author: LEWIS, Chief Judge. HOLLOWAY, Circuit Judge

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Harry BATH, Defendant-Appellant.
    No. 73-1921.
    United States Court of Appeals, Tenth Circuit.
    Argued July 11, 1974.
    Decided Oct. 22, 1974.
    Rehearing Denied Nov. 25, 1974.'
    Holloway, Circuit Judge, filed a concurring and dissenting opinion.

      John A. Criswell, Englewood, Colo. (William E. Myrick, Denver, Colo., and Leslie Scherr, Washington, D. C., with him on the brief), for defendant-appellant.
    W. Allen Spurgeon, Asst. U. S. Atty., Denver, Colo. (James L. Treece, U. S. Atty., and Paul D. Cooper, Sp. Asst. U. S. Atty., Denver, Colo., with him on the brief), for plaintiff-appellee.
    Before LEWIS, Chief Judge, and HOLLOWAY and DOYLE, Circuit Judges.
   LEWIS, Chief Judge.

Harry Bath, president of Local 961, International Brotherhood of Teamsters, appeals from the judgment on his jury trial conviction under Title II of .the Labor-Management Reporting and Disclosure Act. Count I of the indictment charged that Bath had knowingly reported payments of union money to hired pickets as “strike benefits” to union members in violation of section 209(b) of the LMRDA, 29 U.S.C. § 439(b); Count II charged that he willfully made false entries in records required to be kept for the purpose of verifying or clarifying the local union’s annual financial reports to the Secretary of Labor in violation of section 209(c), 29 U.S.C. § 439(c). Following conviction, Bath was sentenced to 18 months’ probation for each violation, to run concurrently. We affirm his conviction under section 209(b) and decline to reach the issues raised with respect to his conviction under section 209(c) since reversal on that count would not alter the sentence imposed by the court below; nor are we able to discern the possibility of any adverse consequences to Bath from our refusal to treat his appeal from the second conviction. See Benton v. Maryland, 395 U.S. 784, 89 S.Ct. 2056, 23 L.Ed.2d 707; Barnes v. United States, 412 U.S. 837, 848 n. 16, 93 S.Ct. 2357, 37 L.Ed.2d 380; United States v. Sawyer, 10 Cir., 485 F.2d 195, 198.

In 1970, Local 961 struck the Centennial Turf Club, a racetrack in Denver, Colorado. Local 961 established a picket line at Centennial which was manned during the strike by at least 31 persons none of whom worked at Centennial. Four of the pickets were not members of the Teamsters union; the rest were either other members of Local 961 or members of sister Teamster locals. In order to pay the pickets an hourly wage and expenses, Local 961 sent to the Teamsters International office and subsequently to the Western Conference of Teamsters a list of 80 names for whom the local purported to request “out-of-work benefits,” that is, union money for members affected by a labor dispute. Of the 80 names on the list sent in request of benefits, only about 20 worked at Centennial in 1970; the rest were persons previously employed at the racetrack.

The list did not name the pickets to whom the requested funds were eventually paid. In response to Local 961’s requests for money, which were renewed weekly during the strike, the International and later the Conference sent a series of checks drawn on the union’s strike fund. Each check was accompanied by the union’s “Out-of-Work Benefits Report” form, which listed the 80 names previously submitted by the local and required signature by the listed persons acknowledging their receipt of funds. Bath and other Local 961 personnel forged these signatures on the reports, disbursed a total of $17,730 to the pickets, and then returned the reports to the International and Conference respectively. As the pickets were paid, the local’s officials obtained accurate signed recepits from the actual payees and kept them in the local’s records.

Bath testified that he used this method of channeling union money to his pickets in order to save time. Negotiations with Centennial had continued until immediately before its season opening. To establish quickly an effective picket line, Bath considered it necessary to obtain money by out-of-work benefits applications rather than by the slower process of applying for a grant of union funds to pay pickets. On cross-examination, he conceded that accounting for the $17,730 as payments to hired pickets rather than as benefits payments to members would have increased the local’s .1970 operating losses from approximately $35,000 to approximately $52,000. Whatever Bath’s purposes, however, none of the funds obtained from the International or the Conference was diverted to the personal use of Bath or any other union official.

Section 209(b) of the' LMRDA prohibits . any person from making a false statement or representation of a material fact in any report required under the LMRDA. Section 201(b) of the LMRDA, 29 U.S.C. § 431(b), requires every labor organization through its president and treasurer to file an annual financial report (form LM-2) with the Secretary of Labor. The LM-2 form requires disclosure, inter alia, of receipts and disbursements of union funds; its Schedules 8 through 12 and Schedule 14 require particularization of cash disbursements under the categories “Disbursements to Officers,” “Disbursements to Employees,” “Purchase of Investments and Fixed Assets,” “Benefits,” '.‘Contributions, Gifts and Grants,” and “Other Disbursements.” Labor Department instructions accompanying form LM-2 define “Benefits” as “all disbursements for the direct’or indirect benefit of officers, employees, or members.” The form’s Schedule 11 which requires specification of the union’s benefits disbursements requires a general disclosure of the recipients of benefits. Here Local 961’s accountant entered the word “Members” beside the $17,730 figure. The instructions define “Disbursements to Employees” as “the total salaries . . allowances, and other direct and indirect expenses . . . for all employees.” “Other Disbursements” is defined as disbursements that do not fit under the other more particular categories.

Count I of Bath’s indictment charged that besides falsely reporting $17,730 as “strike benefits” to members under the LM-2 form’s “Benefits” category, Bath knowingly failed to disclose that the money “was a strike expense paid to hired pickets.” In this appeal Bath argues that even if his 1970 LM-2 form improperly listed-the money under “Benefits,” still his conviction cannot stand unless the evidence supports the conclusion that the sum must have been listed under the catch-all “Other Disbursements” category since the term “strike expenses” contained in the indictment does not appear on the LM-2 or in the accompanying instructions.

We believe that this argument entails an overly technical reading of the indictment. The essence of the charge is that Bath knowingly reported the money as having gone to members on strike when it was actually used to pay hired pickets for their time. Reading the indictment, as Bath urges, to require proof that the $17,730 could only have been reported as a strike expense under the LM-2 form’s “Other Disbursements” category therefore ignores the import of Count I. Such a requirement of proof, moreover, would unnecessarily defeat the purpose of the LMRDA to insure that union officers accurately report to union members the details of all' disbursements of union money. In this respect the Senate Report on the bill that became the LMRDA remarked:

Labor organizations are creations of their members; union funds belong to the members and should be expended only in furtherance of their common interest. . • . . The members who are the real owners of the money and property of the organization are entitled to a full accounting of all transactions involving their property.
•X- -X- -X- -X- -X- -X-
[U]nion members armed with adequate information and having the benefit of secret elections . . would rid themselves of untrustworthy or corrupt officers. (S.Rep.No.187, 86th Cong., 1st Sess., 2 U.S.Code Cong, and Admin. News, 1959, at pp. 2324, 2325.)

Certainly the members of Local 961 had an interest in knowing whether members or nonmembers received union money and in knowing the purposes for which such money was paid. We believe this is precisely the interest that Congress intended to protect by enacting the LMRDA and therefore reject any reading of the indictment that unnecessarily prevents vindication of that interest.

Bath next contends that the court erred in failing to instruct the jury that it must determine whether the statements on the LM-2 form were false based upon the Labor Department’s definitions as contained in its instructions to form LM-2. Instead the court instructed the jury to decide whether the disbursements “were falsely reported as strike benefits paid to members.” We believe that the court’s instruction as given substantially conformed to the definition of “strike benefit” that follows from the express definitions contained in the Labor Department’s instructions. Accordingly, we hold that the court below provided the jury with a correct standard by which to test the falsity of the entries on the LM-2 form.

Bath finally contends that as a matter of law he could not have possessed the guilty state of mind required by section 209(b). He reasons as follows. Since the question whether the $17,730 should have been entered as a “benefit” was a matter of dispute among experts, Bath could not have willfully intended to make a false entry. Bath, moreover, was advised by Teamsters officials to rely on the advice of his accountant in the preparation of the LM-2 form; his good faith reliance negated the possibility of his own guilty intent. Bath observes that the local’s 1970 LM-2 report made no attempt to intermingle the $17,730 figure with other entries or otherwise to obscure the nature of the disbursements. He also notes that his local kept accurate written receipts from the paid pickets.

We do not believe these circumstances absolve Bath of the crime charged in Count I. Contrary to the assumption of Bath’s counsel, the state of mind expressly required by section 209(b) is not willfulness but knowledge that the statement made in the LM-2 was false. Although statutory terms designating culpability are sometimes elastic and often used confusingly, it is clear that the government need only have proved that Bath knew that the LM-2 falsely listed as benefits paid to members money actually paid to hired pickets. Bath’s signature on the LM-2 raised the presumption that he knew its contents and the evidence does not as a matter of law destroy that presumption. Nor does Bath’s alleged reliance on the advice of his accountant insulate him from criminal liability. In United States v. Oates, 3 Cir., 467 F.2d 129, cert. denied, 410 U.S. 909, 93 S.Ct. 965, 35 L.Ed.2d 271, the court acknowledged reliance on the advice of an accountant as a defense to a charge under section 209(b), but refused to recognize the defense where the defendant supplied the accountant with false information with which to prepare the report. In the present case the accountant preparing the LM-2 was given access both to the receipts from the pickets to whom funds were paid and also to copies of the falsified Out-of-Work Benefits Reports. Since Bath did not offer evidence to prove that the accountant relied solely on the receipts from the pickets as the basis of the “Benefits” entry in the LM-2, the jury was free to believe that the accountant relied rather upon the falsified Out-of-Work Benefits Reports. Bath is simply foreclosed from asserting his good faith reliance upon his accountant.

Affirmed.

HOLLOWAY, Circuit Judge

(concurring and dissenting):

I agree with the opinion as to the af-firmance of the conviction on count I, but am unable to agree as to count II and would reverse the conviction on that count.

The opinion reasons that we should decline review of count II because no possible adverse consequences can be discerned from refusal to treat the second conviction, the sentences of 18 months’ probation on each count being concurrent. However, as the Special Findings of the District Court made after trial point out, probation is not the only consequence involved here. Under 29 U.S.C.A. § 504 appellant also is barred from serving as an officer (he is President of Local 961 and holds other union offices) director, etc., of a labor organization for 5 years after such conviction, unless the Board of Parole determines that such person’s service would not be contrary to the purposes of the statute. The Supreme Court has pointed specifically to the effect of this bar of § 504 against serving as an official of a labor union in rejecting the contention of mootness where a sentence has already been served. Carafas v. LaVallee, 391 U.S. 234, 237, 88 S.Ct. 1556, 20 L.Ed.2d 554. I feel that similar considerations apply here, calling for review.

In its Special Findings the District Court, after referring to the bar of § 504 on holding office, made several observations favorable to appellant, stating that the penalty is one the Court would not impose if it lay in its discretion, although the Court subscribed heartily to the general purpose o,f the statute.

In these circumstances I feel we cannot say that adverse circumstances may not result for appellant from refusal to review count II. The Board of Parole will have power to determine whether or when appellant is to be relieved from the penalty of being unable for 5 years to serve in such positions as he has held. The District Court’s Special Findings will serve as a factor favorable to him. Whether there are one or two separate convictions will be another factor before the Board. I am not satisfied that the circumstance of two convictions, instead of one, might not affect the Board’s judgment and feel we should review count II.

As to this count, I am persuaded by appellant’s argument that the Government proof did not show a violation of 29 U.S.C.A. § 439(c). Among other things, that portion of § 439 prohibits wilfully making a false entry in any books, records, reports or statements required to be kept by the statute. Section 436 imposes a requirement to maintain records on the matters required to be reported which will provide in sufficient detail the necessary basic information and data from which the documents filed may be verified, explained or clarified, and checked for accuracy and completeness, including “vouchers, worksheets, receipts, and applicable resolutions. . .”

Here the proof as to count II was that there were false entries in the “Out-of-Work Benefits Report” forms sent down to Local 961 by the International and the Conference. The entries made were the signatures (which were forged) by persons acknowledging their receipt of funds. These reports were sent to the International and the Conference, but copies were kept in the Local’s files. The Reports were used by the International and the Conference to plan for disbursements of cash to local union members. As the opinion points out, the Local also obtained accurate signed receipts from the actual payees and kept them in the Local’s records.

To me the statute should not be construed to cover these Reports. They were initiated from the other union offices and served their planning purposes. Section 436 seems to be aimed at those vouchers, worksheets, receipts and the like which are the basic papers initiated and used by the reporting unit — here the Local. The statute’s application has been made to such vouchers, financial statements and cash disbursement journals of the reporting unit. E. g., United States v. Budzanoski, 462 F.2d 443 (3d Cir.), cert. denied, 409 U.S. 949, 93 S.Ct. 271, 34 L.Ed.2d 220; United States v. Haggerty, 419 F.2d 1003 (7th Cir.), cert. denied, 397 U.S. 1064, 90 S.Ct. 1502, 25 L.Ed.2d 686. While the statute might in other circumstances reach reports having connection with two offices and their purposes, here it does not seem to me that the statute applies. As a -criminal statute it must be strictly construed and any ambiguity must be resolved in favor of lenity. United States v. Enmons, 410 U.S. 396, 411, 93 S.Ct. 1007, 35 L.Ed.2d 379. Therefore I would set aside the conviction on count II.

      . Donald Espeland, the Labor Department investigator who audited Local 961’s LM-2 report, testified that 31 persons manned the picket lines in addition to an undetermined number of pickets from Teamsters Local 13. Espeland further testified on cross-examination by Bath’s' counsel that Local 961’s bookkeeper, Mary Butler, had informed him that four of the 31 pickets were not Teamsters and eight were Teamsters. He had no further knowledge of the pickets’ union status.

      . Local 961 officials testified that they did not have access to the names of Centennial’s 1970 employees at the time the local applied for union benefit funds. Business agent Charles Hasslock therefore compiled the list from union dues ledger cards collected from Centennial employees between 1967 and 1969.

      . Even assuming we adopt Bath's reading of the Indictment, the government’s failure to prove that the $17,730 could only have been reported as strike expenses under “Other Disbursements” need not be fatal to Bath’s conviction. “It is not essential that everything in an indictment be proved. It is only necessary to prove so mud) thereof as establishes, prima facie, that there has been a violation of the statute involved.” United States v. Archer, 10 Cir., 455 F.2d 193, 194, cert. denied, 409 U.S. 856, 93 S.Ct. 135, 34 L.Ed.2d 100.

      . Joseph Ballew, assistant director of the Western Conference of Teamsters, defined “strike benefits” as payments to “[m] embers of the local union involved who are employees wherever the dispute has developed into a strike activity.” John P. Linn, professor of law at University of Denver College of Law, testified that disbursements to hired pickets could be categorized as “benefits” to union employees.

      . Among other things the Special Findings state:
      In rhe view of the Court, the evidence presented during the trial of this case disclosed a technical violation of the provisions of 29 U.S.O. § 439. , There was no evidence of personal gain or profit to defendant and there was no evidence that defendant intended personal gain or profit. The evidence disclosed an intent on defendant’s part to benefit the local union and the members of the local union represented by defendant. In substantial part, defendant’s wrongful acts were the result of poor judgment, carelessness or reliance on the advice of others.
      Read in the context with the crimes mentioned in the statute, the statutory penalty here imposed is fairly comparable to the imposition of statutory mandatory minimum sentences sometimes required by Congress under circumstances a court does not believe warrant such mandatory minimum penalties. The harsh penalty here imposed is one required by Congress, and the Court is given no power or discretion to lessen the impact of what will probably mean five years of economic hardship on defendant and his family. The penalty is one the Court would not impose if the penalty lay within the Court’s discretion. The Congressional purpose in enacting this statute is clear, and it is one to which the Court heartily subscribes, but in the Court's opinion, the facts proven as to this defendant do not fit the intended pattern of the declared Congressional purpose, although the conviction does come within the statutory provisions.


source: Caselaw Access Project

author: PICKETT, Circuit Judge.

license: Public Domain

text:
    CATTLE FEEDERS TAX COMMITTEE, an unincorporated association, and Western Heritage Land and Cattle Company, a partnership, Plaintiffs-Appellees, v. Hon. George SHULTZ, Secretary of the Department of the Treasury of the United States of America, et al., DefendantsAppellants.
    No. 73-1896.
    United States Court of Appeals, Tenth Circuit.
    Oct. 4, 1974.
    Rehearing Denied Nov. 11, 1974.

      David H. Rosenberg and Ben L. Krage, of Rosenberg, Kasmir & Willing-ham, Dallas, Tex. (Cyril D. Kasmir, Dallas, Tex., with them on the briefs), for plaintiffs-appellees.
    Richard M. Roberts, Dept, of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwaeks, Crombie J. D. Garrett, and Carleton D. Powell, Tax Div., Dept, of Justice, Washington, D. C., on the briefs), for def endants-appellants.
   PICKETT, Circuit Judge.

The purpose of this action is to enjoin United States Treasury officials from enforcing a departmental ruling and for judgment declaring the ruling to be invalid. The rule affects farmers who file income tax returns on a cash receipts and disbursements basis and deduct as an ordinary business expense the cost of feed to be consumed by livestock in years other than the taxable year. The trial court, following an evidentiary hearing on an application for a temporary injunction, considered the case on its merits, held that the Government could not ultimately prevail, and permanently enjoined the enforcement of the ruling. The decisive question presented is whether the action is barred by the Anti-Injunction Act, 26 U.S.C. § 7421(a). It is the Government’s position that there are no special circumstances in this case which would prevent the application of the statute. We ágree.

As alleged in the complaint, the Tax Committee is an unincorporated association whose members sponsor and form limited partnerships which principally engage in the purchasing, grazing, feeding and marketing of cattle. Western Heritage Land and Cattle Company is a partnership doing business in Oklahoma as the sponsor and general partner of limited partnerships which purchase, graze, feed, and market cattle. Western Heritage and those represented by the Tax Committee solicit investments from the public to be used in the purchase of cattle and feed. Although the investors are limited partners, the management of these public funded cattle-feeding and marketing programs is exclusively in those offering the investments. The feed for the cattle is generally purchased in the late months of the year but is not utilized until a following taxable year. Consequently, during a year in which the purchases are made there is no income and the relationship between the - operating company and the investors is such that those who are on a cash basis of accounting may, in computing their income taxes for that year, deduct as an expense the full amount of their proportional share of the feed costs. The trial court found that the income distortion test provision of Rev. Rui. 73-530 may reasonably be expected to result in the disallowance of income tax deductions for prepaid feed to be used by farmers, resulting in a destruction of the incentive for investment in the cattle-feeding industry, thereby causing irreparable injury to appellees’ businesses by depriving them of investment capital.

Income Tax Regulation § 1.471-6 (a) provides that a farmer “may make his return upon an inventory method instead of the cash receipts and disbursements method. It is optional with the taxpayer which of these methods of accounting is used.” Income Tax Regulation § 1.162-12 provides that the “purchase of feed and other costs connected with raising livestock may be treated as expense deductions insofar as such costs represent actual outlay. . . . ” No contention is made that the appellees are not farmers as the term is used in the regulations. See Hi-Plains Enterprises, Inc. v. C.I.R., 496 F.2d 520 (10th Cir. 1974). It is argued that the Internal Revenue Service is bound by these regulations and cannot require farmers, in computing their income taxes, to use inventories through the guise of the income distortion tést.

The purpose of Section 7421(a) is to give the United States a free hand in assessing and collecting taxes claimed to be due without intervention on the part of the courts, and to limit a determination of disputed sums to a suit for refund. Enochs v. Williams Packing Co., 370 U.S. 1, 82 S.Ct. 1125, 8 L.Ed.2d 292 (1962). The Williams Packing case recognized the broad sweep of the anti-injunction statute and held that an injunction could.be obtained against the assessment of tax only upon a showing that two factors exist: (1) That under no circumstances could the Government ultimately prevail, and (2) a basis for equity jurisdiction exists. In recent decisions the Supreme Court has discussed the purpose of Section 7421(a) as interpreted by Williams Packing, supra, and others, particularly Miller v. Standard Nut Margarine Co., 284 U.S. 498, 52 S.Ct. 260, 76 L.Ed. 422 (1932), and under facts analogous to those of the instant case it held the statute applicable. Alexander v. “Americans United” Inc., 416 U.S. 752, 94 S.Ct. 2053, 40 L.Ed.2d 518 (May 15, 1974); Bob Jones University v. Simon, 416 U.S. 725, 94 S.Ct. 2038, 40 L.Ed.2d 496 (May 15, 1974). In these two cases the complainants claimed they were within the tax exempt status of 26 U.S.C. § 501(c)(3) and the Internal Revenue Service had issued the required letters which established that they were organizations to which tax deductible contributions could be made. The Internal Revenue Service later announced that, for stated reasons, the ruling letters would be revoked and donors would no longer have advance assurance that donations to the organizations would be treated as charitable contributions. In these cases it was held that actions to enjoin the revocation of the letters, although not brought by a taxpayer, were primarily to restrain the assessment and collection of a tax and within the prohibition of Section 7421(a). In Bob Jones, supra, 416 U.S. at 739, 94 S.Ct. at 2047, it is said:

. Moreover, petitioner seeks to restrain the collection of taxes from its donors — to force the Service to continue to provide advance assurance to . those donors that contributions to petitioner will be recognized as tax-deductible, thereby reducing their tax liability. Although in this regard petitioner seeks to lower the taxes of those other than itself, the Act is nonetheless controlling. Thus in any of' its implications, this case falls within the literal scope and the purposes of the Act.

The appellees recognize the impact of the Bob Jones and Americans United decisions, but contend that if the action is one controlled by Section 7421(a), the record discloses that they are irreparably injured by the ruling with no adequate remedy at law and that the Government cannot ultimately prevail; therefore, they are within the Williams Packing exception. We think this contention is answered in the Bob Jones and Americans United cases. The Court, in Bob Jones, supra 416 U.S. at 742, 94 S.Ct. at 2048, said:

Williams Packing indicates that the case was meant to be the capstone to judicial construction of the Act. It spells an end to a cyclical pattern of allegiance to the plain meaning of the Act, followed by periods of uncertainty caused by a judicial departure from that meaning, and followed in turn by the Court’s rediscovery of the Act’s purpose.

The Court continued:

Williams Packing switched the focus of the extraordinary and exceptional circumstances test from a showing of the degree of harm to the plaintiff absent an injunction to the requirement that it be established that the Service’s action is plainly without a legal basis. The Court in essence read Standard Nut not as an instance of irreparable injury but as a case where the Service had no chance of success on the merits. 370 U.S., at 7, 82 S.Ct. at 1129. And the Court explicitly held that the Act may not be evaded “merely because collection would cause an irreparable injury, such as the ruination of the taxpayer’s enterprise.” Id., at 6, 82 S.Ct. at 1129. Yet petitioner’s argument that we should find Williams Packing inapplicable turns, in the last analysis, on its claim that to do otherwise would subject it to great harm. The Court rejected that consideration in Williams Packing itself, and we reject it as a reason for finding that case not controlling. Under the language of the Act, the degree of harm is not a factor, and as a matter of judicial construction, it does not provide a meaningful stopping point between Standard Nut and Williams Packing. Acceptance of petitioner’s irreparable injury argument would simply revive the evisceration of the Act inherent in Standard Nut. (416 U.S. at 745, 94 S.Ct. at 2050)

We are of the opinion that the appellees do not bring themselves with either of the two requirements of the Williams Packing case exception. The question of whether the Government can ultimately prevail must “be determined on the basis of the information available to it at the time of suit. Only if it is then apparent that, under the most liberal view of the law and the facts, the United States cannot establish its claim, may the suit for an injunction be maintained.” 370 U.S., supra, at 7, 82 S.Ct. at 1129. The court’s function in this injunction suit is not to try out the validity of Rev.Rul. 73-530, but to determine if there is any basis upon which the ruling can be upheld. 26 U.S.C. § 461(a) provides:

The amount of any deduction or credit allowed by this subtitle shall be taken for the taxable year which is the proper taxable year under the method of accounting used in computing taxable income.

The provisions of 26 U.S.C. § 471 are:

Whenever in the opinion of the Secretary or his delegate the use of inventories is necessary in order clearly to determine the income of any taxpayer, inventories shall be taken by such taxpayer on such basis as the Secretary or his delegate may prescribe as conforming as nearly as may be to the best accounting practice in the trade or business and as most clearly reflecting the income.

26 U.S.C. § 446(a) provides that taxable income shall be computed under the method which the taxpayer regularly uses in computing his income. The Government argues that this provision is subject to that of Section 446(b), which requires the computation of' taxable income to be made on a basis which clearly reflects income. Sections 446 and 461(a) appear to implicitly allow the Commissioner to adjust a taxpayer’s method of computing taxable income in a manner which will clearly reflect income. Authority for this procedure is found in 26 U.S.C. § 7801 et seq. We can not hold that the action of the Government in promulgating Rev.Rul. 73-530 is plainly without any legal basis or that it cannot ultimately prevail under any circumstances. Nor can we say as a matter of law that the ruling is not an interpretative action authorized by 26 U.S.C. § 7801 et seq.

The appellees are in substantially the same situation as the complainants in Bob Jones and Americans United. In each instance they are not the taxpayer but allege an injury because third parties are adversely affected by I.R.S. rulings. In each case it was alleged that irreparable injuries occurred because the rulings effectually “destroyed their business” with no remedy in the courts. As observed in Bob Jones and Americans United, allowing injunctive relief on irreparable injury alone would render Section 7421(a) meaningless. In Williams Packing the Court stated that if Congress had desired to make injunctive remedy available against the collection of federal taxes not lawfully due, it would have said so explicitly. It is now settled that the degree of harm is not a factor in determining the application of Section 7421(a). Bob Jones, supra; Williams Packing, supra. Furthermore, any investor in appellees’ businesses could litigate the validity of the ruling in a suit for refund or in the Tax Court. It is indicated that at least some of the organizations represented by the Tax Committee and possibly Western Heritage could claim the cost of prepaid feed costs as an expense deduction and would be in a position to challenge the order.

Reversed and remanded with instructions to dismiss the action.

      . The ruling, Rev.Rul. 73-530 published in Internal Revenue Bulletin 1973-49 dated December 3, 1973, provides that before a farmer can deduct the cost of feed to be consumed by his livestock in the following year, three tests must be met: First, the expenditure must be a payment for the purchase rather than a mere deposit; second, the prepayment must be made for a business purpose, and not merely for tax avoidance; third, the deduction of such costs in the tax-, able year of prepayment must not result in a material distortion of income.

      . Section 7421(a) provides that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.”

      . Tins statement had reference to the Standard Nut and like cases. Referring to Standard Nut, the Court said :
      . . . Read literally, the Court’s opinion effectively repealed the Act, since the Act was viewed as requiring nothing more than equity doctrine had demanded before the Act’s passage. . . . (416 U.S. at 744, 94 S.Ct. at 2050)

      . The legislative history of Section 461 states:
      Section 461 adopts the provisions of section 43 of the 1939 Code in rearranged form. The timing of deductions . . . is determined by the taxpayer’s method of accounting. The method must clearly reflect the income of the taxpayer. (3 U.S. Code Cong. & Admin.News (1954) p. 4300)


author: ELY, Circuit Judge:

text:
    UNITED STATES of America for the Use of CELANESE COATINGS COMPANY, Appellee, v. Duane GULLARD, d/b/a United Paint Company (Defendant), and Fireman’s Fund American Insurance Companies (Defendant and Appellant), Defendant-Appellant, v. Richard V. McNAIR, Third-Party Defendant.
    No. 74-1103.
    United States Court of Appeals, Ninth Circuit.
    Oct. 17, 1974.

      Bruce E. Gagnon (argued), Atkinson, Conway, Young, Bell & Gagnon, Anchorage, Alaska, for defendant-appellant.
    Richard F. Lytle (argued), Houston & Lytle, Anchorage, Alaska, for appellee.
    Before BROWNING, ELY and GOODWIN, Circuit Judges.
   OPINION

ELY, Circuit Judge:

Fireman’s Fund American Insurance Companies (hereinafter Fireman’s Fund), a surety, appeals from a summary judgment against it. Its principal, Duane Gullard, also suffered an adverse judgment, but he has not appealed. The action arose under the Miller Act, 40 U. S.C. §§ 270a-270e.

Contracting in 1969 to maintain the fuel storage tanks at Eielson Air Force Base, Alaska, Gullard furnished the Government with a payment bond for the protection of his laborers and material-men as required by 40 U.S.C. § 270a. Fireman’s Fund was the bonding company. Subsequently, Gullard’s subcontractor, Richard V. McNair, purchased paint for the storage tanks from Celanese Coatings Company (hereinafter Cel-anese), the appellee. When the paint was delivered, however, McNair claimed that it was defective and refused to pay Celanese the purchase price of $19,638.-25.

Celanese filed this 40 U.S.C. § 270b action against Gullard and Fireman’s Fund on July 7, 1971, and the defendants thereafter filed a third party complaint against McNair, alleging that he had been paid the full amount due under his subcontract, an amount that was to cover the cost of paint for the storage tanks. Celanese did not allege that it had delivered any of the paint to Mc-Nair within twelve months before Cel-anese filed its action, as required by 40 U.S.C. § 270b. The defendants did not plead the limitation period in defense. Finding no genuine factual issues in dispute, the District Court entered a preliminary summary judgment in favor of Celanese.

Shortly thereafter, Fireman’s Fund filed a motion to reconsider and vacate the preliminary judgment and a motion for entry of summary judgment in its favor. Its motions were supported with an affidavit from McNair stating that the last delivery of the Celanese paint had arrived at the Alaska job site in May, 1970, more than one year before Celanese filed its action. Celanese did not controvert or in any other way respond to McNair’s affidavit; therefore, there was no factual dispute before the District Court as to when the last of the paint was supplied. See Fed.R.Civ.P. 56(e). Nevertheless, the Court denied the motions filed by Fireman’s Fund on the grounds that the defendants had waived the one year statute of limitations by failing to plead it as an affirmative defense before the Court entered preliminary judgment, and that the preliminary judgment was res judicata as to issues concerning the Court’s jurisdiction. Ultimately, after the parties stipulated to entry of judgment on the third party complaint, the Court entered final judgment for Celanese against Gul-lard and Fireman’s Fund, and for Gul-lard and Fireman's Fund against the third party defendant McNair. This appeal followed.

Congress enacted the Miller Act to protect persons supplying labor and materials for public works against failures of prime contractors to pay, but the Act’s protections are conditional. See United States ex rel. Bailey v. Freethy, 469 F.2d 1348 (9th Cir. 1972). The Act specifically provides that no suit may be commenced under its provisions after “expiration of one year after the day on which the last of the labor was performed or material was supplied . . . .” 40 U.S.C. § 270b(b). If a use plaintiff fails to allege in his pleadings or show in his proof that his action is timely, the defendant should raise the issue immediately so as to speed disposition of the case; however, if the defendant fails to do so, he does not waive the limitation’s protection. As an integral part of the statute creating the remedy, the one year limitation in 40 U.S.C. § 270b is jurisdictional. Compliance with the limitation period is a condition precedent to maintaining an action under that section. See, e.g., United States ex rel. Wrecking Corp. of America v. Edward R. Marden Corp., 406 F.2d 525 (1st Cir. 1969); United States ex rel. Dover Elevator Co. v. General Ins. Co. of America, 339 F.2d 194 (6th Cir. 1964); United States ex rel. Soda v. Montgomery, 253 F.2d 509 (3d Cir. 1958).

The entry of preliminary judgment did not bar consideration or application of the 40 U.S.C. § 270b (b) time limitation, a jurisdictional requirement that may be raised at any time, even for the first time on appeal. See United States ex rel. Soda v. Montgomery, 253 F.2d 509 (3d Cir. 1958); Fed.R.Civ.P. 12(h)(3).

Celanese also argues that Fireman’s Fund, as a mere surety, has no standing to maintain this appeal since Gullard, the principal, has not appealed. We have concluded that this contention has no merit whatsoever. Stovall v. Banks, 77 U.S. (10 Wall.) 583, 19 L.Ed. 1036 (1870), upon which Celanese relies, involved the effect in a collateral action against a surety of a judgment rendered against his principal and is, consequently, inapposite to such a direct attack on the judgment against -an appellant as we have here. Fireman’s Fund was a party in the District Court, and it was aggrieved by the Court’s judgment. There is no bar to its appeal. See generally 5B C.J.S. Appeal and Error § 1921 at 417 (1958).

Having failed to allege or establish that it supplied materials within the prescribed one year period before it filed its suit, Celanese cannot succeed against the Miller Act surety. Accordingly, the District Court’s judgment for Celanese against Fireman’s Fund is reversed; and upon remand, the complaint against Fireman’s Fund will be dismissed. Since the District Court’s judgment for Fireman’s Fund against the third party defendant McNair is predicated on the liability of Fireman’s Fund to Celanese,- it is also reversed; and upon remand, the surety’s third party complaint will also be dismissed.

Reversed and remanded, with instructions.

      . We further pursued the (late of delivery question on appeal. During oral argument, inquiry was made of counsel for Celanese whether, in the event of remand, it could be proved that Celanese supplied materials within the twelve months period prior to the date when the suit was instituted. He declined to state that any such proof could be adduced.

      . McNair’s stipulation to entry of judgment against him in favor of Fireman’s Fund on the third-party complaint obviously' should be read as conditional upon the surety’s continued liability to Celanese under the District Court’s earlier preliminary judgment, which judgment, in its final form, we hereinafter reverse.

      . The District Court also rendered its judg.ment for Celanese against Gullard pursuant to a finding of jurisdiction under 40 U.S.C. § 270b. That judgment, too, may be void because of Celanese’s failure to show that it brought its suit within the statute’s one year limitations period. But Gullard has not appealed, and the validity ' of the judgment against him is not now before us.

      . The District Court’s judgment against McNair in favor of Fireman’s Fund for $2,000 in attorney’s fees was founded upon the stipulation of McNair, who has not appealed ; hence, that judgment is not affected by the disposition of this appeal.


author: FEINBERG, Circuit Judge: MOORE, Circuit Judge

text:
    Daniel AVENA, Plaintiff-Appellant, v. CLAUSS & CO., Defendant and Third-Party Plaintiff-Appellee, v. MAUDE JAMES, INC., Third-Party Defendant-Appellee.
    Nos. 1079, 1226, Dockets 73-2787, 74-1016.
    United States Court of Appeals, Second Circuit.
    Argued June 24, 1974.
    Decided Oct. 1, 1974.

      Moore, Circuit Judge, dissented and filed opinion.
    William M. Kimball, New York City (Burlingham, Underwood & Lord, New York City, on the brief), for defendant and third-party plaintiff-appellee.
    Albert V. Testa, New York City (Alexander, Ash, Schwartz & Cohen, Sidney A. Schwartz, New York City, on the brief), for third-party defendant-appel-lee.
    Before MOORE and FEINBERG, Circuit Judges, and PALMIERI, District Judge.

       Of the United States District Court for the Southern District of New York, sitting by designation.

   FEINBERG, Circuit Judge:

Plaintiff Daniel J. Avena, a longshoreman employed by Maude James, Inc. (the stevedore), was allegedly injured aboard the S.S. Gronnebek, owned by Clauss & Co. (the shipowner) in July 1967. In March 1970, plaintiff sued defendant shipowner; the latter impleaded the stevedore as third-party defendant. In October 1973, the case was tried in the United States District Court for the Southern District of New York before Charles L. Brieant, Jr., J., and a jury on the questions whether the vessel was un-seaworthy and the ship’s officers negligent. At the close of plaintiff’s case, the latter theory was voluntarily abandoned. Then, after hearing argument from the parties, the judge also dismissed plaintiff’s claim of unseaworthiness on the ground that there was insufficient evidence to create a jury issue. Plaintiff appeals, claiming that he had made out a prima facie case. We agree, and therefore reverse the judgment dismissing the complaint.

Considering the evidence in the light most favorable to plaintiff, as we must when a case is taken away from the jury, the facts are as follows: Plaintiff, a longshoreman for many years, was moving a 300-pound cardboard carton off a wooden pallet when he was injured. Plaintiff had inserted the end of his longshoreman’s hook under one of the several metal bands which secured the carton. The band was about one inch wide and when plaintiff pulled on it with the hook, the band broke, lacerating his hand and causing him to lose his balance and fall backwards. Plaintiff testified that longshoremen in New York customarily hook bands like these to haul such cargo and that he was doing so in the usual way. No other witness testified for plaintiff. On this record, the judge held that there was

no evidence at all before me which would warrant a reasonable juror to reach the inference that the steel tape, or metal tape around the carton broke because of any defect in the steel strap or tape.
A defective strap is an essential element in a cause of action for unseaworthiness, and that, gentlemen, is about all there is to it, and I find that there has been a failure of proof

Plaintiff argues that this holding was incorrect because it was based on the faulty assumption that he had to prove why the band broke. Plaintiff asserts that he only had to show “that the device in question failed under conditions when it should have functioned properly.” Oliveras v. American Export Isbrandtsen Lines, Inc., 431 F.2d 814, 816 (2d Cir. 1970). He further contends that if “an appliance or piece of equipment breaks or fails in the normal course of use, a plaintiff need not show why the failure occurred, but only that it did occur with the resulting injury.” Greene v. Vantage S.S. Corp., 466 F.2d 159, 163 (4th Cir. 1972). We agree with these propositions but they do not decide the crucial issue before us; they merely state it. That issue is whether sufficient evidence existed that the use being made of the band when it snapped was an “intended” one. Mitchell v. Trawler Racer, Inc., 362 U.S. 539, 550, 80 S.Ct. 926, 4 L.Ed.2d 941 (1960). See Blier v. United States Lines Co., 286 F.2d 920, 923 (2d Cir.), cert. denied, 368 U.S. 836, 82 S.Ct. 32, 7 L.Ed.2d 37 (1961). To this question we now turn.

One “intended” use of the steel bands wrapped around the 300-pound carton was to secure it so that its contents would not fall out during loading — that proposition is so clear as to be self-evident. What is less obvious is that any one of the bands was meant to be used to support the weight of the carton while it was being moved. For the doctrine of unseaworthiness to apply here, we believe that plaintiff was required to prove that a longshoreman’s use of the band to yank it off a pallet and into stow was “intended.” Plaintiff apparently accepts this burden and relies on his own brief testimony as to the custom in New York to provide the necessary evidence. Defendant shipowner argues in response: “Testimony that a paint brush broke while being customarily used aboard ship to hammer spikes would not be prima facie evidence that the brush was unseaworthy.” In other words, as defendant also contends: “Customary hooking which breaks bands would not make the bands unseaworthy unless the custom were proper.”

But this reply begs the question. To claim in effect that custom does not evince intended use unless the custom itself is proper brings the argument full circle without shedding light on the basic problem — whether plaintiff’s proof sufficed to go to the jury. To be sure, evidence of custom need not be conclusive on the matter of proper or “intended” use. Marshall v. Ove Skou Rederi A/S, 378 F.2d 193, 201, 202 (5th Cir.), cert. denied, 389 U.S. 828, 88 S.Ct. 86, 19 L.Ed.2d 84 (1967); The T. J. Hooper, 60 F.2d 737, 740 (2d Cir.) (L. Hand, J.), cert. denied, 287 U.S. 662, 53 S.Ct. 220, 77 L.Ed. 571 (1932). But it certainly has some probative value, Parker v. S/S Dorothe Olendorff, 483 F.2d 375, 379-380 (5th Cir. 1973), cert. denied, 416 U.S. 905, 94 S.Ct. 1609, 40 L.Ed.2d 110 (U.S. April 2, 1974); Siderewicz v. Enso-Gutzeit O/Y, 453 F.2d 1094, 1095 (2d Cir.), cert. denied, 407 U.S. 912, 92 S.Ct. 2441, 32 L.Ed.2d 686 (1972); Shenker v. United States, 322 F.2d 622, 626 (2d Cir. 1963), cert. denied, 376 U. S. 907, 84 S.Ct. 659, 11 L.Ed.2d 606 (1964), and in fact would seem to constitute the usual form of proof on this issue, Nuzzo v. Rederi, A/S Wallenco, 304 F.2d 506, 510-511 (2d Cir. 1962)— at least where the questioned practice is neither patently proper nor obviously unintended (as in defendant’s paint brush example). Cf. Tropea v. Shell Oil Co., 307 F.2d 757, 763 (2d Cir. 1962) (custom in trade relevant on issue of due care in negligence cases).

Here, the dragging of a heavy carton by its band was not a clearly unintended use. Indeed, the Fifth Circuit recently held that upon evidence of a “long standing custom” of moving bales “by inserting longshoremen’s hooks under the bale bands”, the longshoreman-was entitled to a “peremptory instruction that the shipowner warranted the bands to be safe as appliances for handling the bales.” Parker v. S/S Dorothe Olendorff, supra, 483 F.2d at 379-380. Admittedly, the evidence in this case was fairly skimpy. Cf. Parker v. S/S Dorothe Olendorff, supra. But the fact remains that proof is often meager in cases like this. In Rice v. Atlantic Gulf & Pacific Co., 484 F.2d 1318, 1321 (2d Cir. 1973), we noted “the liberal attitude displayed toward unseaworthiness claims such as the present one, . ... which are closely analogous to claims under the Federal Employers Liability Act . . . .” No argument has been made, to us or to the court below, that plaintiff — a longshoreman with 31 years of experience at the time of trial— lacked sufficient expertise to testify to custom in the trade regarding the moving of cargo. Cf. Tropea v. Shell Oil Co., supra, 307 F.2d at 763 (service station operator of 20 years qualified to testify to custom of trade in disposing of waste pumped from full storage tanks); T. H. Browning S.S. Co. v. F. H. Peavey & Co., 235 F.2d 5, 9 (8th Cir. 1956) (witness who had been seaman on Great Lakes for 25 years and chief engineer for a number- of years qualified to give evidence as to customary manner of conducting dock tests). Besides, expert testimony may not even have been required since the behavior at issue (use of a metal band to drag a carton) was susceptible to lay jurors’ common sense evaluation as to its propriety. See Salem v. United States Lines Co., 370 U.S. 31, 82 S.Ct. 1119, 8 L.Ed.2d 313 (1962); Eaton v. Long Island R.R., 398 F.2d 738, 742 (2d Cir. 1968). Cf. Nuzzo v. Rederi, A/S Wallenco, supra, 304 F.2d at 512 (Clark, J., dissenting, would not require plaintiff workman to engage in battle of experts with industry defendants).

On the record before us, plaintiff adduced sufficient evidence to entitle him to a jury trial. Therefore, we reverse the judgment dismissing the complaint and remand for further proceedings consistent with this opinion.

MOORE, Circuit Judge

(dissenting):

I dissent.

In my opinion, the fallacy underlying the conclusion reached by the majority is to be found in its assumption that the function of the steel bands was to enable longshoremen to use them as a grip for their hooks in endeavoring to move a 300 pound container from one position to another — hence, an “intended use.” But “intended” by whom is the real question.

The majority holds that evidence showing that it is customary for longshoremen to place their hooks around the steel bands binding certain cargo and to use the bands for hauling the cargo is sufficient to raise a jury question on whether this was an “intended” use for the bands. I am unable to agree with this conclusion. The duty of a shipowner is “to furnish a vessel and appurtenances reasonably fit for their intended use.” Mitchell v. Trawler Racer, Inc., 362 U.S. 539, 550, 80 S.Ct. 926, 933, 4 L.Ed.2d 941 (1960). In countless cases involving claims of unseaworthiness, evidence of custom has been introduced to show .that a ship was reasonably fit. E. g., Nuzzo v. Rederi, A/S Wallenco, 304 F.2d 506 (2d Cir. 1962). Custom need not in all instances be conclusive on the issue of reasonableness, but it is evidence thereof. Id. at 510. I cannot, however, ascribe to the view that because longshoremen customarily use devices in a certain manner, this use thereby becomes an intended one. The intended.use must be determined with reference to the shipper and not to the Cargo-handling practices that longshoremen may have developed. The shipowner ought not to be charged with having intended a use merely because that use has become the custom, at least in the absence of direct evidence that the shipowner knew of the practice and acquiesced in it.

The cases cited by the majority, by and large, use evidence of custom to show reasonableness, not intended use. Of the decisions in this Circuit cited by the majority, only Shenker v. United States, 322 F.2d 622 (2d Cir. 1963), cert. denied, 376 U.S. 907, 84 S.Ct. 659, 11 L.Ed.2d 606 (1964), used evidence of custom to show intended use. But in that case the plaintiff was merely walking on top of a hatch when he tripped over some loose dunnage and was injured. Quoting the findings of the district judge, the court found that

[I]n walking on the hatch Shenker and Judice were giving it an intended use because they “were following a customary practice” that was “foreseeable as a likely one by the owner and was consonant with a shipboard procedure recognized as permissible.”

322 F.2d at 626.

I do not deem this language in Shenker to be controlling in this case because it is patently obvious that people must walk on a hatch to accomplish loading and unloading tasks, if not for numerous other reasons. Thus, custom or not, the shipowner must have intended that people walk on the hatch. Here, in contrast, it is by no means obvious that the steel bands tightly binding the cargo were to be used for moving the cargo about the decks.

A case relied upon by the majority and by appellant is Parker v. S/S Dorothe Olendorff, 483 F.2d 375 (5th Cir. 1973), cert. denied, 416 U.S. 905, 94 S.Ct. 1609, 40 L.Ed.2d 110 (1974). There the plaintiff had also moved cargo by placing his hook around the metal bands and had been injured when one of the bands broke. The court held that since uncontradicted testimony showed that it was a long standing custom to use the bands in this manner, the use became a condition which should have been reasonably anticipated. The plaintiff there was therefore- entitled to an instruction which indicated that use in dragging the cargo was one of the purposes of the hands. 483 F.2d at 379-380.

The issue came before the Court of Appeals upon the failure of the trial court to give a requested charge that if the wire binding the bales was too light for its purpose namely, dragging bales after inserting longshoremen’s hooks into the wire, this fact would make the vessel unseaworthy. The court was undoubtedly influenced by the fact that the trial judge had originally assured counsel that he would give such a charge but changed his mind. The appellate court believed that “one of the intended purposes of the band which broke was to serve as a point of attachment for longshoremen’s hooks during loading.” The court said: “This part of the instruction is crucial because it establishes the legal standard by which the strength of the bands is to be judged.” 483 F.2d at 379. However, the majority seemingly qualified immediately the force of its decision by saying:

While a vessel warrants that every cargo container is adequate to protect the cargo and to prevent spillage, common sense indicates that a shipowner does not warrant every part of any cargo container is strong enough to serve as a point of attachment for longshoremen’s hooks or other lifting devices. Thus, the vessel owner is not an insurer against accidents resulting from lifting cargo by metal straps which are not intended for such use. Reed v. M. V. Foylebank, 415 F.2d 838 (5th Cir. 1969), cert. denied, 397 U.S. 910, 90 S.Ct. 909, 25 L.Ed.2d 91 (1970).

483 F.2d at 379.

In Reed v. M. V. Foylebank, 415 F.2d 838 (5th Cir. 1969), cert. denied, 397 U. S. 910, 90 S.Ct. 909, 25 L.Ed.2d 91 (1970), the Fifth Circuit had no difficulty in affirming the dismissal of the libel in a case involving the breaking of a steel band enclosing a crate under the stress of a longshoreman’s hook with which he was pulling the crate into place. However, the court rationalized in terms of operational negligence and held that “The sole proximate cause of appellant’s injury was his own negligent use of the hand hook behind the steel band.” 415 F.2d at 839.

In the instant case, all that this decision can accomplish is to alert shipowners and stevedoring companies to the necessity of posting notices visible to all longshoremen “Do not attach hooks to, or under, steel strapping for any purpose.” An alternative, of course, would be not to accept as cargo any container which did not have an unbreakable device for pulling it.

The fact that a use may have been reasonably anticipated does not make it an intended one. To so hold would rewrite the definition of unseaworthiness contained in Mitchell, supra. Furthermore, shippers cannot be charged with knowledge of every custom of the longshoremen. Common sense surely does not dictate that the metal bands be used for moving cargo. I would, therefore, require the plaintiff to introduce' more than evidence of custom before subjecting a shipowner to potential liability.

      . On the doctrine of liability for unseawortliiness, the Court stated :
      What has been said is not to suggest that the owner is obligated to furnish an accident-free ship. The duty is absolute, but it is a duty only to furnish a vessel and appurtenances reasonably fit for their intended use.
      Id.

      . Brief for Defendant-Appellee at 3.

      . Id. at 2.


author: PER CURIAM.

text:
    LeRoy WHITFIELD, Plaintiff-Appellant, v. ILLINOIS BOARD OF LAW EXAMINERS et al., Defendants, Len Young Smith, Defendant-Appellee.
    No. 73-2085.
    United States Court of Appeals, Seventh Circuit.
    Argued May 24, 1974.
    Decided Oct. 18, 1974.

      LeRoy Whitfield, pro se.
    William J. Scott, Atty. Gen., and Herbert L. Caplan, Asst. Atty. Gen., Chicago, 111., for defendant-appellee.
    Before PELL and STEVENS, Circuit Judges, and LARAMORE , Senior Judge.

       Senior Judge Don N; Laramore of the United States Court of Claims is sitting by designation.

   PER CURIAM.

Plaintiff, LeRoy Whitfield, is a law school graduate who, after failing the Illinois Bar Examination five times, brought a civil rights action against the Board of Law Examiners and its individual members. He alleged that: 1) the bar examination is unconstitutional because it has no rational connection with an applicant’s fitness or capacity to practice law; 2) he passed the examination and should be so certified; and 3) procedural due process requires that he be permitted to see his exam papers and to compare them with model answer^ or answers of successful applicants.\ Plaintiff also alleged that the defendants had discriminated against him be-of his race; this claim, however, has been abandoned on appeal. The district court dismissed plaintiff’s complaint for failure to state a cause of action. We affirm.

I.

Plaintiff alleged that, in addition to his fine academic and military record, he had extensive legal experience. This included employment at various legal aid clinics, where he litigated cases (see 111. S.Ct. Rule 711), interviewed clients and prepared legal documents, and as “Legal Advisor, special policeman and Project Director” of the Gary, Indiana, Police Department, where he drafted search warrants and directed searches. Plaintiff argued that an applicant with his background clearly has the capacity and fitness to practice law; and, if the Illinois Bar Examination had a “rational connection” to such capacity and fitness, he would have passed it. He therefore concluded that, under Schware v. Board of Bar Examiners, 353 U.S. 232, 77 S.Ct. 752, 1 L.Ed.2d 796, the examination is unconstitutional.

We may assume arguendo that plaintiff’s background does establish his ability to practice law. The fact that the bar examination has prevented one even exceptionally qualified individual from practicing is not, however, a sufficient reason to declare it violative of the Fourteenth Amendment. It is well settled that the question of whether a classification passes constitutional muster cannot be answered simply by assessing chance effect upon a particular individual. See, e. g., Colgate v. Harvey, 296 U.S. 404, 436, 56 S.Ct. 252, 80 L.Ed. 299. As the Supreme Court has concluded :

“[T]he fact that the Rules [concerning admission to the bar] may result in ‘incidental individual inequality’ [does not] make them offensive to the Fourteenth Amendment.”

Martin v. Walton, 368 U.S. 25, 26, 82 S.Ct. 1, 2, 7 L.Ed.2d 5. Since plaintiff’s attack on the Illinois Bar Examination is based solely upon such a chance effect, it is plainly insubstantial.

II.

Plaintiff further alleged that, in light of his background, it was “impossible” for him to have failed a bar examination five times; thus, he must have passed and should be so certified. It was un-controverted that the Board actually determined that plaintiff failed each of his five examinations. His contention, however, was that the Board made “serious mistakes” in grading.

Admission to practice in a state and before its courts is primarily matter of state concern. Schware, supra, 353 U.S. at 248, 77 S.Ct. 752 (Frankfurter, J., concurring). And the determination of which individuals have the requisite knowledge and skill to practice may properly be committed to a body such as the Illinois Board of Law Examiners. Douglas v. Noble, 261 U.S. 165, 43 S.Ct. 303, 67 L.Ed. 590. A federal court is not justified in interferin'g' with this determination unless there is proof that it was predicated upon a constitutionally impermissible reason. See Schware, supra, 353 U.S. at 238-240; id. at 248-249, 77 S.Ct. 752 (Frankfurter, J., concurring); cf. Theard v. United States, 354 U.S. 278, 281, 77 S.Ct. 1274, 1 L.Ed.2d 1342. Since nothing in plaintiff’s complaint indicates that he was denied admission for such a reason, the district court correctly rejected plaintiff’s request to overrule the judgment of the Board of Examiners.

Plaintiff, of course, did allege that defendants acted arbitrarily in grading his examination. There may very well be situations in which a capricious denial by state officials may give rise to a federal remedy. See Schware, supra, 353 U.S. at 239; id. at 249, 77 S. Ct. 752 (Frankfurter, J., concurring). But, as Justice Brandéis observed for a unanimous Court in Douglas v. Noble, supra, “it is not to be presumed that powers conferred upon the administrative boards will be exercised arbitrarily .. • • . ” 261 U.S. at 170, 43 S.Ct. at 305. In this case plaintiff has merely alleged, in essence, that an essay-type examination requires subjective evaluation and that the standards of grading are not susceptible to precise definition. We agree with the Eighth and Ninth Circuits that such an allegation is not sufficient to state a claim for federal relief. Feldman, supra note 5; Chaney, supra note 5.

III.

Finally, plaintiff alleged that procedural due process requires that he be permitted to see his examination papers and to compare them with model answers or answers of successful applicants. We may assume that the due process clause requires the state to employ fair procedures in processing applications for admission to the bar and, therefore, that an applicant who has failed the bar examination is entitled to some procedural protections. Nevertheless, we do not believe that, in the context of this case, the procedures requested by plaintiff are required by the Constitution.

Plaintiff argues that these procedures were absolutely necessary to expose errors in the grading process and to discern his various strengths and weaknesses. Plaintiff, however, had been given five opportunities to write a bar examination which was offered biannually. Ill.S.Ct. Rule 704(c). There is no allegation that in the future, he will be denied the same opportunity. As the Attorney General persuasively argues, reexamination provides an adequate means of exposing grading errors. In addition, at least one of the examiners personally discussed with plaintiff his general performance in the exam and even graded sample answers which plaintiff wrote. Given the availability of these alternative procedures, the requested procedures were not constitutionally required.

Furthermore, merely seeing his examination or comparing it with others would not allow plaintiff to expose errors or discern his abilities. These procedural rights would be virtually meaningless unless plaintiff also was able to confront the bar examiners and obtain from them explanations of their grades. Several hundred applicants fail the Illinois Bar Examination annually. Requiring an explanation for each of these applicants would place an intolerable burden upon the bar examiners. It also would place at an unfair disadvantage those applicants who were taking the exam for the first time.

As plaintiff notes, several state courts have determined, either by rule or decision, that a failing applicant should be afforded the procedúres which he seeks. See, e. g., Application of Peterson, 459 P.2d 703 (Alaska 1969). These determinations, however, were made in the exercise of the courts’ supervisory powers. It is axiomatic that the Fourteenth Amendment does not necessarily require those same procedural safeguards which a legislature or court may consider desirable as a matter of policy.

IV.

Plaintiff has raised two other contentions. The first, which apparently was never considered by the district court, is that defendants violated Article I, § 12 of the Illinois Constitution. As plaintiff recognizes, this purely state claim is pendent to his federal claims. Since we have concluded that the district court' properly dismissed all of these claims, it was within the court’s discretion to refuse consideration of the state claim. See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218.

Second, plaintiff contends that the district court should have entered a default judgment against defendants because their pleading in response to his complaint was filed three days late. In Duling v. Markun, 231 F.2d 833, 836 (7th Cir. 1956), cert. denied, 352 U.S. 870, 77 S.Ct. 96, 1 L.Ed.2d 76, this court stated that, whether a default judgment should be entered, is “a matter resting in the sound discretion of the trial judge.” We find no abuse of that discretion.

The judgment of the district court is therefore

Affirmed.

      . Plaintiff alleged that his action arose under the Fifth, Sixth, Thirteenth and Fourteenth Amendments to the Federal Constitution, Article I, § 12 of the Illinois Constitution S.H.A., and 42 U.S.C. §§ 1981, 1982 and 1983. Jurisdiction was predicated upon 28 U.S.C. §§ 1331 and 1343(3) & (4).

      . Only the defendant Smith was served with process.

      . In Schware the Supreme Court held :
      “A State can require high standards of qualification, such as good moral character or proficiency in its law, before it admits an applicant to the bar, but any qualification must have a rational connection with the applicant’s fitness or capacity to practice law.”
      353 U.S. at 239, 77 S.Ct. at 756.

      . Plaintiff also cited as authority Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158. In Griggs, however, the Supreme Court was concerned solely with the scope of Title VII of the Civil Rights Act of 1964.

      . It might be noted that the Eighth and Ninth Circuits have further concluded that essay-type examinations, such as those taken by plaintiff, have a rational connection with the capacity to practice law. Feldman v. State Board of Law Examiners, 438 F.2d 699, 705 (8th Cir. 1971) ; Chaney v. State Bar of California, 386 F.2d 962, 964-965 (9th Cir. 1967), cert. denied 390 U.S. 1011, 88 S.Ct. 1262, 20 L.Ed.2d 162. See also Application of Brewer, 430 P.2d 150, 152 (Alaska 1967). As Judge Tone, speaking for this court, recently observed:
      “Educational requirements and proficiency examinations are time-tested means of assuring that practitioners meet minimum standards of competence.”
      Rasulis v. Weinberger, 502 F.2d 1006, 1010 (1974).

      . Ill.S.Ct. Rule 704(c) specifies the subjects upon which the Board may test. Precisely what proficiency is required in these subjects and whether an individual applicant possesses this proficiency are factual matters entrusted to the Board’s judgment. See Ill.S.Ct. Rule 709.

      . State courts have also consistently approved essay examinations and have refused to perform the role of “super bar examiner” by regrading them. See authority cited in Annot., Court Review of Bar Examiners’ Decision in Applicant’s Examination, 39 A. L.R.3d 719 (1971).

      . On appeal plaintiff has argued that he also should have been afforded a full-blown adversary hearing. It is not necessary that we specifically consider this contention. There is no allegation in the complaint that plaintiff ever requested a hearing. Compare Suckle v. Madison General Hospital, 499 F.2d 1364 (7th Cir., 1974). Indeed, there is no such request in the complaint itself. It should be clear, however, that, if the procedures requested by plaintiff are not required, a hearing certainly is not mandatory.

      . The Illinois Supreme Court has not published any rule which specifically prevents the bar examiners from releasing examination papers. The Attorney General, however, stated at oral argument that this is the court’s policy.

      . Chief Justice Warren, speaking for the Court in Hannah v. Larche, 363 U.S. 420, 442, 80 S.Ct. 1502, 1514, 4 L.Ed.2d 1307, concluded:
      “ ‘Due process’ is an elusive concept. Its exact boundaries are undefinable, and its content varies according to specific factual contexts. . . . Whether the Constitution requires that a particular right obtain in a specific proceeding depends upon a comjilexity of factors. The nature of the alleged right involved, the nature of the proceeding, and the possible burden on that proceeding, are all considerations which must be taken into account.”

      . Ill.S.Ct. Rule 704(d) does provide in part: “An applicant who has been rejected at a fifth examination shall not again be admitted to an examination except upon the permission of the Board of Law Examiners or the Supreme Court. The board or Court so granting the permission may, as a condition to the granting of another examination, prescribe a further course of study.” At oral argument plaintiff stated that be did receive permission to take the exam a sixth time (and that he failed once again).

      . See generally Comment, Review of Failing Bar Examinations: ' Does Reexamination Satisfy Due Process?, 52 Bos.U.L.Rev. 286 (1972).
      The federal Administrative Procedure Act provides various procedural protections in the case of an “adjudication,” which includes licensing. 5 U.S.C. § 554. The Act further provides, however, that these protections are not required where there is involved “proceedings in which decisions rest solely on inspections, tests, or elections . . . .” 5 U.S.C. § 554(a)(3). Implicit in this subsection is the recognition that, where examinations are available, further procedural protections are unnecessary. See also 1 K. Davis, Administrative Law Treatise § 7.09 (1958).

      . As plaintiff argues: “The appellees’ denial of appellant’s right to see his Illinois Bar Examination papers deprives the appellant of the opportunity to contest the grades of the examiners . . . .” Br. at 1.

      . Art. I, § 12 provides:
      “Every person shall find a certain remedy in the laws for all injuries and wrongs which he receives to his person, privacy, property or reputation. He shall obtain justice by law, freely, completely, and promptly.”

      . “Needless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicable law. Certainly, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well.”
      383 U.S. at 726, 86 S.Ct. at 1139 (footnotes omitted).


author: CLARK, Associate Justice.

text:
    Rocco Anthony MAREESE and WilliaT. O’Sullivan, Plaintiffs-Appellants, v RICHARD’S MEDICAL EQUIPMENT, INC., and Aireo, Inc., Defendants-Appellees.
    No. 73-1760.
    United States Court of Appeals, Seventh Circuit.
    Argued June 3,1974.
    Decided Oct. 21, 1974.

      Edmund A. Godula, Chicago, 111., for plaintiffs-appellants.
    Arlie 0. Boswell, Jr., Dugald S. Mc-Dougall, Chicago. 111., for defendants-ap-pellees.
    Before CLARK, Associate Justice (Ret’d.), and PELL and SPRECHER, Circuit Judges.

       Associate Justice Tom C. Clark of the Supreme Court of the United States (Retired) is sitting by designation.

   CLARK, Associate Justice.

The appellants, Dr. Marrese and William T. O’Sullivan, appeal from an adverse judgment in their consolidated actions for patent infringement against Aireo, Inc. and its sales agent, Richard’s Medical Equipment, Inc. Appellants applied for and were jointly granted a patent covering a system for use in hospitals which prevents anaesthetic gases from escaping an anaesthesia circuit into an operating room and thus protecting the occupants of the room from such gases. The District Court after hearing the testimony of Dr. Marrese, witnessing his courtroom demonstrations of the device in controversy and hearing the testimony of three expert witnesses, in addition to studying a host of exhibits, found the patent in suit to be invalid. The detailed findings of the court declared the subject matter of the patent to be obvious under 35 U.S.C. § 103 ; and was known and used by others in this country before appellants’ invention thereof and that its subject matter had been in public use or on sale in this country before the appellants’ invention and for more than one year prior to the date on which appellants applied for a patent, under 35 U.S.C. § 102. We affirm.

1. Background:

Air pollution in the hospital operating room caused by anaesthetic gases being released therein during an operation has been long recognized in the medical literature as a serious problem. The an-aesthesia is most commonly administered in what is called a semi-closed system wherein excess volumes of oxygen and anaesthetic gases are recirculated, the patient re-breathing the gas after the carbon dioxide is removed in a can-nister. Since far more volumes of gas are used than are required, the excess must be periodically discharged from the circuit. This was conventionally done by discharging it through the “pop-off” valve into the operating room. The pop-off valve is preset by a spring or other means which permits the discharge of gases into the room when pressures exceed a predetermined level.

In the early stages the gases used were explosive and by expelling them into the open room, a dangerous condition was created. A leading British medical journal, The Lancet, in an article by Bullough, took note of such dangers as early as 1954 and proposed a solution. Bullough inserted a “T junction” in the anaesthesia line adjacent to the pop-off valve with its “vertical limb” connected to a pipe extending outside the operating room; an adjustable valve controlled the flow of gases. The pop-off valve was shut tight, and this enabled the gas to flow into the “T junction” and to the pipe extending outside the operating room. A subsequent article in the same journal in 1966 pointed out that while the gas was then non-explosive, it did present health hazards when directly released into the operating room. The author was concerned with liver damage to occupants of the room who were continuously exposed to such gases. Numerous other articles called attention to the health hazards involved in the indiscriminate venting of halogenated anaesthetic gases into operating rooms, including one by McIntyre, et al, in the Canadian Anaesthetists Society Journal.

In April, 1945, Foregger had its research director design an anaesthesia system for Duke University. It had a gas-collector device connected to the pop-off valve that took the gas outside the operating room. Duke never ordered a Foregger system, but the system is on the market today.

In August, 1965, Dr. Carter, a practicing anaesthesiologist at Hamot Hospital in Erie, Pennsylvania, became ill with hepatitis due to inhalation of gases from the operating room. Thereafter its Chief Anaesthesiologist, Robert Byers, and Dr. Carter reviewed the literature on the excess gases released in operating rooms but found no apparatus available to carry off the gases. They then asked Ohio Medical Products Division of Aireo to develop an apparatus that would collect the gases and direct them away from the anaesthetist. On January 4, 1966, Ohio shipped a collector ring it had made for the purpose to Hamot. Thirteen more collector rings were ordered after the first one proved successful. These collector rings remained in daily use in the operating rooms of Hamot until 1972. The Ohio gas collector rings were adapted to fit over the pop-off valve, collect the excess gases from it and direct them away from the anaesthetist’s face and toward the floor of the operating room. During the period mentioned they were used successfully by various doctors on the Staff of the Hospital in thousands of operations, and no effort was made to secrete their use. In October, 1968, another inquiry to Ohio from another doctor led to his use of the Ohio collector ring. Likewise, in March 1969, a Mayo Clinic technician met with Ohio’s Vice President, and urged that its device for collecting such gases be improved and added to Ohio’s regular sales line. An improved gas collection device was sold to Hamot and was publicly exhibited in October, 1969, in San Francisco.

In 1966 Dr. Rowley, a practicing an-aesthesiologist in Concord, California, wrote Dupaco and asked it to design a device for collecting gases from the pop-off valve and taking them out of the room. The device included a cup fitted around the exhaust valve with a hose device running to an outlet in the side wall of the operating room. The suction drew room air down through the cup and carried away the waste gases escaping from the valve. It carried away 90 percent of the excess gases, and the remaining ten percent was captured by placing a rubber surgical glove over the top of the cup with a clamp keeping the glove in proper position. In 1970 a Stanford University doctor recommended that Dupaco market its system, and it placed a covering over the cup and added a vacuum regulator to the system. It was then put on the market.

2. The Claim of the Appellants:

Dr. Marrese became interested in the problem in April, 1967. He conceived the notion of placing a bladder around the pop-off valve. However, the bladder idea was abandoned and the apparatus in suit was developed. Subsequently a company was formed by Marrese and O’Sullivan, known as “Marosul”. The application for a patent was filed on January 10, 1969, and was granted on April 20, 1971. The application covered both modes of operation, i. e., the conventional discharge of gas through the pop-off valve into the operating room and a closed system that carried the gas out of the room, permitting the doctor to use whichever he wished. The closed system was effected by mounting a diverting body member to the housing of the pop-off valve. Excessive gases could then be moved into this gas through the diverting body to a tube which was connected to the suction fitting on the wall which sucked the gas into the central vacuum system in the hospital.

3. Appellants’ Subject Matter was Obvious:

We find after a careful review of the record that appellants’ apparatus was obvious in light of the Bullough and other articles. The two systems — Bullough • and appellants — are not identical but they are twins. It is true that Bullough had no suction withdrawal but that was taught in the prior art by McIntyre. Dupaco also used suction with

his cup-type gas collector. (Finding 37 at A 130, 131). In addition the Robinson patent teaches withdrawal of gases for analysis but after going through that process the gases were carried off by a suction line to a safe disposal place, rather than being released in a room. (Finding 38). There may be a distinction present, but it is without a difference. Likewise, the Benzel patent taught the method of using a suction hose to carry off waste gases.

Appellants make much of the fact that the early gas collector apparatus leaked. But this was not an inherent problem; it was the result of poor construction. Indeed, Bulle ugh had earlier called on the manufacturers to correct leaking defects in his. apparatus. Moreover Bul-lough had used his device for three years both with success and without mishap. The Ohio collector ring had also been used in thousands of operations successfully. The stature of appellants’ claim is indicated by the fact that a rubber glove was able to stop the leaking gas around the connection in an earlier apparatus.

4. Prior Public Use Renders Appellants’ Apparatus Invalid:

As we. have seen, the Ohio and Dupaco gas evacuation devices had accomplished the identical purpose of the appellants in a substantially similar manner long before the latter entered the field. The former enjoyed years of successful use at two different hospitals long prior to appellants’ patent being issued. Appellants claim that the usage at these hospitals was “not public” under the statute. However, the authorities are to the contrary. Electric Storage Battery v. Shimadzu, 307 U.S. 5, 17, 613, 616, 59 S.Ct. 675, 83 L.Ed. 1071 (1939); Randolph v. Allis-Chalmers Mfg. Co., 264 F.2d 533, 535 (7th Cir. 1959); Magnetics, Inc. v. Arnold Engineering Co., 438 F.2d 72, 74 (7th Cir. 1971). Also cf. Applicability of the Public Use Bar Provision of 35 U.S.C. 102(b) to Patentability of a Completed Invention Used at a Government Installation, by Paul F. McCaul, 56 Journal of Patent Office Society, 143; March 1974.

5. Assuming Validity, Ohio Accused Devices do not Infringe:

The District Court held that even if the appellants’ patent be found valid, Ohio’s accused device would not be an infringement. However, in light of our other holdings, we do not find it necessary for us to pass on this issue and we do not do so. The judgment is

Affirmed.

      . § 103:
      “A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made. (July 19, 1952, ch. 950, 06 Stat. 798).”

      . § 102:
      “A person shall be entitled to a patent unless—
      (a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or
      (b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, .more than one year prior to the date of the application for patent in the United States . .

      . The appellants insist that they need not meet the requirements of Rule 52(a) as to the findings being clearly erroneous because they were essentially based on documentary evidence. We cannot agree since some of the testimony — even of Dr. Marrese — as well as of the three experts, was crucial to the issue of infringement. For example, the testimony as to public use prior to appellants’ invention was indispensable; and the fact that Dupaco’s device was 90 percent efficient as to escaping gas was based entirely on oral testimony. However, we carefully studied the record because it appeared that the findings were prepared by counsel and adopted by the trial court. We felt it our obligation to make sure that the findings were supported by substantial evidence. We found that they not only had that support but we were left “with the definite and firm conviction” that no mistake was made by the trial court in this regard. United States v. United States Gypsum, 333 U.S. 364, 395, 68 S.Ct. 525, 942, 92 L.Ed. 746 (1948).