author: DOYLE, Circuit Judge.

text:
    Chick M. FARHA and Leenda Farha, Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. Woodrow W. FARHA and Dodie Ann Farha, Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. Sue M. FARHA, Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee.
    Nos. 72-1867 to 72-1869.
    United States Court of Appeals, Tenth Circuit.
    Argued and Submitted July 16,1973.
    Decided July 16, 1973.
    Roy C. Lytle of Lytle, Soule & Emery, Oklahoma City, Okl., for appellants.

      Carleton D. Powell, Atty., Tax Div., Dept, of Justice (Scott P. Crampton, Asst. Atty. Gen., and Meyer Rothwaeks and Bennet N. Hollander, Attys., Tax Div., Dept, of Justice, on the brief), for appellee.
    Before BREITENSTEIN, HILL and DOYLE, Circuit Judges.
   DOYLE, Circuit Judge.

The present appeal involves an income tax controversy in which § 453 of the Internal Revenue Code of 1954 is in question and, particularly, the limitation on the installment method of reporting income which requires that in the taxable year the sale or disposition of the payments do not exceed 30 percent of the selling price.

In the case at bar there was a sale of stock in a corporation which was engaged in the buying, processing and selling of meat and food products, together with a partnership which owned the land and buildings, trademarks and trade names. The question is whether the corporation and the partnership can be treated as a single business unit so that the 30 percent limit can be related to the total selling price. The Tax Court ruled that it could not, holding that business was conducted through separate entities and that they could not be brought together in order to serve a purpose favorable to the taxpayers.

The businesses here in question were conducted by the Farha family prior to August 19, 1967. There was a corporation called Hereford Heaven Brands, Inc. It was engaged in the buying, processing and selling pf meat and food products. The shareholders were Chick M. Farha, Woodrow W. Farha, Sue M. Farha and Fred M. Farha. Fred is not a party to this appeal.

The partnership was called Hereford Brands Company. It owned the land and buildings' and, as indicated above, the trademarks and trade names. On the mentioned date (August 19, 1967), the Farhas sold the entire business to George A. Hormel & Company. In connection with this sale there were three separate written agreements which were all made at the same time.

The first of these provided for the sale of all the partnership assets. The total of this was $855,000. In 1967, Chick M. Farha received $32,977.50 out of a total of $375,943.50; Sue M. Farha received $8,242.50 out of a total of $93,964.50; and Woodrow W. Farha received $32,977.50 out of a total of $375,943.50.

In connection with the sale of the stock of the corporation, 80 percent of this was sold to Hormel as of August 19, 1967. The amount received was $325,000. Chick, Sue and Woodrow Far-ha received, as of the date of the transfer, and during 1967, $10,000, $2,500 and $10,000 out of totals of $130,000, $32,500 and $130,000, respectively. The agreement further provided that after August 19, 1967 and prior to September 19, 1967, Hormel agreed to cause the corporation to redeem the remaining 20 percent of the stock to be determined by reference to assets as of August 19. This was purchased for $308,116.39 in an amount equal to the company cash, the accounts receivable collected, the value of inventories of finished products at 75 percent of the wholesale price, the cost of raw materials and the value of unexpired insurance and prepaid expenses, less accounts payable. As of the date of this transaction, Chick, Sue and Woodrow Farha received $123,246.55, $30,811.65 and $123,246.55, respectively.

A third agreement made provision for a restrictive covenant, whereby the Far-has agreed not to compete, directly or indirectly, with Hormel. It provided that the Farhas, individually, would receive $2,500 initially and $2,500 in each of the next three years.

In making out their 1967 income tax returns, the Farhas claimed the benefits of § 453, supra, in respect to gain realized on the sale of their partnership interests and the sale of 80 percent of the corporate stock.

The transaction last described involving the sale of 20 percent of the stock was not set up as an installment transaction.

The Commissioner ruled that the installment method of accounting could not apply to appellants’ sale of 80 percent of the corporate stock. The Tax Court affirmed the Commissioner.

The argument made by appellants in the Tax Court was that the sale of 80 percent of their stock and the 20 percent redemption were separate transactions, but the Tax Court ruled otherwise. It held that the sale and redemption of the stock constituted a single transaction and more than 30 percent of the selling price was received during 1967. The appellants also contended in the Tax Court that if the sale and redemption were a single transaction, it, along with the sale of the partnership, should be considered a single transaction. It was argued that the sale should be considered as the selling of a going business. Considered in this light, less than 30 percent of the total selling price would have been received during 1967, whereby the appellants would have been eligible for § 453 treatment, but the Tax Court rejected this approach also.

Here the appellants continue to argue that the stock and the partnership sales should be aggregated, but we are unable to agree with this reasoning. The question is largely one of fact. The Tax Court so regarded it and our disposition is to accept this viewpoint.

There is substantial evidence in support of the Tax Court’s decision. A partnership sale and corporate sale were evidenced by separate agreements. There were distinct legal entities sold. A partnership entity had acted as landlord, whereas a corporate entity had operated the business. We do not regard the Tax Court’s ruling as a disregard of business realities,and as embracing legal formalities. See Clodfelter v. Commissioner, 426 F.2d 1391, 1393-1394 (9th Cir. 1970); Tombari v. Commissioner, 299 F.2d 889, 892 (9th Cir. 1962); Commissioner v. Moore, 48 F.2d 526, 528 (10th Cir. 1931). Also, we agree with the Tax Court that “there is no evidence that Hormel would not have been happy to obtain either one without the other.”

In essence, the Tax Court reasoned that the taxpayers were, in effect, es-topped by their previous conduct so that they could not bring together businesses which they had treated as distinct units. Thus, it was they who had fragmented, and we cannot disagree with the reaction of the Tax Court.

Perhaps the Tax Court could, under the evidence, have found that the transaction was the sale of but one business. It did not do so and it is not appropriate for this court on appeal to retry the facts. The Tax Court’s findings are not shown to be clearly erroneous nor are its legal conclusions unsupported. See Commissioner v. Duberstein, 363 U.S. 278, 80 S.Ct. 1190, 4 L.Ed.2d 1218 (1963); Riss v. Commissioner, 368 F.2d 965, 971 (10th Cir. 1966); Timanus v. Commissioner, 278 F.2d 297 (4th Cir. 1960).

The judgment of the Tax Court is affirmed.

      . Sec. 453. Installment Method.

      (a) Dealers in Personal Property.—
      (1) In general. — Under regulations prescribed by the Secretary or his delegate, a person who regularly sells or otherwise disposes of personal property on the installment plan may return as income therefrom in any taxable year that proportion of the installment payments actually received in that year which the gross profit, realized or to be realized when payment is completed, bears to the total contract price.
      (b) Sales of Realty and Casual Sales of Personalty.—
      (1) General rule. — Income from — •
      (A) a sale or other disposition of real property, or
      (B) a casual sale or other casual disposition of personal property (other than property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close ■ of the taxable year) for a price exceeding $1,000, may (under regulations prescribed by the Secretary or his delegate) be returned on the basis and in the manner prescribed in subsection (a).
      (2) Limitation. — Paragraph (1) shall apply—
      (A) * * * only if in the taxable year of the sale or other disposition—
      (ii) the payments (exclusive of evidences of indebtedness of the purchaser) do not exceed 30 percent of the selling price.

      . The reasoning of the Tax Court is shown in the following summary excerpt from the opinion:
      To what extent, if any, should the transactions here be comminuted or fragmented ?
      On the stipulated record here we are presented with a factual situation in which petitioners sold certain interests with respect to two distinct entities— the corporation and the partnership. On the one hand, the inference seems strong that the function of the corporation and the function of the partnership were complementary and that when taken together the two entities comprised a larger operation which might loosely be called a “business.” On the other hand, the record proves that the “business” was operated, and recognized to be operating, in a mixed, form for income tax purposes. Thus, the “business” existed as two separate taxable entities and there is no evidence that Hormel would not have been happy to obtain either one without the other.
      The facts here presented are that petitioners made the choice to conduct their “business” in mixed form and to have the separate entities of corporation and imrtnership recognized for income tax purposes. Petitioners then cast their sales to Hormel in this same form and respondent’s determinations have adopted and confirmed it. Recognizing this posture we can only conclude that petitioners have not carried their burden of proving that the substance of their actions was the single sale of the “business” and we cannot permit them to ignore the existence of the separate entities in accounting for the gains from such sales. Therefore, we hold that for the purposes- of section 453 the transactions of August 19, 1967, amounted to two sales — (1) a sale by each petitioner of all of his shares in the corporation and (2) a sale by each petitioner of either his interest in the partnership or of his interest in each of the partnership assets transferred to Hormel.


source: Caselaw Access Project

author: DUNIWAY, Circuit Judge:

license: Public Domain

text:
    Jere L. DENTON, Plaintiff-Appellant, v. SECRETARY OF the AIR FORCE, Defendant-Appellee.
    No. 26565.
    United States Court of Appeals, Ninth Circuit.
    June 8, 1973.
    Rehearing Denied July 16, 1973.

      Lawrence H. Stotter (argued), of Stern, Stotter & Rosenberg, San Francisco, Cal., for plaintiff-appellant.
    John Link, Asst. U. S. Atty. (argued), James L. Browning, Jr., U. S. Atty., Steven Kazan, Asst. U. S. Atty., San Francisco, Cal., for defendant-appellee.
    Before BROWNING, DUNIWAY and GOODWIN, Circuit Judges.
   OPINION

DUNIWAY, Circuit Judge:

Denton, a former Air Force Captain, appeals from a summary judgment against him. The action was for a declaration that his discharge from the Air Force “under honorable conditions” was illegal, and for the recovery of pay and emoluments of office since the discharge. The court heard the action on the administrative record. We affirm.

1. The Administrative Proceedings.

Denton was stationed in Germany. In February, 1964, he was informed by his Commanding General that he was recommending action under Air Force Regulation 36-2 to effectuate Denton’s discharge. Four allegations were the basis of the recommendation: (1) wrongfully cohabiting with a woman not his wife, he being then married; (2) having in his possession numerous obscene photographs; (3) failing to provide, without good cause, timely and adequate financial support to his legal dependents; and (4) continuing to associate with a person known by him to be a confessed and convicted agent of a communist government. On March 16, Denton responded, denying that the matters charged were of such importance that he should be separated from the service. On May 6, a Selection Board found that on the basis of the record before it Den-ton should show cause why he should be retained in the Air Force. On May 21, Denton was informed of this action by letter accompanied by a “Statement of Reasons” which set out the same four allegations, together with another, (5) that on or about December 2, 1963, he had exhibited a defective attitude and behaved himself with disrespect toward his commanding officer, Lt. Colonel Wyse. This was based on an unsworn statement of Wyse.

At Denton’s request, a Board of Inquiry [the Board] was ordered convened. On July 1, Denton was notified that the Board would meet on July 16, and that he could request the presence of any witness whose testimony he believed to be pertinent. On July 10, Denton asked for a postponement, and that Wyse appear as a witness before the Board. A postponement until July 30 was granted. Wyse had earlier (July 4) been rotated back to the United States. Inquiry by the Board of Wyse’s superiors in the United States resulted in advice that Wyse would not be available to return to Germany to appear as witness. On July 23, Denton requested a further delay until Wyse would be available, or permission to travel to the United States to take Wyse’s oral deposition. Both requests were denied, but the convening date of the Board was postponed until August 12.

The Board met on August 12. After a hearing, it recommended that Denton be separated from the Air Force, and be given a general discharge (under honorable conditions). The Board based its recommendations on five findings:

1. The Board finds that Captain Jere L. Denton, [ AXXXXXXXX ], did conduct himself in a manner incompatible with exemplary standards of personal conduct, character and integrity, as is evidenced by his recurrent misconduct in that:

a. He did not during the period 1 October 1963 to 31 December 1963 maintain a close continuing association with an individual known to him to have been convicted of the crime of conspiracy to commit treason against the Federal Republic of Germany, as set forth in paragraph la of the Statement of Reasons, but did during the period 29 October 1962 to about 1 December 1963, maintain a close and continuing association with one Herbert Schu-macher, an individual known to him to be a confessed agent of the MFS, an East German Intelligence Agency; such association easting a highly unfkvorable reflection upon the United States Air Force, as well as constituting a violation of a lawful regulation.

b. He did wrongfully and unlawfully cohabit and engage in adulterous intercourse with Ann Mattson, a woman not his wife, he being at that time married to another woman, such wrongful cohabitation being open and notorious, as set forth in paragraph lb of the Statement of Reasons, but during the period 4 September 1962 to about 28 January 1963, rather than the dates specified in the Statement of Reasons.

c. He did on or about 2 December 1963, exhibit a defective attitude and behave himself with disrespect toward his Commander, Lt. Col. James M. Wyse as set forth in paragraph lc of the Statement of Reasons.

d. He did on or about 29 October 1962, have in his possession in his BOQ room in Rothwesten, Germany, a number of obscene photographs as set forth in paragraph Id of the Statement of Reasons.

2. The Board finds that Captain Jere L. Denton, [ AXXXXXXXX ], did mismanage his personal affairs as set forth in paragraph 2 of the Statement of Reasons [failing to provide, without good cause, timely and adequate financial support to his dependents].

This recommendation was affirmed by an Air Force Board of Review on November 5, and on December 3, by the Judge Advocate General, USAF. On December 22, 1964, the Secretary of the Air Force ordered Denton discharged, effective January 26, 1965. On March 22, 1968, Denton applied, under 10 U.S.C. § 1552, to the Air Force Board for the Correction of Military Records for relief from the discharge on grounds of error and injustice. On May 23, 1968, that Board denied his application. This action was filed March 14, 1969.

2. Jurisdiction.

Although the Secretary does not urge that the district court or this court lacks jurisdiction, we consider the question because of our decision in Arnheiter v. Chafee, 9 Cir., 1970, 435 F.2d 691, aff’g Arnheiter v. Ignatius, N.D.Cal. 1968, 292 F.Supp. 911. There we held that the courts do not have jurisdiction to review a decision of the Navy to relieve an officer from command of a ship. We relied upon the famous dictum in Orloff v. Willoughby, 1953, 345 U.S. 83, 73 S.Ct. 534, 97 L.Ed. 842, that “judges are not given the task of running the Army.” (345 U.S. at 93, 73 S.Ct. at 540). However, we conclude that Arnheiter is not applicable here. It related to a matter strictly internal to the Armed Forces — a duty order. So did Orloff. The present case differs; it deals with a discharge, an action that deprives the affected officer of his livelihood and, when not “honorable,” can seriously hamper his civilian career. In at least one discharge case, the Supreme Court has exercised jurisdiction and invalidated a discharge on the ground that the Secretary had exceeded his statutory powers. Harmon v. Brucker, 1958, 355 U.S. 579, 78 S.Ct. 433, 2 L.Ed.2d 503. See also Marshall v. Brucker, 1958, 356 U.S. 24, 78 S.Ct. 562, 2 L.Ed.2d 503. The Court has not, so far as we can discover, spoken directly to this question since.

The question presented here differs from that in Harmon, supra. Denton does not assert the kind of misinterpretation of statutory authority that existed in Harmon. His claim is, essentially, that the Air Force Regulations (AFR) guarantee him a fair hearing, and that he did not get one, for a number of reasons. He relies on the general rule, stated and applied in such cases as Vitarelli v. Seaton, 1959, 359 U.S. 535, 79 S.Ct. 968, 3 L.Ed.2d 1012; Service v. Dulles, 1957, 354 U.S. 363, 77 S.Ct. 1152, 1 L.Ed.2d 1403 and Powell v. Zuckert, D.C.Cir., 1966, 125 U.S.App.D.C. 55, 366 F.2d 634, that administrative decisions are subject to review, and can be judicially held invalid, on the ground that the Secretary has failed to follow his own valid regulations. We hold that we have jurisdiction. A number of other circuits have come to the same conclusion: Mindes v. Seamans, 5 Cir., 1971, 453 F.2d 197; Feliciano v. Laird, 2 Cir., 1970, 426 F.2d 424; Van Bourg v. Nitze, 1967, 128 U.S.App.D.C. 301, 388 F.2d 557; Dunmar v. Ailes, 1965, 121 U.S.App.D.C. 45, 348 F.2d 51. See also Schwartz v. Covington, 9 Cir., 1965, 341 F.2d 537, 538, n. 1; Craycroft v. Ferrall, 9 Cir., 1969, 408 F.2d 587.

3. The Scope of Review.

The federal courts do not sit to run the Air Force, or, except possibly in an extreme ease, to tell it on what grounds it may or may not discharge an Air Force officer. The Air Force is entitled to discharge an officer on grounds rationally related to the standards of fitness for retention in that branch of the service.

The question before us is, did Denton get the fair hearing that the Air Force regulations require? We consider Den-ton’s arguments seriatim.

4. Finding la — association with Schumacher.

The facts are not in dispute. Denton met Schumacher in 1961 and became a good friend of Schumacher and his family. In April of 1962, Schumacher and one Straube made contact in East Germany with two persons acting on behalf of the MFS, an East German intelligence organization. They received about $200 each, for which they were to obtain information relating to the activities of the CIC (Counter-Intelligence Corps) and its employees in Kassel, Germany. Neither Straube nor Schumacher followed through on these plans. In July of 1962 they voluntarily disclosed their activities to German and United States authorities, and they were eventually convicted of “treasonable relations.” (“Treasonable relations” is a minor crime, as opposed to “treason” which is a major crime.) Schumacher was sentenced to six months in prison.

On October 29, 1962, Denton was interviewed by a special agent of the Office of Special Investigations [OSI] who was investigating Schumacher’s relationships with Americans. He .explicitly told Denton of Schumacher’s activities. However, Denton decided that Schu-macher’s activities were not quite as serious as the agent had indicated, and he continued his close association with Schumacher. During 1963 Denton had several meetings with Col. Wyse at which Denton’s association with Schu-macher was discussed. Wyse felt that AFR 205-57 was applicable. Denton disagreed, feeling that he was violating no Air Force regulation, and continued to associate with Schumacher. Then, on December 2, 1963, Denton again met with Wyse and the subject of his association with Schumacher again arose. This meeting was described in Wyse’s statement of December 3, 1963. In what we consider the important respects, Den-ton’s version of the meeting does not differ from Wyse’s. What is undeniably clear is that at this meeting Denton was told unequivocally by Wyse that his longtime friendship with Schumacher, which had continued despite several meetings with Wyse on the subject, was in Wyse’s opinion highly suspect, that Denton disagreed and indicated he would continue to see Schumacher, and that Denton did in fact continue to see Schu-macher.

Denton argues that finding la is not supported by substantial evidence. The argument is without merit.

He also argues that action under AFR 36-2 with respect to findings la and lc had first to be approved under the provisions of AFR 35-62. Under ¶4(f) of AFR 36-2 proceedings based upon qualifications regarding national security must have first been approved under AFR 35-62. Thereafter, if warranted, proceedings under AFR 36-2 are held. Denton argues that findings la and lc relate to questions of national security, and the Board should not have made findings regarding those allegations until further proceedings had been approved under AFR 35-62. We do not think that finding lc is related to national security, and therefore we treat Denton’s argument only with respect to finding la.

Paragraph 3(f) of AFR 35-62 provides that that regulation will not be used where security is not the primary consideration. Here, action under AFR 36-2 was taken on the basis of five allegations. Only one dealt with security qualifications. Therefore, under the language of ¶3(f) of AFR 35-62, the Air Force could reasonably conclude that it need not proceed under that regulation.

Denton next argues that under paragraph 10 of AFR 36-2 the Board was required to follow the provisions of AFR 124-4, which it did not do. AFR 124-4 deals with the handling of OSI reports. More specifically, ¶9(d) of that regulation provides that OSI reports are not to be introduced in evidence in proceedings such as the one here, and prohibits furnishing OSI reports to Article 32 investigating officers. Denton does not argue that an OSI report itself was in evidence before the Board. However, an Article 32 Investigating Officer’s report (concerning Article 32 charges brought against Denton for unlawful cohabitation) was in evidence before the Board. The Investigating Officer had evidently at one point been shown part or all of the OSI report concerning Den-ton’s relationship with Schumacher. Assuming that this was so, it may have been a security violation under AFR 124-4. However, we cannot see how this circumstance is relevant to the use as evidence of the Article 32 Investigating Officer’s report. W,e see no merit in this argument.

Denton argues that the Board improperly considered the statements of Captains Wolff and Hummel. These statements were both part of the Article 32 Investigating Officer’s report which were before the Board. One of them relates to finding lb, and we consider it infra. The other, that of Captain Hum-mel, outlined the results of the legal action taken against Schumacher. He stated that Schumacher had been found guilty of “treason,” and had been sentenced to ten months in prison. Denton offered no rebuttal before the Board. However, he later submitted to the Board of Review an affidavit of one Henry F. Waldstein, a member of the West German bar. He contradicted the Hummel statement in two respects. He stated that Schumacher had been convicted of “treasonable relations,” not “treason,” and that Schumacher had been sentenced to six months in prison, not ten months. Denton argues that by virtue of the errors in the Hummel statement, the Board was misled when considering finding la, and that its finding was consequently prejudiced. The four-month difference in the length of the sentence we think irrelevant. Hummel’s characterization of Schumacher’s crime as “treason” as opposed to “treasonable relations” is not significant. The Board found that Denton maintained “a close and continuing association with ... an individual known by him to be a confessed agent of the MFS. . . .” Schumacher’s actual crime, “treasonable relations,” supports finding la.

Denton argues that finding la is fatally vague in that the “lawful regulation” which it is alleged Denton violated was never specified. The argument is frivolous. From the record there is no doubt that Denton was aware that AFR 205-57 was being referred to.

5. Finding lb — unlawful cohabitation.

This finding is not seriously attacked —nor could it be. It is amply supported by the record.

In the statement of Captain Wolff, there is a discussion of Denton’s alleged relationship with German women and his use of his apartment in that connection. Wolff was of the opinion that no one particular woman lived there, but that Denton kept the apartment to entertain various German women. It is clear that this statement did not prejudice Denton with respect to the only issue it concerned — the alleged wrongful cohabitation with a particular woman. The statement does contain hearsay. However, the Board is not required to follow strict rules of evidence, and because we can see no prejudice here, we find no error.

6. Finding 1c — disrespect toward Col. Wyse.

This finding is based entirely upon the unsworn statement of Col. Wyse, the relevant contents of which are set out in the margin. Denton argues that had he had the opportunity to cross-examine Wyse he would have been able to convince the Board that the alleged disrespect was but a disagreement over the proper interpretation of an Air Force Regulation, that he had at all times maintained a respectful attitude toward Wyse, and that his remarks regarding his no longer wanting any part of the service were taken out of context and given undue emphasis. We cannot escape some skepticism about this argument. Wyse would obviously have been a hostile witness, and all too often cross-examination of such a witness only serves to strengthen the case against the cross-examiner’s client. However, occasionally such cross-examination does produce the miracle that lawyers like to attribute to it, and we cannot say with assurance that it would not have done so here.

The only other evidence relating to finding lc is an unsworn statement by Denton. In it, he does not really deny using the words that Wyse says he used. What he does say is that his statements related to what he believed to be the unfairness of the Air Force’s attempt to control the lives of its members, and that he did not intend to indicate that he wanted out of the service. It is for the Air Force, not this court, to say whether the words used were incompatible with Denton’s duty toward his superior.

Nevertheless, if finding lc stood alone, we might well reverse because Denton had no chance to cross examine Wyse. See Greene v. McElroy, 1959, 360 U.S. 474, 508, 79 S.Ct. 1400, 3 L.Ed.2d 1377. However, it is but one of five findings; and, for reasons stated infra,, we hold that the decision must be upheld on the basis of other findings.

7. Finding Id — possession of obscene photographs.

There is no question that Denton possessed the photographs; he took them himself. He argues that they are not obscene, citing recent Supreme Court cases. We certainly do not find them shocking. But we also think that this ground for discharge is a makeweight, and that the Board would have reached the same result without it. See the discussion, infra.

8. Finding 2 — failure to provide for dependents.

The evidence on this question is in conflict, but there was sufficient evidence to support the finding. We do not sit to retry the question, and it makes no difference that, if we had been the Board, we might have found the other way.

9. The effect of the doubtful validity of findings lc and Id.

For the purpose of this discussion, we assume that findings lc and Id cannot stand, lc because it is based entirely upon unsworn hearsay and Denton had no chance to cross examine his accuser, and Id because the photographs are not obscene. It does not follow from this that the judgment must be reversed.

When a court finds error in a finding of an administrative body, this does not lead to automatic reversal. Reversal follows if the court has substantial doubt that the same result would have been reached if the questioned finding had not been made. Fairmont Foods Co. v. Hardin, 1971, 143 U.S.App. D.C. 40, 442 F.2d 762, 770-771; Tashof v. FTC, D.C.Cir., 1970, 141 U.S.App.D.C. 274, 437 F.2d 707, 713; NLRB v. Reed & Prince Mfg. Co., 1 Cir., 1953, 205 F. 2d 131, 139; see generally Braniff Airways, Inc. v. CAB, 1967, 126 U.S.App. D.C. 399, 379 F.2d 453.

Here the Board’s recommendation was based upon five separate matters, each a ground for the action recommended. At least one of them, finding la, appears, even to this non-military body, to be very serious. In addition, the original initiating action did not mention disrespect to Col. Wyse. That ground, like Id, appears to be a makeweight. Under the circumstances, we have no doubt that the Board would have made the same recommendation if it had found the other way in findings lc and Id.

10. Double jeopardy.

Denton’s final argument is that, in charging him with unlawful cohabitation, the Air Force subjected him to double jeopardy. The basis of the argument is that he had earlier accepted non-judicial punishment under Article 15, UCMJ (10 U.S.C. § 815) for wrongful cohabitation, and was therefore subjected, in violation of the Federal Constitution, to double jeopardy when his general discharge was based in part on this same cohabitation. The Board of Inquiry proceedings, however, were administrative in nature, conducted to determine the fitness of an officer for retention in the Air Force. Paragraph 3b of AFR 36-2 provides that, “[R]ecurrent misconduct is a basis for initiation of action under this regulation when the officer has by the pattern of his actions raised serious doubt regarding his fitness for retention, regardless of whether such misconduct has or has not resulted in prior judicial or nonjudicial punishment.” In following this provision of the regulation, the Air Force was not subjecting Denton to double jeopardy as prohibited by Federal Constitution.

Second, Denton argues that under Article 15, UCMJ, punishment for an act or omission which is not a serious crime is a bar to further prosecution. The statute provides that punishment imposed is not a bar to a subsequent court martial for a serious crime or offense growing out of the same act or omission. Appellant argues that by implication the punishment is a bar to further prosecution for an offense which is not serious. This argument is misplaced. We are not dealing here with a subsequent court martial, and the statute is inapplicable. Denton was separated from the Air Force for “recurrent misconduct” which consisted of several elements, and it was proper for the Board to consider the unlawful cohabitation, for which Denton had admittedly been punished, as evidence of such misconduct.

Affirmed.

      . AFR 36-2 establishes, inter alia, criteria for identifying officers of the Air Force serving in active military service who, because of evidence of unfitness or unacceptable conduct, should be required to show cause for retention in the Air Force.

      . It has been held that, because the vast majority of military discharges are honorable, anything less than an honorable discharge stigmatizes the recipient and is punitive in nature. Bland v. Connally, 1961, 119 U.S.App.D.C. 375, 293 F.2d 852.

      . AFR 36-2 was promulgated pursuant to statutory provisions for separation of officers from the regular Air Force, 10 U.S.C. § 8791 et seq., and for separation of reserve officers, 10 U.S.C. §§ 1162-63. Section 8792 (separation of regular Air Force officers) entitles the officer to a “fair and impartial” hearing; there is no similar provision for reserve officers in 10 U.S.C. §§ 1162-63. Because Den-ton was a reserve officer, this statutory guarantee does not apply to him. However, AFR 36-2 applies to both regular and reserve officers, and thus is applicable to Denton. AFR 36-2 reiterates the guarantee of a “fair and impartial” hearing,

      . AFR 205-57 requires that each Air Force member must notify his commander immediately upon becoming aware of contacts, whether intentional or by chance, of an Air Force member (including himself) or his dependent with individuals or representatives or employees of organizations of foreign governments whose activities or interests are hostile to, against the best interests of, or may be harmful to the United States.

      . “On 2 December 1983, at approximately 1130 hours, in my office at Sembacli Air Base, Germany, I was approached by Captain Jere L. Denton, [ AXXXXXXXX ], and he again renewed his request that I assist him in acquiring the return of some photographs of women in various stages of undress that are presently in the hands of the JAG. I told him that I would look into it. The conversation then revolved around his behavior and apparent lack of judgment in his associations. I informed him that it has been brought to my attention that he had spent a weekend in either late September or early October 1963 in the home of one Mr. Schumacher, a man who had been convicted as an agent of the East German Soviet Intelligence. This weekend referred to was at Kassel, Germany, where Captain Denton had previously undergone investigation on the same allegations. He readily admitted that he had spent the weekend there and indicated that he still considered Mr. Schumacher a good friend. When I informed him that this was in violation of AFR 205-57 and that the government frowned on behavior such as this, he remarked, ‘Well, if the service is going to tell me who I can or cannot associate with, I want no part of the service’. I then told him that I would see if I couldn’t oblige him. I also informed him that if my guess was right that he. also spent time in the Schumacher home over the Thanksgiving weekend. He readily admitted that he did. Neither of these visits was reported to me by Captain Denton, as required by regulation, and when I hold him that he was violating regulations by associating with known agents of a government unfriendly to the United States, he stated that he ‘would like to see them’.”


author: STEPHENSON, Circuit Judge.

text:
    Martin W. LINDEN, Plaintiff, v. CHICAGO, BURLINGTON & QUINCY RAILROAD, a corporation, and Farmers Elevator Mutual Insurance Company, a corporation, Defendants. CHICAGO, BURLINGTON & QUINCY RAILROAD, a corporation, Third Party Plaintiff, Appellant, v. HOLDREGE COOPERATIVE EQUITY EXCHANGE, a corporation, Third Party Defendant, Appellee.
    No. 72-1772.
    United States Court of Appeals, Eighth Circuit.
    Submitted May 17, 1973.
    Decided Aug. 15, 1973.

      Harry B. Otis, Omaha, Neb., for appellant.
    William B. Craig, Omaha, Neb., for appellee.
    Before MATTHES, Chief Judge, and LAY and STEPHENSON, Circuit Judges.

       Senior Circuit Judge, effective July 15, 1973.

   STEPHENSON, Circuit Judge.

This cause of action arose initially out of a construction agreement (Unloading Pit Agreement) between defendant-third party plaintiff, Chicago, Burlington & Quincy Railroad Co. (C.B. & Q.) and third party defendant, Holdrege Cooperative Equity Exchange (Holdrege) under which C.B. & Q. granted permission to Holdrege to construct an unloading pit in and under trackage operated by C.B. & Q. at Holdrege, Nebraska. The pit would be used by Holdrege in connection with the unloading of railroad cars.

In an order dated April 24, 1972, the trial court entered judgment (filed on November 27, 1972) against C.B. & Q. in the amount of $22,000.00, together with costs in favor of plaintiff, Mark W. Linden, a Holdrege employee, who had been negligently injured while working underneath a hopper car located upon tracks at the west side of an under track unloader pit. The site was covered by an indemnification provision entitled paragraph “3” of the Unloading Pit Agreement. In its order, the trial court reserved the right to determine whether C.B. & Q. ultimately would be indemnified by Holdrege.

On November 14, 1972, the trial court ordered that C.B. & Q.’s third party complaint against Holdrege be dismissed upon the merits. It held that the injury sustained by Linden was not intended to be within the scope of liability as expressed by the parties in the indemnity provision.

It is from this decision that C.B. & Q. appeals. We reverse.

The trial court adopted the stipulation of facts submitted by the parties. In its memorandum of November 14, 1972, the trial court stated that the terms of the agreement relative to injuries “ ‘arising out of’ . . . can be read to cover any and all injuries or damages that merely occur at the situs of the unloading pit or it can be read less broadly, to cover any and all injuries which have a nexus or casual relationship to the unloading pit.” It applied the strict rule of construction and rejected the first broad construction, and held that the situs alone was insufficient. It stated that the injury must be “within a class of injuries reasonably associated with the unloading pit to the degree that the parties could be said to have anticipated the occurrences . ” C.B. & Q. was precluded from recovering because it failed to establish that the negligent act in question would “be more likely to occur by reason of the unloading pit facility,” and that the resulting damage was not shown “to be of a class within the expectations of the parties.”

The relevant facts, as stipulated, are as follows: That on the date of the accident, May 6, 1968, the Unloading Pit Agreement was in full force and effect and binding upon C.B. & Q. and Hold-rege and covered the designated unloading pit only. Paragraph 3 of the Agreement reads as follows:

“The Industry [Holdrege] further agrees to indemnify and save harmless the Railroad Company [C.B. & Q.] against all claims, demands, suits, actions, judgments, loss, costs and expense (including attorneys’ fees) for death of or injury to, or loss of or damage to the property of, any person or persons whomsoever, including the parties hereto .and their employees, whether caused by the negligence of the Railroad Company, or otherwise, in any manner arising out of the construction, maintenance, operation, use, existence, or removal of said unloading pit, and/or out of the restoration of, or failure to restore, the roadbed and track as in Section 4 provided.” (emphasis supplied)

That at sometime prior to 5:00 p.m. on the date of the accident, a storm came up suddenly; that employees of both C. B. & Q. and Holdrege were of the impression that it would be severe, and began to take precautionary measures; that during the day, prior to the advancing storm, C.B. & Q. had placed a hopper car (car #1) over an “under track unloader” adjacent to the Holdrege Cooperative Elevator; that the point where this car was spotted was in the area described in the Unloading Pit Agreement; that C.B. & Q. employes spotted a second hopper car (car #2) on trackage at a point approximately 600 feet to the west of the unloading pit— not in the area described in the Agreement; that as the storm became imminent, C.B. & Q.’s brakemen attempted to make sure that the brake was on car #2; that the brakemen “spun the brake wheel probably about twice” and “threw a blocking piece of wood under and towards the wheels of said car;” that car #2 was not spotted for use in connection with the unloading pit but was placed by C.B. & Q. and remained under its care and control; that at or near the same time, Linden proceeded to car #1 for the express purpose of closing the car’s hopper because of the storm; that Holdrege’s manager saw from his office window car #2 moving down the track toward car #1 under which he knew Linden was working; that a Holdrege employee ran from the office to warn Linden, but to no avail because of thunder, wind and noise; that another Hold-rege employee jumped aboard car #2 but was not able to prevent impact with car #1, which was pushed an approximate distance of fifteen feet.

At the time of the accident, Linden was under car #1 using a broom to clean fertilizer which had spilled on the railroad tracks and ties beside the un-loader and on top of its lid, which had been removed in order to allow the un-loader to be used. As a result of the impact, Linden was dragged, crushed and pushed the approximate distance travelled by ear # 1 after impact.

The issue dispositive of this cause is whether by the terms of the indemnity provision the parties intended Holdrege to be liable for loss such as that incurred by Linden while performing his work.

At the outset, we note that this indemnity agreement does not, as Holdrege suggests, contravene Article X, § 4 of the Nebraska constitution, which precludes railroad corporations from limiting their liability when operating as common carriers. The contract was not executed by C.B. & Q. in its capacity as a common carrier. C.B. & Q. had no public duty to consent to the construction of the unloading pit by Holdrege, and it was at liberty to lawfully bargain for indemnity against its own negligence in this instance. See, Luedeke v. Chicago & N. W. R. Co., 120 Neb. 124, 231 N. W. 695, 696-697 (1930); accord, Minneapolis-Moline Co. v. Chicago, M., St. P. & P. R. Co., 199 F.2d 725, 729 (8th Cir. 1952) (applying Minnesota law), and, Michigan Millers Mut. Fire Ins. Co. v. Canadian North Ry. Co., 152 F.2d 292, 294-295 (8th Cir. 1946) (applying Minnesota law); see also, 6A Corbin on Contracts, § 1472 (1962).

In accordance with the Supreme Court’s pronouncement in United States v. Seckinger, 397 U.S. 203, 211, 90 S.Ct. 880, 885, 25 L.Ed.2d 224 (1970), C.B. & Q. should not be permitted to recover for its own negligence unless we are convinced that such was the intention of the parties pursuant to the indemnity provision. Consistent with Nebraska law, we are governed by the rules applicable to construction and interpretation of contracts generally. It is our duty to fairly and reasonably interpret the language and terms of the indemnity provision based upon a reading of the contract in its entirety. Currency Services, Inc. of Minnesota v. Passer, 178 Neb. 286, 133 N.W.2d 19, 21 (1965).

The critical language in the indemnity provision, upon which we find liability on the pai't of Holdrege, states that C.B. & Q. would be indemnified by Holdrege against liability “whether caused by the negligence of the Railroad Company, or otherwise, in any manner arising out of the construction, maintenance, operation, use, existence, or removal of said unloading pit.” (Emphasis supplied)

Holdrege urges that this clause be narrowly construed to include indemnification only where the unloading pit performed an active part in bringing about the injury or damage. Holdrege refers us to Luedeke v. Chicago & N. W. R. Co., supra, 120 Neb. 124, 231 N.W. 695 (1930) as weighing heavily in its favor. We disagree. In Luedeke, a dry gas unloading device was the subject of an indemnity agreement which did not contemplate indemnification for loss unassociated with the use of the unloading device. Id. at 697. The facts of Lue-deke show that fire equipment was unable to reach buildings damaged by an explosion in the unloading pit because the railroad’s freight cars had blocked the access route to the burning property. The Nebraska court held that under these facts, the contract as written did not free the railroad of liability since the alleged negligence was “not caused by the use of the unloading device,” (emphasis supplied) as required by the indemnity provision in that instance. The court reasoned that although the fire and resultant loss arose out of the use of the unloading device, the action was not brought to recover loss due to the fire, but only loss based upon the railroad’s act of negligently blocking the access route for an unreasonable length of time. Id.

The language in the indemnity provision before us mandates a different result than that reached in Luedeke. See generally, Missouri Pacific Railroad Co. v. Winburn Tile Mfgr. Co., 461 F.2d 984, 986-988 (8th Cir. 1972) (applying Arkansas law). The plain and ordinary meaning attributed to the phrase “in any manner arising out of the construction, maintenance, operation, use, existence, or removal of said unloading pit,” (emphasis supplied) does not, as Holdrege would have it, contemplate a showing of “proximate cause,” cf., Insurance Co. of North America v. Royal Indemnity Co., 429 F.2d 1014, 1018 (6th Cir. 1970), but instead contemplates only a causal connection between the unloading pit facility and the injury, which connection we believe is adequately demonstrated upon this record.

As stipulated by the parties, Linden’s presence in the unloading pit was incidental to his work. He had proceeded to ear #1, which was situated over the under track unloader, for the express purpose of closing the hopper on the railroad car because of the storm, and was injured in the performance thereof. See, Aluminum Co. of America v. Hully, 200 F.2d 257, 263 (8th Cir. 1952) (applying Iowa and Pennsylvania law). Had Linden been injured at the site, but as a casual observer or passer-by and not in the furtherance of Holdrege’s business it would be more difficult to find that such an occurrence was contemplated by the agreement. We are convinced, however, that in this case the scope of Holdrege’s liability has been clearly established as including the injury to Linden “arising out of the maintenance, operation, use” and/or “existence” of the unloading pit and as being in “a class [of injuries] within the expectations of the parties.” We therefore reverse the decision of the district court and remand this cause with instructions to enter judgment upon the third party complaint in favor of C.B. & Q.

Reversed and remanded.

      . The indemnity provision in LuedeIce reads in pertinent part as follows: “The licensee assumes and agrees to pay for all loss or damage to property, and injury to or death of persons, including costs and expenses incident thereto, caused T>y the construction, installation, maintenance, presence or use of said pipe or pipes or said unloading device, or by reason of any failure to lock, maintain or remove the movable connections as hereinbefore provided or by their presence or use upon the property of the railway company, or by the failure of the licensee or the officers, agents or employees of the licensee to abide by or comply with any of the conditions of this licensee.”

      . In Hully, the qualifying phrase “. . . or in any manner connected with . ” is added to “arising out of” in the indemnity provision. The distinction is not critical, however, since the language in the present case is sufficiently broad and encompassing to find liability on the part of Hold rege.

      . See also, Fix Fuel and Material Co. v. Wabash Railroad Co., 243 F.2d 110, 115 (8th Cir. 1957). But note that in Fix Fuel the railroad could not recover from its lessee under a contract of indemnity similar to the one before us unless both parties were negligent. We held that evidence sustained the district court’s finding that the injured Fix Fuel employee contributed to his own injury, and that the railroad was therefore entitled to indemnification. The critical indemnity language in the Fix Fuel contract rends as follows : “. . . arising from or growing out of, directly or indirectly, the existence, operation, use or maintenance of such unloading pit, or its removal.”


author: PER CURIAM:

text:
    Marcellus B. McCULLOUGH, Plaintiff-Appellant, v. L. B. LOHN, Individually and in his official capacity, etc., et al., Defendants-Appellees.
    No. 73-1560
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 16, 1973.
    Larry Watts, Houston, Tex., for plaintiff-appellant.
    Joe H. Reynolds, Houston, Tex., for defendant-appellee.
    Before JOHN R. BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges.

       Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir., 1970, 431 F.2d 409, Part I.

   PER CURIAM:

This complaint by a black teacher for non re-employment, unlike so many, makes no claim of racial motivation or reprisal for exercise of First Amendment or similar constitutional rights. The complaint rests on an assertion of denial of procedural due process. But even read through rosy Conley glasses it makes no serious factual contention that as a probationary teacher he had such expectancy of re-employment as to entitle him to these safeguards for reemployment under the Roth-Sindermann principle.

Affirmed.

      . Conley v. Gibson, 1957, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80.

      . “Any. person who is employed as a teacher by any school district for the first time, or who has not been employed by such district for three consecutive school years subsequent to August 28, 1967, shall be employed under a “probationary contract,” which shall be for a fixed term as therein stated ; provided, that no such contract shall be for a term exceeding three school years beginning on September 1 next ensuing from the making of such contract;
      V.T.C.A. Education Code § 13.102.
      “The board of trustees of any school district may terminate the employment of any teacher holding a probationary contract at the end of the contract period, if in their judgment the best interests of the school district will be served thereby; . . . . ”
      V.T.C.A. Education Code § 13.103.

      . Board of Regents v. Roth, 1972, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548; Perry v. Sindermann, 1972, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Salvador G. SANTOS and Valerio Santos, Defendants-Appellants.
    No. 73-1101
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    July 9, 1973.
    Rehearing Denied Aug. 7, 1973.
    Certiorari Denied Nov. 19, 1973.
    See 94 S.Ct. 540.
    Jeremiah Ingels Rhodes, Eagle Pass, Tex., for defendants-appellants.
    William S. Sessions, U. S. Atty., James W. Kerr, Jr., Asst. U. S. Atty., San Antonio, Tex., for plaintiff-appellee.
    Before JOHN R. BROWN, Chief Judge, DYER and SIMPSON, Circuit Judges.

       Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir., 1970, 431 F.2d 409, Part I.

   PER CURIAM:

Valerio and Salvador Santos appeal from their conviction of various violations of the Gun Control Act of 1968, 18 U.S.C.A. § 922. We affirm.

Appellants’ main contention is that there was not sufficient evidence to convict them on each count of the sixteen count indictment. Our review of the record convinces us that this is not true.

Appellants also contend that it was plain error for the court to fail to give a cautionary instruction as to the weight to be accorded the testimony of an accomplice without a request for such an instruction or an objection to the court’s failure to give it. The answer to this contention is that the government did not rely on accomplices’ testimony. The witnesses for the government may have violated Title 18, U.S.C., Section 922(a), by acquiring or assisting other purchasers to acquire weapons but each of the substantive counts, Count I through Count XV, inclusive, charged the appellants with offenses as firearms dealers in violation of Title 18, U.S.C., Sections 922(b)(3), 922(b)(5) and 922(m). If the testimony had been offered in proof of the charges against the purchasers, a cautionary instruction as to the weight to be afforded accomplices’ testimony would have been appropriate. It was clearly not called for in the circumstances present here, where none of the government witnesses knowingly corroborated with or aided or abetted either appellant. As to Count XVI, the conspiracy count, there was no evidence that any government witness was a co-conspirator or collaborated in the violations of the Firearms Act by the appellants.

Affirmed.

      . Valerio Santos is charged with twelve substantive counts. Salvador Santos is charged with three substantive counts. Both appellants are charged in the sixteenth count of the indictment as co-conspirators.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Roger Dean UNDERHILL, Defendant-Appellant.
    No. 72-3583
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    July 13, 1973.
    Rehearing Denied July 24, 1973.
    Stephen A. Land, Atlanta, Ga., for defendant-appellant.
    John W. Stokes, Jr., E. Ray Taylor, Jr., Asst. U. S. Atty., Atlanta, Ga., for plaintiff-appellee.
    Before THORNBERRY, GOLDBERG and RONEY, Circuit Judges.

       Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 431 F.2d 409, Part I (5th Cir. 1970).

   PER CURIAM:

Defendant was convicted by a jury on a charge of receiving, concealing, and storing stolen property, the property having been transported in interstate commerce in violation of 18 U.S.C. § 2315. The property consisted of eleven antique firearms, stolen in Texas, and possessed by defendant in Georgia. We affirm.

The evidence was sufficient to support the jury verdict under the standard of Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1940), which requires us to view the evidence in the light most favorable to the Government.

The court’s charge as to the inference of knowledge that might be drawn from the unexplained possession of recently stolen property was proper. United States v. Gordon, 421 F.2d 1068 (5th Cir. 1970); Hale v. United States, 410 F.2d 147 (5th Cir. 1969); Thurmond v. United States, 377 F.2d 448 (5th Cir. 1967). Although the defendant argues that this is a judicially-created “inference without legislative investigation and determination of its factual basis,” relying on the reasoning in Commonwealth v. Owens, 441 Pa. 318, 271 A.2d 230 (1970), and United States v. Rispo, 338 F.Supp. 662 (E.D.Pa.1972), cf. United States v. Taylor, 334 F.Supp. 1050 (E.D.Pa.1971), the Supreme Court has recently sustained such a charge against constitutional attack. Barnes v. United States, — U.S. -, 93 S.Ct. 2357, 37 L.Ed.2d 380 [1973]. Thus, United States v. Cameron, 460 F.2d 1394 (5th Cir. 1972), has been devitalized as a contrary precedent.

In any event, the defendant continued to possess the guns for a month after he was advised by a gun dealer that they were stolen, which would furnish a sufficient evidentiary base for the jury’s verdict.

A review of the record reveals that any error that may have occurred in the district attorney’s final argument was cured by proper instructions of the trial court.

Affirmed.


author: CLARK, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Charles E. SELLERS, Jr., et al., Defendants-Appellants.
    No. 72-3733.
    United States Court of Appeals, Fifth Circuit.
    July 26, 1973.
    Rehearing and Rehearing En Banc Denied Nov. 7, 1973.

      Calvin M. Whitesell, William R. Gordon, Montgomery, Ala., for Sellers & Sexton.
    Joseph D. Phelps, Philip H. Butler, Montgomery, Ala., for Carr.
    Ira DeMent, U. S. Atty., D. Broward Segrest, David B. Byrne, Jr., Asst. U. S. Attys., Montgomery, Ala., for plaintiff-appellee.
    Before GOLDBERG, CLARK and RO-NEY, Circuit Judges.
   CLARK, Circuit Judge:

Sellers, Sexton, and Carr appeal from their convictions for the use of a wire communication facility for the transmission in interstate commerce of wagering information in violation of 18 U.S.C. § 1084(a). We find no merit in any of the contentions raised on this appeal and therefore affirm the convictions.

Validity of the Search Warrant

The Unidentified Informer’s Tip — The appellants first urge that the warrant authorizing the search of the premises on which the gambling operations were conducted did not comply with the standards set out in Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723 (1964), and further explicated in Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969). These cases hold that an affidavit based solely upon an unidentified informer’s tip may provide the probable cause basis for the issuance of a search warrant if the affidavit contains sufficient objective assertions from which a detached magistrate may reasonably conclude that the hearsay should be credited. In these rulings the Supreme Court established a two-prong test for assaying affiants’ hearsay statements: (1) the affidavit must present sufficient objective evidence to enable the magistrate to conclude that the unnamed informant is credible or that his information is reliable, and (2) the affidavit must set forth some underlying circumstances which reveal the source of the informer’s information pertaining to the criminal activity.

The appellants here do not challenge the sufficiency of the instant affidavit to meet prong (1) — the reliability of the unidentified informer. Rather, they contend that the affidavit in this case fails to satisfy prong (2) — the requirement that the warrant disclose the underlying circumstances from which the informant drew his conclusion of criminal activity so as to enable independent magisterial evaluation.

The face of the affidavit in the case at bar does not expressly state any source for the informer’s information. The government, however, contends that a reading of the entire affidavit discloses sufficient detail to satisfy the alternative prong (2) standard enunciated in Spinelli because the affidavit describes the criminal activity “in sufficient detail that the magistrate may know he is relying on something more substantial than a casual rumor circulating in the underworld or an accusation based merely on an individual’s general reputation.” Spinelli, 393 U.S. at 416, 89 S.Ct. at 589.

Though appellants quarrel somewhat with the Spinelli premise that a sufficiently detailed affidavit may support the inference that the informant gained his information in a reliable way, their principal argument is that the affidavit in this case does not meet that standard. They contend that the affidavit here is little more detailed than the one found defective in Spinelli and that the objective facts set out do not support the requisite inference. We disagree. As did the affiant in Spinelli, the affiant here, Mr. Painter, asserted that two telephones were located on the premises to be searched and that an informer who had proven to be exceptionally reliable had stated that the suspects were operating a gambling enterprise. Unlike the affiant in Spinelli, however, Mr. Painter did not content himself with a mere conclusory statement that the defendants were conducting a gambling operation. Instead, he went on to outline the administrative hierarchy of the bookmaking operation to the magistrate by swearing that he had been told that two of the individuals furnished “the line” to and “handled layoffs” for the third, and that the third individual disseminated “the line” locally. These detailed statements relating to the organizational procedures of the gambling operation provided a basis from which a detached judicial officer could reasonably infer that the informant must have had specific and direct knowledge of this particular bookmaking operation. In addition, Mr. Painter disclosed to the magistrate that he was advised that two telephones were maintained at each of two other specified addresses and that frequent long distance toll calls were made between all three addresses. He also stated that the telephone service at one of the addresses was in the name of Michael Canon, and opined that Canon was a known gambler. A magistrate could have reasonably inferred from his wealth of detail as to the inter-use of these telephones that the information was the product of the informer’s personal knowledge or that the informer had access to and had examined telephone survey records.

Moreover, common sense impelís the conclusion that when a confidential informer is shown to be unusually reliable, the magistrate may place added credibility in such information in the affidavit as reveals the precise source of the informer’s knowledge. The affidavit before us here recites that the informant had furnished reliable information on more than one hundred occasions. In cases where the affidavit presents such cogent assertions of reliability the quantum of underlying circumstances which reveal the source of the informer’s knowledge necessary to sustain the affidavit is clearly less than in cases where the indicia of informer reliability is less dramatic. In sum, either of the two objective standards from which the magistrate is to judge the worth of the hearsay may support, although it may not displace, the other. See United States v. Crawford, 462 F.2d 597 (9th Cir. 1972); cf. United States v. Roth, 391 F.2d 507, 511 n.5 (7th Cir. 1967). While the instant case is both a unique and close one, on these facts we hold that the face of the affidavit properly permitted the magistrate to infer that sufficient probable cause was shown to justify the issuance of a search warrant.

It is not the intent of the Aguilar and Spinelli decisions to make it difficult for a policeman to get a warrant if in fact he has probable cause. On the contrary, the cases contemplate that an affiant with some basic understanding of the law can get a warrant if he has probable cause and simply sits down and explains why. Accordingly, we have evaluated the warrants in this case not under technical requirements but against the benchmark cases that the Supreme Court has indicated we should use. In doing so, we have construed the preference for searches under warrants to imply that the benchmark cases are concerned with practical inferences that may be taken from the facts as a whole.

Gonzales v. Beto, 425 F.2d 963, 970 (5th Cir. 1970) (footnote omitted).

State Search Warrants and Federal Rule b-1 — Relying on this court’s recent opinion in United States v. Brouillette, 478 F.2d 1171 (5th Cir. 1973), which held that a warrant may be issued by a United States Commissioner to federal officers only upon a showing of probable cause to believe that a federal crime has been committed, the appellants mount a second, more technical, attack on the state court search warrant. They contend that the fruits of the search, conducted under authority of the warrant issued by an Alabama judge on a probable cause showing of a breach of Alabama law, but not federal law, are not admissible in a federal prosecution. This somewhat startling contention is based on the premise that the federal involvement in this particular search made it equivalent to a federal search and thus subjected it to the technical requirements of Rule 41 of the Federal Rules of Criminal Procedure, including the Brouillette requirement that the warrant only issue upon a showing sufficient to establish probable cause to be-live a federal crime has been committed.

Despite the government’s contention that the fact is otherwise, we assume for the purpose of this decision that there was sufficient federal involvement to require that the search be treated as a federal search.

At the same time we note that there is no suggestion that the state participation in the search was not a bona fide effort to secure evidence of a violation of state law for use in a state prosecution.

In Navarro v. United States, 400 F.2d 315 (5th Cir. 1968) (hereinafter Navarro 7), this court held that the fruits of a search conducted jointly by federal and state officers pursuant to a state warrant were improperly admitted into evidence in a federal prosecution since the warrant was not issued by a “court of record” as then required by Rule 41. The question presented here, where the search was conducted by federal and state officers under the authority of a warrant issued by a state court on the affidavit of a state officer which averred that evidence of a state crime might be found, is whether Navarro I requires the suppression of the fruits of that search in a federal prosecution because the warrant was not secured through procedures which complied in all respects with the requirements of Rule 41.

Properly read, Rule 41 grants the authority to designated judicial officers, federal and state, to issue federal search warrants. The authority granted to state courts under this rule is in addition to the state-vested power of those courts to issue a warrant upon a showing that probable cause exists to believe a violation of state law has occurred. While Rule 41 sets out the procedure to be followed in issuing a warrant for a violation of federal law, it obviously should not be contemplated that the federal rule would purport to regulate the procedures through which state courts may issue search warrants predicated on violations of state law. A federal court reviewing the sufficiency of a warrant issued by a state court, for the purpose of determining whether the fruits of a resulting search are lawful and hence admissible in a federal prosecution, must determine whether the warrant was issued as a federal warrant or as a state warrant. If the warrant was issued under authority of Rule 41 as a federal warrant clearly it must comply with the requirements of the rule. If, however, the warrant was issued under authority of state law then every requirement of Rule 41 is not a sine qua non to federal court use of the fruits of a search predicated on the warrant, even though federal officials participated in its procuration or execution. The products of a search conducted under the authority of a validly issued state warrant are lawfully obtained for federal prosecutorial purposes if that warrant satisfies constitutional requirements and does not contravene any Rule-embodied policy designed to protect the integrity of the federal courts or to govern the conduct of federal officers.

Navarro I established that the “court of record” requirement of Rule 41 was a substantive standard by which the conduct of federal searches should be measured rather than any mere procedural standard. Our holding today must not be construed as a retreat from the principle of that case. It is, rather, a refusal to extend Navarro I beyond the limits of common sense.

The requirement of Rule 41 (before it was amended) that warrants be issued only by “courts of record” apparently reflected an intent that federal searches were not to be conducted on the authority of search warrants issued by state tribunals whose functions are so limited that they have not been made courts of record. Navarro I accomplished this purpose, through the use of this court’s supervisory power, by excluding from federal prosecutions the fruits of searches conducted with federal officers participation.

No such useful purpose could be served, however, by a declaration that state warrants must be issued only to investigate federal crimes if federal officers may be present when the search is conducted. In a ease where sufficient evidence of any federal crime is lacking, as it was apparently lacking in the case sub judice, cooperating officials would be completely unable to comply with such a rule. The fault which the appellants urge us to declare could not be avoided by procuring the warrant from another court. The only effect of such a requirement on the conduct of federal officers would be to preclude federal cooperation and participation in any warranted search conducted by state officers for state purposes. We decline to hold, that such an anomalous and baseless rule was ever intended by Rule 41. Navarro I certainly intended no such result. To the contrary, it stated:

We do not mean to suggest in any way that we would discourage cooperation between federal and state law enforcement officers.

400 F.2d at 319

The proper test to be applied is whether a particular Rule 41 standard is one designed to assure reasonableness on the part of federal officers, or whether the provision merely blueprints the procedure for issuance of federal warrants. The case sub judice presents a paradigm of the latter class of requirements. The federal crime essential of Brouillette is a recognition of the inherent limits of the authority granted by Rule 41 to federal and state magistrates to issue federal search warrants. It does not exist to limit the activities of federal officers when they cooperate with state officers. We decline to apply this particular Rule 41 requirement to state warrants. The contention that the fruits of this joint federal’ and state search should be suppressed is without merit.

Moreover, we specifically decline to adopt any rule under our supervisory power that would require that state court warrants meet all of the Rule 41 procedural requirements whenever federal officers have sufficient evidence of federal law violations to obtain a federal warrant. Such a rule would not only serve no useful purpose, but it would also place officers acting jointly on the horns of a dilemma in deciding whether to charge a state or federal crime. Such officials should be free to make a considered choice based on the best available information and unencumbered by merely technical procedural rules.

“Transmission” under the Statute

Appellant Carr, conceding for the sake of argument that the evidence established that wagers were received by telephone from out-of-state betters, nevertheless contends that the government failed to establish a violation of 18 U.S. C. § 1084(a). He bases this argument on his contention that “transmission” as used in that provision does not embrace the act of receiving. For this proposition he cites United States v. Stonehouse, 452 F.2d 455 (7th Cir. 1971), and Telephone News Systems, Inc. v. Illinois Bell Telephone Co., 220 F.Supp. 621 (N. D. Ill.1963) (three judge court) (dicta), aff’d per curiam, 376 U.S. 782, 84 S.Ct. 1134, 12 L.Ed.2d 83 (1964), both of which lend some support to his contention. In Sagansky v. United States, 358 F.2d 195, cert. denied, 385 U.S. 816, 87 S.Ct. 36, 17 L.Ed.2d 55 (1966), however the First Circuit reached a contrary result.

While this might be a proper construction of the term “transmission” taken out of context, § 1084(a) does not punish the mere transmission of bets or wagers, but rather the “use” of interstate wire communication facilities for their transmission. When a person holds himself out as being willing to make bets or wagers over interstate telephone facilities, and does in fact accept offers of bets or wagers over the telephone as part of his business, we think it is consistent with both the language and the purpose of the statute to hold that he has “used” the facility for the transmission of bets or wagers.

358 F.2d at 200. The First Circuit’s interpretation has recently found favor in the Tenth Circuit, which gave the statute a similar reading in United States v. Tomeo, 10 Cir., 459 F.2d 445, cert. denied, 409 U.S. 232, 93 S.Ct. 232, 34 L. Ed.2d 175 (1972).

In reaching this conclusion we give consideration ... to the fact that the telephone is designed for a two-way conversation and exchange of information. If we were to accept the appellant’s contention, we would effectively deny that any discussion or exchange took place, and we find that assumption rather strained. We also note that an interpretation of use of the wire facility which is limited to the isolated sending of messages does not meet the basic purpose of the statute and renders its scope more limited than an everyday experience with the telephone would dictate. The statute deals with bookmakers — persons “engaged in the business of betting or wagering.” Bookies take bets, they receive them, they handle them; it is a transaction requiring mutuality or a meeting of minds. It is unlikely in framing section 1084(a) that Congress considered betting transactions to move in but one direction in the use of the telephone.

459 F.2d at 447. Aligning ourselves with the views of the First and Tenth Circuits, we conclude that the statute properly construed reaches the activities of these professional gamblers who, as the jury found, conducted their activities through the use of interstate telephone facilities, regardless of which party sent and which received the wager.

Sufficiency of the Evidence as to Carr

Next, Carr contends that, even if the evidence was sufficient to support a jury finding of his involvement in an intrastate gambling operation, the government failed to show that he personally knew of the interstate character of the enterprise. The contention is not well taken.

The proof in this case was overwhelming that telephone calls were received from an out-of-state bettor. Moreover, if the statute requires actual knowledge of the non-local origin of such telephone transmissions, it is clear that at least one or more of the participants in the enterprise knew that calls were received from Kosciusko, Mississippi. It was not necessary that the Government prove that Carr had actual intent to violate federal law, in light of the more-than-sufficient proof that he aided and abetted the state law violation.

There must exist a community of unlawful intent between the accessory and the perpetrator of the crime, but * * an accessory is liable for any criminal act which in the ordinary course of things was the natural or probable consequence of the crime that he advised or commanded, although such consequence may not have been intended by him.” 22 C.J.S., Criminal Law, § 92, p. 164.

Russell v. United States, 222 F.2d 197, 199 (5th Cir. 1955); McClanahan v. United States, 230 F.2d 919, 924 (5th Cir.), cert. denied, 352 U.S. 824, 77 S.Ct. 33, 1 L.Ed.2d 47 (1956). See also United States v. DeLaMotte, 434 F.2d 289 (2d Cir. 1970), cert. denied, 401 U.S. 921, 91 S.Ct. 910, 27 L.Ed.2d 825 (1971).

Carr’s reliance on Grimes v. United States, 379 F.2d 791 (5th Cir.), cert. denied, 389 U.S. 846, 88 S.Ct. 104, 19 L.Ed. 113 (1967), is misplaced. In that ease the aiding and abetting conviction was reversed, not for lack of knowledge that a gambling associate had traveled interstate, but expressly because the proof did not show Grimes had coun-selled or assisted that activity. Reading that case with this court’s opinions in Russell and McClanahan, as we must, it is apparent that the interstate activity proven in Grimes was implicitly held not to be a natural or probable result of Grimes’ participation in the illegal local gambling operation. In the case at hand, Carr is bound to have known that it was most natural and highly probable that an operation of this magnitude would receive at least one interstate call.

The Unabridged and Unexpurgated Tapes

Finally, the appellants urge reversal on the ground that during its deliberations the jury was improperly permitted to listen to certain recorded tapes, only portions of which had been admitted into evidence. After determining that at least some members of the jury had listened to substantial portions of the tapes which were not properly before them, the trial judge denied the appellant’s motion for a mistrial, finding that appellants had suffered no prejudice and that the error, if any, was the fault of appellants’ trial counsel.

The trial judge, through the bailiff, specifically advised the attorneys for each of the defendants and the Government that it was their responsibility to review the exhibits that had been placed in the hands of the clerk for the purpose of seeing that no exhibits not admitted into evidence went to the jury. Though appellants apparently recognize that ordinarily a failure of counsel to comply with such an order would provide them with no basis for objection, see Dallago v. United States, 138 U.S. App.D.C. 276, 427 F.2d 546, 554 (1969), and United States v. Strassman, 241 F. 2d 784, 786 (2nd Cir. 1957), they argue on this appeal that they were misled by the statements of the Government attorney. As the transcript of the trial court’s inquiry into this question reveals, one of the attorneys for the appellants stated to the Government attorney that he was concerned about the tapes going to the jury room. The Government attorney responded that although the entire tape had been placed in the recorder, it was set so that the portion of tape that had been admitted into evidence would play when the machine was turned on. The counsel for the appellants acquiesed in this procedure, and the tapes were sent to the jury. Some one and a half hours later and before any further word had been received from the jury the defendants’ attorney, apparently regretting after reflection his initial decision to furnish the tapes to the jury in this manner, brought the matter to the attention of the court. The court stated that he would inquire of the jury when they returned a verdict as to whether they had listened to any unadmitted portions of the tapes.

We need not reach or decide whether the Government’s representations were so misleading as to free the defendants of the consequences of their lawyer’s choice, because we determine that no prejudice resulted from the jury’s exposure to the unadmitted portions of the tapes. Sellers and Sexton did not contest the fact that they operated a bookmaking enterprise, while the evidence as to Carr’s participation was overwhelming. The only really contradicted issue at trial was whether the appellants used the telephone in interstate commerce. In its order denying the motions for a new trial, the district court stated:

This court has very carefully listened to the tape recordings in question and finds that, in addition to some “family talk” and singing and pop music, there is general talk by unidentified men regarding betting, the recording of sports scores from short-wave radio, the giving of betting lines on basketball games, and a discussion by two unidentified men in which Charles Carr’s name is mentioned with reference to a land transaction in Cren-shaw County, Alabama. Thus, this court specifically finds that none of the defendants were prejudiced to any degree by the tape recordings in question going to the jury.

After listening to these two tapes, we can reach no other conclusion except that any error was harmless beyond a reasonable doubt. See Schneble v. Florida, 405 U.S. 427, 92 S.Ct. 1056, 31 L.Ed.2d 340 (1972); Harrington v. California, 395 U.S. 250, 89 S.Ct. 1726, 23 L.Ed. 284 (1969); Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed. 2d 705 (1967).

We have considered the other issues raised by the appellants and find them without merit. The convictions appealed from are

Affirmed.

      . AFFIDAVIT FOR. SEARCH WARRANT
      STATE OF ALABAMA COUNTY OF ELMORE
      SS.

        Willie B. Painter, affiant, being first duly sworn on oath, deposes and says:
      (1) That the following property constitutes evidence of criminal conduct: In that the herein described automobiles and real property contains records and other evidence of transactions whereby money or other valuable things may be won or lost upon prize fights, ball games, or other contests or book-making or pool-selling, contrary to Title 14, Sections 261 and 278, Code of Alabama 1940, as amended.
      (2) Affiant further says that the above-mentioned property is located at the following described place: 243 Murphy Drive, a residence located in the Scenic Hills section, a residential area located in the Southwest section of El-more County, Alabama, being the residence of Charles E. Sellers.
      One 1971 Pontiac Grand Prix two door sedan, VIN 2765718171502, bearing 1972 Alabama Licence plate number 29-9109, issued to Charles E. Sellers, Route 5, Prattville, Alabama.
      One 1968 Chrysler 300, two door sedan, YIN 3M23K86C201138, being 1972 Alabama License plate number 29-9110, issued to Charles E. Sellers, Route 5, Prattville, Alabama.
      (3) Affiant further says that he has probable cause to believe the above-listed property to be searched for and seized is now located upon said described premises, based upon the following facts: Information is that Charles Sellers is operating book from his residence located at 243 Murphy Drive, Prattville, Alabama. He has two telephones listed from this residence as follows: #365-6461 and #365-8657. Information REFLECTS THAT #365-8657 is apparently used for the bookmaking operation.
      Toll calls have been made from this number to telephone number 853-1252 in Birmingham frequently during recent months. Telephone number 853-1252 is in the name of Michael Canon, 1120 B. Florentine Circle, Birmingham, Alabama. This number is an unlisted number. Canon also has telephone service through #853-8751 and Canon is a known gambler.
      Telephone number 322-6928 has been called frequently from Charles Sellers residence number. This number is in the name of Anthony Ippolito at 2646 Milner Court, Birmingham, Alabama. Ippolito also has #324-7195. Frequent calls have been made from telephone number 365-8657 to telephone number 853-8751 in Birmingham.
      Information is that Canon and Ippolito are furnishing the line to Charles Sellers on basketball games at the present and on football and baseball games during the season. Sellers in turn furnishes the line to local bookmakers in the Montgomery area. Canon and Ippolito reportedly are handling layoffs for Charles Sellers.
      The above information was supplied by an informant who has given reliable information in more than one hundred instances in matters of investigation.

      . As it turns out, the unnamed informant was a Special Agent of the Federal Bureau of Investigation.

      . At tlie time of the issuance of the warrant the relevant portion of Rule 41 read as follows:

        Rule J¡1.

        Search and Seizure

      (a) Authority to Issue Warrant. A search warrant authorized by this rule may be issued by a judge of the United States or of a state, commonwealth or territorial court of recoi’d or by a United States commissioner or territorial court of record or by a United States commissioner within the district wherein the property sought is located.
      (b) Grounds for Issuance. A warrant may be issued under this rule to search for and seize any property
      (1) Stolen or embezzled in violation of the laws of United States ; or
      (2) Designed or intended for use or which is or has been used as the means of committing a criminal offense; or
      (3) Possessed, controlled, or designed or intended for use or which is or has been used in violation of Title 18, U.S.O., § 957.
      (c) Issuance and Contents. A warrant shall issue only on affidavit sworn to before the judge or commissioner and establishing the grounds for issuing the warrant. If the judge or commissioner is satisfied that grounds for the application exist or that there is probable cause to believe that they exist, he shall issue a warrant identifying the property and naming or describing the person or place to be searched. The warrant shall be directed to a civil officer of the United States authorized to enforce or assist in enforcing any law thereof or to a person so authorized by the President of the United States. It shall state the grounds or probable cause for its issu-anee and the names of the persons whose affidavits have been taken in support thereof. It shall command the officer to search forthwith the person or place named for the property specified. The warrant shall direct that it be served in the daytime, but if the affidavits are positive that the property is on the person or in the place to be searched, the warrant may direct that it be served at any time. It shall designate the district judge or the commissioner to whom it shall be returned.

      . The proof discloses that the informant was an active federal official and that this informant and one other such official accompanied state officers to the premises and participated in certain phases of the search process. After a successful state prosecution based upon the evidence disclosed by the search, the instant federal charges were filed.

      . In United States v. Navarro, 429 F.2d 928 (5th Cir. 1970), however, this court held that the use in a subsequent state court prosecution of the physical evidence discovered by the state officers during the joint search should not be enjoined, though the federal officers were not allowed to testify as to the fruits of their search. Finally, in United States v. Navarro, 441 F.2d 409 (5th Cir. 1971), we held that an officer who was a state agent at the time of the search could testify as to the fruits of the search at the state trial despite the fact that he had subsequently accepted employment by the federal government.

      . The 1972 amendments to Rule 41, effective October 1, 1972, omit the court of record requirement.

      . See Navarro I, supra, 400 F.2d at 318 n. 2.

      . Compare Navarro I.

      . Brouillette also recognized tlie necessity of federal-state co-adjuvaney.
      After all, under the system of federalism, there is room for dual state-federal activity. Federal officials often refer information they have received to state officials for jjossible prosecution. 478 F.2d at 1177.

      . Though some of the testimony in this case indicates that the federal officers suspected a violation of federal law, we are unable to determine from the record before us whether the officers had sufficient evidence to have secured a federal warrant.

      . Whoever being engaged in the business of betting or wagering knowingly uses a wire communicaion facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for tlie transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined not more than $10,000 or imprisoned not more than two years, or both.

      . Compare United States v. Swank, 441 F.2d 264 (9th Cir. 1971).

      . In light of this holding that any error was harmless, we need voice no opinion as to whether, when a motion to retrieve the tapes had been proiierly presented, the trial judge would have committed error if he had not taken immediate action to retrieve the tapes. It is possible that such action would have prevented what ultimately transpired in the jury room; on the other hand, it might well have only empliasized to the jury that certain evidence, probably unfavorable to the defendants, was being withdrawn from their consideration. No contemporaneous recording was made of the colloquy between counsel and the trial judge as to this matter. However, it appears that defense counsel acquiesced in the trial court’s suggestion that no action be taken pending the jury verdict.