author: GODBOLD, Circuit Judge:

text:
    Lamar RUDD, Petitioner-Appellee, v. STATE OF FLORIDA, Respondent-Appellant.
    No. 72-2409.
    United States Court of Appeals, Fifth Circuit.
    April 23, 1973.

      Robert L. Shevin, Atty. Gen. of Fla., Wallace E. Allbritton, Asst. Atty. Gen., Tallahassee, Fla., for respondent-appellant.
    Kathryn L. Powers, Jacksonville, Fla., court-appointed, for petitioner-appellee.
    Before JONES, GODBOLD and IN-GRAHAM, Circuit Judges.
   GODBOLD, Circuit Judge:

This appeal is by the State of Florida from the issuance of a writ of habeas corpus for Lamar Rudd, a state prisoner serving a 40-year term for armed robbery of a store. The District Court’s order, entered after a full evidentiary hearing and pursuant to a memorandum opinion, 343 F.Supp. 212, directed the immediate release of Rudd from state custody and allowed the state to retry him if it so elected. The error that caused the writ to issue was the introduction at Rudd’s state trial of identification testimony that had its roots in assertedly unconstitutional pretrial lineups, show-ups, and photo displays. We affirm.

The robbery for which petitioner was convicted occurred December 7, 1968. It was witnessed by three persons — Tilson, the manager of the store, and Ison and Sweat, two customers who entered just as the robber was leaving. While emptying the cash register at gunpoint, Tilson viewed the bandit from a distance of only a few feet, and Ison and Sweat obtained a glimpse of him from close proximity as they passed him at the door. Nevertheless, none of these witnesses was able to obtain a full view of the robber’s face because he wore a cowboy hat with a wide brim pulled down across his eyes. Consequently the witnesses did not note any distinguishing physical characteristics, and they were unable to afford the police with even a moderately detailed description.

Although the three witnesses to the December 7 robbery supplied the heart of the case against Rudd, the state also relied on testimony by two witnesses to a January 3, 1969 robbery of another store. Evidence of this later robbery, which the state contended was also committed by petitioner, was introduced to show a common scheme. The witnesses to the January 3 robbery were Payne, manager of the store, and Loos, a customer. From close range during actual consummation of the robbery, Payne was able to observe the thief, who this time wore a short-brimmed hat pulled low across his eyes. During the robbery Loos stood to the rear of the store and saw only the robber’s back except for a fleeting moment when the thief glanced around. Loos was not even aware that a robbery was being committed until after the bandit left the store.

At trial defense counsel contended that all the eye-witnesses — those present during the December 7 robbery as well as those present during the later robbery on January 3 — had attended constitutionally defective pretrial identification procedures, and accordingly counsel moved to exclude all their identification testimony. The state trial court summarily denied this motion without conducting a hearing outside the presence of the jury to determine either the correctness of counsel’s contention or the circumstances surrounding any pretrial identifications that might have occurred. From the full evidentiary hearing conducted by the habeas court, we now know that each of the witnesses to the respective robberies attended one or more of either a lineup, showup, or photo display. Payne and Loos, the two witnesses to the January 3 robbery, attended pretrial lineups at which they identified Rudd as the January 3 bandit. Tilson and Sweat made pretrial identifications of Rudd at a one-man showup in the state attorney’s office. Finally, prior to trial Tilson, Sweat, and Ison selected Rudd’s picture from spreads of four or five photos.

This is an unusually complex photo display-lineup-showup case raising a plethora of issues. We are here concerned with five witnesses who viewed two separate robberies and who attended three different kinds of pretrial identification procedures. Additionally there were two legally significant categories of testimony at the state trial — testimony by some of the witneses that they had identified the defendant at pretrial identification procedures (“pretrial recognition”) and trial testimony by all witnesses that the defendant was the thief (“in-court identification”). Moreover, the pretrial recognition testimony may be further subdivided into testimony elicited by the state and testimony elicited by defense counsel to mitigate the force of an in-court identification.

Much of the District Court’s opinion is devoted to factual reconstruction of pretrial identifications occurring more than four years ago, and we can rearrange that factual composite only to correct clear error. See, e. g., Hines v. Beto, 473 F.2d 1034 (CA5 1973). On this appeal the state has not established any instance of a clearly erroneous finding of fact. Our task, then, is to determine if in light of the findings of fact and the applicable legal standards the District Court reached the correct result — to determine “the constitutional significance to be attached to [the elemental facts].” Neil v. Biggers, 401 U.S. 188, 193, 93 S.Ct. 375, 379, 34 L.Ed.2d 401, 407-408 n.3 (1972).

1. LINEUPS

The findings of fact made by the habeas court show that in 1969 Payne and Loos, witnesses to the January 3 robbery, attended pretrial lineups at which, despite his request, Rudd was not represented by counsel. He was exhibited along with four or five other men of similar height, weight, and age. Both the witnesses selected Rudd from these lineups as the January 3 bandit.

At the merits trial neither Payne nor Loos, in response to questioning by the state, testified about his pretrial recognition of Rudd, although they did make in-court identifications of him as the January thief. The District Court made a finding of fact not clearly erroneous that their in-court identifications were based on recollections formed at the lineups, not on their recollections from the crime. Consequently, if the pretrial lineup did not meet constitutional standards, then the witnesses’ in-eourt identifications were the fruit of a forbidden procedure and should not have been used in the state’s case. United States v. Wade, 388 U.S. 218, 239-242, 87 S.Ct. 1926, 18 L.Ed.2d 1149, 1164-1166 (1967).

In Gilbert v. California, 388 U.S. 263, 87 S.Ct. 1951, 18 L.Ed.2d 1178 (1967), and United States v. Wade, supra, the Supreme Court held that postindictment lineups conducted without presence of counsel, and in the absence of a valid waiver of counsel, are unconstitutional. The District Court concluded on authority of these decisions that the lineups in issue were constitutionally defective. Unquestionably Rudd was denied counsel at the lineups. As Kirby v. Illinois, 406 U.S. 682, 689, 92 S.Ct. 1877, 1882, 32 L.Ed.2d 411, 417 (1972), makes clear, however, the Wade-Gilbert right to counsel attaches only “at or after the initiation of adversary judicial criminal proceedings — whether by way of formal charge, preliminary hearing, indictment, or arraignment.” In this case the District Court did not find precisely when the lineups occurred, which is understandable since Kirby v. Illinois was not decided until one week after Rudd had been granted his writ of habeas corpus. The absence of a finding as to time of occurrence makes it impossible to determine whether the lineups in issue were conducted in violation of the Wade-Gilbert right to counsel.

Since a new trial is warranted for reasons we will presently discuss a remand to the District Court for resolution of the Kirby v. Illinois issue is unnecessary; it may appropriately be resolved by a state trial court should the state retry petitioner. Compare Kimbrough v. Cox, 444 F.2d 8, 11 (CA4 1971); United States ex rel. Phipps v. Follette, 428 F.2d 912, 915-916 (CA2), cert. denied, 400 U.S. 908, 91 S.Ct. 151, 27 L.Ed.2d 146 (1970), with United States ex rel. Rivera v. McKendrick, 448 F.2d 30 (CA2 1971), cert. denied, 404 U.S. 1025, 92 S.Ct. 678, 30 L.Ed.2d 675 (1972). See also Collins v. Estelle, 474 F.2d 988 (CA5 1973).

The District Court also held that the state trial court committed constitutional error by permitting Payne and Loos to make in-court identifications without first determining that their recollections were not rooted in the illegal lineups. This statement was erroneous if by it the District Court meant that failure to hold a hearing outside the jury’s presence on the independent origin issue was by itself sufficient cause for new trial. Both Wade and Gilbert were direct criminal appeals in which the lower courts permitted in-court identifications by witnesses who had attended constitutionally defective pretrial identifification procedures without first determining that the in-court identifications were of untainted origin. In each case the Supreme Court vacated the convictions and remanded to the trial court for a finding on the independent origin issue. In essence, both Wade and Gilbert establish that the state at the minimum is entitled to one opportunity to adduce evidence in support of independent origin. Normally the state should be allowed to discharge that burden at the federal evidentiary hearing, if not previously discharged at trial or other post-conviction proceedings.

2. SHOWUP

Tilson and Sweat, two of the witnesses to the December 7 robbery, testified at trial in response to the prosecution’s questioning that they had identified Rudd at a pretrial showup. The habeas court in reconstructing this pretrial showup found that state investigators had called Tilson and Sweat to the state attorney’s headquarters and that the witnesses had there viewed Rudd as he sat in a small office. Rudd was alone except for two or three other police officers who were seated nearby, and he was unaware that a showup was in progress.

Under Stovall v. Denno, 388 U.S. 293, 302, 87 S.Ct. 1967, 1972, 18 L.Ed.2d 1199, 1206 (1967), pretrial identification procedures “unnecessarily suggestive and conducive to irreparable mistaken identification” may violate due process without regard to the Wade-Gilbert right to counsel. The District Court did not err in ruling that the showup arranged by the police was impermissibly suggestive and in violation of the standards enunciated in Stovall v. Denno. By inviting the witnesses to view the suspect as he sat alone in the state attorney’s office beside one or two police officers, the police in effect suggested that “This is the man.” Foster v. California, 394 U.S. 440, 443, 89 S.Ct. 1127, 22 L.Ed.2d 402, 407 (1969) (italics original). Such singling out, or indicating to the witness that the man in custody is the man the police believe to have committed the crime, is a classic example of impermissible suggestiveness. See Crume v. Beto, 383 F.2d 36, 39 (CA5 1967), cert. denied, 395 U.S. 964, 89 S.Ct. 2106, 23 L.Ed.2d 749 (1969). Consequently the state committed constitutional error in eliciting testimony of identifications made at this tainted procedure, and since it has made no attempt to show that its error was harmless beyond a reasonable doubt under the teachings of Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967), petitioner is entitled to federal habeas relief. Should the state decide to retry petitioner, it must do so without testimony of identifications made at the showup.

Aside from their testimony of pretrial recognition at the showup, Til-son and Sweat also made in-court identifications of Rudd. For the test by which to gauge the admissibility of in-court identifications by witnesses who have attended impermissibly suggestive pretrial identification procedures, we look to Simmons v. United States, 390 U.S. 377, 88 S.Ct. 967, 19 L.Ed.2d 1247 (1968). In Simmons the Court held that the state commits constitutional error in eliciting in-court identifications by witnesses who have attended pretrial identification proceedings “so impermissibly suggestive as to give rise to a very substantial likelihood of irreparable misidentification.” Id. at 384, 88 S.Ct. at 971, 19 L.Ed.2d at 1253. While the habeas court did, as we have noted, correctly determine that the showup was impermissibly suggestive, it did not specifically find that the showup was likely to induce irreparable misidentification, a finding indispensable to proper application of the Simmons test. See Neil v. Biggers, 409 U.S. 188, 93 S.Ct. 375, 34 L.Ed.2d 401, 410-411 (1972); United States v. Sutherland, 428 F.2d 1152, 1155 (CA5 1970). On this cold record we cannot make the required factual determinations. For example, irreparability of suggestiveness may hinge in part on the strength of the witnesses’ preshowup recollections, which can best be measured by one having an opportunity to observe the witnesses’ demeanors under questioning. As with the lineups, however, we conclude that a remand to the federal District Court is unwarranted. The issue of irreparability may appropriately be resolved by the state trial court should the state retry petitioner. Without a favorable finding on this issue the state should proceed without in-court identifications by Tilson and Sweat.

3. PHOTO DISPLAYS

a. Tilson display

Tilson, manager of the store robbed on Dee. 7, testified at the state trial in response to questions of the prosecution that he had identified Rudd at a pretrial photo display. Testimony at the habeas hearing reveals that Tilson was shown a group of five or six photographs of men not markedly dissimiliar in appearance from petitioner. The habeas testimony also shows that the police manipulated the photographs to make some of the men appear as if they were wearing a hat. Tilson testified under questioning by Rudd’s counsel at the evidentiary hearing :

THE WITNESS:
Well, when he robbed the store, he was wearing a cowboy hat and they took it like, turned the picture over and blocked the top part of his head off, you know, all of them, one at a time.
THE COURT:
The detectives?
THE WITNESS:
Yes, sir.
. . . . . .
Q. When you were shown the photographs, did you pick Mr. Rudd’s picture out immediately or did the police officers put on the hats before you picked Mr. Rudd’s picture out?
A. I picked two out first and then they put the hats on and then I—
Q. You picked out two photographs because wou weren’t sure — you weren’t sure which of the two was the man who robbed the store and then the police officers put the hats on the pictures to help you identify the robber?
A. Yes, ma’am.
Q. When the police called and asked if they could come to your home, did they say that they had a suspect?
A. No, ma’am, they didn’t call. They just knocked on my door.
Q. When they knocked on your door and entered your home, did they tell you that they had a suspect?
A. No, ma’am, they just asked me to look at some pictures.

In light of this testimony the District Court concluded that the police had suggestively manipulated the photographs by making them to appear to wear hats, and accordingly found that the state committed constitutional error by eliciting testimony at the state trial as to Tilson’s identification made at the defective display.

Application of Stovall v. Den-no to the elemental facts compels us to disagree with the habeas court. Accenting the features of a particular photograph to focus the witness’ attention on it indeed will often be impermissibly suggestive. As this court explained in Crume v. Beto, 383 F.2d 36 (CA5 1967), cert. denied, 395 U.S. 964, 89 S.Ct. 2106, 23 L.Ed.2d 749 (1969):

The fault common to all these practices is that the police single out one person and influence the witness by directing attention to some element known to be connected with the crime —the unique appearance of the suspect, the words spoken in the course of the crime, or clothing similar to the suspect’s clothing. The necessary result of this singling out is to suggest to the witness that the suspect so isolated is in fact the one the police think is guilty.

Id. at 39. Impermissible singling out does not necessarily occur, however, when the police attempt to reenact the atmosphere of the crime by having all subjects wear clothing similar to that worn by the bándit, or by having only two or three of the subjects wear similar clothing if the witness has already narrowed his choice to those two or three subjects. To the contrary, reenactment of crime atmosphere is often the preferred identification procedure. Wigmore suggests:

At the time of presenting for recognition, whether upon arrest or at trial in the courtroom, measures should be taken to increase the simulus of association and to decrease the risk of false suggestion, (a) The person to be identified should be clothed and placed (so far as feasible) in the same conditions as when originally observed, (b) The person to be identified should be presented in company with a dozen others of not too dissimilar personalities.

3 Wigmore, Law of Evidence § 786a, at 206 (Chadbourn rev. ed. 1970) (italics original). This circuit has expressly approved such stimuli of association, provided they are not used to direct the witness’ attention to a particular subject. Thus in Crume v. Beto, supra, we upheld the practice of placing a hat on a subject and having him say, “This is a stick-up,” because the witness had already made a tentative identification and the associational procedures were merely to test her initial impression.

The facts adduced at the habeas hearing were that the police did not make the photographs appear to wear hats until Tilson had already narrowed his choice to two photographs, and at that time the police made both of the photos appear to wear hats. Consequently, the police did not, within the meaning of Stovall v. Denno, impermissibly focus attention on a particular photograph.

b. Ison-Sweat display

Ison and Sweat, customers in the store on December 7, also attended a pretrial photo display at which they selected Rudd from a spread of four or five photographs, and they testified at state trial in response to the prosecution’s questions as to these pretrial recognitions. The habeas court held that the photo display was impermissibly suggestive within the meaning of Stovall v. Denno, and that the state consequently committed constitutional error in eliciting testimony of identifications made at this display.

We find no error in the holding of the habeas court that this display was impermissibly suggestive. From testimony at the merits trial and at the habeas hearings, we know that the police brought four or five photos to the home of Miss Sweat and there staged a display in the presence of both Ison and Sweat. While Miss Sweat was momentarily absent from the room, Ison picked up one of the photos from the table and began scrutinizing it. When Miss Sweat returned and while Ison was holding Rudd’s photo in his hand, both Ison and Sweat at the same time identified it as the photo of the thief. The District Court essentially found that the witnesses made mutually, reinforcing identifications that they might not have made independently. On the facts of this case, we are not able to say that the District Court erred in holding the mutually reinforcing, simultaneous identifications to be improper. In reaching this conclusion we consider as important the witnesses’ lack of opportunity to obtain a clear view of the bandit at the crime as well as the ample time available to the police for staging separate displays.

In connection with the display the District Court articulated an erroneous per se rule concerning simultaneous identifications by two or more witnesses. The court said: “Thus, this Court holds that any simultaneous identification of a suspect by two or more witnesses in the presence of each other is so impermissibly suggestive as to amount to a denial of due process, and any subsequent in-court identifications must be subjected to a per se exclusionary rule.” Pretrial identification procedures should not be found impermissibly suggestive on the basis of rigid application of categorical rules. For example, indicia of reliability such as a witness’ strong recollection from an independent, untainted source may in some cases counteract the suggestiveness in certain identification procedures. Also, exigencies of efficient police work may occasionally justify identification procedures that in other contexts would be unnecessarily suggestive. Because of these and other variables spanning the range of human experience, courts have wisely counseled against determination of constitutionally impermissible suggestiveness on other than a case-by-case basis. See, e. g., United States v. Sutherland, 428 F.2d 1152, 1156 (CA5 1970); Pearson v. United States, 389 F.2d 684, 688 (CA5 1968). In short, due process inquiries into impermissible suggestiveness should be made in the absence of per se rules.

In addition to their testimony of pretrial recognition, both Ison and Sweat made in-court identifications. As noted previously, the constitutionality of such in-court identifications must be measured by the Simmons test of conduciveness to irreparable misidentification. As we read the opinion below, the habeas court did not apply this test to determine whether the in-eourt identifications were constitutionally permissible. As we have held in another part of this opinion, however, this issue may be appropriately resolved by a state trial court if the state retries petitioner. Subject to a favorable finding on this issue, the state should proceed without an in-court identification by either Sweat or Ison. Also, because the display itself exceeded the bounds of permissible suggestiveness, the state should not elicit testimony as to recognitions made at the display.

Affirmed.

      . The District Court found that petitioner had exhausted his state remedies as required by 28 U.S.C. § 2254, the state has not contended otherwise, and the record is devoid of any indication that Rudd did not exhaust.

      . This circuit holds that admission into evidence of similar crimes committed close in time to show general scheme is not constitutional error. Dinkins v. Wainwright, 451 F.2d 587 (CA5, 1971). This is not to suggest, of course, that use of such evidence is nonreviewable in direct criminal appeals. See, e. g., United States v. Rodriguez, 474 F.2d 587 (CA5, 1973).

      . Under cross-examination Loos mentioned identifying Rudd at a pretrial lineup. Since this testimony was not in response to questioning by the state, “the admissibility of evidence of the lineup identification itself is not involved.” United States v. Wade, 388 U.S. 218, 240, 87 S.Ct. 1926, 1939, 18 L.Ed.2d 1149, 1165 (1967). Compare Gilbert v. California, 388 U.S. 263, 87 S.Ct. 1951, 18 L.Ed.2d 1178 (1967) (state elicits testimony of pretrial recognition at lineup; court reviews admissibility of that testimony). Indeed constitutional error might have been committed had the trial court prevented defense counsel from proving pretrial recognition in an attempt to mitigate the force of the in-court identification. See Pearson v. United States, 389 F.2d 684, 687-688 (CA5 1968).

      . Our discussion assumes, of course, that the petitioner has exhausted his state remedies.

      . The District Court also concluded that the showups were conducted in violation of Rudd’s Wade-Gilbert right to counsel. AYe agree that the showup in issue is governed by Wade-Gilbert principles. It was staged at the station house by the police for the purpose of exhibiting Rudd in connection with the specific offense for which he was then in custody. Under these circumstances it would be illogical to deny the applicability of Wade-Gilbert solely because the police did not hold a formal lineup under the lights with more than one subject on display. See Rivers v. United States, 400 F.2d 935, 940 (CA5 1968). See generally Comment, The Right to Counsel at Lineups: Wade and Gilbert in the Lower Courts, 36 U.Chi.L.Rev. 830 (1969). Under Kirby v. Illinois, 406 U.S. 682, 92 S.Ct. 1877, 32 L.Ed.2d 411 (1972), however, a showup governed by Wade-Gilbert would be constitutionally defective only if it was held after initiation of adversary judicial criminal proceedings. Since the District Court did not find precisely when the showup occurred, we cannot determine whether Rudd’s right to counsel was denied.
      We have already held that the showup was impermissibly suggestive within the meaning of Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967). Without regard to the Wade-Gilbert right to counsel the state should not use testimony as to identifications made at the showup should it decide to retry petitioner. Use of the second category of testimony — i. e. an in-court identification by Tilson or Sweat — would be conditional upon a favorable finding on the Kirby v. Illinois issue concerning time of occurrence or a finding that the in-court identifications would be of an origin independent of the showup, United States v. Wade, 388 U.S. 218, 239-242, 87 S.Ct. 1926, 18 L.Ed.2d 1149, 1164-1166 (1967). These prerequisites would, of course, be in addition to the necessity of a favorable finding on the irreparability issue discussed in text.

      . Use of an in-eourt identification by Miss ■ Sweat should, of course, be conditioned on the other prerequisites we have discussed in connection with the impermissibly suggestive showup, which Miss Sweat also attended.


source: Caselaw Access Project

author: BOREMAN, Senior Circuit Judge:

license: Public Domain

text:
    Nannie Carr HARRIS, Incompetent, and Robert A. Eubanks, Guardian, Appellee, v. COMMISSIONER OF INTERNAL REVENUE, Appellant.
    No. 72-1343.
    United States Court of Appeals, Fourth Circuit.
    Argued Oct. 5, 1972.
    Decided May 4, 1973.

      William L. Goldman, Atty., Tax Div., Dept. of Justice (Scott P. Crampton, Asst. Atty. Gen., Mayer Rothwacks and William A. Friedlander, Attys., Tax Div., Dept. of Justice, on brief), for appellant.
    James H. Johnson, III, Chapel Hill, N. C. (Haywood, Denny & Miller, Chapel Hill, N. C., on brief), for appellee.
    Before BOREMAN, Senior Circuit Judge, and WINTER and RUSSELL, Circuit Judges.
   BOREMAN, Senior Circuit Judge:

This is an appeal by the Commissioner of Internal Revenue from a decision of the United States Tax Court, 56 T.C. 1165.

In the spring of 1962, Robert A. Eu-banks, the duly qualified guardian of taxpayer, Nannie Carr Harris, an incompetent, negotiated with one Robert I. Lipton for the sale of certain improved real estate owned by taxpayer in Chapel Hill, North Carolina. On May 18, 1962, Eubanks, as such guardian, and Lipton executed a contract providing for the sale of the property, subject to the required approval of the Superior Court of Orange County, North Carolina. One Thousand Dollars was to be paid upon securing the necessary judicial approval and the balance on or before August 1, 1962.

Pursuant to the contract and the pertinent North Carolina statutes, Eubanks filed a petition with the Clerk of the Superior Court of Orange County on May 21, 1962, seeking authority to sell the property for $156,500, alleging as grounds therefor the low net income from the property, the insufficiency of the income to provide the support needed by taxpayer and to satisfy certain debts owed by her. On the same day, the Superior Court ordered (1) that Eu-banks offer the property to Lipton for $156,500, (2) that Eubanks file a report of the offer, and (3) that the sale be confirmed after ten days if no objections or upset bids were filed. Also on May 21, 1962, Eubanks made the offer and filed the report as ordered, and Lipton made the $1,000 down payment called for in the contract. The petition, court order and report filed May 21 did not deal with the disposition of sale proceeds.

It appears that sometime between May 21, 1962, and June 1, 1962, during the 10-day period before the sale could be confirmed, Eubanks was advised that a reduction in income tax could be effected if the purchase price were payable in installments. On June 1, 1962, he filed a supplemental petition, seeking approval of an arrangement whereby Lipton would pay $46,500 upon delivery of the deed and would deposit the balance of $110,000 with First Federal Savings and Loan Association of Durham, North Carolina, as escrow agent, with instructions to the agent to pay $27,500 plus interest to the guardian on January 2 of each of the following four years. In addition to this supplemental petition, Eubanks’ attorney sent a letter to the Clerk in which he approximated the tax savings if the receipts from the sale of the property were reported over a period of five years. By order entered June 1, 1962, the Superior Court confirmed and approved the sale and authorized the plan of payment as requested in the supplemental petition.

Subsequently, the closing date of the contemplated transaction was extended and Lipton assigned all his rights in the property to W. J. Darnell, George S. Goodyear, and George F. Lattimore, Jr. .(hereinafter referred to as the assignees). The property was ultimately deeded to the assignees on or about August 31, 1963, pursuant to an order entered by the Superior Court on August 23, 1963.

Under the agreement between Eu-banks and the assignees, payment of the purchase price was to be substantially as set forth in the confirmation order of June 1, 1962, with only the payment dates changed to reflect the passage of time. Ultimately, the sum of $6,000 was paid during or before 1963, the sum of $40,500 was paid on or about January 17, 1964, and, also on January 17, 1964, the sum of $110,000 was paid to First Federal Savings and Loan Association of Durham pursuant to an escrow agreement of that date.

In her tax return for 1964, taxpayer included in her taxable income $40,500, representing that portion of the sale price actually received by her on January 17, 1964. The Commissioner determined a deficiency of $30,757.32, ruling that (1) the $110,000 paid to First Federal Savings and Loan Association, as escrow agent, and (2) $4,070.04 interest credited to the escrow account in 1964, were constructively received by taxpayer in 1964. The Tax Court recognized the established rule that where payment is made by the purchaser to a third party at the seller’s behest the seller has constructively received the payment for tax purposes but held that the rule did not apply here because the $110,000 was paid to First Federal Savings and Loan Association at the direction of the Superior Court rather than by direction of taxpayer or her guardian. The Tax Court determined a deficiency of only $226.67. We reverse as to the $110,000 deposited in the escrow account. The Commissioner does not appeal the Tax Court’s holding as to the interest credited to the escrow account during 1964.

Section 451(a) of the Internal Revenue Code of 1954, 26 U.S.C., provides:

The amount of any item of gross income shall be included in the gross income for the taxable year in which received by the taxpayer, unless, under the method of accounting used in computing taxable income, such amount is to be properly accounted for as of a different period.

Treasury Regulations Section 1.451-2(a), 26 C.F.R., sets forth the general rule with respect to constructive receipt of income:

Income although not actually reduced to a taxpayer’s possession is constructively received by him in the taxable year during which it is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time, or so that he could have drawn upon it during the taxable year if notice of intention to withdraw had been given.

It is clear that if taxpayer had not been incompetent and had made the same escrow agreement acting for herself, or if the escrow arrangement had been entered into solely by Eubanks acting on behalf of taxpayer as her guardian without the supervision of the local court, the $110,000 payment to the escrow agent would be treated as constructively received by her in 1964. Williams v. United States, 219 F.2d 523 (5 Cir. 1955); Rhodes v. United States, 243 F.Supp. 894 (W.D. S.C.1965); Pozzi v. Commissioner, 49 T.C. 119 (1967). Lipton had signed on May 18, 1962, a contract of sale calling for payment in cash on or before the date set for closing the transaction. Further, on January 17, 1964, Lipton’s assignees, the ultimate purchasers, were ready, willing and able to pay the entire remainder of the purchase price, $150,500, and in fact did irrevocably part with the full amount thereof on that date. Sale proceeds, or other income, are constructively received when available without restriction at the taxpayer’s command; the fact that the taxpayer has arranged to have the sale proceeds paid to a third party and that the third party is, with taxpayer’s agreement, not legally obligated to pay them to taxpayer until a later date, is immaterial. See Griffiths v. Commissioner, 308 U.S. 355, 60 S.Ct. 277, 84 L.Ed. 319 (1939); Hicks v. United States, 314 F.2d 180 (4 Cir. 1963). The sole question presented, therefore, is whether this rule is inapplicable for the reason that, where the property of an incompetent is being sold, the terms of the sale and the disposition of the sale proceeds must be approved by the local court under North Carolina law.

In his brief filed with the Tax Court, the Commissioner argued as follows:

Respondent’s [Commissioner’s] position is that the entire consideration was constructively received in 1964 since it was within the power and control of the petitioner to have received the funds at that time.
* * * * * *
It is the respondent’s position that the circumstances of this case are such that, when the purchase price was paid into the escrow account for the benefit of the petitioner, there was constructive receipt of the full amount. When negotiations were completed and the contract entered into on May 18, 1962, it was the intention of both parties that the sale would be a cash transaction. On that date petitioner was ready, willing and able to close the transaction for a cash payment of $156,500. On the day the sale was approved by the Court, petitioner became equitably entitled to the full purchase price. This contractual right was an asset which he could sell or otherwise transfer. It was within petitioner’s power and control to receive the purchase in cash, but instead he elected to have it delivered to the bank under an escrow agreement.

The Tax Court noted that implicit in this argument is the assumption that taxpayer at one time had an enforceable right to receive the total sale proceeds in cash but that she then decided to voluntarily put herself under some legal disability with respect to payment, i. e., the escrow arrangement. The Court reviewed the applicable North Carolina statutory and ease law and determined that, in North Carolina, when a guardian of an incompetent sells real property under order of the court, the guardian is merely an “agent” of the court, and the sale is not consummated until it is confirmed by the resident judge, which confirmation represents the consent of the court to the sale. Pike v. Wachovia Bank and Trust Company, 274 N.C. 1, 161 S.E.2d 453 (1968). The Tax Court then concluded that Eubanks was merely acting for the Superior Court of Orange County in contracting for the sale of taxpayer’s property and that the May 18, 1962, contract of sale created no rights in any of the parties unless and until the sale was confirmed by the resident judge. Since the confirmation was contained in the order of June 1, 1962, which order also authorized and directed the use of the escrow arrangement, the court held that Eu-banks, on behalf of taxpayer, never had the power to receive the full purchase price in 1964, and thus did not constructively receive that amount in 1964.

We find no error in the Tax Court’s analysis of the respective powers of Eubanks, as guardian, and the Superior Court of Orange County. We agree that, under North Carolina law, Eu-banks could not enter a binding agreement for the sale of taxpayer’s real property without the confirmation of the resident judge. The error of the Tax Court was in regarding the state court’s role in the proceedings as representing an interest adverse to, or independent of, the interests of the incompetent taxpayer, and in regarding the state court’s order to place the funds in escrow as a denial to the taxpayer and her guardian of dominion over the payment. North Carolina Gen. Stat. § 33-31, which requires judicial supervision of the sale of an incompetent’s property, actually supplements the guardianship protection afforded the incompetent. The resident judge must ensure that any sale is made “on such terms as may be most advantageous to the interest of the ward.”

In City Bank Co. v. McGowan, 323 U.S. 594, 65 S.Ct. 496, 89 L.Ed. 483 (1945), the Supreme Court rejected the distinction between the acts of an incompetent and those of a court acting in her behalf. The question there was whether a transfer of the decedent’s property, made pursuant to court order because the decedent was incompetent, was in contemplation of the decedent’s death, which fact would make the property includible in the decedent’s estate for federal estate tax purposes. The Court stated, 323 U.S. at 598-599, 65 S.Ct. at 498:

The issue is a narrow one. Literally Mrs. Vail neither made the transfers nor did she have any motive with respect to them. But a court stood in her place and unquestionably had the function of effectuating a transfer of her property and of determining what motive or purpose would have actuated her had she been competent to act. It seems to us that it is sticking in the bark to say that, in the circumstances, the transfers are not within the section because Congress did not add a phrase to the effect that where a court made the transfer, acting in lieu of the incompetent owner, such a transfer should be governed by the statute.
We hold, therefore, that where, as in New York, the court is to substitute itself as nearly as may be for the incompetent, and to act upon the same motives and considerations as would have moved her, the transfer is, in legal effect, her act and the motive is hers.

The act of the Superior Court of Orange County in directing, upon the request of Eubanks, that the $110,000 be placed in escrow was “in legal effect” the act of the taxpayer. We hold that the escrow deposit was constructively received, for income tax purposes, in 1964.

Reversed.

      . N.C.Gen.Stat. § 33-31 (1966 Repl.Vol.):
      Special proceedings to sell; judge’s approval required. — On application of the guardian ... by petition, verified upon oath, to the superior court, showing that the interest of the ward would be materially promoted by the sale . . . of any part of his estate, real or personal, ... a decree may thereupon be made that a sale ... be had by such person, in such way and on such terms as may be most advantageous to the interest of the ward; all petitions filed under the authority of this section wherein an order is sought for the sale ... of the ward’s real estate . . . shall be filed in the superior court of the county in which all or any part of the real estate is situated ; . . . no . . . conveyance of the title [shall be] made, unless confirmed and directed by the judge, and the proceeds of the sale . . . shall be exclusively applied and secured to such purposes and on such trusts as the judge shall specify. . . .
      In the ease of a private sale, such as the one here, the sale may be confirmed if no upset bids are submitted within ten days after the report of sale is filed. N.C.Gen. Stat. § 1-339.37 (1969 Repl.Vol.).

      . The Superior Court summarized the proceedings, and concluded:
      This cause again coming on to be heard and being heard and it appearing to the court that under a prior order entered in this matter Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, reported to the court that he had an offer for the property described in the pleadings from Robert I. Lipton, Trustee, through Foushee-Olsen Realty Company for $156,500.00, of which sum $6,-500.00 is due and payable to FousheeOlsen Realty Company as commissions; the said report has remained on file in this office for more than ten days as required by law; no objections or upset bids have been filed and Robert A. Eu-banks, guardian for Nannie Carr Harris, incompetent, has filed a supplementary petition in which he prays that he be permitted to accept a down payment of $46,500.00 and that the remainder of the purchase price be deposited by Robert I. Lipton, Trustee, or his assigns with First Federal Savings and Loan Association of Durham, N. C., as escrow agent, with irrevocable authorization to the escrow agent to pay to Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, on the 2nd day of January 1963, the sum of $27,500.00, plus accumulated interest and on the 2nd day of January, 1964, 1965, and 1966, each, the sum of $27,500.00 plus accumulated interest so that the taxable income from the sale of this property can be reported by the guardian on an installment sale basis and over a period of five years; and it appearing to the court that it would be to the best interest of the estate of Nannie Carr Harris, incompetent, that this method of payment for the said property would be advantageous to the estate and should be approved by the court.
      NOW, THEREFORE, IT IS ORDERED, ADJUDGED AND DECREED, that the sale of the-property described in the pleadings by Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, to Robert I. Lipton, Trustee, or his assigns, for the full sum of $156,500.00 be and the same is hereby in all respects confirmed and fully approved.
      IT IS FURTHER ORDERED, ADJUDGED AND DECREED, that the said Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, be and he is hereby authorized and permitted to accept the sum of $46,500.00 in cash and Robert I. Lipton, Trustee, or his assigns, is authorized to deposit with First Federal Savings and Loan Association of Durham, N. C., as escrow agent, under an irrevocable escrow agreement the remaining sum of $110,000.00 which escrow agreement shall authorize First Federal Savings and Loan Association of Durham, N. C., as escrow agent, to pay to Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, on the 2nd day of January, 1963, from the said funds $27,500.00 plus accumulated interest and on the 2nd day of January of the years 1964, 1965, and 1966, each, the sum of $27,500.00 plus accumulated interest to each date until transfer of the said funds to Robert A. Eu-banks, guardian of Nannie Carr Harris, incompetent, has been completed, or to the duly qualified representative of Nannie Carr Harris should she die before the escrow agreement terminates. IT IS FURTHER ORDERED AND DECREED, that Robert A. Eubanks, guardian of Nannie Carr Harris, incompetent, shall and he is hereby authorized, empowered and directed to execute and deliver to Robert I. Lipton, Trustee, or his assigns, a good and sufficient deed in fee simple, with taxes, insurance and rents adjusted as of the date of the closing of this matter and upon payment of $46,500.00 and delivery to him of a copy of the above mentioned escrow agreement between Robert I. Lipton, Trustee, or his assigns, and First Federal Savings and Loan Association of Durham, N. C., relative to the balance of $110,000.00.

      . In a second supplemental petition to the Superior Court filed on August 23, 1963, Eubanks reported that: (1) he had been unable to complete the sale of the property to Lipton; (2) Lipton had assigned his rights in the matter to Goodyear, Lattimore and Darnell; (3) the assignees had arranged through Goodyear Mortgage Corporation to finance the purchase of the property and the erection of a multiple unit motel and business building on the property for $850,000; and (4) the assignees would authorize one Lee W. Settle, Trustee in the deed of trust securing the indebtedness to Goodyear Mortgage Corporation, and the Goodyear Mortgage Corporation, to pay the first funds disbursed by the mortgagee in payment of the purchase price in the amount of $46,500, and that the Goodyear Mortgage Corporation would deposit the balance of $110,000 under the escrow agreement earlier contemplated.
      The Superior Court’s Order of August 23, 1963, provided in pertinent part:
      ORDERED, ADJUDGED AND DECREED that Robert A. Eubanks, Guardian of Nannie Carr Harris, incompetent be and he is hereby authorized, empowered and directed to execute a fee simple deed to the property described in the pleadings to George S. Goodyear, George F. Lattimore, Jr. and W. J. Darnell and is further authorized, empowered and directed to enter into a contract with the said parties, their spouses, and Lee W. Settle, Trustee, and Goodyear Mortgage Corporation to the effect that the first monies disbursed by Goodyear Mortgage Corporation on the . . . [demand] note of $850,-000.00 [executed by the assignees payable to the Goodyear Mortgage Corporation] shall be paid to Robert A. Eu-banks, guardian of Nannie Carr Harris, incompetent, and on or before December 15, 1963 and he may provide in that contract for the payment of $46,500.00 on or before the said date and for the payment of the remainder through an escrow agreement over a period of four (4) years as set out in an order of this Court dated June 1, 1962, and he is further authorized and directed to see that his deed to George S. Goodyear, George F. Lattimore, Jr. and W. J. Darnell, the deed of trust securing an indebtedness to Goodyear Mortgage Corporation, and an agreement relative to payments are filed for registration simultaneously in the Office of the Reister of Deeds of Orange County and to see that there are no intervening liens against the said property.

      . The escrow agreement between Lee W. Settle, Trustee, and the First Federal Savings and Loan Association, provided in part:
      Whereas, the order of the Clerk of the Superior Court of Orange County and approval by the Resident Judge of the Fifteenth Judicial District of the Superior Courts of North Carolina, authorized and permitted the party of the first part [Settle] to deposit the balance of the purchase price and in the sum of $110,000.00 with the party of the second part, as Escrow Agent, and under the following irrevocable terms and conditions, ....

      . Taxpayer reported the receipt of $5,000 of the proceeds of the sale on her 1963 individual income tax return and made an election to report the sale on the installment basis. On her 1964 return, she reported the receipt of $40,500 as a long-term capital gain installment on the 1963 installment sale. The issue here is whether the amount of the 1964 installment was understated and whether the amount deposited in escrow should have been included in the 1964 tax return.

      . This deficiency of $226.67 was apparently due to the fact that taxpayer originally claimed $10,000 as the basis of the property sold, the Commissioner used a basis of $1,000 in determining the deficiency, and the parties ultimately stipulated a basis of $6,000.

      . See footnote 1.


author: STEVENS, Circuit Judge.

text:
    L. F. STRASSHEIM COMPANY, a Wisconsin corporation, d/b/a Bowling Green Chair Co., Plaintiff-Appellant, v. GOLD MEDAL FOLDING FURNITURE COMPANY, a Wisconsin corporation, Defendant-Appellee.
    No. 72-1010.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 24, 1973.
    Decided April 23, 1973.
    As Amended on Denial of Rehearing May 18, 1973.

      Charles B. Cannon, Chicago, Ill., Donald C. Heide, Kenosha, Wis., Lawrence F. Scinto, New York City, for plaintiff-appellant.
    James E. Nilles, Milwaukee, Wis., for defendant-appellee.
    Before SWYGERT, Chief Judge, and STEVENS and SPRECHER, Circuit Judges.
   STEVENS, Circuit Judge.

The principal question is whether the district court properly found that newly discovered evidence, which plainly required an earlier judgment of patent validity to be set aside, was not sufficient to prove that the patentee had fraudulently concealed the invalidating prior public use of the invention. We accept the district court’s credibility determinations but disagree with its appraisal of the legal consequences of the patentee’s serious lack of diligence in connection with its patent application and in responding to relevant pretrial discovery requests. We therefore modify the judgment entered below.

The parties are competing manufacturers of informal furniture, including folding chairs. Defendant is the owner of Patent ’816 covering a “non-sag back” feature of a collapsible director’s chair, and a design patent describing a rearwardly inclined arm rest assembly. In 1964, plaintiff, admittedly an infringer if the patents are valid, filed a declaratory judgment action alleging invalidity for various reasons, including public use and sale in this country more than one year prior to December 28, 1953, the filing date of the application for the ’816 patent. The district court found both patents valid and infringed. After plaintiff filed its notice of appeal, but before argument, the parties entered into a settlement agreement pursuant to which plaintiff paid $15,000 to defendant and the district court's injunction against further infringement remained in effect. Thereafter, the appeal was dismissed and, on October 31, 1968, the district court entered a “final judgment on mandate.”

Less than one year later plaintiff filed a motion to reopen on the basis of newly discovered evidence. Plaintiff alleged that defendant was guilty of deliberate fraud and prayed for a new trial, the entry of a new judgment, treble damages, attorneys’ fees, and a reference to the United States Attorney and the Commissioner of Patents for appropriate investigation and discipline. The district court reopened the case, allowed further discovery, and, after a second trial, held Patent ’816 invalid and set aside the settlement, but otherwise denied the requested relief.

The effect of that decision was to require defendant to refund the settlement payment of $15,000, less its damages for pre-1968 infringement of the design patent, such damages to be determined either by negotiation or an accounting, and to leave in effect the injunction against further infringement of the design patent. Plaintiff appeals, principally contending that the failure to find fraud is clearly erroneous and that, in any event, the relief is inadequate.

I.

December 28, 1953, is the date on which the application for the ’816 patent was filed. The evidenee adduced at the two trials establishes beyond any question that defendant was selling chairs embodying the “non-sag back” feature prior to December 28, 1952, and that the ’816 patent was therefore invalid. Amphenol Corp. v. General Time Corp., 397 F.2d 431, 433 (7th Cir. 1968). A summary of that evidence is a necessary background for an appraisal of the ultimate issues.

The invention was conceived in July, 1951, and “reduced to practice” on September 14, 1951. In October, or possibly earlier in 1951, defendant employed an attorney named Young, now deceased, to file a patent application; he was sent an arm assembly for the No. 35 chair “with new designed back post and canvas back,” and his invoice for filing fees was paid. For unexplained reasons, however, Young did not file this application.

In 1952, defendant manufactured chairs to order and also made some sales through distributors, one of whom maintained an inventory in Miami, Florida. An order placed by a customer in Hollywood, Florida, dated November 15, 1952, was filled on November 18, 1952, by taking 30 chairs out of defendant's stock in Miami. Those chairs had the “non-sag back” feature.

On November 17, 1952, defendant sent a letter, enclosing a price list, to about 2,000 customers. The price list was: “Reissued November 15, 1952”; it included prices for 19 different styles of the “No. 35” chair. It also carried a note: “All No. 35 style chairs now regularly equipped with new patented feature — removable covers and non-sag backs.”

The November 17, 1952, letter referred to the fact that defendant’s “October-Chicago Market was very favorable.” Defendant had exhibited at the furniture show in Chicago in October, 1952. It seems likely that the new chair was displayed at that time, but there is no finding or evidence directly on the point. In any event, as a result of defendant’s promotional efforts, the non-sag back was described in an issue of a trade publication mailed to about 12,000 subscribers on December 10, 1952, and, necessarily, prepared some time earlier. The new chair was unquestionably on the market before the end of 1952.

In November of 1953, defendant became concerned about the status of its patent protection and wrote directly to the Patent Office to ascertain whether Young had, in fact, filed the application as requested well over a year earlier. A letter from the Patent Office, dated December 4, 1953, brought the distressing news that no application had been filed. Oti December 7, 1953, a new lawyer was retained with “authority to proceed as necessary to file the application on this matter at the earliest possible date, realizing that it must be done by early January, 1954.” At that time, of course, the new chair had been on the market for over a year and it was already too late to obtain patent protection. The newly retained lawyer was able to file by December 28; he testified that he made no attempt to determine the date of the first public offer or sale of the patented device.

At this point we pause to note that in November and December of 1953 defendant’s executives either (1) were under the honest, but mistaken, impression that they had introduced the non-sag back chair at the Chicago show in January of 1953, or (2) well knew that their right to obtain patent protection was irretrievably lost and nevertheless sought to create that false impression. There is substantial evidence in the record consistent with either alternative; in the last analysis, however, the factual determination turns on an appraisal of the credibility of the executives who testified, and, skeptical as we may be based on our reading of the cold record, we are not prepared to substitute our judgment for that of the experienced trial judge who heard and saw the witnesses. We do note, however, that there can be no question about the ready availability of the true facts to defendant’s executives and attorney when the patent application was filed. The failure to make an appropriate investigation at that time— particularly since the critical importance of filing within one year of the first public offer was obvious to all concerned —reflects an extraordinary lack of diligence to which we consider it appropriate to attach legal significance.

Defendant and its trial counsel also displayed a comparable lack of diligence in responding to discovery requests in advance of the first trial.

In preparing to depose John B. Gittings, plaintiff’s counsel requested in June of 1964 that certain documents be produced for use at the deposition. That request plainly called for the production of the price list reissued on November 15, 1952, the letter to the trade enclosing that list, and the promotional article in the December trade publication. A copy of each of those items was in defendant’s possession at that time, and at least the letter enclosing the price list and the article were apparently seen by John B. Gittings shortly before his deposition was taken in Kenosha on July 16. Many other documents were produced in connection with the Kenosha deposition, but none of the items in question was mentioned or brought to the attention of plaintiff’s counsel.

The explanation for this important oversight, though somewhat complex, may be summarized briefly. Price lists, advertising copy, and promotional items were normally retained in large scrapbooks, each covering a one-year period. Contrary to customary practice, the overlooked items dated in November and December of 1952, had been improperly placed in the 1953 book. The books for 1951, 1952 and 1953 were made available to plaintiff’s counsel, but neither he nor defendant’s counsel carefully examined the 1953 book because they apparently accepted the Gittings’ representation— whether express or implied is not clear —that the 1953 book would not contain any 1952 material. Anything after December, 1952, would not, of course, have been significant.

The testimony of both of the Gittings brothers is consistent with the defense theory that although John had seen the letter enclosing the reissued price list and the trade publication article when he was rummaging through the documents in his basement in preparation for the Kenosha deposition, he had not realized the significance of the documents because the letter contained no reference to the non-sag back feature and the text of. the article referred only to 1953.”

This theory also explains defendant’s inaccurate response to written interrogatories, as well as the inaccurate testimony given at the first trial. With some reluctance, the district court accepted the defendant’s explanation for the failure to disclose the critical, damaging documents. Again, however, we are persuaded that defendant’s lack of diligence, even though not constituting deliberate fraud, is of sufficient importance to require consideration in determining the appropriate remedy.

At the time of the entry of the “Final Judgment on Mandate” on October 31, 1968, plaintiff had lost a lawsuit which it was plainly entitled to win. It had incurred expenses for legal fees and other costs of litigation that would not have been necessary if- defendant, or its counsel, had made a conscientious investigation of the timeliness of the application for the ’816 patent. Plaintiff entered into a voluntary settlement which gave defendant benefits it should never have received. Those benefits not only included the payment of $15,000, but also the protection against competition from chairs embodying the ’816 non-sag back feature and also a waiver of an appeal from the finding of validity of the design patent. We cannot retrospectively determine whether or not the 1968 appeal would have been successful, but it certainly was not frivolous. Thus, since 1968 defendant has had the benefit of an injunction against infringement of the ’816 , patent — a benefit that we do not know how to evaluate but which was plainly unwarranted — and also the benefit of an injunction against infringement of the design patent — a benefit which arguably it should never have received.

These considerations would support a reinstatement of the appeal from the portion of the original judgment of validity of the design patent and the postponement of the ultimate determination of the pecuniary rights of the parties until that issue is resolved. ' However, defendant’s lack of diligence has already caused this litigation to be much more protracted than it ever should have been. We therefore decide that relief should be entered which will (1) promptly and completely terminate this litigation, and (2) insofar as practicable, impose upon defendant, and absolve plaintiff from, the costs consequent upon its exceptional lack of diligence.

Even though plaintiff failed to sustain its heavy burden of proving actual fraud, defendant’s lack of diligence, both in 1953 and in 1964, was sufficiently serious to make this an “exceptional case” within the meaning of 35 U.S.C. § 285. Plaintiff, as the prevailing pai’ty, is therefore entitled to an award of reasonable attorneys’ fees. That right did not mature until the 1964 depositions in Kenosha had been concluded without the critical documents being produced; we therefox’e conclude that the award should only cover services subsequent to August 4, 19 64.

The impossibility of accurately measuring the offsetting value of defendant’s damage claim for pre-1968 infringement of the design patent, on the one hand, and its unwarranted protection from post-1968 infringement of the ’816 patent, on the other, makes it dubious as to which party should recover fx-om the other even if the design patent is assumed to be valid. We need not face that issue because plaintiff has persuaded us that the design patent is completely lacking in invention and should be held invalid.

The order terminating this litigation should provide for:

1. Return to plaintiff of the entire settlement payment of $15,000 plus interest ;

2. An award of attorneys’ fees covering the services of plaintiff’s counsel in this litigation subsequent to August 4, 1964;

3. A finding that the design patent is invalid for lack of invention;

4. Vacation of the injunction against infringement of the design patent; and

5. Except for such costs as the district court may tax against defendant, no other monetary award shall be made in favor of either party. The costs of this appeal shall be taxed against defendant.

Plaintiff’s other requests for relief were properly denied in view of the district ^ court’s finding on the issue of fraud.

The judgment entered on November 1, 1971, is vacated and the case is remanded for the entry of a new judgment consistent with the foregoing.

Vacated and remanded.

      . U.S. Letters Patent No. 2,699,816 on “chair back” issued January 18, 1955, to William L. Gittings and others as assignors to Gold Medal Folding Furniture Company (defendant herein) pursuant to application dated December 28, 1953.

      . U.S. Letters Patent Des. 189,343, issued November 29, 1960, pursuant to application filed December 2, 1958.

      . A. 466. Defendant’s letter of November 30, 1953, to the Commissioner of Patents had said, in part, “would you please give us a prompt answer as according to our knowledge of the law the limitation on the time for filing will soon run out. ...” A. 463.

      . William D. and John B. Gittings were then the principal officers of the company. They were sons of William L. Gittings, who was president and presumably the principal owner of the company when the non-sag back chair was invented and patented. The sons were active in the business at that time, but obviously with less responsibility than after the death of their father in May of 1964. Although both were named in the notice of deposition, only John B. was in fact deposed.

      . “7. One speciment of each and every catalogue or other piece of advertising or sales promotional material published or distributed by the defendant illustrating or describing folding chairs made and sold by defendant and embodying the construction of the folding chair disclosed and claimed in patent No. 2,699,810, in suit;
      *****
      “11. One specimen of each and every catalogue or other piece of advertising or sales promotional material jmblished by the defendant in the years 1950, 1951, 1952 and 1953, illustrating or describing folding chairs manufactured and sold by the defendant embodying an arm rest having a spindle at the front and portions thereof and connected to the front and portion of the arm rest below the latter; ” A. 726, 727.

      . For example, interrogatories 14 and 27 (a), and the answers thereto, were as follows:
      Interrogatory No. 14: “State the earliest date when the defendant sold a folding chair embodying the construction disclosed and claimed in patent No. 2,699,816, in suit.
      Defendant’s Answer: “Sometime shortly after January 15, 1953.
      Interrogatory No. 27(a) : “State the date when the defendant first began producing folding chairs embodying the construction disclosed and claimed in United States Letters Patent No. 2,699,816, in suit, which are referred to in the following testimony of John B. Gittings, given by him in his deposiiion taken by the plaintiff, in Kenosha, Wisconsin on July .16, 1964, said testimony being as follows (Tr.P. 70) :
      “ ‘Gosh, I don't know. I imagine we started shijiping them in January, 1953. We started producing them that previous fall to get them into stock.’ ”
      Defendant’s Answer: “Defendant at this time, does not know the date requested and it has been unable to find any records which would indicate this date.” A. 407.

      . For example, John B. Gittings testified:
      “Q. Mr. Gittings, in your deposition —would you tell the Court, first of all, when you first advertised, Gold Medal advertised that is, the subject matter of the ’816 non-sag back patent in suit?
      “A. In January, 1953.
      “Q. And I hand you — that was the first advertisement of any kind ; is that right?
      “A. Yes, sir.

        “Q. First offer for sale of any kind?
      “A. Right.
      * * * * *
      “Q. And you have searched your advertising material and you can find no advertising in 1952 of the non-sag back [446] feature?
      “A. I find no advertising matter at all that we advertised it in 1952.
      “Q. And you kept that in a scrapbook, did you?
      “A. Yes, sir, wo have a scrapbook.” A. 411, 419.
      And William D. Gittings testified:
      “Therefore, on the particular non-sag back feature, which we are talking about, I am sure that we began producing those back posts probably in late December, 1952. We were aware of the fact that we were going to introduce them in ’53 at the Chicago Furniture Show in January, and also by reason of our ’53 Catalog, which was mailed shortly after January 15th. It would do us no good to ship these chairs ahead of the resultant good that we could get from introducing it to the trade at the Shows and through the use of our catalogs. Therefore, I am sure that we did not produce these back posts prior to late December of ’52, and we started shipping the chairs — we have a normal ten-day cycle in our Assembly Department — after January 15th of ’53 when the catalog came out.” A. 430.

      . “Strassheim’s counsel had every right to rely on Gold Medal’s representations that it had produced all of the pertinent material in their files requested by Strassheim during the discovery period.
      * * * * *
      ‘•‘It is understandable that they might not remember events occurring more than fifteen years ago. More perplexing is the failure to disclose the damaging items contained in their own scrapbooks when requested so to do during the pendency of the trial. But a finding that this was deliberate concealment rather than a simple failure to examine their files and the scrapbooks carefully cannot be made. A finding of deliberate misrepresentation and fraud requires stronger and more convincing evidence than that which has been adduced.” A. 280, 283.

      . Fee awards pursuant to § 285 are most frequently predicated on a claim of fraud. In such cases we have required clear and definite proof of fraud. Armour & Co. v. Wilson & Co., 274 F.2d 143, 148 (7th Cir. 1960); Sarkes Tarzian, Inc. v. Philco Corp., 351 F.2d 557, 560 (7th Cir. 1965). The “exceptional case” justification for the allowance of fees is not, however, limited to the fraud category. See, e. g., Kearney & Trecker Corp. v. Giddings & Lewis, Inc., 452 F.2d 579, 597 (7th Cir. 1972); General Instrument Corp. v. Hughes Aircraft Co., 399 F.2d 373, 380-381 (1st Cir. 1968). The award in this case is supported not only by the patentee’s failure to verify or disclose critical facts at the time of application, but also by the same considerations that underlie the authorization of sanctions for failure to make discovery. See Rule 37, Fed.R.Civ.P. This case is truly exceptional because the record unambiguously demonstrates that the defendant’s “exceptional oversight” with respect to “critically important information” (cf. 399 F.2d at 381) resulted in an erroneous judgment and put jdaintiff to legal expenses that would otherwise have been unnecessary.

      . Although Gittings was deposed on July 16, he signed the deposition on August 4. We think this is the appropriate date from which to measure foes.

      . The claim in the patent is on the “ornamental” design for a collapsible chair, the dominant features of the design being shown in the heavy lines in these two figures: