose for which it was designed, (primarily diagnostic purposes, according to Dr. Done) this would indicate that the peak level of concentration in JoAnn was somewhat over 160 mili-grams percent. The trial court concluded that it made no difference whether the peak was 160 miligrams percent or 200 miligrams percent. This may well have been due to the trial court’s accepting Dr. Done’s statement at one place in his testimony that at a level of 160 mili-grams percent “In our experience they all died.” This testimony is belied by other testimony by Dr. Done and completely disproved by his own graph showing numerous survivals at or above the 160 level where conservative treatment was used.

While some of the uses to which the chart were put were criticized by appellants, and although we agree that it was potentially seriously prejudicial to the appellants for the time of the taking of the blood sample to be misstated by some two and a half hours, we conclude that it is not necessary to rule out the use of the chart completely to arrive at a conclusion that the use of it does not support Dr. Done’s testimony. Without it, there is no proof of what the peak level of salicylate would have been had even conservative treatment been commenced immediately. It must be borne in mind that there is no proof as to what amount of aspirin was eaten at 3 :30, and no attention was paid by any witness to the subsequent ingestion of children’s aspirin upon the doctor's prescription late at night.

One troublesome factor of this case is that a study prepared by Dr. Done based upon what he had determined to be the average length of time it takes for aspirin taken at a single dose (a point on which there is no proof in this record) to be totally absorbed into the blood stream was used here as proof that the presence of 87.5 miligrams percent sali-cylate at a certain time equalled proof of a peak level in excess of 160 miligrams percent; this, even though the graph prepared by Dr. Done made certain assumptions which he himself suggested were either based on averages or were arbitrarily chosen. For instance, he stated that the graph was made on the assumption that the peak was arrived at six hours after ingestion, although he stated that it sometimes takes as long as eight to ten hours. He also stated “It depends on many factors including whether the stomach is full or empty” and in response to the question “And sometimes you say, the peak level is reached early or sometimes later. It is just impossible to say in any given human being?” He answered “It is impossible to say except within very broad limits.” (Emphasis added). Thus it is that, since no one knew how much aspirin Jo Ann had eaten, and no tests were made when she went to the doctor on the evening of September 4, the only proof as to the “fact” that she had consumed enough aspirin to make her survival unlikely even with proper treatment, promptly taken, is the result of the blood test taken shortly before noon the following day.

Dr. Done plotted the point representing 87.5 miligrams percent on his chart or nomogram at a point representing a time between twenty-two and twenty-three hours after ingestion. Then by plotting a logarithmic curve (here a straight line) through this point he concluded that the peak level had been approximately 200 miligrams percent. The nomogram cannot be adequately understood without reproduction. It is therefore attached as Appendix 1. It must be borne in mind that this chart was devised by Dr. Done to assist a physician dealing with a child the amount of whose intake of aspirin was unknown, but who was shown at a known time after ingestion to have salicylate poisoning, to approximate the peak level by taking a blood sample. The diagonal descending lines indicate the rate of regression from the peak level that Dr. Done’s studies “approximately” indicated would “likely” occur through normal body processes.

The burden of Dr. Done’s testimony, which was borne out by the other expert witnesses who relied on his studies was to the effect that if the peak level of sa-licylate exceeded 160 miligrams percent a person suffering from this condition would be more likely to expire than to survive.

Now we come to the critical defect in the government’s case. The difficulty here is that Dr. Done made it abundantly clear that his testimony was based upon the assumption that the peak level of salicylate in the child’s blood was 160 miligrams percent or over. But this assumption was never put to the witness as a proven fact as a part of the hypothesis upon which his opinions were based. The only assumption which was proved with respect to the salicylate level was that at some point between nineteen and twenty-three hours after ingestion there was a level of 87.5 miligrams percent. Based on this proven fact, the witness then drew on his own experience and research and study to do some hypothesizing of his own. Government counsel asked Dr. Done “Doctor, in terms of your opinion, what is the significance of the positioning of the Rewis child on your chart ?” Dr. Done answered “Well, if one accepts the stated interval since ingestion and assumes that the blood level salicylate was correct, it places her clearly within the range where fatal outcome is really to be expected. It also places her in an area where, the medical probability is that a fatal outcome would ensue.”

In addition to the fact that “the stated interval since ingestion” cannot be accepted for the purpose of his answer, it is also clear that the answer is based upon further assumptions as to the correctness of the blood level salicylate, which means that the graph could be used as proof of the fact that with the 87.5 figure known at a definite time an accurate reading could be made to prove what JoAnn Rewis’ peak level had been at the critical point, here contended by the government to be at or above the 160 miligrams percent mark.

We need only look to Dr. Done’s own explanation of his nomogram and his testimony at the trial to conclude that the Court could not accept his second assumption any better than it could accept the first. Dr. Done testified, as of course he would have to, that he did not know what the peak level was in Jo-Ann’s case. He undertook to substitute this lack of knowledge by a graph which, as Dr. Done testified, was only a disag-nostic aid. When questioned by counsel for appellants as to the entries on the chart, including entries indicating what had happened to other patients suffering from aspirin poisoning, Dr. Done conceded that the chart was “minimal in terms of correctness.” This frank answer was to be expected in view of the fact that the assumption that the chart was correct for the purpose of fixing Jo Ann’s peak level at 160 miligrams percent was based on several other assumptions. The first was that the aspirin was ingested in a single dose, whereas we know that at least to the extent that she ingested aspirin after the doctor’s examination at 10:00 p. m., this assumption is not true. Furthermore, there is, of course, no proof as to the actual method or sequence of events when Jo-Ann ate the aspirin. The second assumption which is made in the use of the monogram is that the aspirin had been fully absorbed into the blood stream in six hours. Of course we know this is not true, because JoAnn took additional children’s aspirin after six hours from the first ingestion. Moreover, no such assumption can be made because Dr. Done testified, and his article bore out the statement, that the rate of absorption was affected by the condition of the particular patient, by the kind of aspirin, by the extent to which it may have impacted in the stomach or may have been flaky and easily absorbed and although Dr. Done testified that the time of absorption might be as long as eight to ten hours and that such time could not be stated “except within very broad limits.” The third assumption is that the rate of regression (elimination from the blood) during the hours up to the taking of the blood test the next day was “average”. There was no basis for Dr. Done’s determining, and he made no effort to testify to the effect, that Jo-Ann’s rate of regression was average.

Thus, we do not have an expert witness testifying in response to a hypothetical question in which he is asked his opinion as to the likelihood of survival of a child in whom it has been determined that there was a peak salicy-late level of 160 miligrams percent or higher. He was asked about a child whose salicylate level at a stated time following ingestion was 87.5 miligrams percent, and he thereupon assumed several unproven facts to arrive at the conclusion that she had a peak level of 160 miligrams and that above this figure death was more likely to occur than not.

As we stated in Rewis I “Of course, in order for the opinion to have any value it must be based on assumptions which the trier of the facts can find to have been proved. See United States v. Cooper, 5 Cir., 277 F.2d 857; International Paper Company v. United States, 5 Cir., 227 F.2d 201.” (Emphasis added). Here there was no opportunity for the trial .court to make a finding that Jo Ann’s peak level was equal to or above 160 miligrams percent. Dr. Done was not even asked whether he had a sufficient basis to form an opinion as to her actual peak level. He did testify that he could not state what it was. Of course Dr. Done did not see the child. His testimony was based entirely upon assumed facts and since, as we have said in the cases already cited that an expert opinion is no better than the hypotheses upon which it is based, we must conclude that Dr. Done’s opinion cannot be considered as a basis for the trial court’s judgment.

It is apparent that Dr. Finley, the Medical Officer of the Day, and Dr. Ageloff, the pediatrician who first learned of the 87.5 miligrams percent blood level the following day, based their opinions as to causation equally upon Dr. Done’s logarithmic chart. Each of them discussed the finding of 87.5 mili-grams percent as the basis for his conclusion that no treatment would have been likely to have saved the child. We conclude, therefore, that their opinions as to causation cannot be relied upon to support the trial court’s judgment.

On behalf of the plaintiffs, Dr. Shepherd testified to a number of measures that should immediately be taken upon the ascertainment of aspirin poisoning. He testified as to the importance of the same conservative means described by Dr. Done in his articles. He included in his recitation also the use of exchange transfusion or the use of the artificial kidney for dialysis, mentioning the artificial kidney of course only in a situation where it was available. He then stated “All of these are measures that can be taken and if done early and expeditiously there is every reason to believe that you will succeed in the salvaging of this child, saving this child.” After being queried by government counsel as to the degree of severity represented by a salicylate level of 87.5 miligrams percent nineteen and a half hours after ingestion he agreed that this would be considered “a very severe case.” He was then asked “However, if this had been done, this blood exchange, at six hours?” He answered “That’s an entirely different question. The probability would be far greater for the salvage of life.” (Emphasis added).

Because of the fact that this case has been tried three times, and depositions were also taken, it is not easy to winnow out the hypotheses on which each question was presented to the experts. Nevertheless, we have attempted carefully to analyze the real basis attributed by each expert witness for the opinion given by him. We conclude without any hesitation that Dr. Shepherd’s opinion was based on facts proven in the record. We are equally certain that the opinions of the three government experts were based on assumptions that were not. so proven.

However, because of our reluctance as an appellate court to reverse findings of fact by the trial court, we think it appropriate to discuss a further feature of the ease as it was presented. It is plain that all of the doctors testifying agreed that if there had been a proper diagnosis made at 10:00 on September 4 some immediate measures would have been undertaken. Efforts would have been made to remove the remaining amounts of aspirin that had not yet been absorbed, and of course no additional aspirin would have been prescribed. Other measures would have followed immediately to hasten the removal of the salicy-late from the blood after absorption. From the testimony by the government’s witness, Dr. Done, some of these measures would have caused a rapid decrease in the level.

For some unknown reason, at one point in his testimony as to the patients appearing above the 160 miligrams percent line, Dr. Done said “This is the line above which fatalities are likely to occur In our experience they all died.’’ (Emphasis added). A most casual glance at this nomogram proves this to be demonstrably incorrect. There are several on or above the 160 miligrams line, who received only conservative treatment, and who survived. A more significant thing, however, is that clustered just at or below the 160 miligrams percent line there is an even larger number, thus emphasizing the importance of what has been said before to the effect that had the doctor in charge made the examination and given the treatment which proper medical practice would have required, it appears almost as a matter of course that this patient would have fallen among this large grouping under the 160 line, all but one of whom survived.

What we have just said has even greater significance in pointing out why it is essential that the court scrutinize as we have the basic assumptions that Jo Ann’s peak level was 160 miligrams percent. If, because she did not fit into the neat pattern of those (1) whose absorption was completed in precisely six hours, (2) that the ingestion of aspirin was all in one dose, (3) that she was normal with respect to the matter of absorption and (4) average with respect to the degree of regression, there is at least an equal chance that she would have fallen below the line indicated, in which event she would have shown up on the chart as one patient who survived.

We do not reach the question, much discussed by the trial court, as to the relative efficiency of treatment by exchange transfusion and dialysis by use of an artificial kidney back in 1963. It is perfectly clear that Dr. Done gave his opinion with respect to the likelihood of JoAnn’s survival based on the assumption, included in the government’s hypothetical question, that no kidney machine was available. On one occasion he himself suggested that the hypothesis be inserted in the question put to him by counsel.

Then, however, Dr. Done expressed the opinion that, although the process of exchange transfusion was readily available at Walker Air Force Base and although if undertaken it would rapidly reduce the salicylate level, it would have been medical negligence to have undertaken an exchange transfusion, if an artificial kidney was available. The trial court also felt it appropriate to quote from this testimony which, we consider to be totally without value in view of the fact that no artificial kidney was available. The court’s recitation of Dr. Done’s statement “That anyone who had access to hemodialysis would, in his view, be foolish to resort to exchange transfusion because it would simply delay the more effective procedure”, thus turns out to be meaningless, because the Rewis child did not have access to hemodialysis.

The witness’s final opinion, that either with or without a kidney machine he was of the view that JoAnn would have been more likely to have expired than to have survived, makes unnecessary any comparison as to the effectiveness of such treatment. Since, however, this opinion was based upon assumptions not in the record, as we have pointed out above, the opinion is no aid to the government in meeting the prima facie case made by the plaintiffs.

Finally, we think it appropriate to add that Dr. Done’s testimony and his articles, freely drawn from in the discussion of his testimony in open court, clearly and plainly expressed the view that upon diagnosis of salicylate poisoning something should be done immediately to ameliorate the condition. Since it was misdiagnosis of the government doctor which resulted in a failure to take any of these steps and caused the administration of additional aspirin it seems a heavy burden, indeed, to require a plaintiff to prove that if the doctor had done what proper medical practice would require it is more likely than not that the child’s life would have been saved. This, however, as we have noted, is the burden. We conclude that the testimony of Dr. Shepherd, supported as it is in some material respects by Dr. Done, clearly made a prima facie case of causation under the requisite standard of proof. It is equally clear that when the government’s expert opinions on causation are disregarded, because they are unsupported by a proper hypothesis, plaintiffs’ proof stands unrebutted. This, therefore, required a finding by the trial court in favor of the plaintiffs.

The judgment for the defendant is reversed and the case is remanded to the trial court to enter a judgment for the plaintiffs for such amount as determined by the court.

APPENDIX 1

SIMPSON, Circuit Judge

(dissenting) :

Following the last remand of this case the district judge made careful and complete findings of fact, amply-supported by the record, adequate conclusions of law, correctly applying controlling precedent, and entered judgment thereon for the United States.

The last appeal determined that negligence was proved and that the trial court was clearly erroneous in finding that the employee of the United States, Dr. Finley, was not negligent in his examination and diagnosis of the Rewis’s fifteen months old daughter, Joann Re-wis. Since the trial judge had found no negligence was present, the direction on remand was that he make findings “on the issue of causation and other relevant issues.”

The district judge took additional evidence as to causation and as noted, made full and complete findings, concluding:

“Plaintiffs have not carried the burden imposed on them. This Court finds that six hours after ingestion it is more probable that Joann would have died than that she could have been saved. I have concluded that failure to diagnose her condition on September 4, 1963, was not the proximate cause of her death. Therefore, there can be no recovery against the United. States for the acts or omissions of Dr. Finley in diagnosing the symptoms. The cause of Joann’s death was not faulty diagnosis or delay in proper treatment. It was the lethal dose of aspirin the child had consumed.
Judgment is entered accordingly.”

This, I respectfully submit, is where this difficult and protracted lawsuit should come to permanent rest. Instead the Court undertakes to reverse the trial court on this crucial and strongly controverted factual issue, despite ample evidence in the record supporting the decision of that court.

I do not so understand our appellate function under the constrictions of the “clearly erroneous” standard of Rule 52(a), F.R.Civ.P. and the numerous cases decided by this and other courts interpreting the rule. Fact-finding is the business of the trial court. I cannot accede to usurpation of that role by this court.

Further dissertation in this dissent would be a work of supererogation. The district court memorandum opinion, attached as Appendix A illustrates my point with clarity and telling precision.

With deference, I dissent.

APPENDIX A

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This action having been tried upon the facts by the Court without a jury, the Court does hereby find the facts and states separately its conclusions of law thereon, and directs the entry of the appropriate judgment, as follows:

STATEMENT OF THE CASE

(D

Sometime during the afternoon of September 4, 1963, fifteen-month-old Joann Rewis ingested what proved to be a fatal dose of aspirin. Her father, a Sergeant in the Air Force, had discovered that she had been playing with a bottle which once contained 300 adult aspirin tablets but neither parent sought medical assistance at that time. Instead, the parents waited until 6 hours later when the child had become ill. Joann’s father then took her to the Walker Air Force Base Hospital where Dr. Robert Finley misdiagnosed her condition as a viral infection of the respiratory tract. At no point during the examination did Sergeant Rewis suggest that Joann might have ingested any aspirin even though Dr. Finley specifically asked him whether she had taken any medicine. See Rewis v. United States, 369 F.2d 595 (5th Cir., 1966). The child was sent home with her father but because her symptoms became more severe the Sergeant returned her to the hospital on the next morning. There he again remained silent about the possible aspirin poisoning until Dr. Andrew Age-loff recognized the now advanced symptoms and ordered a blood test to determine the blood salicylate level. At that point the Sergeant- remembered that Joann had been playing with an aspirin bottle, p. 449. The blood test, taken approximately 22 hours after ingestion, revealed a salicylate level of 87.5 milligrams per cubic centimeter of blood. This was so high that it was decided that only an artificial kidney offered any hope of survival. The nearest available one was in San Antonio, Texas, and at about 3:00 p. m. Joann was placed on an aircraft to take her there. During the flight her vital functions began to fail, forcing the plane to land in Big Springs, Texas, where doctors were unable to revive the child.

(2)

The plaintiffs in the case are the child’s parents, individually and her mother as the temporary administratrix of the daughter’s estate. The parents claim the loss of services of the child and the administratrix seeks recovery for the value of Joann’s life. The plaintiffs based jurisdiction under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680. They contend that the Government employee, Dr. Finley, negligently failed to diagnose the aspirin poisoning, thereby proximately causing her death.

(3)

This is the third time this Court has considered these claims. The case was first tried before Judge Scarlett in the Spring of 1965. His finding for the Government was appealed and reversed by the Court of Appeals for the Fifth Circuit. Rewis v. United States, 369 F.2d 595 (5th Cir., 1966). The appellate court felt the court had improperly applied a prior decision in Watson v. United States, 346 F.2d 52 (5th Cir., 1965) by requiring specific expert testimony that, to a reasonable degree of medical certainty, the child’s life could have been saved if Dr. Finley had initially diagnosed the aspirin poisoning. The Court of Appeals believed that even without such a statement the record, as it stood, might well have supported a finding that the child would have been saved. Furthermore, the Court of Appeals ruled that several expert opinions, which may have influenced the finding that Dr. Finley was not negligent, were based upon the unsupported assumption that the child was either crying vigorously or breathing normally. As a result the case was remanded for additional consideration of these issues.

(4)

The case was retried in 1969 under a stipulation that all testimony given at the first trial, except the deposition of Dr. A. L. Ageloff, would be considered as though it had been given at the second trial. In addition, this Court heard expert testimony on the questions of causation and negligence. The Court reaffirmed its determination that Dr. Finley was not negligent in diagnosing Joann’s ailment as a viral infection and, therefore, did not reach the question whether the child could have been saved had the aspirin poisoning been diagnosed.

(5)

This decision was also appealed. Again the Court of Appeals for the Fifth Circuit reversed, finding that Dr. Finley was negligent in diagnosing the child’s condition as a viral infection. Because there had been no finding on the issues of causation and other relevant issues the Court of Appeals remanded the ease for further findings upon all issues raised by the pleadings and the evidence. See Rewis v. United States, 445 F.2d 1303.

(6)

In view of these instructions the trial record was reopened to include additional expert testimony on causation.

At this point it will be useful to recapitulate the medical testimony bearing upon the question of probability of death irrespective of the erroneous diagnosis.

Dr. Edwin C. Shepherd, a highly competent Savannah pediatrician, discussed such measures as intravenous bicarbonate treatment, peritoneal dialysis (flushing the stomach), exchange transfusion of blood and the use of an artificial kidney. He testified that bicarbonate treatment could possibly be effective to save life in severe cases and that an exchange transfusion was considered by many to be as effective as the use of an artificial kidney and by some, more effective. Record, pp. 615-619. He was of the opinion that if “the diagnosis was properly made and certain procedures were following [sic] I would think that the child could be saved.” p. 613. He was of the opinion that if the measures mentioned had been “done early and expeditiously there is every reason to believe that you will succeed in the salvaging of this child, saving this child.” p. 614. Dr. Shepherd stated that the probability of salvage of life would be far greater as the result of blood exchange if it had been resorted to six hours after ingestion rather than at 19.5 hours, p. 619.

Dr. Harry E. Rollings of Savannah, a specialist in internal medicine, testified that a salicylate level of 87.5 mg% would be a “highly lethal dose.” p. 76.

Dr. Andrew L. Ageloff, who was Base Pediatrician at Walker A. F. B., New Mexico, testified that after receiving the report of 87.5 mg% blood salicylate level that it was his opinion that “this child in order to survive, if she were able to survive, needed the benefit of an artificial kidney . . . .’’He attempted to locate one in the immediate area but none was available, p. 440. He testified that an exchange transfusion of blood was not indicated and that that treatment is not well accepted and that “its success is very, very limited.” p. 510. He further stated that it is the least satisfactory method of treating sal-icylate poisoning, and that the artificial kidney is well accepted as the most efficient method. Nor was peritoneal dialysis as practiced in 1963 effective in removing salicylate. Asked about eventualities had treatment been begun at 10:00 p. m. on September 4th, Dr. Age-loff testified that in the light of the treatment available at Roswell, New Mexico, “I believe the child probably would have died anyway” and that the odds were more against than in favor of survival, p. 513.

Dr. Robert H. Finley who initially treated the child was questioned as to the probability of survival with a salicy-late level of 87.5 mg%. He stated that he would have been unable to .save the child; that such an amount of poison would be “incompatible with life” and was recognized as a fatal level, p. 174. It was his impression that the child would have died although therapy would have gone on in the hope that “this would have been one of the cases that could be saved.” p. 211.

Dr. Bernard M. Portman of Savannah, who is a pediatrician, testified that the medical probability that the child would not have been saved, had prompt measures been taken, depended on the salicy-late level at that time. Eliminating statistics and curves, he said it was impossible to say that the child could not have been saved but that there is a level beyond which it could not have been at that stage. Excluding the use of Dr. Done’s computation and with no sympto-matology Dr. Portman said he would be unable to say that the child could be saved. “I couldn’t say either way.” pp. 604-607.

Like Dr. Shepherd, Dr. Allen K. Done is a certified member of the American Board of Pediatrics. He has specialized in the diagnosis and treatment of poisoning. He is an officer of the American Association of Poison Control Centers and was full Professor of Pediatrics and Professor of Clinical Toxicology at the University of Utah. In addition, he has served as the Director of the Inter Mountain Regional Force and Poison Control Center. At the time of the second trial he had published 92 articles, 13 of which were solely on the subject of salicylate poisoning. Finally, in addition to treating cases in the University Hospital, Dr. Done has independently researched the characteristics of salicylate poisoning.

Dr. Done testified that aspirin and other salicylates, unlike many other poisons which act directly, produce their toxicity by putting into motion certain metabolic abnormalities that take time to develop. He said that it is these metabolic derangements that are brought about in a case of aspirin poisoning that cause death or serious illness, p. 525. In Dr. Done’s opinion the medical probability is that the child would not have survived even if treatment had been instituted at 10:00 p. m. on September 4th. p. 529. On the basis of his study and experience, he was of the opinion that the child would have died since the level was such which is “in most patients, particularly children, ineompati-ble with life, unless measures are taken such as the artificial kidney is used.” p. 530. In his opinion exchange transfusion is so inefficient compared with artificial kidney that anyone who had access to hemodialysis would, in his view, be foolish to resort to exchange transfusion because it would simply delay the more effective procedure, p. 569. Dr. Done thought that an exchange transfusion at 10:00 p. m. on September 4, 1963, when there was the capability of flying the child to a place where an artificial kidney was available would be negligence. p. 586. He testified that if there was a salicylate level of 87.5 mg% about noon on September 5th that the level calculated back to the time of ingestion would be 164 mg%. pp. 555-556. Asked whether at an ingestion level of 160 mg% fatalities are likely to occur, Dr. Done replied, “In our experience they all died.” p. 589. He said that even if the child were still alive at the time an artificial kidney became available an additional two hours (or even much later) would be necessary to get it in operation and that such preparation could not be made while the patient was enroute. p. 587; 3 — p. 45, Tr. 1/7/72.

At the January, 1972, hearing Dr. Done testified that since his first appearance in the case the opinion then expressed by him could then be substantiated even more strongly than in 1969. He said that it could not be substantiated that “this child would have survived had the diagnosis been made at that earlier time.” 3 — p. 10, Tr. 1/7/72. Dr. Done further testified that it was, of course, possible that Joann could have been saved but that he did not believe it was probable. 3 — pp. 48-49.

FINDINGS OF FACT

(D

The Government submitted Proposed Findings of Fact and Conclusions of Law on October 10, 1972. The plaintiff had submitted findings in 1969 which covered both the malpractice and the causation issue. I have long debated and mulled over the solution of the difficult factual issue presented to the Court in this case.

There is no question but that we are largely dealing with conjecture, surmise and imponderables. We must rely on the view of experts. The choice of ultimate fact is not an easy one.

No one knows whether Joann Rewis could have been saved if the aspirin poisoning had been properly diagnosed. However, it is possible to determine the probability of survival given the concentration of salicylate in the blood at a known time after ingestion and given the types of treatment available.

(2)

When Dr. Shepherd was asked whether the child probably could have been saved, he replied, as already stated, “if the diagnosis was properly made and certain procedures were followed, I would think that the child could be saved.” p.'613. On cross-examination, Dr. Shepherd stated that these procedures should be done “early and expeditiously.” p. 614. He conceded that some of them would not have been useful. The most conservative treatment is the administration of bicarbonates so as to accelerate the rate of discharge of the salicylate. However, this is not very effective and, in his opinion, offered no more than a “possibility” of survival, p. 615. Peritoneal dialysis is a second option but in 1963 this was still an ineffective measure because it had not yet been combined with the administration of human albumin. (Ageloff, p. 511; Done, p. 571; Shepherd, p. 616). Under the evidence, the only procedures which might offer significant probability of survival in such a case as this were exchange transfusions and hemodialysis (artificial kidney).

(3)

The record reflects substantial disagreement among the experts as to the comparative efficacy of exchange transfusions and hemodialysis. For example, Dr. Shepherd could not say which technique is preferred if both are available, p. 617. On the other hand, Dr. Ageloff believed hemodialysis is the most efficient way to remove salicylate from the blood (p. 510) and Dr. Done stated that an “exchange transfusion is so inefficient by comparison with hemodialysis that anyone who had access to hemodi-alysis would, in my view, would [sic] be foolish to resort to exchange transfusions because it would simply delay the more effective procedure.” p. 569. This dichotomy in expert opinion is complicated by the fact that transportation to an artificial kidney and the initiating of hemodialysis would have involved several hours delay. As a result, some experts would perform an exchange transfusion in preference to or before moving a patient to an artificial kidney (Dr. Shepherd, pp. 617-618) while others feel the artificial kidney is so much more effective that no time should be wasted with transfusions. (Dr. Ageloff, p. 510; Dr. Done, p. 569).

On the basis of the expert testimony presented in this case, I find that hemo-dialysis is substantially more effective than an exchange transfusion and, therefore, more likely to have saved Joann’s life had it been available in Roswell, New Mexico.

(4)

Since 1960 Dr. Done has studied and analyzed over 500 additional eases of aspirin poisoning in children, pp. 3-9, Tr. 1/7/72. Based on his researches, he prepared charts of salicylate levels as a function of time from ingestion. Although patients reach their maximum concentration of salicylate at different times he found that the concentration thereafter drops in a manner which depends on a constant. His studies and graphs show extrapolation from a blood salicylate level, S, at a known time after ingestion, t, to obtain a value, S0, where log So = log S + 0.015t. Plaintiff’s Exhibit 1, Tr. 1/7/72. The S0 factor permits comparison of cases on the same basis at the same point in time, namely at t = 0. This would not be possible if the maximum salicylate concentration were used because even if such, maximum could be measured, similar máxi-mums reached at different times represent different severities of aspirin poisoning. See p. 549. By calculating the S„ value for a particular patient one can make a fairly accurate determination of the chances of survival based upon how many other patients survived with that or a higher S0 value.

(5)

Because this technique compiles experience, one would expect the conclusion reached with it to be fairly consistent with what other expert witnesses concluded on the basis of their experience. That appears to be the case here. But, as several of the witnesses made apparent by their desire to rely on Dr. Done’s article, this technique has the advantage of providing a much less subjective estimate of the chances of surviving with whatever treatment is available than would an opinion based on random experience. Using this research and the chart, Dr. Done concluded that the medical probability was that Joann could not have survived even if the aspirin poisoning had been diagnosed by Dr. Finley. 3 — p. 10. This would be the case regardless of whether the blood salicylate level was measured 18% or 22 hours after ingestion, pp. 529 and 3 — p. 31. It would be the case even if the best possible treatment had been sought immediately. 3 — pp. 36, 37, 43, 49, Tr. 1/7/72.

(6)

The time that elapses between ingestion and measurement of the blood sali-cylate level is critical as it determines the severity of the poisoning. The blood level was measured when Dr. Ageloff saw the child between noon and 1:00 p. m. on September 5, 1963. pp. 427 and 462. The testimony of the parents indicates that Sergeant Rewis discovered aspirin on the floor at some time between 3:00 p. m. (p. 37) and 3:30 p. m. (p. 234) on the preceding day. Mrs. Rewis testified that the house was in order shortly after 2:30 p. m. p. 37. If one assumes that she cheeked the kitchen cabinet where the aspirin was kept or that she was sufficiently alert to observe aspirin on the floor, then the blood test must have been conducted between 21 and 22 hours after ingestion.

(7)

On the basis of the evidence in the record and reviewed above, I find that at the time Dr. Finley first examined Joann Rewis, it could not be said to a reasonable degree of medical certainty that she could be saved even by the best possible combination of treatment. In making this finding, I emphasize that while there is some chance of survival in almost every situation the probability of survival under the circumstances of this case was much less than the probability that the child would die.

(8)

Although it may not initially appear so, this finding is consistent with the relatively mild symptoms exhibited when Dr. Finley examined Joann. As several of the expert witnesses explained, aspirin does not destroy the body directly. Instead, it creates a chemical imbalance which makes it difficult to absorb sufficient oxygen. As a result, the maximum concentration of aspirin in the blood is reached long before the maximum body reaction. The symptoms develop more slowly and, therefore, do not fully reflect the severity of the poisoning until some time after the poison is absorbed, p. 525. Joann’s condition at 10:00 p. m. on September 4th appeared relatively mild because there had not yet been time for the complete symptomatology to develop though she had already absorbed so much poison that it was improbable she could survive.

CONCLUSIONS OF LAW

(D

The controlling substantive law is that of New Mexico where the malpractice occurred. 28 U.S.C. § 2674. New Mexico follows the general rule that the plaintiff must establish that the departure from recognized standards of medical practice was the proximate cause of the injuries. Schrib v. Seidenberg, 80 N.M. 573, 458 P.2d 825 (1969). This burden was formulated by the Court of Appeals for the Fifth Circuit as a requirement that the plaintiff prove to a reasonable degree of medical certainty that this child’s life could have been saved if Dr. Finley had correctly diagnosed her condition on September 4, 1963. Rewis v. United States, 369 F.2d 595, 599 (5th Cir., 1966). To show that the patient could be saved, the plaintiff need not exclude every possible hypothesis that the child would have died but need only establish by a fair preponderance of the evidence the reasonable medical probability that it would not have died. Rewis, 369 F.2d 603.

The Supreme Court of New Mexico has held that in malpractice cases it is not sufficient to show that the negligence charged might reasonably have caused the injury, “if the circumstances shown indicate an equal probability that it was due to some other cause.” See Buchanan v. Downing, 74 N.M. 423, 394 P.2d 269 (1964). To similar effect is the rule which is applied in New Mexico (it is the general rule) that where there are two possible causes, for only one of which a defendant is responsible, the plaintiff must show that the defendant’s act or omission is the more probable. The application of the rule does not place upon the person injured the burden of excluding every possible cause of the accident for which the defendant would not be liable. The burden rests upon the plaintiff “to introduce evidence to remove the cause from the realm of speculation and to give it a solid foundation upon facts.” Sanders v. Atchison, Topeka & Santa Fe Railway Company, 65 N.M. 286, 336 P.2d 324 (1959).

Plaintiffs have not carried the burden imposed on them. This Court finds that six hours after ingestion it is more probable that Joann would have died than that she could have been saved. I have concluded that failure to diagnose her condition on September 4, 1963, was not the proximate cause of her death. Therefore, there can be no recovery against the United States for the acts or omissions of Dr. Finley in diagnosing the symptoms. The cause of Joann’s death was not faulty diagnosis or delay in proper treatment. It was the lethal dose of aspirin the child had consumed.

Judgment is entered accordingly.

This May 22, 1973.

/s/ Alexander A. Lawrence

CHIEF JUDGE, UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF GEORGIA

      . Tliis ultimate finding is based on a correct formulation of tbe standard of causation, as discussed above. We construe the finding as meaning that tbe court finds that, bad proper diagnosis and treatment been started six hours after ingestion, it is more probable that JoAnn would have died than that slie could have been saved. That is clearly the import of the court’s other findings and conclusions.

      . In point of fact the graph presented by Dr. Done assumed that the blood sample had been taken between lKen1i/-1wo and twenly-lliree hours after ingestion. As we read the record, we conclude that the entire case was tried on the assumption that .ToAnn ate the aspirin at approximately 3:30 in the afternoon. It is clear from the government’s witnesses that the blood was taken from JoAnn before she was admitted to the hospital, shown at one time to be II :50 and at another to be 12:00. Moreover, the hypothetical question put to Dr. Done by government counsel stated the child’s blood salicy-late level “was subsequently determined to be 87.5 miligrams percent at about nineteen to twenty hours after ingestion.” By using the figure from twenty-two to twenty-three hours, rather than the correct figure of nineteen to twenty hours the grapli showed that the peak level of salicylate in JoAnn’s blood was 200 miligrams percent. The graph thus seriously misrepresented the most important fact which formed the basis of all the experts’ opinions. The mistake is< understandable, though none the less harmful to the appellants. The author of this chart may have taken the time the laboratory report was given rather than the time when the blood was taken from the child.

      . On the chart introduced in evidence the line ICO miligrams percent, was marked “Lethal”. Such an expression of opinion on the chart is, of course, improper. Incidentally, in his 1960 article, later referred to, Dr. Done called this line “Severe”.

      . The importance of this will be seen when it is understood that the graph represented studies which undertook to show the peak level because the rate of regression or dispersal of the salicylate from the blood was at a known rate. In other words the salicy-late level would descend at a constant rate from the peak, so that if a figure of 87.5 miligrams percent were shown at twenty-two to twenty-three hours after ingestion it would of course indicate a much higher peak than if it were shown at nineteen and a half hours after ingestion.

      . As pointed out in footnote 2, supra, this was incorrect by some two and a half hours.

      . Reference to this chart shows how dramat- ■ ic a difference the use of the longer time interval makes in the picture that purports to portray not only .ToAnn’s peak level, but also her position relative to others whose eases were superimposed on the chart. The prej-1 udicial effect of this was heightened bv the printing of the word “Lethal” at the 160 miligrams percent line and the fact that the 200 line (clotted line in the Appendix) and the “x” identifying JoAnn Rewis were drawn •in red ink, whereas the rest of the chart was black. .

      . It is to be particularly noted that the Rew-is child was shown on the chart to be at the 200 miligram line, because the 87.5 mili-grams percent projection was drawn at between twenty-two and twenty-three hours following ingestion, a figure which we have shown to be wrong.

      . “Q. This graph is only a diagnostic aid, is it not?
      A. (Dr. Done) Tes, it is pointed out in the paper.”

      . “Q. However, in this particular case that we have just computed, you can’t say, even from your research, that the salicy-i late level, the actual peak level, was even as high as 160 can you?
      A. No.”

      . It is quite significant that the trial court placed sufficient weight on this statement to quote it in the court’s opinion.

      . Rewis v. United States, 5 Cir. 1971, 445 F.2d 1303. The first appeal is reported at 369 F.2d 595 (5 Cir. 1966).

      . The district judge’s Findings of Fact and Conclusions of Law are reproduced as Appendix A to this dissenting opinion.

      . Eleven years after the child’s death in September, 1963, and following three trials in the district court and appeals to this court.

      . The Court said (445 F.2d 1306) : “In view of the above, we reverse the district court’s holding that Dr. Finley was not negligent in examining Joann Kewis and that there was . no malpractice involved in his examination, diagnosis or making of additional tests. Because the district court found no negligence, there is absent any finding on the issue of causation and other relevant issues. The case is remanded to the court below for further findings upon all relevant issues raised by the pleadings and the evidence. Since the case was tried to the court without a jury, sueli findings may be made upon the record of evidence now before the court, or the district court in its discretion may reopen the case for the development of further evidence.”

      . Counsel for the United States had earlier requested that decision in the case be delayed until a transcript of the January 7, 1972, hearing was available. This was filed on July 13tli last.


source: Caselaw Access Project

author: WILLIAM E. MILLER, Circuit Judge.

license: Public Domain

text:
    In the Matter of KALAMAZOO STEEL PROCESS, INC., Bankrupt. H. G. BURNETT, Trustee, Petitioner-Appellant, v. H. O. U. CORPORATION OF KALAMAZOO, MICHIGAN, Respondent-Appellee.
    No. 74-1250.
    United States Court of Appeals, Sixth Circuit.
    Argued June 6, 1974.
    Decided Oct. 9, 1974.

      David Davidoff, Stanley, Davidoff, Long & Gray, Kalamazoo, Mich., for petitioner-appellant.
    William A. Dornbos, Kalamazoo, Mich., for respondent-appellee; Charles E. Ritter, Stapelton & Adams, Kalamazoo, Mich., on brief.
    Before CELEBREZZE and MILLER, Circuit Judges, and GRAY, District Judge.

       The Honorable Frank Gray, Jr., Chief Judge for the Middle District of Tennessee, sitting by designation.

   WILLIAM E. MILLER, Circuit Judge.

On November 15, 1967 Kalamazoo Steel Process, Inc., a Michigan Corporation, sold certain equipment to Roman Industrial Corporation, also a Michigan Corporation, but retained in the equipment a security interest pursuant to a security agreement executed the same day. Each party knew that the other intended to change its name in the near future. The security agreement reflected this knowledge as follows: “ . it is anticipated that the Debtor will change its name to that of the Secured Party and it is further anticipated that the Secured Party will change its name to H.C.H. Corp.” On the following day a financing statement was filed with the Michigan Secretary of State. The statement gave the debtor as Roman Industrial Corporation and the secured party as Kalamazoo Steel Process.

As envisaged by the security agreement, the parties, by amendments to their respective charters, changed their names: the secured party became H.O. U. Corporation on May 10, 1968. In November 1, 1968 the debtor, Roman Industrial, became Kalamazoo Steel Process, Inc. On November 5, 1971 H.O.U. Corporation instituted proceedings to foreclose its security interest, taking possession of the collateral on November 15. There is no dispute that as of November 5, H.O.U. Corporation knew that its debtor was insolvent. Subsequently, on December 17, 1971 Kalamazoo Steel Process filed a voluntary petition in bankruptcy.

The trustee in bankruptcy contends that in order for H.O.U. Corporation to have maintained a perfected security interest in the collateral, it had to file a new financing statement or amendment at the time of the name change indicating the new name of the debtor as Kalamazoo Steel Process, Inc. This duty is said to arise because the secured party had knowledge at the time the security agreement was executed of the anticipated name change and also had notice when the change actually occurred. If it were otherwise, the trustee asserts, there would be created a “secret lien”— one which a would-be creditor or purchaser could not locate by a diligent search of the financing statements on file in Michigan. If the security interest were unperfeeted as of the date of the filing in bankruptcy, the right of H. O.U. Corporation to the collateral would be subordinate to that of the trustee in bankruptcy. Bankruptcy Act § 70c, 11 U.S.C. § 110c.

The bankruptcy court agreed with the trustee, holding that at the time of bankruptcy, the security interest was unperfected because H.O.U. Corporation had failed to meet the good faith filing requirements of the Uniform Commercial Code adopted in Michigan. On review, the district court reversed, finding that the Code did not expressly provide that a secured party must refile when its debtor changed its name. To interpret the Code to require such a refiling would, the district court held, amount to “judicial revision” of the statute. The trustee perfected his appeal to this Court.

The drafters of the Uniform Commercial Code adopted a system of “notice filing.” M.C.L.A. § 440.9402, Official UCC Comment -2. The filing provisions do not require a complete description of the security agreement but rather only require facts sufficient to put concerned parties on notice to inquire further. The purpose of such filing is to give notice to potential future creditors of the debtor or to purchasers of the collateral.

If the filing system is to be effective in placing interested parties on inquiry it is of paramount importance that the name of the debtor is stated in such a way as not to be misleading. The Code provisions support this proposition. The section prescribing the formal requisites for financing statements excuses minor errors only when they “are not seriously misleading.” M.C.L. A. § 440.9402(5).

The potential for misleading creditors or purchasers is peculiarly serious where there is an improper listing of the debt- or’s name. This is true because it is under the name of the debtor that financing statements are directed by the Code to be indexed. M.C.L.A. § 440.9403(4). It is significant that while provision is made that a filing in the proper place “continues effective even though the debtor’s residence or place of business or the location of the collateral or its use, whichever controlled the original filing, is thereafter changed,” no similar result is prescribed in the case of a change in the debtor’s name. M.C.L.A. § 440.-9401(3).

In the present case, once the debtor changed its name from Roman Industrial Corporation to Kalamazoo Steel Process, a diligent search of the index of financing statements in the office of the Secretary of State would not have disclosed the prior lien. We are persuaded that H.O.U. lost its perfected security interest in the collateral of the debtor when its name was changed to Kalamazoo Steel Process. When a secured party has knowledge at the time the security agreement is executed that the debtor intends to change its name, and the new name is known to him, the secured party must act in good faith to insure that the filing under the Code not only discloses the current and correct name of the debtor but also reflects the pending name change of which the parties are aware.

The Code provides that “every contract or duty within this act imposes an obligation of good faith in its performance or enforcement.” M.C.L.A. § 440.1203. Good faith is in turn defined as “honesty in fact in the conduct or transaction concerned.” M.C-.L.A. § 440.1201(19). It has been recognized by commentators that “honesty in fact” may place affirmative obligations on the secured party; “a realization that another is unaware of something or does not understand it may be considered as not conforming to the good faith standard of the Code.” As pointed out by the Referee in Bankruptcy, “[a] secured party cannot claim that it is being completely honest when it files a financing statement knowing that it will be indexed under a name that will be in use only so long as it takes two corporations to take the legal steps required to change their names. This makes a farce out of notice filing.”

H.O.U. Corporation has principally relied upon two bankruptcy court cases both of which are factually distinguishable from the present case. In In Re The Grape Arbor, Inc., 6 UCC Rep.Svc. 632 (D.C., E.D.Pa., 1969), the secured party was not aware of the name change until after the filing of the bankruptcy petition. Admittedly, a secured party cannot be required to give notice of a fact of which he has no knowledge. In In Re Gac, (Bankruptcy No. NK 1-72 B 9; D.C., W.D.Mich., 1972), a prior decision by the same bankruptcy judge who considered the present case below, the bankruptcy court held that the secured party had no duty to refile when it learned after filing the financing statement that the debtor had changed her name following a divorce. In contrast, in the present case H.O.U. Corporation had knowledge of the anticipated change at the time of the execution of the security agreement. We do not have a ease now before us requiring a determination of the responsibilities of a secured party where he learns of a name change at a later time.

The district judge emphasized the problems involved with a secured party’s refiling after a name change. As we view the matter with respect to the present facts, there would be no unnecessary burden placed .on the secured party in this case, in light of its advance knowledge of the change, in requiring that it file in such way as to avoid the “secret lien” that results from filing only under the original name of the debtor. The secured party can require, as a condition to extending credit on the proposed collateral, that the debtor obligate itself to sign upon the occurrence of the name change an amended statement reflecting its new name. M.C.L.A. § 440.9402(4) defines “financing statement” as “the original financing statement and any amendments.” Such amended statement, if filed promptly by the secured creditor would, at least in most instances, protect him against the possibility of intervening liens, arising from the bankruptcy of the debtor or otherwise.

As an even simpler method of avoiding any confusion, the original financing statement could be drafted to indicate the contemplated change with the result that it could be indexed under both names. Such a listing of the intended change is clearly permissible since the Code expressly provides for the use of the security agreement itself (which in this case expressed the intended change) as a financing statement. M.C.L.A. § 440.9402(1). Furthermore, the directive in M.C.L.A. § 440.9403(4) for indexing certainly permits the implication that dual indexing can be required in such circumstances.

It is true that it would be possible for a potential creditor to search the records kept under the Michigan General Corporations Act, M.C.L.A. § 450.1 et seq., to ascertain whether the corporation to which he was considering lending credit had ever been known by another name. Nevertheless, we feel that, at least in the case of a secured party with advance knowledge, such a burden on a potential creditor or purchaser would frustrate the intention of the drafters of the Code in creating a central filing location to which potential creditors and purchasers can look to determine whether any prior lien exists against the debt- or’s collateral.

Neither does the determination that a proper filing must include a notation of any known and intended change of name of the debtor involve impermissible judicial legislation. The drafters of the Uniform Commercial Code clearly foresaw that no statute, no matter how well written, could possibly articulate in express language all of the rights and duties of the parties that could arise from unforeseeable circumstances. Judicial interpretation would be required to accomplish the broad policies and objectives of the statute as these circumstances arose. Consequently, the drafters incorporated in the Code itself the unmistakable directive that the statute should “be liberally construed and applied to promote its underlying purposes and policies.” M.C.L.A. § 440.1102. This mandate is made even more specific in the Official U.C.C. Comment to this section.

This Act is drawn to provide flexibility so that, since it is intended to be a semi-permanent piece of legislation, it will provide its own machinery for expansion of commercial practices. It is intended to make it possible for the law embodied in this Act to be developed by the courts in the light of unforeseen and new circumstances and practices. However, the proper construction of the Act requires that its interpretation and application be limited to its reason.

Courts have been careful to keep broad acts from being hampered in their effects by later acts of limited scope. Pacific Wool Growers v. Draper & Co., 158 Or. 1, 73 P.2d 1391 (1937), and compare Section 1-104. They have recognized the policies embodied in an act as applicable in reason to subject-matter which was not expressly included in the language of the Act, Commercial Nat. Bank of New Orleans v. Canal-Louisiana Bank & Trust Co., 239 U.S. 520, 36 S.Ct. 194, 60 L.Ed. 417 (1916) (bona fide purchase policy of Uniform Warehouse Receipts Act extended to case not covered but of equivalent nature). They have done the same where reason and policy so required, even where the subject-matter had been intentionally excluded from the act in general. Agar v. Orda, 264 N.Y. 248, 190 N.E. 479 (1934) (Uniform Sales Act change in seller’s remedies applied to contract for sale of choses in action even though the general coverage of that Act was intentionally limited to goods “other than things in action.”) They have implemented a statutory policy with liberal and useful remedies not provided in the statutory text. They have disregarded a statutory limitation of remedy where the reason of the limitation did not apply. Fiter-man v. J. N. Johnson & Co., 156 Minn. 201, 194 N.W. 399 (1923) (requirement of return of the goods as a condition to rescission for breach of warranty ; also, partial rescission allowed). Nothing in this Act stands in the way of the continuance of such action by the courts.

The Act should be construed in accordance with its underlying purposes and policies. The text of each section should be read in the light of the purpose and policy of the rule or principle in question, as also of the Act as a whole, and the application of the language should be construed narrowly or broadly, as the case may be, in conformity with the purposes and policies involved.

Our decision does not breach the barricade between judicial interpretation and judicial legislation. We hold simply that the Code may be fairly construed to mean that a secured creditor, having knowledge at the time of the exe-eution of the security agreement, that the debtor contemplates at a future time changing its name to a particular new name, and nevertheless proceeds to extend credit knowing that the original filing of a financing statement will not reflect the change and will therefore mislead and deceive potential creditors and purchasers, forfeits his protected interest when the change of name occurs unless he perfects the filing under the Code by one of the methods herein indicated. By pursuing such course, the secured creditor protects his own interest in the collateral and at the same time promotes one of the principal purposes of the Code to obviate secret liens.

The judgment of the district court is reversed and the action is remanded for entry of judgment affirming the decision of the bankruptcy court.

      . Although at the time of the filing in bankruptcy H.O.U. Corporation had possession of the collateral, and possession may perfect a security interest, M.C.L.A. § 440.9302, the interest is voidable by the trustee if possession was acquired within four months of bankruptcy, and the creditor knew of the debtor’s insolvency. Bankruptcy Act § 60b, 11 U.S.C. § 96b. Tlie parties in this case agree that the question of whether the security interest was perfected depends on whether the financing statement was at all times properly filed.

      . Donald B. King, “Policy Decisions and Security Agreements under the Uniform Commercial Code,” 9 Wayne Law Review 561 (1963).

      . In Re Kalamazoo Steel Process, Inc. (Bankruptcy No. NK 556-71 B 4, W.D. Mich., 1972) at 6-7.

      . Clearly distinguishable from the case before us is a class of cases in which there has been no change in the debtor’s name, but the debtor’s name has been inaccurately filed or indexed. In a number of such instances the courts have upheld the creditor’s security interest despite the mistake or inaccuracy, upon the theory that the name actually given is sufficiently similar to the correct name of the debtor to put the subsequent creditor or purchaser on notice and to impose the duty upon him to make further inquiry. This line of cases is well illustrated by In Re Excel Stores, Inc., 341 F.2d 901 (2nd Cir. 1905), in which the debtor’s name was inaccurately listed as “Excel Department Stores” rather than under the true name “Excel Stores, Inc.” The perfection of the security interest was upheld despite the mistake because the erroneous name was sufficiently suggestive of the true name that a third party would be put on notice of a possible mistake and would be required to pursue the matter by making further inquiry. For other cases falling within the same category, see In Re Platt, 257 F.Supp. 478, 482 (E.D.Pa.1966); Stafford v. Admiral Credit Corp., 280 F.Supp. 818, 822 (M.D.N.C.1968); In Re Automated Bookbindery Services, Inc., 336 F.Supp. 1128, 1131 (D.C.Md.1972) (rev’d on other grounds 471 F.2d 546). In sharp contrast to this line of cases, is the present case in which the new name of the debtor, Kalamazoo Steel Process, Inc., was simply not filed or indexed in any form and there was no tiling to place a searcher for any code filings on notice to make further inquiry. The filing and indexing iiere were in the office of the Secretary of State in the old name of Roman Industrial Corporation, of which a person examining tlie filings under the Code would be unaware. In some instances, illustrated by In Re Colorado Mercantile Co., 299 F.Supp. 55 (D.Colo.1969), and In Re Wilco Forest Machinery, Inc., 491 F.2d 1041 (5th Cir. 1974) the security interests were upheld although the name of the secured creditor was incorrectly stated. Such cases are inapposite in our situation for the obvious reason that they involve the name of the secured party and not the name of the debtor — the indexing under the Code being accomplished in the latter’s name and not in the name of the secured party. M.C.L.A. 440.9403(4).
      It is clear, from these cases and the purpose behind the Code’s “notice filing” system that any obligation which a subsequent creditor may have to expand his investigation beyond the Code’s filing system arises only when lie is alerted, by a filed financing statement or in some other manner is put on notice that further inquiry is needed. In this case the failure (o provide for the expected name change rendered the filing totally inadequate to alert a subsequent creditor or purchaser of such a need for continued investigation.


author: LIVELY, Circuit Judge.

text:
    AQUIONICS ACCEPTANCE CORPORATION, Plaintiff-Appellant, v. Richard KOLLAR et al., Defendants-Appellees.
    No. 74-1236.
    United States Court of Appeals, Sixth Circuit.
    Argued June 11, 1974.
    Decided Oct. 9, 1974.

      James R. Brandon, Canton, Ohio, for plaintiff-appellant; Jeffery E. Zink, Amerman, Burt & Jones, Canton, Ohio, on brief.
    Owen C. Neff, Cleveland, Ohio, for defendants-appellees; Gerald E. Johnson, James P. Oliver, Johnson & Umstead, Cleveland, Ohio, on brief.
    Before PECK and LIVELY, Circuit Judges; and CECIL, Senior Circuit Judge.
   LIVELY, Circuit Judge.

Two questions are presented in this appeal from a jury verdict in favor of the defendants. The plaintiff sued for damages suffered by it in the purchase of stock of the defendant Statler Engine Corporation in reliance upon allegedly false and misleading statements made by various defendants. The corporate plaintiff caused the stock in Statler to be issued in its name as an investment medium for its shareholders. Both Aquionics and Statler are Ohio corporations and the negotiations which led up to the purchase of Statler stock by Aquionics took place within that state. In addition to a number of face-to-face meetings there were intrastate telephone calls between officers and directors of the two corporations. Several months after plaintiff purchased and paid for the stock, Statler caused a stock certificate to be sent through United States mails to Florida where its secretary was then living for his signature. This certificate was returned by mail from Florida to Ohio and delivered to plaintiff.

This action was instituted pursuant to Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5. Section 10(b) (15 U.S.C. § 78j (b)) provides as follows:

§ 78j. Manipulative and deceptive devices
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange—
X X X -X X- X
(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

Rule 10b-5 (17 C.F.R. § 240.10b-5) provides that—

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange,

(1) To employ any device, scheme, or artifice to defraud;
(2) To mak§ any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(3) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security.

The district courts of the United States have exclusive jurisdiction of all actions brought to enforce liabilities and duties created by the 1934 Act. 15 U.S.C. § 78aa.

The factual basis of the plaintiff’s claim is that the individual defendants represented to various officers and directors of the plaintiff that Statler Engine Corporation had developed a rotary engine that was superior to the Wankel engine. It was alleged that the defendants represented that a 100-horsepower version of their engine was working and that they had orders from at least one public utility company and interest from another. It was further claimed that the defendants represented that Statler held a patent on a “tip seal” which corrected a major weakness of the Wankel engine. At the time of the negotiations, Aquionics had a franchise for a one-man golf cart and was interested in developing a commercial product of this type. It is assei'ted that the defendant Kollar gave assurances to the president of Aquionics that there would be no problem in reducing the horsepower of the Statler rotary engine so that it could be utilized on a golf cart and that this could easily be done within 150 days. A portion of this conversation took place during an airplane trip from Ohio to Florida.

The appellees take the position that it is unnecessary for this court to consider the assignments of error made by appellant because there was no evidence of a violation of Section 10(b) or Rule 10b-5 and that appellees were entitled to a directed verdict. We have examined those portions of the transcript which are included in the record on appeal and conclude that the district court properly submitted this case to the jury. The testimony of Jack Sinn, the president of Aquionics, although contradicted by the testimony of various witnesses for the defendant, is clearly sufficient to require submission to the jury. By a motion to dismiss filed in this court, the appellees urge us to apply the “two issue” rule and affirm the judgment. This rule has no application to a trial in a federal court. Williams v. Powers, 135 F.2d 153, 156 (6th Cir. 1943).

Appellant contends that the district court incorrectly charged the jury on the meaning of interstate commerce as used in the statute and rule. The portion of the charge to which plaintiff objected at the time and upon which it bases its claim of error is as follows:

THE COURT: The term “interstate commerce” means trade, commerce, transportation, or communication among the several states, or between any foreign country and any state, or between any state and any place or ship outside thereof.
Now, the term “interstate commerce” is compared with the term “intrastate commerce,” which means trade, commerce, transportation or communications wholly within the external boundaries of a single one of the United States. In other words, commerce within the limits of one state.
The Court charges you as a matter of law that the mails, the telephone, the interstate highway system, and similar methods of communication and travel are all instrumentalities of both interstate and intrastate commerce.
Thus, the issue which you must determine from the evidence is whether a particular instrumentality is one of interstate commerce, and to make that determination, you must consider the use to which any given instrumentality was put or the manner in which it was used rather than its nature.
To put it another way, you must determine the character of a method of communication or travel as an instrumentality of commerce, and this depends upon its employment or use at the time and not upon remote probabilities.
Thus, if a particular method of communication or transportation was employed to effect a purely local transaction wholly within the external boundaries of Ohio, then the instrumentality was not one of interstate commerce.
Conversely, if it was used as among several states to effect a transaction, then in that event, it was an instrumentality of interstate commerce. After the jury had begun delibera-

tions it requested a clarification of the charge by directing the following question to the court:

We would like a clarification on the interstate portion of the charge to the jury. As we understand the charge, they, Statler Engine Corporation, were accused of fraud in the sale of the stock, violating one law, and then there is a second charge that this alleged fraud took place in part through the mails and so forth, violating a second law. Is that correct ?

In responding to this question the court repeated a portion of its previous charge including the statement that—

The Court charges you as a matter of law that the mails, telephone, the interstate highway system, and similar methods of communication and travel are all instrumentalities of both interstate and intrastate commerce.
* * * * * *■
Thus* if a particular method of communication or transportation was employed to effect a purely local transaction wholly within the external boundaries of Ohio, then the instrumentality was not one of interstate commerce.

We believe the district court committed error in this instruction. The appellees suggest that if this was error, it was harmless. This is obviously not true, since the jury was sufficiently concerned with this matter to request clarification from the court. The district court relied primarily upon the holding in Rosen v. Albern Color Research, Inc., 218 F.Supp. 473 (E.D.Penn.1963). We are persuaded that the United States District Court for the Northern District of Ohio reached the proper conclusion on this issue in Lennerth v. Mendenhall, 234 F.Supp. 59 (1964). In that action for rescission of the sale of securities on account of fraud the court held that the use of a telephone to arrange a meeting, even though the call both originated from and was received in the State of Ohio, met the requirements of Section 10(b). The court held, “It is the character of the instrument used rather than the nature of the call, which determines.” Id. at 63. In Nemitz v. Cunny, 221 F.Supp. 571 (N.D.Ill.1963), it was held that even where no misrepresentations were made over the telephone its use in arranging a meeting which furthered the fraudulent scheme was the indirect use of an instrumentality of interstate commerce within the meaning of Rule 10b-5. The court also held that the 1934 Act applies to a case involving clearly intrastate transactions in the stock of a closed corporation incorporated in the state where the fraudulent transactions took place.

The Eighth Circuit reached the same conclusion in Myzel v. Fields, 386 F.2d 718 (1967), cert. denied, 390 U.S. 951, 88 S.Ct. 1043, 19 L.Ed.2d 1143 (1968), in which Nemitz v. Cunny, supra, was cited. On the other hand, in a brief per curiam opinion containing no statement of facts the Ninth Circuit found that there was “no use of an ‘instrumentality of interstate commerce’ within the contemplation of the statute by reason of two local telephone calls to the companies’ counsel who was also an assistant secretary.” Burke v. Triple A Machine Shop, Inc., 438 F.2d 978, 979 (1971). It is significant that both the statute and the rule speak in terms of an “instrumentality of interstate commerce” (emphasis added) rather than an instrumentality in interstate commerce. It is settled that Congress may regulate intrastate activities which have an appreciable effect on interstate commerce. United States v. Wrightwood Dairy Company, 315 U.S. 110, 62 S.Ct. 523, 86 L.Ed. 726 (1942); United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609 (1941); Lloyd v. United Liquors Corp., 203 F.2d 789, 796-797 (6th Cir. 1953). Thus, our interpretation of congressional- intent in enacting Section 10(b) is not vulnerable to the claim of the appellees that regulation of such activities would exceed the power of Congress under the Commerce Clause.

Although discussion by the parties is directed exclusively to the intrastate telephone calls, we note that the mails were used to obtain a properly signed stock certificate for delivery to the plaintiff. In Ellis v. Carter, 291 F.2d 270 (9th Cir. 1961), it was held that interstate transportation of a stock certificate some months after a sale was for the purpose of consummating the sale and was a sufficient basis for federal court jurisdiction under Section 10(b) and Rule 10b-5. A similar holding is found in Myzel v. Fields, supra, 386 F.2d at 728.

The second ground for reversal urged by appellants relates to the trial court’s rejection of tendered evidence that one Chester Dudek made misrepresentations concerning the Statler rotary engine to another group of persons some months after the Aquionics purchase and that they were similar to misrepresentations allegedly made earlier to the Aquionics principals. The purpose of this evidence was to show that there was a continuing fraud. However, in the proffer it was stated that Dudek was a business broker who was “brought in” by some of the defendants. There was no proffer of any evidence that Dudek was an agent of the defendants with authority to speak for them or bind them in any way. The district court correctly held that such evidence was inadmissible.

The judgment of the district court is reversed, and the case remanded for a new trial.