author: CLARK, Circuit Judge:

text:
    Mrs. Marie BROWN, Plaintiff-Appellee, v. FORD MOTOR COMPANY, Defendant-Appellant.
    No. 72-3100.
    United States Court of Appeals, Fifth Circuit.
    June 1, 1973.
    Rehearing and Rehearing En Banc Denied Aug. 6, 1973.

      Edmund A. Landau, Jr., James Y. Davis, Albany, Ga., for defendant-appellant.
    Edward T. Hughes, Robert E. Hughes, Camilla, Ga., Sol Altman, Larkin M. Fowler, Jr., Thomasville, Ga., for plaintiff-appellee.
    Before WISDOM, GEWIN and CLARK, Circuit Judges.
   CLARK, Circuit Judge:

. [1] Mrs. Marie Brown brought this diversity action seeking damages for the death of her husband, who died as a result of an automobile crash. Plaintiff contended that the accident was caused by the negligence of Ford Motor Company in assembling the automobile’s steering mechanism. The jury rendered a verdict in favor of Mrs. Brown against Ford Motor Company. After carefully reviewing the record in this case, we conclude that the verdict was unsupported by the evidence and reverse.

According to the uncontradicted evidence, the 1967 Ford Mustang automobile driven by Mr. Brown had been purchased used and had been wrecked and repaired before he acquired it. He was killed when the car left the highway and, despite the fact that it traversed both banks of a sloping ditch, traveled 280 feet in a straight line before running head-on into a large oak tree. The highway patrolman who investigated the accident testified that there were no signs of brake or skid marks between the point where the automobile left the pavement and the point of impact. Plaintiff’s case rested on evidence tending to show that the nut affixing the steering wheel to the steering wheel shaft was loose. According to testimony presented on behalf of the plaintiff, such a condition would have allowed the splines on the steering wheel to become worn. The worn splines, it is asserted, would have permitted the steering wheel to rotate freely on the shaft, depriving the driver of effective control over the vehicle’s direction of travel.

Ford contends on appeal that the jury verdict was contrary to the mechanics of physical science in light of the uncontradicted testimony introduced on its behalf that without steering control an automobile could not have angled across the ditch at the side of the road while traveling a straight path. However, our disposition of the question discussed below renders it unnecessary to resolve this point.

Even assuming that there was sufficient evidence from which the jury could have reasonably concluded that the accident was proximately caused by the alleged defect, the plaintiff fell short of presenting sufficient evidence from which it could be concluded that the defect was the result of Ford’s negligence. Mr. Walter Jurvis, sales manager of the parts supply company which manufactured the steering wheel for Ford, testified that a special marking on the wheel taken from the Brown car identified it as being one of a special order of steering wheels which was not delivered to Ford until some ten months after the latest possible date of manufacture of the car. This testimony was uncontra-dicted and unimpeached.

This circuit is firmly committed to the general rule that ordinarily questions of credibility of witnesses are for the jury and our opinion today signals no departure from this standard. Rather, we emphasize the caveat expressed by the Supreme Court in Chesapeake & O. Ry. Company v. Martin, 283 U.S. 209, 216, 51 S.Ct. 453, 456, 75 L. Ed. 983 (1931):

[Tjhis does not mean that the jury is at liberty, under the guise of passing upon the credibility of a witness, to disregard his testimony, when from no reasonable point of view is it open to doubt.

The plaintiff argues, however, that the jury was not required to accept Jurvis’ testimony because of possible bias and interest in the outcome of the case. This claim of partiality is based solely upon the fact that Jurvis’ employer, the manufacturer of the wheel, had been doing a substantial amount of business with Ford Motor Company. Some decisions contain language to the effect that the testimony of an interested witness always creates a jury question as to credibility. We decline to adopt any such absolute rule. Each case must turn upon its individual facts. Where the interest of the testifying witness in a particular outcome of the pending litigation is substantial, his possible bias may be sufficient in itself to create a jury question as to credibility. On the other hand, where the interest of the witness is altogether remote or indirect a jury should not be permitted to speculate as to veracity. Between these two extremes various gradations of bias are possible. In these neither-fish-nor-foul cases the decision to submit the question to the jury must depend not only upon interest but also on various additional factors, including the inherent plausibility of the testimony and its contradiction or corroboration by the other evidence. For example, in Chesapeake & O. Ry. Company v. Martin, supra, the Supreme Court held that the fact that the witness was an employee of a party-litigant — a direct and much more substantial relationship than that presented here — was not enough to create a jury question as to his veracity. See also Central Truck Lines v. Lott, 249 F.2d 722 (5th Cir. 1957); cf. Falk v. C. I. R., 332 F.2d 922, 927 n.6 (5th Cir. 1964). See generally Ferdinand v. Agricultural Insurance Co., 22 N.J. 482, 126 A.2d 323, 62 A.L.R.2d 1179 (1956), and annotation following, 62 A.L.R.2d 1191(1958).

Jurvis’ testimony reveals no lack of candor. On cross-examination the plaintiff did not explore his testimony on this critical point. When, during the course of cross-examination, the witness stated that he had documentary evidence in his possession on the witness stand which reflected facts about the manufacture date of the wheel, plaintiff’s counsel abruptly changed the subject of his inquiry rather than seeking to use such records to question the accuracy of the statements. In this particular case the indirect interest of the witness in the outcome of the case was insufficient to create a credibility question requiring jury resolution. This conclusion is reinforced by the objective nature of Jurvis’ testimony which, if untrue, was readily susceptible to impeachment.

On the facts here presented, we simply cannot conclude that any reasonable jury could have disbelieved the testimony which established that the date of the wheel’s manufacture was subsequent to the stipulated date of the car’s manufacture. Therefore, the wheel introduced in evidence as the steering wheel affixed to the automobile at the time of the accident could not have been the steering wheel which was affixed to the car by Ford at the time of the automobile’s manufacture. Thus, assuming that the defect charged — a faulty attachment of the steering wheel to the steering mechanism of the car at the time of the accident — was proven to have existed, the uncontradieted proof established that this defect could not have been created by Ford during the manufacturing process and it was not proven to have been attributable to this defendant in any other way.

The court below erred in basing its judgment on the jury’s verdict. We reverse and remand to the district court with directions to render judgment in favor of the defendant.

Reversed and remanded.

      . The defect here alleged is the same as that alleged by the plaintiff in Nevels v. Ford Motor Co., 439 F.2d 251 (5th Cir. 1971), in which we held that sufficient evidence had been adduced to present a jury question as to Ford’s negligence. Some time after the accident in suit here, one Mr. Nevels, apparently a relative of the plaintiff in the former case, purchased the steering wheel assembly of Mr. Brown’s wrecked Mustang from a salvage operator, examined it in bis workshop, then contacted Mrs. Brown to inform her of his findings. The attorneys for the plaintiff are those that represented the plaintiff in Nevels, while Ford is represented by the same attorneys who represented it in the Nevels action.

      . In Nevels the automobile followed an erratic path.

      . The division of functions between judge and jury in diversity cases is a question of federal law. Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir. 1969).

      . In its written opinion denying defendant’s motion for judgment notwithstanding the verdict, the trial court aeknowl-edged that it considered the question “a close one.”


source: Caselaw Access Project

author: JOHN W. PECK, Circuit Judge.

license: Public Domain

text:
    KAYSER-ROTH CORPORATION, Plaintiff-Appellee, v. TEXTILE WORKERS UNION OF AMERICA AFL-CIO, Defendant-Appellant.
    No. 72-2175.
    United States Court of Appeals, Sixth Circuit.
    Argued April 6, 1973.
    Decided May 31, 1973.

      Wilkes T. Thrasher, Jr., Thrasher, Sherrill & Anderson, Chattanooga, Tenn., Patricia E. Eames, Joel Ronald Ax, Textile Workers Union of America, New York City, for defendant-appellant.
    O. W. McKenzie, Dayton, Tenn., J. W. Alexander, Jr., B. H. Boswell, Blakeney, Alexander & Machen, Charlotte, N. C., for plaintiff-appellee.
    Before PECK and LIVELY, Circuit Judges, and O’SULLIVAN, Senior Circuit Judge.
   JOHN W. PECK, Circuit Judge.

On January 19, 1969, the Kayser-Roth Company filed this action against the appellant Textile Workers Union of America in the Circuit Court of Rhea County, Tennessee, seeking recovery for damages arising from a strike that occurred at the Kayser-Roth hosiery plant in Dayton, Tennessee, in 1968. The company’s complaint presented three theories for recovery: tortious interference with business, conspiracy to interfere with business, and violation of the federal secondary boycott laws. On February 10, 1969, the appellant union caused the action to be removed to the Federal District Coui't for the Eastern District of Tennessee, and filed a counterclaim charging the company with an unlawful conspiracy to incite litigation, to induce perjury and to prevent the union from carrying out its lawful activities. The company denied the allegations of the counterclaim.

A trial was had to the District Court sitting without a jury, and the Court made extensive findings of fact and conclusions of law which are reported at 347 F.Supp. 801 (E.D.Tenn.1972), and which need not be repeated here. The Court found that the company had sustained losses and damages of $1,158,632.-46 as a direct result of violence and unlawful strike activity which the union either participated in, authorized or ratified. The Court found that the evidence was insufficient to establish an unlawful secondary boycott, and also found that the union failed to establish its counterclaims. The union has perfected this appeal from the judgment of the District Court.

The union’s first contention is that the District Court lacked jurisdiction over the non-federal causes of action when it denied relief to the company upon its only federal claim, the violation of the secondary boycott provisions of the Taft-Hartley Act, 29 U.S.C. § 158(b)(4). At this point, the union contends, it became clear that the state claim was the real body of the case and that it should have been dismissed from the federal court.

The only findings necessary to support the District Court’s exercise of pendant jurisdiction over the non-federal causes of action are that the federal claim has apparent substance and that the state and federal claims derive from a common nucleus of operative fact. United Mine Workers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). Although the evidence did not warrant a finding for the company on the issue of secondary boycott, the evidence did indicate that there was substance to the company’s allegations; For example, the company offered evidence tending to show that the union violently intimidated employees of neutral common carriers to the extent that they ceased to do business with the company, 347 F.Supp. at 805-806. And not only did the union not contest the jurisdiction of the District Court, the case was removed from the state court upon the union’s motion. Given the expenditure of judicial time and energy on this case, and given the common nucleus of operative fact, we cannot say that the exercise of pendant jurisdiction by the District Court was an abuse of its discretion. Gibbs, supra, 383 U.S. at 725-726, 86 S.Ct. 1130; Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148 (1933); Ritchie v. United Mine Workers, 410 F.2d 827, 831-832 (6th Cir. 1969); Connecticut General Life Ins. Co. v. Craton, 405 F.2d 41, 48 (5th Cir. 1968); Price v. United Mine Workers, 336 F.2d 771, 776 (6th Cir. 1964); Rumbaugh v. Winifrede Railroad Company, 331 F.2d 530, 539 (4th Cir. 1964).

Secondly, the union contends that the evidence did not warrant the judgment because the company failed to show that the union was responsible for, participated in, authorized or ratified the acts complained of. Such a showing is necessary under the NorrisLaGuardia Act, which provides:

“No officer or member of any association or organization, and no association or organization participating or interested in a labor dispute, shall be held responsible or liable in any court of the United States for the unlawful acts of individual officers, mem-bes or agents, except on clear proof of actual participation in, or actual authorization of, such acts, ‘or of ratification of such acts, after actual knowledge thereof.” 29 U.S.C. § 106. (Emphasis supplied.)

The statutory requirement of “clear proof” lies somewhere between the traditional burdens of reasonable doubt and preponderance of the evidence. Gibbs, supra, 383 U.S. at 737, 86 S.Ct. 1130. A review of the relevant evidence and of the reported findings of the District Court indicates that the company did meet this burden of proof on the issues of participation, authorization and ratification of numerous acts of violence by the strikers.

The involvement of the union in the violence and other unlawful and damage causing activities during the strike is demonstrated most clearly by the actions of Adolph Benet, the union’s International Vice President, and Ted Benton and Walter Rainey, its International Representatives. During the course of the strike, these union officials personally participated in, observed, supervised and controlled the activities of the strikers. They leased property adjacent to the plant site for use as a strike headquarters; a mobile office was moved onto this property, and a shelter for the strikers was also provided. Other evidence indicated that Benton instructed the pickets to walk in such a manner as to make entrance to the plant difficult. Rainey instructed them that they should stop non-strikers from entering the plant by any means they could, including stripping off their clothes. Benton admitted that he was at the picket line from the beginning of the strike until the plant was closed supervising strike activities; Rainey spent about one-half of his time assisting Benton in the supervision of the strikers. During this period, numerous acts of extreme violence occurred which are fully recounted in the opinion of the District Court. In their capacity as strike supervisors for the union, Rainey and Benton observed groups of strikers while they blocked, stoned, and in some cases overturned vehicles bearing non-strikers attempting to enter or leave the plant.

Benton admitted that he was aware of the systematic daily implantation and re-implantation of nails and broken glass on company driveways, and when the company sought to provide bus service for non-striking workers, Benton personally directed the strikers to jam the buses to prevent boarding by non-strikers. The company eventually capitulated to the violence, and the plant was closed on June 24, 1968. Thereafter, the striking employees effectively prevented its reopening until September 16, 1968.

Nevertheless, the union maintains that it cannot be held responsible for the acts of violence committed by the strikers. This argument is not persuasive for several reasons. First of all, the union, as part of its program of conducting the strike, promised to protect the strikers against charges of criminal activities. The union provided bail bonds and defense counsel for all strikers who were arrested, all but one of whom pleaded guilty, and all of whom were convicted. Fourty-three strikers, including Benton and Rainey, were charged with and were convicted of criminal contempt for failure to abide by the- state court injunctions; all were represented by union counsel. The union paid over $167,000 in attorney’s fees and over $155,000 was spent on strike benefits, appeal bonds and fines. Secondly, although the union asserts that it attempted to cool an explosive strike situation, it continued to pay strike benefits to strikers who pleaded guilty to criminal charges, and it provided free counsel and paid the fines of all strikers who were arrested and charged with criminal conduct or criminal contempt. ,

On the issue of ratification, which alone would be sufficient to justify an award under the Act, the company showed that when Benton returned from Atlanta after the two days of extreme violence, he congratulated some of the strikers for a job well done in closing down the plant. In its widely distributed magazine, the union boasted that “When they get angry enough to do things here in Tennessee they go all the way. The strike is 100% effective. The hosiery factory in Dayton seems to have been ‘struck by a plague’ . . . . ” Benton testified that these statements were not retracted by the union. The union wrote various union confederates letters in which it was stated that even though the company had attempted to continue plant operations, “we have the soldiers to win this battle,” and that the union had “frustrated every move” the company made.

The union’s contention that the finding of the District Court that the union representatives authorized, ratified and condoned the violent acts complained of was based only upon the testimony of three witnesses whose credibility was impeached is not well taken. First of all, the court found that this testimony was in fact corroborated by other evidence in the case, 347 F.Supp. at 809, and secondly, the evidence concerning credibility goes only to weight, not to admissibility. On the basis of the record before us, we will not disturb the findings of the District Court on this question.

“What is required [in order to warrant a finding of ratification] is proof, either that the union approved the violence which occurred, or that it participated actively or by knowing tolerance in further acts which were in themselves actionable under state law or intentionally drew upon the previous violence for their force.” Gibbs, supra, 383 U.S. at 739, 86 S.Ct. at 1146.

The company offered clear proof that the union not only approved of the violence which occurred but that it, through several of its highest ranking officers, conducted, encouraged, authorized and participated in acts of violence which were violative of state law. The union’s contention that the proof on these points is not clear proof is without merit.

The union next contends that the company should not be permitted to recover damages which it would not have incurred had it not violated the National Labor Relations Act. This contention is based upon the fact that the National Labor Relations Board has determined that the company violated the Act by refusing to bargain in good faith during contract negotiations prior to the strike. Kayser-Roth Hosiery Co., 166 N.L.R.B. 372; Kayser-Roth Hosiery Co. v. N.L.R.B., 430 F.2d 701 (6th Cir. 1970); Kayser-Roth Hosiery Co. v. N.L.R.B., 447 F.2d 396 (6th Cir. 1971). The union’s argument is in essence a contention that the results of picket line violence should be treated as additional penalties to be imposed upon a company whose unfair labor practices have caused a strike. This argument fails to consider that special appropriate remedial sanctions are available for unfair labor practices by a company, as have been invoked in this case. Furthermore, the Supreme Court has rejected the argument that violence by strikers should not be reimbursable if the strike was caused by the unfair labor practices of the company.

“ . . . [R] eprehensible as was that conduct of the respondent [company], there is no ground for saying that it made respondent an outlaw or deprived it of its legal rights to the possession and protection of its property. The employees had the right to strike but they had no license to commit acts of violence or to seize their employer’s plant. ... To justify such conduct because of the existence of a labor dispute or of an unfair labor practice would be to put a premium on resort to force instead of legal remedies and to subvert the principles of law and order which lie at the foundations of society.” N.L.R.B. v. Fansteel Metallurgical Corp., 306 U.S. 240, 253, 59 S.Ct. 490, 495, 83 L.Ed. 627 (1939).

In appealing from the amount of the judgment, the union does not deny that substantial damages were suffered; instead it contends that the company’s proof of loss was not sufficiently documented and that the company failed to mitigate its losses. The District Court carefully distinguished between the losses sustained as a consequence of the lawful strike activity, which it ruled were not recoverable, and the losses which resulted directly and proximately from the violence and other unlawful strike activity, which it ruled were recoverable upon a showing of the “usual preponderance of the evidence rule generally applicable to civil cases.” 347 F.Supp. at 814.

The company’s evidence proved that the orders necessary to shipping the finished goods still in the plant when it was closed existed only in that plant and that access to the plant was being denied to all officers and employees of the company. Efforts were made with customers to obtain copies of these orders and new shipping instructions, but these efforts were of no avail. In addition, the union’s assertion that the company failed to make additional attempts to enter the plant to regain control of the needed records and documents is not persuasive in light of the testimony concerning violence directed at virtually every employee of the company who attempted to cross the picket line. The company cannot be held to be liable for having failed to attempt to gain access to its plant under the existing circumstances. If anything, this cautious approach served to prevent additional violence and attendant additional damage.

Evidence indicated that binding orders were received by the plant for 386,774 dozen fishnet tights, most of which orders were not able to be shipped. The company established that other plants in the area could not have finished or shipped these goods, because the Dayton plant was the only company plant which was equipped to fabricate, dye, package and ship fishnet goods. Testimony also showed that the other Kay-ser-Roth plants were already engaged to capacity in the production of other different types of hosiery.

The union also appeals from the District Court’s dismissal of its counterclaim, asserting that the company had conspired to subject the union to vexatious and improper suits and that the company had sought to procure perjured testimony through threats and bribery. The conspiracy claim stems from a reward offer which the company made at the height of the violent attacks against its non-striking employees, which is a legitimate method of obtaining aid in the apprehension of criminals and which cannot be considered as inciting litigation. The perjury action is based upon the assertion that the company’s manager sought to induce employees to testify falsely. However, the evidence showed that these employees approached the manager armed with hidden recording devices, and attempted to solicit a proposal from him which might tend to incriminate him. They were not successful, and the District Court’s dismissal of the union’s counterclaims will not be disturbed.

We have considered the remaining contentions of the appellant and find them to be without merit. The judgment of the District Court is affirmed.


author: SPRECHER, Circuit Judge. CASTLE, Senior Circuit Judge

text:
    Darryl B. DEAKTOR, Plaintiff-Appellee, v. L. D. SCHREIBER & CO. et al., Defendants-Appellants. Al PHILLIPS, Jr., et al., Plaintiffs-Appellees, v. The CHICAGO MERCANTILE EXCHANGE et al., Defendants-Appellants.
    Nos. 71-1890, 71-1892, 71-1893.
    United States Court of Appeals, Seventh Circuit.
    Argued Feb. 22, 1973.
    Decided May 21, 1973.
    Rehearing and Rehearing En Banc Denied June 29, 1973.

      Castle, Senior Circuit Judge, concurred and filed opinion.
    Thomas R. Mulroy, John L. Conlon, Lee A. Freeman, Jerrold E. Salzman, Chicago, III., for defendants-appellants.
    Aaron M. Fine, Philadelphia, Pa., Jack Joseph, Bruce P. Bickner, Chicago, 111., for plaintiffs-appellees.
    Before CASTLE, Senior Circuit Judge, and PELL and SPRECHER, Circuit Judges.
   SPRECHER, Circuit Judge.

These interlocutory appeals are from orders of the district court denying motions by defendant Chicago Mercantile Exchange and various other defendants to stay action in the district court pending the exercise of primary jurisdiction by the Commodity Exchange Commission.

Darryl B. Deaktor, plaintiff in Nos. 71-1890 and 71-1893, brought a class action against the Chicago Mercantile Exchange and various members of the Exchange alleging that the defendant members manipulated and cornered the July, 1970 frozen pork bellies futures contracts market, forcing up the price of those contracts and injuring traders, such as the plaintiff, who sold short and had not liquidated their positions prior to the defendants’ manipulation and thus were required to cover their positions by the purchase of contracts at inflated prices. This conduct was alleged to be in violation of 7 U.S.C. § 1 et seq. of the Commodity Exchange Act. The Exchange was sued on the ground of failing to exercise reasonable care in compliance with 7 U.S.C. § 7a(8), and thus failing to be aware of and to promptly halt the unlawful activities of the defendants. Various member defendants and the Chicago Mercantile Exchange moved for a stay of proceedings on the ground that plaintiff should first be required to seek relief from the Commodity Exchange Commission. The district judge denied these motions on August 23, 1971. On October 14, 1971, he certified this order for interlocutory appeal under 28 U.S.C. § 1292(b).

The plaintiffs in No. 71-1892, Al Phillips, Jr., et al., are twenty-four traders who sued the Chicago Mercantile Exchange, certain of its officers and members of its Business Conduct Committee, charging the defendants with monopolizing trading in March, 1970 fresh eggs, causing the price to fall and forcing sales at artificially depressed market prices. This conduct was alleged to violate the notice and hearing provisions in Rule 217(D) of the Rules of the Chicago Mercantile Exchange, 7 U.S.C. §§ 7a(8) and 13(b) of the Commodity Exchange Act, and sections 1 and 2 of the Sherman Act. Defendants’ motion for a stay in proceedings was denied by the district court on September 17, 1971. This Court accepted interlocutory appeals these cases and consolidated them. in

The sole issue in these appeals is whether the district court could take jurisdiction of these actions or whether the Commodity Exchange Commission properly has primary jurisdiction over these proceedings. The defendants-appellants contend that the issue is decided, in their favor, by Ricci v. Chicago mercantile Exchange, 409 U.S. 289, 93 S.Ct. 573, 34 L.Ed.2d 525 (1973). We have concluded that Ricci does not control these cases and that the district court was correct in refusing to stay proceedings to allow the exercise of primary jurisdiction by the Commodity Exchange Commission.

The Chicago Mercantile Exchange is a board of trade designated as a “contract market” by the Secretary of Agriculture pursuant to 7 U.S.C. § 7. Designation as a contract market is required before trading in contract futures can be conducted. In order to qualify as a contract market, the Chicago Mercantile Exchange was required to file with the Secretary its rules, regulations and bylaws, including rules “for the prevention of manipulation of prices and the cornering of any commodity by the dealers or operators upon such board.” 7 U.S.C. §7(d). It was required to

“enforce all bylaws, rules, regulations, and resolutions, made or issued by it or by the governing board thereof or any committee, which relate to terms and conditions in contracts of sale to be executed on or subject to the rules of such contract market or relate to other trading requirements, and which have not been disapproved by the Secretary of Agriculture . . . .”7 U.S.C. § 7a(8).

Pursuant to this requirement, the Chicago Mercantile Exchange Rule 217(C) provided that the Business Conduct Committee be charged with the duty and authority to prevent manipulation of prices and the cornering of any commodity. Rule 217(D) gives the Business Conduct Committee authority to investigate the transactions and financial condition of members, to examine their books, to prescribe capital requirements, and to issue cease and desist orders, after notice and hearing, to members found to be engaging in conduct which is “unfair or unjust.”

No specific private remedy for violations of these provisions is provided. The Act does make it a felony

“for any person to manipulate or attempt to manipulate the price of any commodity in interstate commerce, or to corner or attempt to corner any such commodity, or knowingly to deliver . . . false or misleading or knowingly inaccurate reports concerning crop or market information or conditions that affect or tend to affect the price of any commodity in interstate commerce.” 7 U.S.C. § 13(b).

Other provisions authorize the Secretary of Agriculture and the Commodity Exchange Commission to take preventive and remedial action. Thus, 7 U.S.C. § 8 authorizes the Commission, after notice and hearing,

“to suspend for a period not to exceed six months or to revoke the designation of any board of trade as a ‘contract market’ upon a showing that such board of trade is not enforcing or has not enforced its rules of government ... or that such board of trade, or any director, officer, agent, or employee thereof, otherwise is violating or has violated any of the provisions of this Act or any of the rules, regulations, or orders of the Secretary of Agriculture or the Commission thereunder.”

Provision is also made for the Commission to enter cease and desist orders against any contract market, director, officer, agent or employee who violates any provision of the Act or rules thereunder. Failure to obey the order is declared to be a misdemeanor. 7 U.S.C. § 13a. The Secretary of Agriculture is authorized to disapprove any bylaw, rule, regulation or resolution issued or proposed by a contract market which relates to terms and conditions in contracts of sale if he finds that it will violate any of the provisions of the Act or rules thereunder. 7 U.S.C. § 12a(7).

The Supreme Court considered this statutory scheme in the context of an antitrust suit alleging a conspiracy to restrain trade in the transfer of an Exchange membership in Ricci v. Chicago Mercantile Exchange, supra. The Court decided that in the circumstances there presented, the Commodity Exchange Commission should be given an opportunity to exercise jurisdiction prior to continuing the proceeding in the antitrust court. Although recognizing that the Commission could decide to refuse jurisdiction, the majority of the Ricci Court felt that the combination of three factors present in that case outweighed this uncertainty. Those factors were (1) that it would be “essential for the Antitrust Court to determine whether the Commodity Exchange Act or any of its provisions are ‘incompatible with the maintenance of an antitrust action,’ . ; (2) that some facets of the dispute between Ricci and the Exchange [were] within the statutory jurisdiction of the Commodity Exchange Commission; and (3) that adjudication of that dispute by the Commission promise [d] to be of material aid in resolving the immunity question.” 409 U.S. at 301, 93 S.Ct. at 580.

Regarding the first factor, the Court noted that although repeal of the antitrust laws was not to be lightly assumed the Commodity Exchange Act clearly contemplated a membership organization and standards for the acquisition, retention and loss of membership. The Court reasoned that if the petitioner had lost his membership pursuant to a valid rule, the first question which the antitrust court would have to decide was whether the rule itself was immune from antitrust attack. But, the Court continued, if petitioner Ricci lost his membership in contravention of Exchange rules, “the antitrust action should very likely take its normal course, absent more compelling indications of congressional intent than are present here that the jurisdictional and remedial powers of the Commodity Exchange Commission are exclusive.” Id. at 303, 93 S.Ct. at 581.

Looking at the second factor underlying its decision, the Court, while expressly declining finally to decide the jurisdictional question, noted that the Court of Appeals had found that the membership rules of the Exchange were related to “trading requirements” and “were thus among those rules which the Exchange could not ignore without violating the Act and bringing itself within the jurisdiction of the Commission” to remedy any violation of the statute and underlying rules. Id.

The Court also decided that a prior determination by the Commodity Exchange Commission would be of material aid in resolving the immunity question because the issue turned in the first instance on whether the loss of Ricci’s membership violated the Exchange rules, which in turn involved issues of fact and questions concerning the scope and significance of the rules. These were matters which the Court thought could best be dealt with by those especially familiar with the customs and practices of the industry. The Court concluded that with the aid of administrative action, if the conduct alleged was in accord with a valid rule, “the antitrust court will be in position to make a more intelligent and sensitive judgment as to whether the antitrust laws will punish what an apparently valid rule of the Exchange permits.” Id. at 306, 93 S.Ct. at 583.

It can readily be seen that, except for the antitrust claim in No. 71-1892, these cases are unlike Ricci in one significant respect, in that the district court is not being asked to reconcile the possibly conflicting policies of two congressional acts. Rather, insofar as these actions are founded on alleged violations of the Commodity Exchange Act itself, the district court is simply being asked to do what it has traditionally been called upon to do in cases involving alleged violations of the securities acts, that is, to award monetary compensation to remedy the harm done by unlawful conduct. Therefore, if a private action exists under the Commodity Exchange Act, no reason appears why the discretionary jurisdiction of the Commission should be invoked prior to judicial proceedings, any more than the jurisdiction of any other agency need generally be invoked before commencing a private damage action. The plaintiffs do not allege that any rule of the Chicago Mercantile Exchange is in violation of the antitrust laws or even the Commodity Exchange Act. They simply allege that past conduct by the Exchange and certain of its members, alleged to violate rules of the Exchange and the Commodity Exchange Act, caused them monetary injury for which they seek damages.

It is argued, however, that although no conflicting policies between two acts are here involved, primary jurisdiction should nevertheless be held to rest in the Commodity Exchange Commission on account of the difficult questions involved, which may require expertise beyond that of the average judge or juror, and because of possible conflicts in the law resulting from the opinions of different judges. The latter point may be answered by noting that the personnel, policies and views of administrative agencies and commissions do not remain forever constant. Conflicts arise in agency interpretations of law as well as within the courts. Furthermore, there is no reason to believe that more conflicts will result from judicial intervention in this area than in any other more traditional sphere of judicial activity. Finally, inasmuch as affording the Commission primary jurisdiction would not mean exclusive and final jurisdiction, there is no reason to conclude that whatever conflicts in the law may arise would be avoided by prior Commission action.

The argument that the Commission’s expertise is needed and that judges and jurors would be unable to understand the issues involved may be answered in two ways. First, deference to an administrative commission solely on the basis that lay persons will be unable to understand the proceedings has been shown by experience to be unwarranted. Judges and juries regularly decide patent cases, antitrust claims and complicated securities cases. There is no reason to believe that they would have more difficulty with factual issues involving the purchase and sale of commodities. If issues do become too complex for the average juror, special instructions or the aid of a special master can be utilized. Secondly, the issue is not primarily whether an agency has special expertise as such, but “whether some parts of the case are within the exclusive jurisdiction of the agency.” 3 Davis, Administrative Law § 19.07 at 39 (1958). The Supreme Court in Ricci found prior Commission jurisdiction warranted in order to gain an agency ruling on whether the alleged Exchange action was in accord with Exchange rules. It stated, however, that should the Commission find that the Exchange action violated these rules, its jurisdiction would end, and “the antitrust action should very likely take its normal course, absent more convincing indications of congressional intent than are present here that the jurisdictional and remedial powers of the Commodity Exchange Commission are exclusive.” 409 U.S. at 303, 93 S.Ct. at 581 (emphasis added). Inasmuch as the defendants in the cause of action under consideration here are alleged to have violated valid rules, and the Supreme Court has strongly indicated that the Commodity Exchange Commission’s jurisdiction is limited and non-exclusive, we see no reason to require the plaintiffs to invoke the discretionary jurisdiction of the Commission.

There remains the question whether private damage actions are allowable under the Commodity Exchange Act. As noted earlier, no express provision is contained in the Act. The courts which have considered the question, however, have apparently uniformly concluded that such an action exists. E. g., Booth v. Peavey Co. Commodity Services, 430 F.2d 132 (8th Cir. 1970); Johnson v. Arthur Espey, Shearson, Hammill & Co., 341 F.Supp. 764 (S.D. N.Y.1972); McCurnin v. Kohlmeyer & Co., 340 F.Supp. 1338 (E.D.La.1972); United Egg Producers v. Bauer Int’l Corp., 311 F.Supp. 1375 (S.D.N.Y. 1970); Anderson v. Francis I. duPont & Co., 291 F.Supp. 705 (D.Minn.1968); Goodman v. H. Hentz & Co., 265 F.Supp. 440 (N.D.Ill.1967); 1 Bromberg, Securities Law: § 4.6 (353) (1971). The rationale was stated in Goodman, supra, 265 F.Supp. at 447:

“Violation of a legislative enactment by doing a prohibited act makes the actor liable for an invasion of the interest of another if: (1) the intent of the enactment is exclusively or in part to protect the interest of the other as an individual; and (2) the interest invaded is one which the enactment is intended to protect. Restatement, Torts, Section 286.”

The purpose of the Commodity Exchange Act has been stated to be “to insure fair practice and honest dealing on the commodity exchanges and to provide a measure of control over those forms of speculative activity which too often demoralize the markets to the injury of producers and consumers and the exchanges themselves.” Campbell, “Trading in Futures Under the Commodity Exchange Act,” 26 Geo.Wash.L.Rev. 215, 223 (1958). It is a felony under 7 U.S. C. § 13(b) of the Act to manipulate or attempt to manipulate the price of any commodity or to corner or attempt to corner any such commodity. We think the enactment is at least in part intended to protect the interests of the plaintiff-traders in these actions. We therefore hold that a private cause of action exists under the Commodity Exchange Act in favor of the plaintiffs in these actions and that the district court was correct in permitting the plaintiffs to maintain their actions under the Commodity Exchange Act.

The issue of the antitrust allegation in Phillips v. Chicago Mercantile Exchange is somewhat more complicated. The Supreme Court in Ricci v. Chicago Mercantile Exchange, supra, did hold that an antitrust action in the district court should properly be stayed in order to allow the Commodity Exchange Commission to rule on the question whether the Chicago Mercantile Exchange actions were in accord with valid rules promulgated under the Commodity Exchange Act. We think, however, that the difference in approach to that case by the Court of Appeals and the Supreme Court emphasizes how the present case differs significantly from Ricci and that the scope of the doctrine of primary jurisdiction as applied to the Commodity Exchange Act by the Supreme Court in that case does not include the present alleged conduct. The Court of Appeals in Ricci found that the facts alleged by the plaintiff in support of his antitrust charge would constitute violations of the Commodity Exchange Act and thus could be examined by the Commodity Exchange Commission, stating that the maintenance of a private treble-damage suit in those circumstances would present a problem of coextensive coverage under two acts which might be repugnant to the policy of the Commodity Exchange Act. 447 F.2d 713 (7th Cir. 1971). The Supreme Court, in contrast, held that if the Commodity Exchange Commission found a violation of valid rules, that should end its inquiry and the antitrust action should proceed in the absence of greater evidence that the Commodity Exchange Action remedies were to be exclusive.

This difference in the approaches of the two Courts indicates that our inquiry must focus on the particular conduct alleged to violate the antitrust laws and must consider whether it is arguably protected by the Commodity Exchange Act. In Ricci, the conduct was the transfer of a membership in the Chicago Mercantile Exchange without the permission of or even notice to the owner. Although in the absence of the Commodity Exchange Act such conduct appeared to be a clear violation of the antitrust laws, the Supreme Court held that the possibility that the Commodity Exchange Act limited the applicability of the antitrust laws in that case was “substantial.” The reason for this was that Congress had declared that to deal in commodity futures at all one was required to be or deal through a member of a designated board of trade. “The Act clearly contemplates a membership organization and hence the existence of criteria for the acquisition, transfer and loss of membership.” 409 U.S. at 303, 93 S.Ct. at 581. The Court noted that the Chicago Mercantile Exchange had promulgated such rules and was under the statutory duty to enforce them to the extent they were related to trading requirements. 7 U.S.C. § 7a(8). In contrast, the conduct alleged in the present case is in no way arguably protected by the rules of the Chicago Mercantile Exchange or the Commodity Exchange Act. In fact, the Act expressly prohibits manipulation of commodity prices and the cornering of any commodity. There would therefore be no possible conflict between the antitrust laws and the Commodity Exchange Act unless the Commodity Exchange Act were deemed to be the exclusive means of remedying violations of the two acts. The. Supreme Court, in Ricci, however, decided that question adversely to the petitioners.

We see no further argument for staying the actions in the district court. The orders appealed from are therefore affirmed.

Affirmed.

CASTLE, Senior Circuit Judge

(concurring).

The issue on this appeal is whether the district court abused its discretion in refusing to defer the issues raised by the various complaints to the primary jurisdiction of the Secretary of Agriculture or the Commodities Exchange Commission. I find no abuse of discretion, but I believe that the resolution of this issue is more difficult than the majority opinion indicates.

My understanding of the majority opinion is that deference is not warranted when the plaintiff alleges only that the defendants have violated provisions of the Commodities Exchange Act (the Act) or regulations whose validity he does not challenge. Respectfully, I believe that this approach is too mechanical for guidance beyond these cases, and perhaps not sufficiently appreciative of the problems raised by Ricci v. Chicago Mercantile Exchange, 409 U.S. 289, 93 S.Ct. 573, 34 L.Ed.2d 525 (1973). For the appellants have argued that the question of whether they have violated the Act and/or valid exchange regulations is precisely one for administrative determination. Since all three eases are intricately related to the issue of market manipulation, appellants urge that the determinations of relevant market conditions, the existence of price fluctuations, and the advisability and legality of their activity require the exercise of administrative expertise. Only after deferring to the administrative expertise of the Secretary or the Commission, appellants contend, can a court adequately determine whether there has indeed been a violation of the Act or the regulations promulgated pursuant to it.

Appellants’ argument certainly finds support in past cases which have commanded deference in order to allow administrative agencies to make preliminary comprehensive investigations and analyses of the facts involved and to apply them to a statutory scheme. Port of Boston Marine Terminal Assn. v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 68, 91 S.Ct. 203, 27 L.Ed.2d 203 (1970), Federal Maritime Board v. Isbrandtsen Co., 356 U.S. 481, 498, 78 S.Ct. 851, 2 L. Ed.2d 926 (1958), United States v. Western Pacific Ry., 352 U.S. 59, 64, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956). The same rationale has been applied to the Commodities Exchange Commission’s fact-finding function in Ricci v. Chicago Mercantile Exchange, 409 U.S. 289, 93 S.Ct. 573, 34 L.Ed.2d 525 (1973), where the court required deference to the administrative judgment of the Commodities Exchange Commission. In that case plaintiff Ricci, like the plaintiffs-appel-lees in the instant eases, alleged only that the Act and exchange rules had been violated. 409 U.S. at 289, 93 S.Ct. at 574. Despite the uncertainty of whether Ricci could obtain administrative adjudication of his complaint, the Court held that the Commission must make the first determination of whether valid regulations had been violated:

That issue [of whether the transfer of Ricci’s membership was in violation of the Act for failure to follow exchange rules] in turn appears to pose issues of fact, and questions about the scope, meaning and significance of exchange membership rules. These are matters that should be dealt with in the first instance by those especially familiar with the customs and practices of the industry and the unique marketplace involved in this ease. They are matters typically lying at the heart of an administrative agency’s task and here they appear to be matters which Congress has placed within the jurisdiction of the Commodities Exchange Commission.

409 U.S. at 304, 93 S.Ct. at 582 (footnote and citations omitted). Appellants have argued that this language mandates deference of the issues in these cases to the Commission also.

In Ricci, however, the trial judge had no occasion to pass upon the question of whether the issues involved required deference to the Commission. But both the Court of Appeals and Supreme Court opinions recognized that the very nature of the Commodities Act required that each exchange have a membership organization and criteria for the acquisition, transfer and loss of membership. 409 U.S. at 308, 93 S.Ct. at 581. Even though the factual issues of the case were quite simple and could have been easily disposed of in a civil proceeding, International Brotherhood of Boilermakers v. Hardeman, 401 U.S. 233, 238-239, 91 S.Ct. 609, 28 L.Ed.2d 10 (1971), these opinions recognized that the Commission could articulate the ways in which an exchange could validly exercise its inherent power over membership, and that this articulation would hopefully dispose of a preliminary issue in the task of reconciling the antitrust laws with the Commodities Exchange - Act. Since the Exchange Act does not in any way give a commodities exchange or the Commission power to sanction price manipulation, and since, for reasons to be discussed below, deference to administrative expertise is not vital for defining the scope of the regulations governing the issues raised by the complaints, I do not believe that Ricci compels deference to administrative primary jurisdiction in these cases.

Courts have usually invoked the doctrine of primary jurisdiction where they have determined that the issues raised are within the unique expertise of administrative agencies, where the issues involve administrative discretion, and where the desire for uniformity would be frustrated by many courts reaching inconsistent decisions. United States v. Philadelphia National Bank, 374 U.S. 321, 353, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963). Accordingly, a trial court asked to defer action on a matter arguably within administrative jurisdiction should consider these factors and examine the particular issues raised by the pleadings, the contribution that an administrative adjudication can make, and the effect that deferring the litigation will have upon the litigants involved. Ricci v. Chicago Mercantile Exchange, 409 U.S. at 308, 93 S.Ct. at 584 (Marshall, J., dissenting).

The complaint in Deaktor v. L. D. Schreiber & Co. et al., a class action on behalf of all traders allegedly harmed because of artificially inflated prices, alleges that the defendants exceeded daily trading limits, held or controlled net “long” positions in excess of position limits, and were responsible for manipulation of the prices of pork belly futures for July, 1970. The complaint further alleges that the Chicago Mercantile Exchange was or should have been aware of the manipulative activities and that it failed to act promptly to halt these violations of Exchange rules. All defendants’ answers denied these allegations. From the complaints and arguments on appeal, it appears that the essential issues which must be adjudicated are whether the Commission had set quantitative limits for trading pork belly futures, whether the defendants exceeded these limits, whether the defendants’ conduct caused unreasonable price fluctuations, and whether the exchange knew or should have known about the conduct of the defendants and should have acted to stop it. I do not think that the district court abused its discretion in determining that these issues do not require the application of administrative expertise, for they involve factual determinations within the traditional competence of juries.

The complaint in Phillips v. Chicago Mercantile Exchange, a class action brought on behalf of all traders who lost money on fresh eggs futures contracts allegedly because of the defendants’ conduct, alleges that defendants violated both the antitrust laws and the Commodities Exchange Act by artificially depressing the price of egg futures for their own advantage. The complaint alleges that the defendants, acting through the Business Conduct Committee of the Chicago Mercantile Exchange, ordered parties holding contracts to buy fresh eggs to liquidate 50% of these contracts without giving these parties a hearing and without giving the liquidation order proper dissemination. As a consequence, the price of eggs was driven downward to enable the defendants to purchase sufficient egg contracts to extricate themselves from the economically undesirable position they were in before their illegal activity. The complaint further alleges that the defendants’ activity was in violation of rules of the Chicago exchange relating to hearings and emergency action, constituted manipulation and the circulation of false information as prohibited by the Act, and was an illegal conspiracy in restraint of trade. The defendants have denied all these allegations. Thus, the key issues are whether the defendants had the conspiratorial purpose alleged, whether they acted in the way alleged, and whether the harmful effects flowed from their action. Once again, I do not believe that the trial judge abused his discretion in finding these issues within the competence of his court.

Given the unobtrusive nature of the facts at issue in these cases, I doubt whether deference to the Commission would add substantially to their resolution. These facts do not involve a pervasive regulatory scheme, United States v. Radio Corporation of America, 358 U.S. 334, 350, 79 S.Ct. 457, 3 L.Ed.2d 354 (1959), or matters within administrative discretion, Great Northern Ry. v. Merchants’ Elevator Co., 259 U.S. 285, 294, 42 S.Ct. 477, 66 L.Ed. 943 (1922), but rather a unique set of facts concerning situations which may never be repeated. The main issue common to all these appeals- — i. e., whether a manipulation of prices occurred — is one which the judiciary has considered itself just as competent as the Commodities Exchange Commission to pass upon. Since the term “manipulation” is undefined in the Act, courts of appeal have given it meaning in the cases taken on direct appeal from Commission determinations. Volkart Brothers Inc. v. Freeman, 311 F.2d 52, 58 (5th Cir. 1962), General Foods Corp. v. Brannan, 170 F.2d 220, 223-224 (7th Cir. 1948). Although commentators have argued that the judicial interpretation of “manipulation” has varied from circuit to circuit, Congress has declined to substitute a statutory definition of that term for the sake of uniformity. Vogelson, Tightened Regulation for Commodity Exchanges, 55 A.B.A.J. 858, 860 (1969). In short, it is doubtful that deference can add much to the work of a court and jury in resolving the issues concerning manipulation in the instant cases; nor does it appear that Congress regards uniformity as a compelling consideration.

Finally, the interest of the plaintiffs in these cases should be considered. Any deference to administrative primary jurisdiction and subsequent appeals from administrative decisions before a district court adjudication of their complaints will increase costs, delay redress of any wrongs, and act to deter litigation. I also perceive several knotty problems involved in allowing an administrative agency to decide issues which are at the heart of a judicial proceeding. Assuming for the moment that a tort action for interference with one’s trade was cognizable at common law, plaintiffs are entitled to a trial of their actions by a jury in the district court. See, Fleitmann v. Welsbach Street Lighting Co., 240 U.S. 27, 36 S.Ct. 233, 60 L. Ed. 505 (1916), 5 Moore’s Federal Practice ¶ 38.19 (2d Ed. 1971). I seriously question whether a prior administrative determination of matters at the heart of a lawsuit could subsequently bind a court, for then the administrative proceeding would amount to a deprivation of plaintiff’s Seventh Amendment rights. If the administrative adjudication were not binding, I doubt whether it could be brought to the attention of the jury in the subsequent court proceeding, for it may be inadmissible as infringing upon the province of the jury. Refusal to defer, of course, would avoid these problems.

I find that the trial judge did not abuse his discretion in refusing to defer to the Commission in these cases, given the facts at issue and the particular regulations involved. I concur in the result.

      . 409 U.S. at 304, 93 S.Ct. at 582.

      . Appellants cite Far East Conference v. United States, 342 U.S. 570, 574, 72 S.Ct. 492, 96 L.Ed. 576 (1952), in which the Supreme Court stated, in deciding that the Federal Maritime Board should be given primary jurisdiction in an antitrust case, that “in cases raising issues of fact not within the conventional expertise of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over.”

      . There is support for the view that deference to administrative primary jurisdiction is not necessary when the only issues are whether a party has violated a valid statute or regulation and whether his activity is consequently clearly unlawful. Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 222, 86 S.Ct. 781, 15 L.Ed.2d 709 (1966), Pennsylvania R.R. v. Puritan Coal Mining Co., 237 U.S. 121, 131-132, 35 S.Ct. 484, 59 L.Ed. 867 (1915), McCleneghan v. Union Stock Yards Co., 298 F.2d 659, 668 (8th Cir. 1962). As was noted in Crain v. Blue Grass Stockyards Co., 399 F.2d 868, 874 (6th Cir. 1968): . .it does not require administrative expertise to detei-mine whether plaintiff violated rules and regulations and whether-, because of such violation, defendants had the right to and did exclude plaintiff. . . . ”

      . A statutory argument supporting deference can also be made. The Commodities Exchange Act currently contains three means of punishing price manipulation and other violations : suspension of a commodities exchange or member from trading (7 U.S.C. §§ 8 and 9), the issuance of cease and desist orders (§§ 13a and 13b), and the imposition of criminal penalties (§ 13; but see also § 13e(b)). Each statutory penalty requires some determination by the Secretary that a violation of the Act has been committed before court action to enforce the penalty is allowed. Hearings are guaranteed before suspensions or the issuance of cease and desist orders; and the Secretary can refuse to refer any suspected violation for criminal prosecution if criminal sanctions would not be in the public interest. Here, however, plaintiffs are trying to impose a fourth penalty — monetary damages— which will not be subject to prior determination by the Secretary that a violation has occurred or that the imposition of a penalty would serve the public interest.

      . Some of the factual issues which the Court identified for deference to the Commission were the questions whether Ricci’s membership had been transferred to another before Ricci had revoked a transfer authorization; whether the transfer authorization was valid; whether the party who ordered the transfer had the power to do so; and whether the party ordering the transfer was indebted to Ricci. All these issues appear to be simple questions of fact. 409 U.S. at 305 n. 15, 93 S.Ct. at 582 n. 15.

      . An examination of the exchange rules which the Court of Appeals found relevant indicates that they had little relevance to the factual questions involved. My suspicion is that the Court believed deference would allow the Commission to determine whether any unwritten rules sanctioned or prohibited the membership transfer, 409 U.S. at 299 n. 11, 93 S.Ct. at 579 n. 11.

      . It is also questionable whether the Commodities Exchange Commission could even take jurisdiction over the issues pertaining to whether the defendants violated the rules governing hearings and emergency action. Congress, in giving the Commission power to force exchanges to police violations of their own rules, plainly indicated that this power would not extend to the enforcement of rules and regulations “such as those governing the organization and government of the exchange. . . .” S.Rep. No. 947, 90th Cong., 2d Sess., U.S.Code Cong. & Admin. News, pp. 1673, 1681 (1968).

      . It should be noted also that a court of appeals reviewing any administrative determinations under the Commodities Act can set them aside if they are unsupported by the weight of the evidence. 7 U.S.C. §§ 8, 9, 13a, and 13b. This standard of review has been likened to a de novo determination, with proper regard to the credibility determinations of the trier of fact. Great Western Food Distributors v. Brannan, 201 F.2d 476, 479 (7th Cir. 1953). Surely if Congress were interested in promoting uniformity under the Act, it would have provided for a more stringent standard of review.


author: HAMLIN, Circuit Judge:

text:
    Iver W. and Faith S. SWANSON, Plaintiffs-Appellees, v. UNITED STATES of America, Defendant-Appellant. Iver W. SWANSON, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant.
    No. 71-1474.
    United States Court of Appeals, Ninth Circuit.
    May 9, 1973.

      Ernest J. Brown (argued), Johnnie Walters, Asst. Atty. Gen., Fred B. Ugast, Acting Asst. Atty. Gen., Dept, of Justice, Washington, D. C., John M. Youngquist, Special Asst. U. S. Atty., San Francisco, Cal., Gilbert E. Andrews, William L. Goldman, Tax Div., Dept, of Justice, Washington, D. C., for defendant-appellant.
    Wilson B. Copes (argued), Jackson, Goodstein, Kumler, Copes, Croskey & Smith, Los Angeles, Cal., Robert E. Tout, Stockton, Cal., for plaintiff-appel-lee.
    Before HAMLIN and CHOY, Circuit Judges, and SKOPIL, District Judge.

       Honorable Otto R. Skopil, Jr., United States District Judge, District of Oregon, sitting by designation.

   HAMLIN, Circuit Judge:

The Government appeals from a judgment of the United States District Court for the Eastern District of California awarding tax refunds to appellees in two consolidated cases. In No. 9686 below, the District Court ordered a refund of $25,285.04, plus interest, to appellees Iver W. and Faith S. Swanson. In No. 9687, the District- Court ordered a refund in the amount of $258,824.52, plus interest, to appellee Iver W. Swanson individually. We affirm.

Iver W. Swanson has for many years been a licensed contractor, specializing in underground pipe construction. In connection therewith, he also conducted a concrete pipe manufacturing business. From 1940 to 1945 he was engaged in such business as a partner in a partnership doing business under the name Stockton Construction Company. From 1945 to 1950, Swanson engaged in the business as sole proprietor of Stockton Construction Company.

In January, 1950, Swanson caused a California corporation to be formed under the name of Stockton Construction Co., Inc. '(hereinafter Old Stockton). 'In all material respects, this corporation was wholly owned by Swanson. Old Stockton engaged in both underground pipe construction and the manufacture of the concrete pipes used in its construction projects.

Swanson transferred to Old Stockton the business he had previously been conducting as sole proprietor. He did not, however, transfer to the corporation the machinery and equipment which he had been using in the underground pipe construction business. Rather, Swanson retained such machinery in his own name, thereafter renting same to the corporation as the need arose. All of the corporation’s construction work resulted from successful bidding.

In 1952, Old Stockton acquired an exclusive franchise in a 24-county area in Central California for the manufacture of concrete pipes by the Cen-Vi-Ro process. In 1953, Swanson caused the formation of a second California corporation, Western Concrete Pipe Co., Inc., and was at all times its sole shareholder. In 1956, under a sub-license from Old Stockton, Western commenced manufacturing pipe by the Cen-Ri-Vo process for sale to outsiders. Old Stockton continued to manufacture the concrete pipe it used in its underground pipe construction business.

In 1958 and 1959, Swanson received inquiries from other pipe manufacturers as to whether the Cen-Vi-Ro franchise might be for sale. These included an offer of purchase by Raymond International, Inc. After investigation and negotiations, in January or February, 1960, the parties informally agreed on a sale price of $1,200,000, to be apportioned among Western, Old Stockton and Swanson. The underground pipe construction business and the assets related thereto were not involved in the sale.

Swanson’s tax counsel advised him that, prior to the consummation of the sale, Old Stockton and Western be completely liquidated so as to avoid any tax on the corporate level, pursuant to section 337, Internal Revenue Code of 1954. Accordingly, on February 22, 1960, the boards of directors of both Old Stockton and Western adopted plans of complete liquidation. On February 24, 1960, the parties executed an agreement for the purchase and sale, and on March 10, 1960, the sale was consummated and the purchase price received.

Old Stockton realized a gain of $818,994 from the above sale.

(Hereafter, no further reference will be made to Western Concrete Pipe Co., inasmuch as the sale of its assets and its liquidation are not here in issue.)

After the adoption of the plan of complete liquidation by its Board of Directors, Old Stockton continued to work on projects in progress as of February 22, 1960. It also undertook one further construction job after the adoption of the complete liquidation plan. All the projects were completed by December 7, 1960. Gross receipts from work done by Old Stockton from the period April 1, 1960, to December 7, 1960, totaled $461,833.57.

The first liquidating distribution of Old Stockton occurred on August 8, 1960. By December 7, 1960, the corporation had distributed all its assets to its sole shareholder, Iver W. Swanson, in complete redemption of the stock of such corporation owned by him. The final distribution of assets by Old Stockton -was immediately followed by the filing of a Certificate of Dissolution with the appropriate state officials.

After adoption of the plan of complete liquidation, Swanson engaged in the underground pipe contracting business as a sole proprietor, doing business as Stockton Construction Company. During the period February 23, 1960, through May 23, 1960, the sole proprietorship made seven bids in underground pipe contracting jobs, and was successful on one such bid.

In May, I960, more than two months before the first distribution by Old Stockton, Swanson decided to continue the pipe construction business in corporate form, rather than as a sole proprietorship. He testified that his reasons were to arrange the business so as to be able to transfer an interest to two of his employees, and to limit his liability before bidding on a major construction job.

Therefore, on June 6, 1960, Swanson caused a new California corporation to be formed under the name Stockton Construction Co., Inc. (hereinafter New Stockton). The name of Old Stockton, still in existence, was changed to Tule-berg Construction Co., Inc.

The initial capitalization of New Stockton was $50,000.00 in cash, which was put into the corporation by Swanson from funds other than those which he had received from Old Stockton as liquidating distributions. Another $50,000.-00 was soon realized to be necessary to provide sufficient capital, and was provided to the corporation by Swanson.

Starting in June, 1960, Swanson attempted to secure bonding for New Stockton so that it could bid on two major construction projects. New Stockton bid successfully at $2,014,034.63 for one of the projects, and obtained a bond in that amount from a bonding company. To secure the bond, the bonding company required Swanson to contribute $100,000.00 to New Stockton’s capital, lend $100,000.00 to New Stockton on a subordinated basis, and place assets worth $500,000.00 in escrow as collateral security. Swanson fulfilled the above requirements, and placed in escrow $500,000.00 worth of Federal Bank Debentures distributed to him by Old Stockton as part of the liquidation distribution. Upon completion of the single construction project, the escrow was terminated and the latter sum returned to Swanson.

Thereafter, New Stockton conducted the underground pipe construction business, operating at the same location used by Old Stockton, renting construction equipment from the proprietorship, and employing some of Old Stockton’s old employees.

On its Federal Income Tax Return for the fiscal year ending March 31, 1960, Old Stockton did not report its gain of approximately $818,994.00 realized from the sale to Raymond International, Inc., pursuant to the non-recognition provisions of section 337.

On their joint income tax returns for the calendar year 1960, Iver W. and Faith S. Swanson reported the gain realized by them upon Old Stockton’s liquidation in the amount of $1,203,241.67 as long term capital gain, pursuant to the provisions of section 331, and paid a tax thereon accordingly.

The Internal Revenue Service, after examining the above returns, determined that Old Stockton had not been completely liquidated, but rather had been a party to a reorganization by reason of New Stockton’s incorporation, and concluded that the non-recognition provisions of section 337 were therefore inapplicable. The Service assessed a deficiency of $204,748.48. In view of the fact that all assets had been distributed to Iver W. Swanson, the deficiency was in turn assessed against him as a transferee of Old Stockton’s assets.

On the same theory, the Service further determined that Iver W. Swanson and Faith S. Swanson had in the year 1960 received a dividend from Old Stockton in the amount of $91,857.00, and assessed a deficiency against them in the amount of $20,826.00.

Appellees paid the deficiencies, and claims for refunds were filed and duly rejected. Complaints (Nos. 9686 and 9687, consolidated by Stipulation and Order for all purposes) were subsequently filed for tax refunds in the district court. The Court, in holding in favor of appellees, found that the facts presented a complete liquidation by Old Stockton, entitling it to the benefits of section 337, and its shareholders to the benefits of section 331. The Government appeals from that judgment.

The Government urges on appeal, as it did unsuccessfully in the district court, that the facts of this case present a “corporate reorganization” as that term is defined in section 368(a) (1) (D).

The Internal Revenue Code defines a “D” reorganization as follows:

SEC. 368. Definitions relating to corporate reorganizations.
(a) Reorganization.—
(1) In general. — For purposes of parts I and II and this part, the term “reorganization” means—
* * * * * *
(D) a transfer by a corporation of all or a part of its assets to another corporation if immediately after the transfer the transferor, or one or more of its shareholders (including persons who were shareholders immediately before the transfer), or any combination thereof, is in control of the corporation to which the assets are transferred; but only if, in pursuance of the plan, stock or securities of the corporation to which assets are transferred are distributed in a transaction which qualifies under section 354, 355 or 356.”

As a prerequisite to establishing a corporate reorganization, the statutory terms of section 368(a)(1)(D) require that the stock or securities of the transferee be transferred in a transaction qualifying under either sections 354, 355 or 356. It is undisputed that only section 354 is herein applicable. That section provides as follows:

“SEC. 354. Exchanges of stock and securities in certain reorganizations.
(a) General Rule.—
(1) In general. No gain or loss shall be recognized if stock or securities in a corporation a party to a reorganization are, in pursuance of the plan of reorganization, exchanged solely for stock or securities in' such corporation or in another corporation a party to the reorganization.
X X X X X X
(b) Exception. — -
(1) In general. — Subsection (a) shall not apply to an exchange in pursuance of a plan of reorganization within the meaning of section 368(a)(1)(D), unless—
(A) the corporation to which the assets are transferred acquires substantially all of the assets of the transferor of such assets; and
(B) the stock, securities, and other properties received by such transferor, as well as the other properties of such transferor, are distributed in pursuance of the plan of reorganization.
* * •>:• -x- -x- -x-

The statutory requirements of a “D” reorganization therefore require, inter alia, that (1) there exist a plan of reorganization and (2) the transferee corporation acquire substantially all the assets of the transferor.

In ordering tax refunds to appellees, the district court’s unpublished “Findings of Fact” included the following conclusions :

“XXIV
“The liquidation of Old Stockton and the incorporation of New Stockton were independent acts and were not part of successive steps in a single plan.
* * -X -X- -X- *
XXVII
“There was no transfer of substantially all of the assets of Old Stockton to New Stockton.
* *x- * -X* -X- * ”

The Government states that it does not challenge the district court’s factual conclusions. And to the extent the above conclusions are characterized as fact findings, there is substantial evidence in the record supporting them.. We are unable to conclude that they are “clearly erroneous.” Orrisch v. Commissioner, (9th Cir., March 30, 1973, No. 71-1388).

However, the basis of the Government’s appellate contention is that Findings XXIV and XXVII, supra, are actually legal conclusions, both incorrect as a matter of law.

A corporate reorganization plan never existed.

The Government first -urges that Finding XXIV is based upon the district court’s erroneous understanding of when a plan of reorganization must or must not exist for purposes of section 354(a)(1) and section 368(a)(1)(D).

In the Government’s view, the district court found that a reorganization plan, while existing at some time during the instant transactions, was formed too late for purposes of the reorganization provisions. The Government’s subsequent argument regarding the significant time for determining the existence of a plan of reorganization is totally inapposite, for it is premised upon a basic misunderstanding of the basis of the district court’s conclusion that no reorganization plan existed.

In the district court, the Government argued that the liquidation of Old Stockton was a sham, constituting the first of successive steps in a single plan to transfer the assets of Old Stockton to New Stockton. Testimony was directed toward the Government’s attempt to establish the existence of a plan of reorganization. After listening to the oral testimony, observing witnesses and reviewing the documentary evidence, the district court concluded that no such plan ever existed. The district court specifically found that New Stockton’s formation was not tax motivated. It apparently believed Swanson’s testimony that New Stockton was created for purposes of limiting his personal liability vis-a-vis construction projects, and as a means by which he might sell and transfer his business to some of his employees.

The district court stated in its published Memorandum and Order:

“This Court’s finding is that there was no overall plan to transfer the bulk of the operating assets from the old to the new corporation. Things worked out in that fashion because of the course of events, not because of a prior plan, for there was no such plan.” Swanson v. United States, 319 F.Supp. 959, 961 (E.D.Cal.1970) (emphasis added).

The record is devoid of any evidence indicating that the district court premised its finding as to the non-existence of a reorganization plan on an erroneous legal conclusion as to when such a plan must be met. We think it clear that the district court merely found no reorganization plan ever existed. The existence vel non of a plan of reorganization was a pure question of fact, which the trier thereof decided against the Government.

Having found no reorganization plan to have ever existed, the observation that New Stockton may nonetheless have evolved as the consequence of such a plan is irrelevant for purposes of establishing a “D” reorganization. The statutory requirements for any section 368 reorganization are detailed and precise, and must be specifically met. Simon v. United States, 402 F.2d 272, 277, 185 Ct.Cl. 291 (1968); American Potash & Chemical Corporation v. United States, 399 F.2d 194, 200, 185 Ct.Cl. 161 (1968). “[A reorganization] plan cannot be manufactured by after thought.” Kind v. Commissioner, 54 T.C. 600, 608 (1970).

New Stockton did not acquire “substantially all” of Old Stockton’s assets.

The Government further argues that the district court erred, as a matter of law, in finding that New Stockton did not acquire “substantially all” of Old Stockton’s assets within the meaning of section 354(b) (1) (A). Finding XXVII, supra.

We first note that the “substantially all” transfer requirement must be accomplished pursuant to a plan of reorganization. Simon v. United States, supra, 402 F.2d, at 281. Having concluded, supra, that no such plan ever existed, it follows that the assets could not have been transferred in pursuance of such a plan.

Assuming, arguendo, the existence of such a plan, we would uphold the legal validity of the district court’s finding that there was a failure by Old Stockton to transfer “substantially all” its assets to New Stockton.

In support of the contention to the contrary, the Government notes that New Stockton took over Old Stockton’s name, and continued the pipe construction business at the same location used by Old Stockton. Further, New Stockton employed employees previously employed by Old Stockton, and New Stockton rented construction equipment from the proprietorship, as Old Stockton had done. Swanson served as president of both corporations.

The district court did find that “ . . . there was undoubtedly a continuity and identity between the two corporations in the key employees, the goodwill and reputation of Mr. Swanson, and in some operating equipment rented from Mr. Swanson . . . .” 319 F.Supp. at 962.

The district court, however, premised its finding that New Stockton did not acquire “substantially all” of Old Stockton’s assets on the observation that Old Stockton’s liquid assets were not transferred to New Stockton.

Due to the demonstrated requirement for bonding in the underground pipe construction business, and the need for liquid assets in order to secure same, the Government does not challenge the district court’s conclusion that Old Stockton’s liquid assets were part of its operating assets. See Simon v. United States, supra, 402 F.2d, at 280.

Rather, the Government contends that, as a matter of law, Old Stockton did transfer “substantially all” its assets to New Stockton. Specifically, the Government notes that $500,000 worth of Old Stockton’s liquid assets (in the form of Federal Bank Credit Debentures), were placed in escrow by Swanson to enable New Stockton to secure bonding for one particular construction project. The Government argues that New Stockton’s “beneficial use” of these debentures controverts the district court’s finding that the liquid assets were not in fact transferred by Old Stockton to New Stockton.

Several courts have held that, to satisfy the “substantially all” requirement of section 354(b)(1)(A), it is not necessary for the transferee corporation to acquire the legal title to the operative assets of the transferor corporation. Rather, if the transferee corporation acquires “beneficial use” of significant operative business assets from the transferor corporation by lease, loan or informal acquiescence to use, the “substantially all” transfer requirement of section 354(b)(1)(A) will be deemed satisfied. See, e. g., DeGroff v. Commissioner, 54 T.C. 59 (1970), aff’d, 444 F.2d 1385 (10 Cir. 1971); Babcock v. Phillips, 372 F.2d 240 (10 Cir.), cert. den., 387 U.S. 918, 87 S.Ct. 2030, 18 L.Ed.2d 970 (1967); Moffatt v. Commissioner, 42 T.C. 558 (1964), aff’d, 363 F.2d 262 (9 Cir. 1966), cert. den., 386 U.S. 1016, 87 S.Ct. 1370, 18 L.Ed.2d 453 (1967); Wilson v. Commissioner, 46 T.C. 334 (1966); and James Armour, Inc. v. Commissioner, 43 T.C. 295 (1964).

We find the above cases, however, to be distinguishable. In all those cases, the transferee corporation enjoyed the “beneficial use” of the respective assets for a lengthy continuum. But in the instant case, it is undisputed that the debentures in question were used to secure credit on only one particular construction project. Upon completion of that single project, the escrow in which Swanson had deposited the debentures was terminated, and the bonds were returned to him. No longer were the bonds part of New Stockton’s liquid assets, and no longer could New Stockton use them for bonding capacity. We conclude that the abbreviated nature of New Stockton’s “beneficial use” of the debentures precludes application of the doctrine espoused by the above citations to the facts of this case.

The district court properly concluded that Old Stockton failed, both as a matter of law and fact, to transfer “substantially all” its assets to New Stockton.

Conclusion.

Swanson’s transactions, if east in other molds, may well have resulted in a greater tax. We do not, however, read the Internal Revenue Code to contemplate that a taxpayer maximize his taxes. See Breech v. United States, 439 F. 2d 409, 411 (9 Cir. 1971). As Judge Learned Hand once stated, “there is not even a patriotic duty to increase one’s taxes.” Helvering v. Gregory, 69 F.2d 809, 810 (2 Cir. 1934).

Judgment affirmed.

      . Faith S. Swanson is a party to No. 9686 below solely by reason of the joint federal income tax return filed with her husband, Iver W., in 1960. Reference hereafter will be made to appellee Iver W. Swanson as “Swanson”, who was the sole participant in the transactions involved in both cases.
      No. 9686 below concerns the instant applicability of section 331, Internal Revenue Code of 1954, which provides in part:
      “SEC. 331. Gain or loss to shareholders in corporate liquidations.
      (a) General Rule.—
      (1) Complete Liquidations. — Amounts distributed in complete liquidation of a corporation shall be treated as in full payment in exchange for the stock.
      (2) Partial Liquidations.- — Amounts distributed in partial liquidation of a corporation (as defined in section 346) shall be treated as in part or full payment in exchange for the stock.
      sis * * * * ”

      . No. 9687 below concerns the instant applicability of section 337, Internal Revenue Code of 1954, which provides in part:
      “SEC. 337. Gain or loss on sales or exchanges in connection with certain liquidations.
      (a) General Rule. — If—
      (1) a corporation adopts a plan of complete liquidation on or after June 22, 1954, and
      (2) within the 12-month period beginning on the date of the adoption of such plan, all of the assets of the corporation are distributed in complete liquidation, less assets retained to meet claims, then no gain or loss shall be recognized to such corporation from the sale or exchange by it of property within such 12-month period.
      Appellee Iver W. Swanson, as the transferee of the assets of the corporation involved in No. 9687, is the named party therein.

      . The district court also rejected the Government’s contentions that the facts presented “E” and “F” reorganizations as defined in sections 368(a)(1)(E) and 368 (a) (1) (F) respectively. Swanson v. United States, 319 F.Supp. 959, 961 (E.D.Cal.1970). On appeal, the Government pursues only its “D” reorganization contention.

      . Pebble Springs Distilling Co. v. Commissioner, 231 F.2d 288 (7 Cir.), cert. den., 352 U.S. 836, 77 S.Ct. 56, 1 L.Ed.2d 55 (1956); Lewis v. Commissioner, 176 F.2d 646 (1 Cir. 1949) and Morley Cypress Trust, Schedule “B” v. Commissioner, 3 T.C. 84 (1944), each decided under the less stringent reorganization provisions of the 1939 Code, all involved factual situations where reorganization, plans were found to have existed. The Government’s reliance on these cases is therefore misplaced.


author: AINSWORTH, Circuit Judge.

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. DOWNS-CLARK, INC., Respondent.
    No. 72-3471
    United States Court of Appeals, Fifth Circuit.
    June 5, 1973.

      Elmer P. Davis, Director, Region 16, N. L. R. B., Michael F. Messitte, Atty.,' NLRB, Fort Worth, Tex., for petitioner.
    Hugh M. Smith, Dallas, Tex., for respondent.
    Before THORNBERRY, AINS-WORTH and RONEY, Circuit Judges.
   AINSWORTH, Circuit Judge.

This is an N. L. R. B. petition pursuant to section 10(e) of the National Labor Relations Act for enforcement of its order against respondent, company Downs-Clark, Inc. The Board found that Downs-Clark had violated section 8(a)(5) and (1) of the Act by refusing to execute a written contract incorporating what the Board deemed an agreement reached between the Company and the Oil, Chemical, & Atomic Workers International Union. Downs-Clark had offered to sign a contract if it contained certain provisions as to wages. The Board ordered the Company to delete those provisions and sign the agreement.

To determine whether substantial evidence on the record supports the Board’s majority’s findings, we must examine the facts and circumstances leading to its decision.

The Company and the Union began collective bargaining in January 1970. Both indicated that the effectiveness of any agreements reached was contingent upon later formulation of a contract encompassing all issues between the Company and the Union. Downs-Clark proposed merit raises for four or five specific employees; the Union objected. In April 1970 the Company granted these merit raises, and a strike ensued. The Union filed an unfair labor practice charge, alleging that the Company’s granting these wage increases evidenced a refusal to bargain. The strike ended in August 1970 and in September the matter was settled and negotiations were resumed.

The Company attempted to discuss merit increases as they related to the strike and unfair labor practice charge, but the Union negotiator refused to discuss the issue. There were further negotiations, but disagreement remained as to wages and the duration of the anticipated agreement. At the final bargaining session on December 11, 1970, the federal mediator informed the Union that he did not think the Company would make any further changes in its position. The Union then decided to acquiesce in the Company’s proposals. An effective date still had not been set. The Company was to draw up a contract. The Union negotiator compared his “check-list of items agreed to and items still open” with the Company negotiator’s notes. The Company’s negotiator sought to confirm that the Company had reserved the right to make merit increases. The Union negotiator would not confirm agreement on this point which was the central dispute between the parties. The proposals which previously had been reduced to writing did not include an effective date or duration of the agreement, nor any provisions as to wages.

The Union negotiator testified before the Trial Examiner that he asked the mediator and the Company’s negotiator if there were any changes in the Company’s position on wages or duration of the agreement, and he was told by each that there were not. On appeal, the Union argues that the written proposals at this stage constituted a complete contract and the only agreement between the parties. This position is untenable. The Union has not pursued any theory that wages and term were understood to be orally agreed to by the parties; indeed, the Union now protests that at no time did it agree to the Company’s position on wages. On the other hand, the written proposals do not cover two elements essential to a labor contract, wages and duration.

The Board found that the Company and the Union reached agreement on December 11, and ordered the Company to execute the contract or, at the Union’s option, to resume bargaining and to embody any understanding reached in a signed agreement. We find that the Board’s decision is not supported by substantial evidence. Rather, the record clearly shows that there was no meeting of the minds on the key issues of wages and merit increases. The parties had not accomplished their expressed intention to arrive at a complete, integral agreement. “While a labor contract is sui generis, like commercial or other contracts it comes into being with binding effect only after there has been a meeting of the minds by the contracting parties on a complete agreement.” Shreveport Garment Manufacturers, 133 NLRB 117, 121; see also Dean A. Anderson d/b/a Anderson’s, 161 NLRB 1470. Furthermore, “. . . the rules by which it is determined whether the parties have made a contract are not the rules by which it is determined whether or not the parties have bargained in good faith.” San Antonio Machine & Supply Corp. v. N. L. R. B., 5 Cir., 1966, 363 F.2d 633, 636, quoting from Shannon & Simpson Casket Co., 99 NLRB 430, enforced, 9 Cir., 1953, 208 F.2d 545. Lozano Enterprises v. N. L. R. B., 9 Cir., 1964, 327 F.2d 814, on which the Board relies, is distinguished by its own explanation of its narrow holding: “We do not at all mean to hold that, in general, the normal rules of offer and acceptance are not determinative as to whether an agreement has been reached in a collective bargaining situation. We do hold that where, as in this case, the terms proposed by the union are in fact acceptable to the employer, but delivery of the signed contract is withheld for the obvious tactical purposes that here appear, it is proper for the Board to conclude that there has been a failure or refusal to execute a written contract incorporating the agreement reached within the meaning of section 8(d).” Id. at 819. The Company’s steadfast maintenance of its position on merit increases distinguishes the instant case from other cases which find bad faith in the Company’s reversal of its position, withdrawal of previous agreements, or substitution of discarded terms. See, e. g., N. L. R. B. v. International Furniture Co., 5 Cir., 1954, 212 F.2d 431, 433; San Antonio Machine & Supply Corp. v. N. L. R. B., supra,, 363 F.2d at 641.

We find that at no time was a contract agreed to by the parties. Therefore, the Board cannot properly order Downs-Clark to sign an agreement with the Union. “In the very process of bargaining, both the statute [section 8(d) of the Act, 29 U.S.C. § 158(d)] by its plain terms and the Court decisions affirm that the making of the labor agreement is not for either Board or Court. The Act spells this out by providing that the mutual good faith ‘obligation does not compel either party to agree to a proposal or require the making of a concession. . . .’” N. L. R. B. v. Herman Sausage Co., 5 Cir., 1960, 275 F.2d 229, 231 [footnotes omitted]. As the Supreme Court has explained in N. L. R. B. v. American Nat. Ins. Co., 343 U.S. 395, 401-402, 72 S.Ct. 824, 828, 96 L.Ed. 1027 (1952):

“. . . The National Labor Relations Act is designed to promote industrial peace by encouraging the making of voluntary agreements governing relations between unions and employers. The Act does not compel any agreement whatsoever between employees and employers. Nor does the Act regulate the substantive terms governing wages, hours and working conditions which are incorporated in an agreement. The theory of the Act is that the making of voluntary labor agreements is encouraged by protecting employees’ rights to organize for collective bargaining and by imposing on labor and management the mutual obligation to bargain collectively.” [Footnotes omitted.]

After pointing out that section 8(d) of the Act (29 U.S.C. § 158(d)) “contains the express provision that the obligation to bargain collectively does not compel either party to agree to a proposal or require the making of a concession . . .”, the Supreme Court further states that it is clear “that the Board may not, either directly or indirectly, compel concessions or otherwise sit in judgment upon the substantive terms of collective bargaining agreements.” Id. 343 U.S. at 404. 72 S.Ct. at 829. See also N. L. R. B. v. Herman Sausage Co., supra, 275 F.2d at 231-232, citing the above and further stating: “The obligation of the employer to bargain in good faith does not require the yielding of positions fairly maintained. It does not permit the Board, under the guise of finding of bad faith, to require the employer to contract in a way the Board might deem proper.”

Enforcement denied.

      . 29 U.S.C. § 151 et seq.

      . The Board’s decision and order are reported in 197 NLRB 144.

      . See section 10(e) of the Act, 29 U.S.C. § 160(e); Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 488, 71 S.Ct. 456, 465, 95 L.Ed. 456 (1951); N.L.R.B. v. Fant Milling Co., 360 U.S. 301, 309 n. 10, 79 S.Ct. 1179, 1184, 3 L.Ed.2d 1243, 1249 (1959), enforced on remand, 5 Cir., 1959, 272 F.2d 773; N.L.R.B. v. Texas Coca-Cola Bottling Co., 5 Cir., 1966, 365 F.2d 321, 323; Oil City Brass Works v. N.L.R.B., 5 Cir., 1966, 357 F.2d 466, 469; San Antonio Machine & Supply Corp. v. N.L.R.B., 5 Cir., 1966, 363 F.2d 633, 635.

      . Section 8(d) of the National Labor Relations Act (29 U.S.C. § 158(d)) provides in part that collective bargaining is: “ . . . the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment, or the negotiation of an agreement, or any question arising thereunder, and the execution of a written contract incorporating any agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making of a concession : . . . .” [Emphasis added.] See N.L.R.B. v. Jones & Laughlin Steel Corp., 301 U.S. 1, 45, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352 (1937); N.L.R.B. v. Union Pacific Stages, Inc., 9 Cir., 1938, 99 F.2d 153, 159, 164; Wilson & Co., Inc. v. N.L.R.B., 8 Cir., 1940, 115 F.2d 759, 763; N.L.R.B. v. Boss Mfg. Co., 7 Cir., 1941, 118 F.2d 187, 189; N.L.R.B. v. Texas Coca-Cola Bottling Co., 5 Cir., 1966, 365 F.2d 321.

      . The National Labor Relations Board has held that where no term is specified or understood, there is no valid contract. Ridge Citrus Concentrate, Inc., 133 NLRB 1178, quoting from Stylecraft Furniture Company, 111 NLRB 930: “As the contract was incomplete in this important respect and as this Board cannot supply the omission [of the term], an order directing Respondents to sign the agreement would not be appropriate.”