author: FRIENDLY, Circuit Judge:

text:
    UNITED STATES of America, Appellee, v. Alan C. SOLOMON, Defendant-Appellant.
    No. 514, Docket 74-2316.
    United States Court of Appeals, Second Circuit.
    Argued Dec. 20, 1974.
    Decided Jan. 14, 1975.

      Arthur B. Kramer, New York City (Nickerson, Kramer, Lowenstein, Nessen, Kamin & Soil, and Harold P. Weinberger, New York City, of counsel), for defendant-appellant.
    Daniel J. Beller, Asst. U. S. Atty. (Paul J. Curran, U. S. Atty., S. D. N. Y., and John D. Gordan, III, Asst. U. S. Atty., of counsel), for appellee.
    Before FRIENDLY, TIMBERS and GURFEIN, Circuit Judges.
   FRIENDLY, Circuit Judge:

In mid-April 1973 Arthur Levine and Sol Leit, the chairman and president of Weis Securities, Inc. (Weis), a brokerage and investment banking firm which was a member of the New York Stock Exchange (NYSE), notified the Exchange that the firm was in financial difficulty and that there might have been certain “bookkeeping inadequacies” which had resulted in an understatement by as much as $2.5 million of its reported operating losses over the prior several months. Despite the officers’, urging that NYSE refrain, at least temporarily, from sending in examiners, NYSE commenced a full investigation on the following day. During the next two weeks, a number of financial irregularities were discovered in Weis’ accounts, including an understatement of losses and bank loans. In accordance with its statutory duty, NYSE advised the Securities and Exchange Commission (SEC) of the probable violations of its rules and regulations and began transmitting, on an almost daily basis, reports containing the results of its investigatory activities and contemplated actions.

On May 17, Alan C. Solomon, who as a Weis officer and director was an allied member of NYSE, was summoned to appear before the Department of Member Firms and testify. Article XIV of NYSE’s Constitution provided:

Whenever it is adjudged in a proceeding under this Article that a member, allied member or approved person has been required by the Board or any committee, officer or employee of the Exchange authorized thereby . to furnish information to or to appear and testify before or to causé any such. employee to appear and testify before the Board or any such committee, officer, or employee and has refused or failed to comply with such requirement, such member or allied member may be suspended or expelled and such approved person may have his approval withdrawn.

Accompanied by his then counsel, Solomon appeared and was questioned at some length, first off the record and then on the record. The chief interrogator was Dennis Pape, special counsel to NYSE. According to an affidavit by Solomon, he “was aware of the provisions of Article XIV of the New York Stock Exchange Constitution which empowered the Exchange to suspend me if I refused to cooperate and answer all the questions put to me during the May 17th interrogation.” He averred also that “Mr. Pape and his cohorts in the off-the-record discussions which preceded their formal interrogation, also reminded me of the sanction of suspension which would be imposed if I did not testify.” Under questioning Solomon admitted that he had originated the idea of seeking to create an appearance of a better financial situation for Weis by “taking a position in Pan American convertible bonds 4fc’s 1986, which were selling at around 52, and misevaluating them as Pan Am’s 4V2’s 1984, which were selling around 80.”

Two days prior to Solomon’s testimony before the Department of Member Firms, the SEC entered an order of investigation and on May 16 served a subpoena requiring NYSE to turn over all material developed in its investigation. NYSE immediately submitted depositions already taken; considering the subpoena to be a continuing one, it later furnished Solomon’s. On a complaint by the SEC alleging that Weis did not have sufficient capital under the Securities Exchange Act and the implementing rules of the Commission and NYSE and had been filing false financial reports with both bodies in an effort to conceal this, Weis was placed in receivership at the end of May by the District Court for the Southern District of New York. That action was followed in July by an eighteen count indictment, in the same court, of five of Weis’ officers and directors, including Solomon.

The indictment charged in part a conspiracy to violate and a number of substantive violations of the recordkeeping and reporting regulations promulgated by the SEC under § 17(a) of the Securities Exchange Act, 17 C.F.R. §§ 240.-17a-3, 5. Each of the other defendants pleaded guilty to at least one substantive count and three to the conspiracy count as well. After a bench trial on stipulated facts which included a transcript of his deposition before the Department of Member Firms, Solomon was found guilty on one substantive count of creating and maintaining false books and records. With the Government’s agreement the other counts were dismissed with prejudice. The judge placed him on a supervised probation program for a year and imposed a $5,000 fine.

The sole point on appeal is the use, both before the grand jury and at trial, of Solomon’s self-incriminating testimony to the Department of Member Firms, allegedly in violation of Garrity v. New Jersey, 385 U.S. 493, 87 S.Ct. 616, 17 L.Ed.2d 562 (1967). The complete deposition containing his admissions had been presented to the grand jury and constituted an important basis for the indictment. Solomon’s present counsel moved to dismiss the indictment and to suppress use of the testimony or any of its fruits at trial. The judge denied the motion both before and again after an evidentiary hearing. After the conviction he denied a motion for reargument based on the rationale of this court’s opinion in United States ex rel. Sanney v. Montanye, 500 F.2d 411 (2 Cir. 1974). Reiterating these contentions, Solomon again claims that the indictment should have been dismissed since the allegedly tainted testimony is claimed to have been the only evidence before the grand jury on the count on which he was convicted; alternatively he seeks a reversal and remand for a hearing to determine whether the Government possesses sufficient evidence not derived directly or derivatively through investigation from the deposition testimony to justify a retrial, see generally Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972); Zicarelli v. New Jersey State Commission of Investigation, 406 U.S. 472, 92 S.Ct. 1670, 32 L.Ed.2d 234 (1972); Standards for Exclusion in Immunity Cases after Kastigar and Zicarelli, 82 Yale L.J. 171 (1972). We do not reach the question of remedy since we find no taint.

I.

The United States suggests, in an elaborate footnote to its brief, that we could affirm without reaching the question whether interrogation by NYSE is to be deemed governmental action. The most appealing basis asserted is the lack of any evidence that Solomon claimed his privilege against self-incrimination. Even when the inquiry is by a body having power to compel testimony, the rule is “that when an ordinary witness is on the stand and an incriminating fact, relevant to the issue, is desired to be proved through him, the question may be asked, and it is for him then to say, in terms which the court may reasonably be expected to understand to be a claim of privilege, that he will exercise the option given him by the law”, 8 Wigmore, Evidence § 2268 at 402 (McNaughton rev. 1961) (emphasis in original); per contra with respect to the accused in a criminal case, id. at 406. The former principle, which governs a witness before a grand jury, id. at 403 n.2, O’Connell v. United States, 40 F.2d 201, 205 (2 Cir. 1930), cert. pet. dis. per stip. of counsel, 296 U.S. 667 (1936); United States v. Cefalu, 338 F.2d 582, 584 (7 Cir. 1964), or a Congressional investigating committee, Hutcheson v. United States, 369 U.S. 599, 619, 82 S.Ct. 1005, 8 L.Ed.2d 127 (1962), would seem clearly applicable here. When Solomon appeared before the Department of Member Firms he was a subject of investigation for possible future NYSE disciplinary proceedings, not a person accused of crime.

The first problem with taking this smooth road to affirmance is that except for a possible ground of distinction noted below the same reasoning would have led to a result in Garrity opposite to that reached by the Supreme Court. There the New Jersey Deputy Attorney General had advised the defendants, who at the time were still only unindicted witnesses, of the privilege, but had added that this was “limited to the extent that you as a police officer once sworn and asked questions pertaining to your office and your conduct therein, if you refuse to answer, you may then be subject to a proceeding to have you removed from the department.” State v. Naglee, 44 N.J. 209, 212, 207 A.2d 689, 693 (1965) (emphasis deleted); the officers then proceeded to answer without protest. Although the State’s brief before the Supreme Court did not argue the point that appellants had not claimed their privilege, the Court was surely aware of the usual necessity for this in the case of an ordinary witness. Insofar as the decision rested on a violation of the privilege, the Court evidently considered an exception to that principle to be required when invocation of the privilege was clogged by certain forfeiture of office and pension rights and permanent disability from future state employment. The instant case arguably differs on this score in that Article XIV of the NYSE allows more latitude with respect to the certainty and dimension of the consequences triggered by a refusal to testify than did the New Jersey statute. Article XIV is addressed to all kinds of refusals; conceivably the Exchange would not impose suspension^ at least of long duration, or expulsion, 'on a witness who based a refusal to answer on a not implausible, although erroneous, claim of self-incrimination. Furthermore it is not clear whether Garrity rests on violation of the privilege or on the basis that the statements “were involuntary as a matter of fact”, or on both. See 385 U.S. at 501, 87 S.Ct. at 621. (Harlan, J., dissenting). Insofar as it rests on the involuntary nature of the statements, a view strengthened by the opinion’s heavy reliance on Union Pacific R.R. v. Public Service Commission of Missouri, 248 U.S. 67, 39 S.Ct. 24, 63 L.Ed. 131 (1918), the argument here considered would be inapplicable, since in such cases objection at the time is scarcely realistic and the point is sufficiently preserved by a motion to suppress. We thus prefer to place decision on the basic ground that interrogation by the New York Stock Exchange in carrying out its own legitimate investigatory purposes does not trigger the privilege against self-incrimination or, at least under the circumstances here, render Solomon’s statement involuntary.

II.

Most of the provisions of the Fifth Amendment, in which the self-incrimination clause is embedded, are incapable of violation by anyone except government in the narrowest sense. No private body, however close its affiliations with the government, can hold a person “to answer for a capital or otherwise infamous crime” without an indictment, or subject a person “for the same offense to be twice put in jeopardy of life or limb.” No one can take property for public use except the government or a person on whom the government has expressly bestowed that power. Solomon argues, however, that the remaining provision of the Fifth Amendment, the due process clause, has been extended in some instances to action by private persons having certain types of connection with the government, see, e.g., Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961); that NYSE has close connections with the government; and that the self-incrimination clause as explicated in Garrity should therefore apply.

There is no need for us to add to the extensive discussion of the history of the privilege against self-incrimination in 8 Wigmore, Evidence § 2250, and Professor Leonard W. Levy’s The Origins of ■the Fifth Amendment (1968). Whatever differences in the precise details of its origin and historic scope may exist among scholars, there can be no doubt that the privilege was in large part developed to protect the individual in what was thought to be an unequal contest with the state. The Supreme Court has frequently referred to Wigmore’s statement, 8 Evidence § 2251 at 317:

The privilege contributes toward a fair state-individual balance by requiring the government to leave the individual alone until good cause is shown for disturbing him and by requiring the government in its contest with the individual to shoulder the entire load.

Murphy v. Waterfront Commission, 378 U.S. 52, 55, 84 S.Ct. 1594, 12 L.Ed.2d 678 (1968); Tehan v. United States ex rel. Shott, 382 U.S. 406, 415, 86 S.Ct. 459, 15 L.Ed.2d 453 (1966). The Court has also said that the origin and history of the Fourth Amendment “clearly show that it was intended as a restraint upon the activities of sovereign authority, and was not intended to be a limitation upon other than governmental agencies . . .”, Burdeau v. McDowell, 256 U.S. 465, 475, 41 S.Ct. 574, 576, 65 L.Ed. 1048 (1921). Relying in part on that statement and the fact that Burdeau itself dismissed a self-incrimination claim, we have held the same to be true of the self-incrimination clause of the Fifth, in the context, quite pertinent here, of the application of Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), to interrogation by private security guards at a pier. United States v. Antonelli, 434 F.2d 335 (2 Cir. 1970). Accord United States v. Birnstihl, 441 F.2d 368 (9 Cir. 1971) (per curiam) (store security officer); United States v. Bolden, 461 F.2d 998 (8 Cir. 1972) (per curiam) (same); United States v. Casteel, 476 F.2d 152 (10 Cir. 1973) (employees of private security firm). Cf. United States v. Beasly, 485 F.2d 60 (10 Cir. 1973), cert. denied, 416 U.S. 941, 94 S.Ct. 1946, 40 L.Ed. 292 (1974) (4th Amendment inapplicable to private search); United States v. Echols, 477 F.2d 37 (8 Cir. 1973), cert. denied, 414 U.S. 825, 94 S.Ct. 128, 38 L.Ed.2d 58 (1973) (same); United States v. Ogden, 485 F.2d 536 (9 Cir. 1973), cert. denied, 416 U.S. 987, 94 S.Ct. 2392, 40 L.Ed.2d 764 (1974) (same).

Solomon argues that despite all this, interrogation by NYSE must be deemed the equivalent of interrogation by the United States because the Exchange has become in effect the arm of the Government in administering portions of the Securities Exchange Act. He relies on various provisions of the Act, such as the reporting requirements of § 17(a) and the regulations thereunder and the many other powers over exchanges and their members conferred on the SEC by § 19(a), (b), see Gordon v. New York Stock Exchange, Inc., 498 F.2d 1303, 1306-1307 (2 Cir.), cert. granted, 419 U.S. 1018, 95 S.Ct. 491, 42 L.Ed.2d 291 (1974). See generally 1 Loss Securities Regulation 130-31 (2d ed. 1961). Particular emphasis is placed on Silver v. New York Stock Exchange, 373 U.S. 341, 350-353, 83 S.Ct. 1246, 1254, 10 L.Ed.2d 389 (1963), where, after discussing the proved inadequacies of “ungoverned self-regulation” by the exchanges and the consequent need for government supervision, the Court said:

The pattern of governmental entry, however, was by no means one of total displacement of the exchanges’ traditional process of self-regulation. The intention was rather, as Mr. Justice Douglas said, while Chairman of the S.E.C., one of “letting the exchanges take the leadership with Government playing a residual role. Government would keep the shotgun, so to speak, behind the door, loaded, well oiled, cleaned, ready for use but with the hope it would never have to be used.” Douglas, Democracy and Finance (Allen ed. 1940), 82. Thus the Senate Committee Report stressed that “the initiative and responsibility for promulgating regulations pertaining to the administration of their ordinary affairs remain with the exchanges themselves. It is only where they fail adequately to provide protection to investors that the Commission is authorized to step in and compel them to do so.” S.Rep. No. 792, supra, at 13. The House Committee Report added the hope that the bill would give the exchanges sufficient power to reform themselves without intervention by the Commission. H.R.Rep. No. 1383, supra, at 15. See also 2 Loss, Securities Regulation (2d ed. 1961), 1175— 1178, 1180-1182.
Thus arose the federally mandated duty of self-policing by exchanges.

Solomon misconceives the thrust of the Act and the Court’s discussion of it. The exchanges’ “traditional process of self-regulation” was not displaced. See H.R. Rep. No. 1383, 73d Cong., 2d Sess. 15 (1934); S.Rep. No. 792, 73d Cong., 2d Sess. 13 (1934) (stressing the broad responsibility left with the exchanges to administer their own affairs). Rather the SEC was given the power and the duty to make sure that the responsibility was diligently and effectively used. See Gordon v. New York Stock Exchange, supra, 498 F.2d at 1306-1307, and sources cited therein. NYSE’s inquiry into Weis was in pursuance of its own interests and obligations, not as an agent of the SEC. It is not enough to create an agency relationship that Solomon’s conduct violated both a rule of NYSE, thereby subjecting him to disciplinary action by that body, and federal law, with consequent liability to civil and criminal enforcement proceedings by the Government.

Our conclusion is reinforced by two other related considerations. One is that we see no principled basis whereby acceptance of Solomon’s argument could be confined to interrogation by stock exchanges; this is but one of many instances where government relies on self-policing by private organizations to effectuate the purposes underlying federal regulating statutes. Under the Commodity Exchange Act, § 5, 7 U.S.C. § 7, boards of trade have self-policing functions quite similar to those of stock exchanges under the Securities Exchange Act. Airline and steamship conferences have elaborate enforcement machinery to bring to light the charging of less than prescribed rates, the payment of more than agreed commissions to travel and freight agents, or violations of any of the many other regulations concerning the conduct of their members. Whether or not the agreements provide explicitly for suspension or expulsion for refusal to furnish needed records or testimony, . a member is aware that any such refusal will likely involve this or some other heavy penalty and will have methods of making this known to refractory employees. One purpose of the provision of the Elkins Act, 32 Stat. 847 (1903), as amended, 49 U.S.C. § 41(2), imposing criminal liability on shippers and carriers for railroad rebates resulting from “the act, omission, or failure of any officer, agent, or other person acting for or employed by any common carrier, or shipper, acting within the scope of his employment” was surely to enlist the aid of the carriers and shippers in policing their employees; clearly a refusal to answer an employer’s questions about a rebate on the ground of self-incrimination would lead to discharge, and an employee discharged on that account would be unlikely to gain employment elsewhere in the industry at least for some time. We cite these only as examples that come readily to mind; there would be a complete breakdown in the regulation of many areas of business if employers did not carry most of the load of keeping their employees in line and have the sanction of discharge for refusal to answer what is essential to that end.

The other consideration is that Solomon’s argument would in effect vest the stock exchanges, and many other similar bodies, such as those we have just mentioned, with the power to grant use immunity in circumstances where refusal to testify entailed a potential loss of employment or some similar economic harm. The SEC can grant this in its own investigations only if it concludes that the testimony or other information sought to be compelled may be necessary to the public interest and the individual has refused or is likely to refuse to testify or provide the other information because of his privilege against self-incrimination. Yet acceptance of Solomon’s position would mean that a large number of private bodies have been unwittingly endowed with a power to grant exactly such immunity, compare Adams v. Maryland, 347 U.S. 179, 181, 74 S.Ct. 442, 98 L.Ed. 608 (1954), without any weighing of the need for the evidence against the undesirability of conferring an immunity which goes beyond the testimony or information itself, and without the supervision of the Attorney General to which even government agencies are subjected. Since this would clearly be intolerable, the only possible responses in .the situation here at issue would be for the SEC to order the exchanges not to ask any questions involving the slightest risk of exposure of crime or the abandonment of the only effective sanction possessed by a private body not endowed with the power to compel testimony. The unattractiveness of either solution suggests to us that Garrity’s interpretation of the privilege applies only when the interrogator has the power to compel testimony against which the privilege would be a shield and the state has sought to shatter the shield by the threat that raising it will involve consequences as devastating as in that case.

We find no basis for a different conclusion in the many “state action” cases in wholly different contexts cited by Solomon’s counsel. Analysis of the particular constitutional provision at issue must be among the first, if not the very first, step in the process of “sifting facts and weighing circumstances” needed to attribute “true significance” to “the nonobvious involvement of the State in private conduct” dictated by Burton v. Wilmington Parking Authority, supra, 365 U.S. at 722, 81 S.Ct. at 860. It is one thing to say that the exclusion of blacks is no more permissible for a restaurant which is a lessee of a state parking authority than it would be for the authority itself; it would be altogether different to say that a lease of state property carries the privilege against self-incrimination on its back. Nothing in Burton remotely suggests that if the proprietor of the Eagle Coffee Shoppe had interrogated a waiter suspected of snatching a patron’s purse, under the same kind of threat that refusal to answer would lead to discharge and a report to a restaurant trade association as would be made by other employers, the answer could not be used in evidence at a criminal trial. We need not here decide whether stock exchanges may be subject to some due process requirements for certain types of action as stated in dictum in Intercontinental Industries, Inc. v. American Stock Exchange, 452 F.2d 935, 941 (5 Cir. 1971), cert. denied, 409 U.S. 842, 93 S.Ct. 41, 34 L.Ed.2d 81 (1972) (delisting of corporation’s stock), Crimmins v. American Stock Exchange, Inc., 346 F.Supp. 1256, 1259 (S.D.N.Y.1972) (disciplinary hearing), and Villani v. New York Stock Exchange, 348 F.Supp. 1185, 1188 n.1 (S.D. N.Y.1972), aff’m sub nom. Sloan v. New York Stock Exchange, 489 F.2d 1 (2 Cir. 1973) (same), although the recent decision in Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974), would suggest the need for some caution on this score. We deal here with special factors concerning the privilege against self-incrimination and, although we do not think this decisive, even with that only in a preliminary investigation rather than a formal disciplinary proceeding.

III.

There remains for consideration the ground of involuntariness on which Garrity may have been rested. This interpretation of Garrity seems to have been accepted in United States ex rel. Sanney v. Montanye, supra, 500 F.2d 411, although the majority there held that the economic threat to Sanney — discharge from a job as driver’s assistant which he had held for one or two days — was not sufficiently serious to bring the case within the Garrity doctrine. Compare Lefkowitz v. Turley, 414 U.S. 70, 94 S.Ct. 316, 38 L.Ed.2d 183 (1973). Both Garrity and Sanney are distinguishable from this case. In Garrity there was clearly government action. Similarly, the Sanney court found that the private employer was “admittedly acting as an agent for the police”. While it therefore could perceive no consequence from the fact that the coercive threat was conveyed in that manner “rather than through a person on the public payroll”, it repeatedly stressed that government action was involved, 500 F.2d at 415. Here, as we have concluded above, it was not.

It is settled law that the common law rule excluding confessions induced by a threat is limited to inducement by “a person in authority”; what is generally required is “a legal interest in the prosecution” and “not the mere existence of actual control or influence growing out of the social or commercial relations of the persons.” 3 Wigmore, Evidence, § 829 at 443 (Chadbourn rev. 1970). There is more debate about what “a legal interest in the prosecution” means. Under the leading English case a master or mistress is deemed “a person in authority” for purposes of the rule excluding involuntary confessions when and only when the offense concerns him or her. R. v. Moore, 2 Den.C.C. 522 (1852). In United States v. Stone, 8 F. 232, 254-262 (C.C.W.D.Tenn.1881), the court refused to go even that far, reasoning that the exception made in England was based on the common law requirement that some person be named as prosecutor whereas “the district attorney is the only prosecutor known to our law.” Most American courts have opted for a “middle way” in which “[t]he injured person, or the master of a servant, is not regarded as necessarily having a control sufficient to vitiate confessions made by his inducement . . . ” and “[ejach case is decided upon its own circumstances, and the actual state of the relation between him [the master] and the confessor is inquired into with reference to the probable strength of the inducement”, 3 Wigmore, supra § 830 at 446-47 and cases cited in n.5. See, e.g., People v. Brown, 198 Cal.App.2d 253, 255, 17 Cal. Rptr. 884, 885 (D.C.A. 1st D.1961); State v. Hess, 9 Ariz.App. 29, 449 P.2d 46 (1969).

Whatever may be the ultimate solution of the question how far coercion by non-governmental sources can ever demand exclusion as distinguished from consideration by the fact-finder, in the instant case, on this issue of involuntariness in fact we find the distinction of Garrity noted in section I of this opinion to be important. There the penalty for a claim of a right to remain silent was mandatory dismissal from office, loss of accrued pension benefits and permanent disability from state or municipal employment. Here there was no certainty what penalty NYSE would prescribe if Solomon refused to speak. It seems plain to us that Solomon, who had conferred with counsel and had his lawyer present during the off-the-record and the later on-the-record interrogation, decided it would be to his advantage to make a clean breast of falsifications that were bound to be discovered, or, indeed, very likely had been, rather than add another item to the case against him. To be sure, Solomon’s position was not a particularly pleasant one. But the rule excluding involuntary confessions does not protect against hard choices when a person’s serious misconduct has placed him in a position where these are inevitable. Of course, if there were any question whether Solomon was responsible for the false entries in Weis’ books, he would have been entitled to have a trier of the facts consider whether the circumstances under which he admitted having conceived the plan affected the reliability of his statement. But there was none. It would be a wholly unwarranted extension of the principle with respect to involuntary confessions to include Solomon’s statement to the Exchange.

Affirmed.

      . The warning given by Mr. Pape at the beginning of the on-the-record interrogation mentioned suspension or expulsion only in the context of a misstatement upon a material point.

      . As a result of this misrepresentation, the reported worth of Weis’ unrealized income was inflated by approximately $200,000.

      . Certain of the defendants were also charged with mail fraud, 18 U.S.C. §§ 1341, 1342, unlawful use of the mails to commit a fraud in the sale of securities, 15 U.S.C. §§ 78j(b), 78f(f), 17 C.F.R. § 240.10-b(5); 18 U.S.C. § 2, and wilful affirmance of false financial statements which had been filed with the SEC, 15. U.S.C. §§ 78q(a), 78f(f), 17 C.F.R. § 240.17a-5.

      . In fact the applicable New Jersey statute used the word “shall” rather than “may”. N.J.Rev.Stat. § 2A:81-17.1 quoted in 385 U.S. at 494-495 n.l, 87 S.Ct. 616.

      . Solomon treats the case as if he were threatened with permanent loss of employment in the only business which he knew. We see no basis for concluding that Solomon was faced with consequences for refusal to testify alone as certain and drastic as were the officers in Garrity. Solomon’s doubtless correct belief that he was faced with a serious penalty could have derived rather from his own knowledge of the enormity of his misconduct and the near certainty that this would be discovered or, indeed, already had been as the result of the prior testimony. of other officers of Weis.

      . Lefkowitz v. Turley, 414 U.S. 70, 79-82, 94 S.Ct. 316, 38 L.Ed.2d 183 (1973), treats Garrity as resting on the privilege against self-incrimination.

      . See also § 6 (NYSE registration with SEC); §§ 9(a); 11; 17(a) (SEC regulation of NYSE members); § 12(d) (delisting by NYSE only after application to SEC).

      . Compare the problems of state-federal relations decided in United States v. Coppola, 281 F.2d 340 (2 Cir. 1960) (en banc), aff’d, 365 U.S. 762, 81 S.Ct. 884, 6 L.Ed.2d 79 (1961) (per curiam), and Cleary v. Bolger, 371 U.S. 392, 399-401, 83 S.Ct. 385, 9 L.Ed.2d 390 (1963).

      . For a description of the International Air Transport Association structure and enforcement machinery see Gazdik, Rate Making and the IATA Traffic Conferences, 16 J.Air L. & Com. 298 (1949); Hearings Before the AntiTrust Subcomm. of the Comm, on the Judiciary, 84th Cong.2d Sess. 1072-83 (1955) (prepared statement of IATA Director). See also Bebchick, The International Air Transport Association and the Civil Aeronautics Board, 25 J.Air L. & Com. 8-13 (1958); Koffler, IATA: Its Structure — A Critical Review, 32 J.Air L. & Com. 222, 224-25 (1966). Compare Kharasch, Conferences of Carriers by Sea: Freedom of Rate Fixing, 23 J.Air L. & Com. 287 (1956) (analysis of International Maritime Shipping Conferences in contrast with IATA).

      . The large number of different' maritime agreements creating conferences which have been approved by the Maritime Commission, or by its predecessor body, pursuant to § 15 of the Shipping Act of 1916, as amended, 46 U.S.C. § 814, are not susceptible to generalization with respect to the specific sanctions that may be invoked by the conferences. However, one commentator has noted that the agreements concerning rates almost always provide for strict compliance enforced by a system of fines or potential expulsion. Kharasch, supra note 9, at 296. Any sanctions provided by the conferences reinforce the enforcement mechanisms provided directly under the Shipping Act to induce carriers and shippers to adhere to published tariffs and not engage in rebates or other prohibited practices. See 46 U.S.C. § 812 (rebates); § 815 (discriminatory practices); § 817 (carriers in interstate commerce to establish, observe, and enforce just and reasonable rates and regulations; carriers in foreign commerce to file and adhere to tariffs of rates and charges); § 831 (civil and criminal penalties).
      The International Air Transport Association Articles of Association provide for termination of membership by the Executive Committee for breaches of the articles, or regulations adopted pursuant thereto, or for failure to comply with any procedures adopted to deal with breaches of Traffic Conference action. Art. V. The Traffic Conferences, which enjoy considerable autonomy within the framework established by General Association meetings, are charged with the responsibility of developing agreements relating to traffic and operational procedure, conditions of carriage, and fixing of fares and rates. Under the IATA Traffic Conference Regulations, complaints concerning alleged violations of Conference rules and obligations are filed with the Director General, who may direct the IATA Compliance Office to undertake an investigation. Provisions for the Regulation and Conduct of the IATA Traffic Conferences XII-l(a)5. When pursuing such an investigation, the regulations further provide that IATA members must give the Compliance Office “adequate and full opportunity to interview and obtain information and records from any officer or employee of such Member” who is believed to have information pertinent to the investigation. Id. XII-6. Members found guilty of violations of any Conference regulations are currently subject to penalties which include reprimand, fines, or expulsion. Id. XII-14; Resolution IV of the 5th AGM. For the complete text of the Articles of Association and the Traffic Conference Regulations, see A. Lowenfeld, Aviation Law 279-310 (Doc.Supp.1972).

      . E.g., “The controlling factor is the fact that the state has involved itself in the use of a substantial economic threat to coerce a person into furnishing an incriminating statement. . . The state’s involvement is no less real for having been indirect and no less impermissible for having been concealed. The state is prohibited in either event from compelling a statement through economically coercive means, whether they are direct or indirect.” 500 F.2d at 415.


source: Caselaw Access Project

author: GIBSON, Chief Judge.

license: Public Domain

text:
    FIRST NATIONAL BANK IN MENA, Appellant, Cross-Appellee, v. Jack A. NOWLIN, Appellee, Cross-Appellant.
    Nos. 74-1397 and 74-1427.
    United States Court of Appeals, Eighth Circuit.
    Submitted Nov. 12, 1974.
    Decided Jan. 17, 1975.

      C. J. Giroir, Jr., Little Rock, Ark., for appellant, cross-appellee.
    Jerry D. Jackson, Little Rock, Ark., for appellee, cross-appellant.
    Before GIBSON, Chief Judge, CLARK, Associate Justice, Retired, and WEBSTER, Circuit Judge.

       Associate Justice Tom C. Clark, United States Supreme Court, Retired, sitting by designation.

   GIBSON, Chief Judge.

Is a note which is usurious under state law also usurious when made to a national bank? With the limited exception of a short-term single payment note, we think it is. The central issue presented by this litigation is whether the National Bank Act, 12 U.S.C. § 21 et seq., permits a national bank in Arkansas to reserve interest in advance on installment loans calculated at a numerical rate not in excess of the statutory Arkansas usury limits but yielding an effective rate of return substantially in excess of the state limit.

The First National Bank in Mena (Bank), Mena, Arkansas, an association organized and operating pursuant to the National Bank Act, appeals from a judgment of the District Court finding two installment notes usurious and granting the bank recovery only on the principal of the notes and denying recovery of any interest. The debtor defendant, Jack A. Nowlin, cross-appeals, seeking more extensive relief in the form of forfeiture of the principal due on the notes or, in the alternative, recovery of double the interest reserved on the notes.

In this diversity action the Bank sought declaratory relief and a money judgment for principal and interest due it as payee on the two notes executed January 11, 1974, by Nowlin, a Tennessee citizen. One note evidenced an installment loan of $11,000 payable in twelve equal monthly installments, from which the bank had discounted 8% annual interest, thus making an effective yield of 16.05% per annum; the other evidenced a $2,000 loan payable in thirty-six equal monthly installments to which the bank had added 8% interest in advance, raising the face of the note to $2,480, resulting in an effective interest rate of 15.57%.

Nowlin made no payments and renounced his obligations by letters dated January 15, 1974, claiming both notes were usurious and void under Arkansas law. After the Bank accelerated both notes and filed suit, Nowlin counterclaimed for forfeiture of both the principal of the notes and interest as provided by Arkansas law, or a penalty of twice the amount of interest paid, pursuant to the sanctions of 12 U.S.C. § 86 (1970).

The District Court in this non-jury trial determined that if these installment loans yielding in excess of 10% annually had been made by any Arkansas lender other than a national bank, they would have been usurious under the Arkansas constitution and Arkansas cases construing the constitutional provision. The court further held that because the purpose of 12 U.S.C. § 85 (1970) is to permit national banks to charge as much, but no more, interest than the most favored lenders operating under state laws, a loan by a national bank is usurious under federal law if usurious under state law were it made by such a favored state lender. Consequently, the court held that both Nowlin notes were usurious and thus void with respect to interest but not principal. Nowlin’s counterclaim under § 86 was denied because he had not in fact paid any interest. The Bank does not contest that the loans, as evidenced by the notes, would be usurious if made by any lender operating solely under state law.

Under 12 U.S.C. § 85, (1970), national banks may charge “interest at the rate allowed by the laws of the State * * * where the bank is located * * * and no more * * The penalty under 12 U.S.C. § 86 for knowingly charging a rate of interest greater than allowed by law is a forfeiture of the entire interest where the interest has not been paid and a penalty of double the amount of interest if it actually has been paid on the usurious loan.

The pertinent Arkansas law incorporated by reference in § 85 is a constitutional provision restricting interest rates to an amount not greater than 10% per annum, and the statutory law implementing that constitutional provision setting the maximum state interest rate at 10% per annum. Other state statutory provisions prohibit usurious interest and make all notes and evidence of indebtedness or contracts violative of the usury prohibition void. The test for ascertaining whether a loan or transaction is usurious in Arkansas is a simple one of comparing the amount the borrower is required to pay with the total amount he could be required to pay at the maximum rate of interest (10%), figured at simple interest per annum for the term.

I. The Bank’s Appeal.

The Bank contends that the term “rate” of interest “allowed by the laws of the State,” as used in 12 U.S.C. § 85 should be construed not to apply the maximum “effective rate” or “yield” allowed by state law, but rather merely to incorporate the numerical rate permitted the most favored state lender, as it appears in the state statutes, applying it on a discount basis without taking notice of the state’s cases construing those statutes. The Bank does not dispute that lenders under Arkansas law are prohibited from adding-on or discounting interest to increase the yield on installment notes above the 10% limit. It argues, however, that the 1919 Supreme Court decision in Evans v. National Bank, 251 U.S. 108, 40 S.Ct. 58, 64 L.Ed. 171 (1919), permits national banks to discount loans at the maximum state rate without regard to state prohibitions on discounting which prevent yields in excess of the maximum state rate.

We think that determination of the “rate allowed by the laws of the State” can only be accomplished with reference to state court interpretations of the state’s own constitution and statutes. The primary principle of construction of 12 U.S.C. § 85, to which Evans might be considered a narrow exception, is that the federal Act adopts the entire case law of the state interpreting the state’s limitations on usury; it does not merely incorporate the numerical rate adopted by the state. Citizens’ National Bank v. Donnell, 195 U.S. 369, 374, 24 S.Ct. 49, 49 L.Ed. 238 (1904); Daggs v. Phoenix National Bank, 177 U.S. 549, 555, 20 S.Ct. 732, 44 L.Ed. 882 (1900). As expressed by Mr. Justice McKenna for a unanimous court in Daggs:

The intention of the national law is to adopt the state law, and permit to national banks what the state law allows to its citizens and to the banks organized by it. Tiffany v. National Bank of Missouri, [85 U.S. (18 Wall.) 409, 21 L.Ed. 862 (1873)].

Daggs, supra at 555, 20 S.Ct. at 735.

The rationale of Evans, based on the long standing mercantile practice of discounting short-term single payment commercial paper, should not now be extended to permit usurious discounting practices on installment notes. While many question the soundness of the Evans 6-3 holding and feel that Mr. Justice Pitney’s dissent, concurred in by Justices Brandéis and Clarke, presents a more rational view, we cannot overrule Evans, but we do feel that Evans should be confined to its own facts of single payment short-term paper. To extend Evans’ rationale, as the Bank urges, in order to allow discounting of installment paper would be to extend it to a materially different factual situation and into a new economic setting.

Installment credit as it is extended and utilized today was for all practical purposes nonexistent at the time of Evans. The discounting of short-term single payment commercial paper, however, was a prevalent and widespread practice at that time and has continued to the present time. The now common practice of lending on installment paper of varying terms, including long-terms, and of figuring the interest rate on a discount basis is of fairly recent origin. The practice has only become widespread with the advent of consumer credit, making almost anyone without an extremely dismal credit record eligible to purchase almost any item or service on a comparatively long-term installment credit basis. This practice has only recently found widespread acceptance, increasingly so in the last two decades.

Evans was a 1919 lawsuit by receivers of a state bank to recover the federal usury penalty from a national bank lender which had reserved interest in advance at 8%, the maximum rate permitted in Georgia, to achieve a slightly higher effective yield. Each loan was paid at maturity. The Supreme Court affirmed judgment on the pleadings for the defendant national bank, holding that by discounting “short-time” notes at the maximum 8% rate allowed by Georgia statute, the national bank did not act usuriously under the federal statute. The majority of the Court took note of, but chose not to follow, the current Georgia court-made rule which prohibited the taking of interest in advance at the maximum rate because it inevitably increased the effective yield above the 8% limit. The unsuccessful plaintiff in Evans argued, as does Nowlin in the instant case, that the federal statute applied the same usury rule to national banks as Georgia law applied to individuals and state banks.

The Evans’ Court majority disagreed, however, relying upon Fleckner v. Bank of the United States, 21 U.S. (8 Wheat.) 338, 354, 5 L.Ed. 631 (1823), and a line of American and English authorities, recognizing that the discounting of “short-time” commercial paper in the ordinary course of business was a long settled commercial tradition, and concluding that doing so at the maximum state rate could therefore not be usurious. 251 U.S. at 113-114, 40 S.Ct. 58, 64 L.Ed. 171. The majority reasoned that because “Congress intended to endow national banks with the power * * * of discounting notes reserving charges at the highest rate permitted for interest,” federal law empowers the national bank in Georgia to retain interest at the maximum 8% allowed by Georgia statute, “referring to the state law only to determine the maximum permitted rate,” not to determine the proper means for calculating that rate. 251 U.S. at 114, 40 S.Ct. at 60.

However, in his well-reasoned dissent in Evans, Mr. Justice Pitney argued that the federal courts, in determining the maximum interest rate “allowed by the laws of the State,” must consider not only the multiplier figure but all state cases interpreting and construing the state statute which might reveal the proper arithmetical use of that figure. Specifically, he stated:

The section has regard to substance, not merely to form; and in determining what is in substance the local rate of interest it is fallacious, I submit, to regard the multiplier only (say, 8 per cent.), and ignore the multiplicand, since both factors have equal influence in producing the result. As in other cases of testing state laws by a federal standard, the question is, what is the effect and operation of those laws, as construed and applied by the state court of last resort? Evans, supra, 251 U.S. at 118, 40 S.Ct. at 61.

In conclusion, quoting from Mr. Justice Holmes speaking for the Court in Citizens’ National Bank v. Donnell, 195 U.S. 369, 373-374, 25 S.Ct. 49, 49 L.Ed. 238 (1904), Mr. Justice Pitney stated that in applying the National Bank Act “on the question whether what was done amounted to * * * [usury] within the meaning of the [state] statute, we follow the state court”; therefore, given the existing Georgia court rule, the national bank in Evans “charged more than ‘interest at the rate allowed by the laws of the State.’ ” 251 U.S. at 120, 40 S.Ct. at 62.

The Evans case dealt with “short-time” single payment notes. The 1823 Fleckner case, a bank charter violation case, upon which the Evans majority relied, dealt with a single payment 23-month note of $10,000. The Court’s holding in Evans that the practice of discounting is not usurious even if it raises the effective yield above the state ceiling, is based essentially on the Court’s recognition that discounting on single payment commercial paper was then widely practiced. It is widely practiced on short-term single payment paper as well today, i. e., United States Treasury Bills of 90 days, 180 days, and one year duration. It is doubtful, however, that the Supreme Court would as readily hold the discounting of installment paper by a national bank to be as acceptable today, 150 years after Fleckner, in view of the enhanced economic impact of discounting installment paper as compared to short-term single payment paper and the obvious discrimination in allowing national banks to charge almost double the effective rate charged by state financial institutions. What affects the borrower’s pocketbook is the effective rate, not semantics dealing with figures.

The Bank’s reliance on Northway Lanes v. Hackley Union National Bank & Trust Co., 464 F.2d 855 (6th Cir. 1972), is not persuasive for two reasons. First, for reasons stated above, we disagree with the Sixth Circuit’s extension of Evans and Fleckner as its basis for approving the Michigan national bank’s reservation of interest in advance on a five-year 7% chattel mortgage installment note with an effective annual yield of approximately 13V2%. Michigan’s limit on commercial mortgages and industrial discount or add-on loans was apparently 7%. The Northway court relied upon Fleckner and Evans for the proposition that the taking of interest in advance at the maximum rate, when discounting a note at a bank, is not usurious. 464 F.2d at 860. Quoting the Evans Court’s statement that discounting is an “ancient and commonly accepted doctrine,” the Sixth Circuit affirmed a judgment for the national bank denying the debtor its 12 U.S.C. § 86 statutory penalty without distinguishing between the historically accepted practice of discounting “short-time” single payment commercial paper and reserving advance interest on installment notes. We believe the vast difference between the actual interest charged in discounting installment paper over that charged in discounting short-term single payment notes precludes such a smooth extension of Evans. Although the national bank’s “right to. charge interest in advance arises independent of state laws”, Northway, supra at 860 — 861 of 464 F.2d, that independence is necessarily limited by the Act’s adoption of the state’s law, including its case law, to set the maximum rate. While the validity of the legislative history relied on in North way has been questioned, we need not face that debatable issue in this appeal.

Second, the Northway case is distinguishable from the instant case in that the reservation of interest in advance at the maximum statutory rate by the national bank in that case was not so clearly prohibited by Michigan law as is the instant practice by Arkansas law, the court utilizing the most favored lender doctrine created in Tiffany v. National Bank, 85 U.S. (18 Wall.) 409, 21 L.Ed. 862 (1873), to find the interest and other charges permissible under state law.

A construction of 12 U.S.C. § 85 which takes full notice of the state’s case law is consistent with the Act’s legislative history. The Act reflects a congressional compromise giving national banks full and complete parity of interest rate regulation with state banks while guarding against unfriendly anti-federal state legislation or ruinous competition with state banks. Speaking with respect to a pri- or unsuccessful proposed version of the legislation, Senator Sherman, a principal supporter of national bank interests, stated:

I prefer now to place the national banks in each state on precisely the same footing with individuals and persons doing business in the State by its own laws.

The policy of the pro-national bank faction in Congress in fashioning the Act was to place national banks in a position of limited advantage over state banks by allowing them to charge interest at the highest rate applicable under state law to lenders generally in each respective state, not necessarily at the rate applicable to state banks which might be lower. While it has been questioned whether Congress in the final version of the Act actually intended to adopt the policy of giving national banks most favored lender status rather than parity with state banks,, it has been established in the law since Tiffany v. National Bank, supra. The most favored lender policy has not, hpwever, been extended to give national banks superiority over all state lenders, corporate and individual, including banks, as is contended by the Bank in the instant case.

Further support for construing 12 U.S.C. § 85 so as to incorporate the state’s interpretation of its own law can be found in Union National Bank v. Louisville, N.A. & C. Ry., 163 U.S. 325, 331, 16 S.Ct. 1039, 41 L.Ed. 177 (1896), cited by the Evans dissenters, and in the Supreme Court’s recognition of a general policy of state-federal equalization and “competitive equality” under various twentieth century amendments to the Act in different but related contexts. For example, as Mr. Justice Clark stated for the Court in First National Bank v. Walker Bank & Trust Co., 385 U.S. 252, 261, 87 S.Ct. 492, 497, 17 L.Ed.2d 343 (1966):

It appears clear from this résumé of the legislative history of [12 U.S.C.] § 36(c)(1) and (2) that Congress intended to place national and state banks on a basis of “competitive equality” insofar as branch banking was concerned. * * * To us it appears beyond question that the Congress was continuing its policy of equalization first adopted in the National Bank Act of 1864. (citations omitted.)

The policy of competitive state-federal equality in the context of usury regulation is supported by the District Court’s construction of § 85 which imposes the same interest ceiling on national banks as on the most favored lenders in the state, and thereby puts national banks on an equal footing with the most favored lenders in the state without giving them an unconscionable and destructive advantage over all state lenders. Whether the state banks will enjoy parity in interest regulation with national banks is thus left to the states to decide. The federal statute merely prevents state legislation which purports to give state banks or possibly any state lender advantages over national banks.

II. Nowlin’s Cross-Appeal.

Nowlin argues, admittedly against the weight of authority, see, e. g., McCollum v. Hamilton National Bank, 303 U.S. 245, 248, 58 S.Ct. 568, 82 L.Ed. 819 (1938), that national banks should be subject to state rather than federal penalties for usury. Evans categorically held that penalties for usury committed by a national bank are governed by the National Bank Act. 251 U.S. at 109, 40 S.Ct. 58. To hold otherwise in the instant case would jeopardize the national banking system by allowing the states to set penalties for violations of federal law. That is patently contrary to the congressional policy of assuring national banks parity with state banks and most favored state lenders. Furthermore, since Congress has provided a penalty for usury, that action preempts the field and leaves no room for varying state penalties.

Alternatively, Nowlin argues that he, at least, is entitled to the federal penalty of double the interest paid because he actually “paid” the interest when it was reserved by the Bank in advance and added to the face of the note. A reading of § 86, however, indicates that actual payment of usurious interest is required in order for a debtor to qualify for the federal interest penalty of double the amount of interest paid. McCarthy v. First National Bank, 223 U.S. 493, 499, 223 U.S. 493, 56 L.Ed. 523 (1912).

The District Court properly granted the Bank judgment against Nowlin for the amount of loan principal which Nowlin actually received and forfeited any interest due thereon. Defendant Nowlin is entitled to no further penalty. 12 U.S.C. § 86; Haseltine v. Central Bank, 183 U.S. 132, 135, 22 S.Ct. 49, 46 L.Ed. 117 (1901).

The judgment of the District Court is affirmed. Costs are to be assessed % against the plaintiff Bank and xk against defendant Nowlin.

      . A memorandum opinion filed by the Honorable J. Smith Henley, Chief Judge, United States District Court for the Eastern District of Arkansas, is reported at 374 F.Supp. 1037 (E.D. Ark. 1974).

      . The federal statutes in question, derived from § 30 of the National Bank Act of 1864 and from Rev.Stats. §§ 5197 and 5198 (1875) without material change for purposes of this case, are now codified at 12 U.S.C. §§ 85 (1970) and 86. Section 85 states in relevant part:

        Rate of interest on loans, discounts and purchases

      Any association may take, receive, reserve, and charge on any loan or discount * * * or other evidences of debt, interest at the rate allowed by the laws of the State * * * where the bank is located * * * and no more * * *.
      The alternative rate of one percent in excess of the discount rate on ninety-day commercial paper in effect at the Federal Reserve Bank permitted by the same statute is not pertinent to the issues in this case.

      . 12 U.S.C. § 86 (1970) reads:

        Usurious interest; penalty for taking; limitations

      The taking, receiving, reserving, or charging [of] a rate of interest greater than is allowed by the preceding section, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it * * * jn case the greater rate of interest has been paid, the person by whom it has been paid * * * may recover back, in an action in the nature of an action of debt, twice the amount of the interest thus paid * * *.

      . Ark.Const. art. 19, § 13 reads:

        Usury — Legal Rate. — All contracts for a greater rate of interest than ten percent per annum shall be void, as to principal and interest, and the General Assembly shall prohibit the same by law; but when no rate of interest is agreed upon, the rate shall be six per centum per annum.

      . Ark.Stat.Ann. § 68-602 (1957 repl.) reads:

        Maximum rate of interest by contract.— The parties to any contract, whether the same be under seal or not, may agree in writing for the payment of interest not exceeding ten per centum * * * per annum on money due or to become due.

      . These applicable state statutory provisions read:
      § 68-603 Usurious interest prohibited.— No person or corporation shall, directly or indirectly, take or receive in money, goods, things in action, or any other valuable thing, any greater sum or value for the loan or forbearance of money or goods, things in action, or any other valuable thing, than is in section one [§ 68-602] of this act prescribed.
      § 68-608 Bonds, bilis and notes, conveyances, contracts or securities void when interest excessive. — All bonds, bills, notes, assurances, conveyances, and all other contracts or securities whatever, whereupon or whereby there shall be reserved, taken or secured, or agreed to be taken or reserved, any greater sum, or greater value for the loan or forbearance of any money, goods, things in action, or any other valuable thing than is prescribed in this act * * * shall be void.

      . Davidson v. Commercial Credit Equip. Corp., 255 Ark. 127, 499 S.W.2d 68, 70-71 (1973). In Arkansas the term “rate,” therefore, is to be read as “effective yield.”
      Prior to 1952 the test for determining usury was not so simple. See, e. g., Strickler v. State Auto Finance Co., 220 Ark. 565, 249 S.W.2d 307, 310-311-(1952). See generally Sloan v. Sears, Roebuck & Co., 228 Ark. 464, 308 S.W.2d 802, 804-805 (1958).

      . Loganville Banking Co. v. Forrester, 143 Ga. 302, 84 S.E. 961 (1915).

      . Fleckner is not a sound precedent for a usury case, as the rate limitation of 6% was imposed in the federal charter of United States Banks, and a violation of the limit at best constitutes a charter violation of which only the Government might complain.

      . Citing Farmers’ & Mechanics’ Nat’l Bank v. Dearing, 91 U.S. 29, 32, 23 L.Ed. 196 (1875); Union Nat’l Bank v. Louisville, N.A., & C. Ry., 163 U.S. 325, 331, 16 S.Ct. 1039, 41 L.Ed. 177 (1896); Haseltine v. Central Bank, 183 U.S. 132, 134, 22 S.Ct. 49, 46 L.Ed. 118 (1901).

      . In Citizens’ Nat’l Bank v. Donnell, supra, fifteen years before Evans, the Court held interest on a loan forfeited under the federal statute because the national bank compounded it “oftener than once in a year” in violation of state law, in spite of the fact that the rate of interest charged by the bank, even compounded, was below the 8% state rate.

      . The Evans Court’s long quotation of dictum from Fleckner v. Bank of the United States, 21 U.S. (8 Wheat.) 338, 354, 5 L.Ed. 631 (1823), supports this conclusion:
      [T]his court, through • Mr. Justice Story, said: “If a transaction of this sort [discounting a single payment 2 year note at the maximum 6% nominal rate] is to be deemed usurious, the same principle must apply with equal force to bank discounts, generally, for the practice-is believed to be universal; and, probably, few, if any, charters, contain an express provision, authorizing, in terms, the deduction of the interest in advance upon making loans or discounts. It has always been supposed, that an authority to discount, or make discounts, did, from the very force of the terms, necessarily include an authority to take the interest in advance. And this is not only the settled opinion among professional and commercial men, but stands approved by the soundest principles of legal construction. Indeed, we do not know in what other sense the word ‘discount’ is to be interpreted. Even in England, where no statute authorizes bankers to make discounts, it has been solemnly adjudged, that the taking of interest in advance by bankers, upon loans, in the ordinary course of business, is not usurious.” 251 U.S. at 113, 40 S.Ct. at 59.
      The plaintiff bank’s reliance on Bank of Newport v. Cook, 60 Ark. 288, 30 S.W. 35 (1895), cited by the Evans majority as well, is likewise misplaced for the same reason as its reliance on Evans. Both cases dealt with single payment, not installment, obligations discounted in the ordinary course of business. Moreover, recent Arkansas cases apply the usury laws more strictly than did those in prior years. See note 7, supra.

      . As an example, a $1,000 single payment one-year note discounted at 8% yields 8.70%. The same note yields 16.05% if principal and interest are repaid in twelve monthly installments. The increase in yield is almost as substantial when the interest is added-on in advance rather than discounted. See American Book of Simple Interest Yields 6, 14, 35 (1958).
      The inherent vice in discounting is readily apparent when carried to its extreme. A $10,000 ten year installment note at 10% interest would leave the maker zero' dollars and the ten year discount at 10% would make the discount $10,000, equal to the face of the note. As noted by an early English case, “if the practice [of discounting] be carried to a great length, the interest will annihilate the principal.” Lord Alvanley, quoted in Bank of Newport v. Cook, 60 Ark. 288, 299, 30 S.W. 35, 38 (1895) [Battle, J. dissenting).

      . Northway, supra, 464 F.2d at 857 n. 2, citing Mich.Stat.Ann. Section 19.15(1), Mich. Comp.Laws Ann. § 438.31; and Mich.Stat. Ann. Section 23.766, Mich.Comp.Laws Ann. § 487.38.

      . See Comment, 58 Iowa L.Rev. 1240, 1265-66 (1973). This comment suggests with documentation that Tiffany v. Nat’l Bank, 85 U.S. (18 Wall.) 409, 21 L.Ed. 862 (1873), and cases such as Northway following it find no support in, and directly oppose, the policy of strict national and state bank interest rate parity enunciated in the legislative history of the 1864 Act.

      . See Cong.Globe, 38th Cong., 1st Sess. 2123-15 (1864).

      . Id. at 2126.

      . See Comment, 58 Iowa L.Rev. 1250, 1265-66 (1973).
      Two congressional factions of roughly equal power debated the wording of the original Act. One side sought to prevent national banks from charging higher rates than state banks and thereby gaining a major competitive advantage. The other faction sought to prevent states from passing interest rate legislation hostile to national banks by means such as enacting a “general" low state rate applicable to national banks and then exempting , state banks, permitting them to charge more. The apparent product of the compromise as it appears in today’s Act is the exception that “where by the laws of any State a different rate is limited for banks organized under State laws, the rate so limited shall be al-lowed for associations organized or existing in any such State under this chapter.” 12 U.S.jí. § 85 (emphasis added).
      The cases since Tiffany, supra, have interpreted the term “different” as referring only to a different higher rate of interest, thus permitting the national banks to charge as much as the most favored lenders operating under state law and granting virtual after-the-fact victory to the pro-national bank congressional faction. Another interpretation might be that “different” refers to a higher or lower rate. National banks would thus be paired with state banks even at a different lower state rate than that applicable to most favored lenders. This construction, however, has apparently not received judicial recognition in any usury case.

      . Union National construed the Act as giving national banks “a right to have an equal administration of the rule established by state law.” 163 U.S. at 331, 16 S.Ct. at 1042. See also Partain v. First Nat’l Bank, 467 F.2d 167, 173-174 (5th Cir. 1972); American Timber & Trading Co. v. First Nat’l Bank, 334 F.Supp. 888, 889 (D.Or.1971).

      . Furthering the theme of “competitive equality” in First Nat’l Bank v. Dickinson, 396 U.S. 122, 133, 90 S.Ct. 337, 343, 24 L.Ed.2d 312 (1969), upholding Florida’s prohibition of a national bank’s offsite depository and armored car pick up service as violative of the state’s branch banking regulations, as adopted and applied through 12 U.S.C. § 36(f), the Court recently stated:.
      The policy of competitive equality is therefore firmly embedded in the statutes governing the national banking system. The mechanism of referring to state law is simply one designed to implement that congressional intent and build into the federal statute a self-executing provision to accommodate to changes in state regulation.

      . Ark.Const. art. 19, § 13, would render the loans void as to principal as well as interest.


author: ALBERT V. BRYAN, Senior Circuit Judge:

text:
    UNITED STATES of America, Appellee, v. Gregory Christopher BAILEY, Appellant. UNITED STATES of America, Appellee, v. James Henry BROWN, Appellant. UNITED STATES of America, Appellee, v. Irving Marion MAXWELL, Appellant. UNITED STATES of America, Appellee, v. Robert Lee MORROW, Appellant. UNITED STATES of America, Appellee, v. Larry Eugene WALLACE, Appellant.
    Nos. 73-2374 to 73-2378.
    United States Court of Appeals, Fourth Circuit.
    Argued Sept. 30, 1974.
    Decided Jan. 31, 1975.

      David R. Badger, Charlotte, N. C. (Court-appointed), for appellant in No. 73-2377.
    Keith M. Stroud, .Charlotte, N. C. (Court-appointed), for appellant in No. 73-2374.
    Donald M. Tepper, New York City (Court-appointed), for appellant in No. 73-2378.
    James M. Shannonhouse, Jr., Charlotte, N. C. (Court-appointed), for appellant in No. 73 — 2375.
    Peter Goldberger, Third-year law student (Lila Bellar, Charlotte, N. C. (Court-appointed), on brief), for appellant in No. 73-2376.
    Michael S. Scofield, Asst. U. S. Atty. (Keith S. Snyder, U. S. Atty., on brief), for appellee in Nos. 73-2374, 73-2375, 73-2376, 73-2377 and 73-2378.
    Before BRYAN, Senior Circuit Judge, and WINTER and RUSSELL, Circuit J udges.
   ALBERT V. BRYAN, Senior Circuit Judge:

In three counts, George Christopher Bailey, James Henry Brown, Robert Lee Morrow and Larry Eugene Wallace were charged with the robbery of the Northeast Branch, North Carolina National Bank at Charlotte, North Carolina on July 9, 1973 in violation of 18 U.S.C. § 2113, and Irving Marion Maxwell was indicted with them as an aider and abettor, 18 U.S.C. § 2(a). Tried together, all five were found guilty. Bailey, Brown, Morrow and Wallace were each sentenced to 18 years imprisonment, and Maxwell to 14. They appeal.

With an exception now to be mentioned, no substantive defect in trial is to. be found in any of these cases. The exception is in the sentencing of defendants Bailey, Morrow and Wallace but the findings of their guilt are affirmed. Each of these three, however, was under 22 years of age at the time of conviction and so were eligible for consideration under the Federal Youth Corrections Act, 18 U.S.C. §§ 5005, 5006(e) et seq.

In argument at the bar of this court the United States Attorney called our attention to the circumstance that as to these three defendants before pronouncing sentence the District Court had not made the requisite finding upon whether any of them would benefit from treatment under the Act, 18 U.S.C. § 5010(d). For this omission the prosecution confessed error. It moved that these cases be remanded to the District Court to pass such new judgments on the verdicts as it may deem just after resolution of the question of benefit. Dorszynski v. U. S., 418 U.S. 424, 94 S.Ct. 3042, 41 L.Ed.2d 855 (1974). It will be so ordered.

Another defendant, Brown, was 22 years of age at the time sentence was passed upon him and hence not within the mandates of the Youth Corrections Act. But since he had not reached 26, the treatment outlined in that Act was permissibly available for his sentence as an adult offender, 18 U.S.C. § 4209. Nevertheless, we do not hold this optional use of the latter section an indispensable consideration prerequisite to recourse to the regular adult punishments for offenses like Brown’s. However, since he is a contemporary of his companions in crime, it would not seem amiss, if the District Court saw fit, to allow him the advantages of the Youth Corrections Act as far as extendable under § 4209. Consequently, his case will be remanded to the District Court for that consideration. See United States v. Wilson, 450 F.2d 495, 498 (4 Cir. 1971).

Defendant Maxwell, since he was twenty-two years old when convicted, was not eligible for treatment under the Youth Corrections Act, but he asks to be adjudged an “eligible offender” with the propitious provisions of the Narcotic Addict Rehabilitation Act of 1966, 18 U.S.C. §§ 4251, 4252, as amended.

At the time of his sentencing the District Judge said: “Now, Mr. Maxwell, at your age, you will be considered for parole after you serve one-third of that time. If your habit is as bad as you say it is you will need that length of time and maybe more to get rid of that habit. It is recommended that the defendant be examined to determine whether or not he is a narcotic addict and in the event he is that he be given the necessary treatment”. The record discloses no report made to the Court, after the commitment to the Attorney General, on whether he was an addict. However, there is no necessity to delve into it further because he does not qualify for the treatment provided by the Narcotic Act for an eligible offender as set forth in 18 U.S.C. § 4253.

This is because he had been “convicted of a crime of violence”. 18 U.S.C. § 4251(f)(1). As defined in this Act a crime of( violence “includes robbery . . . extortion accompanied by threats of violence, assault with a dangerous weapon or assault with' intent to commit any offense punishable by imprisonment for more than one year”. 18 U.S.C. § 4251(b). Maxwell’s principals were convicted of violating the bank robbery statute, 18 U.S.C. § 2113. It embraced the taking by force, violence and intimidation of $15,533.75 belonging to or in the possession of a bank and, in the commission of that act, assaulting a person. The crime comprised the putting in jeopardy of the life of the person by the use of a dangerous weapon. These offenses were punishable by imprisonment for more than one year.

Maxwell was convicted of aiding and abetting his co-defendants in the perpetration of these crimes. Therefore, since 18 U.S.C. § 2(a) declares that “whoever commits an offense against the United States or aids [and] abets ... its commission, is punishable as a principal”, then he has been “convicted of a crime of violence”, which disqualifies him for treatment as an eligible offender under the Narcotic Act.

His participation was not simply passive or consultive. His four fellows entered the bank with sawed-off shotguns and a hand gun, presenting the weapons at the faces of the employees and warning that they would be killed if they did not cooperate with the four robbers. All the while Maxwell was waiting for them outside in an escape car. He drove them away immediately as they emerged from the bank. There was a running gun battle between the automobile’s occupants and the police then in pursuit. The car was wrecked and four of the occupants including Maxwell then fled, leaving one of the robbers in the car. A trail of currency and weapons was left by the car and Maxwell with two of the robbers was found hiding in a culvert with large sums of paper money floating about.

Nevertheless, like Brown Maxwell was twenty-two years old when convicted. His case likewise should be remanded to the District Court to consider whether the provisions of the Youth Corrections Act, as allowed by § 4209, should avail him.

No ground appears for interfering with the guilty verdicts as to any of the appellants or with the judgments entered against appellants Brown and Maxwell.

Vacated in part; affirmed in part, and remanded.

      . The Act, 18 U.S.C. § 5006(e), states that a “ ‘Youth offender’ means a person under the age of twenty-two years at the time of conviction”. It states, too, that “ ‘Conviction’ means the judgment on the verdict or finding of guilty . . In passing sentence the District Judge noted to Brown that his age was twenty-two. Thus he was not under the Act a “youth offender”,


author: CRAVEN, Circuit Judge:

text:
    Carlton Oscar WEAVER, and Ronald Eugene All, Appellants, v. G. R. WILLIAMS, Superintendent, North Carolina Department of Correction, Yanceyville, North Carolina, Appellee.
    No. 74-1608.
    United States Court of Appeals, Fourth Circuit.
    Submitted Nov. 7, 1974.
    Decided Jan. 20, 1975.

      Gerald Alch, Boston, Mass., and Thomas W. H. Alexander, Raleigh, North Carolina, on brief for appellant.
    James H. Carson, Jr., Atty. Gen. of North Carolina, and Richard N. League, Asst. Atty. Gen., North Carolina, on brief for appellee.
    Before HAYNSWORTH, Chief Judge, BRYAN, Senior Circuit Judge, and CRAVEN, Circuit Judge.
   CRAVEN, Circuit Judge:

This is a motor-vehicle-search-without-a-warrant case. The fourth amendment does not forbid searches without warrants. It only forbids unreasonable searches. Because we conclude that this search by a state highway patrolman was wholly reasonable under the circumstances, we affirm the district court’s denial of habeas relief to the petitioning state prisoners.

At 7:20 a. m. on March 20, 1971, Virginia state highway patrolman S. R. Vaughn observed a truck being driven on a Virginia highway in a dangerous condition. All of the windshield with the exception of a 10-inch to 12-inch space on the driver’s side was covered with cardboard. After stopping the vehicle, which was occupied by the two petitioners, Vaughn compared its registration with the license plate and in the course of doing so noticed the odor of ham. He stepped up on the wheel axle, enabling him to look over the siding of the truck, and observed that the truck was loaded with hams. Inquiries about the cargo resulted in conflicting stories from the occupants as to the source, and ultimately, in Weaver’s flight. Petitioner All and the truck were taken to the Franklin County, Virginia, jail. Later, when the officers learned that the hams had been stolen, the truck was searched and bolt cutters that had been used to effect the theft were discovered on the floor of the cab. At trial the bolt cutters were received in evidence, and the highway patrolman was allowed to testify that he had smelled the hams and seen them in the truck.

On appeal it is not suggested, of course, that appellants are innocent, but only that their fourth amendment rights were violated, and that because the trooper bungled the prisoners must be set free. We think not. Patrolman Vaughn acted pursuant to his duty under the Code of Virginia:

§ 46.1-8. Stopping vehicles for inspection or to secure information.— Any peace officer who shall be in uniform or who shall exhibit his badge or other sign of authority shall have the right to stop any motor vehicle, trailer or semitrailer, upon request or signal, for the purpose of inspecting the motor vehicle, trailer or semitrailer as to its equipment and operation, its manufacturer’s serial or engine number or its contents or load, if such motor vehiele, trailer or semitrailer is a property carrying vehicle or for the purpose of securing such other information as may be necessary.

We hold that such a statute and the implementation of it by a state highway patrolman with respect to a property carrying vehicle is a reasonable exercise of state police power over the operation of motor vehicles on its highways.

The constitutional difference between searches of and seizures from houses and similar structures and from vehicles stems both from the ambulatory character of the latter and from the fact that extensive, and often noncriminal contact with automobiles will bring local officials in “plain view” of evidence, fruits, or instrumentalities of a crime, or contraband.

Cady v. Dombrowski, 413 U.S. 433, 442, 93 S.Ct. 2523, 2528, 37 L.Ed.2d 706 (1973).

Alternatively, we hold that a state traffic officer may lawfully testify to anything he discerns in or about a motor vehicle on the highway, and that his inspection is not limited by his stature but that he may lawfully position himself by any means available to improve his view. Whether or not inadvertence is an essential element of the orthodox plain view doctrine, see United States v. Bradshaw, 490 F.2d 1097, 1100 (4th Cir. 1974), we hold it is not with respect to a traffic officer on an open highway. “Plain view” in this context means whatever can be seen, whether accidentally or by intentional scrutiny. Cf. Cady, supra, 413 U.S. at 441, 93 S.Ct. 2523.

As for the introduction of the bolt cutters which were discovered after the officers knew of the burglary, we hold that the subsequent search of a motor vehicle lawfully impounded and taken into custody is not a violation of the fourth amendment. Chambers v. Maroney, 399 U.S. 42, 51-52, 90 S.Ct. 1975, 26 L.Ed.2d 419 (1970); see Cady, supra, 413 U.S. at 445-448, 93 S.Ct. 2523, interpreting Harris v. United States, 390 U.S. 234, 88 S.Ct. 992, 19 L.Ed.2d 1067 (1968), and Cooper v. California, 386 U.S. 58, 87 S.Ct. 788, 17 L.Ed.2d 730 (1967).

Affirmed.


author: WILLIAM E. MILLER, Circuit Judge. O’SULLIVAN, Senior Circuit Judge

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Richard SANCHEZ, Defendant-Appellee.
    No. 74-1454.
    United States Court of Appeals, Sixth Circuit.
    Jan. 31, 1975.

      Frederick M. Coleman, U. S. Atty., Toledo, Ohio, Erie D. Chapman, III, Asst. U. S. Atty., for plaintiff-appellant.
    Norman G. Zemmelman, Britz & Zemmelman, Toledo, Ohio (court appointed— CJA), for defendant-appellee.
    Before CELEBREZZE and MILLER, Circuit Judges, and O’SULLIVAN, Senior Circuit Judge.
    MILLER, J., delivered the opinion of the Court in which CELEBREZZE, J., joined. O’SULLIVAN, J., (p. 890) filed a dissenting opinion.
   WILLIAM E. MILLER, Circuit Judge.

Richard Sanchez was indicted by a federal grand jury on November 29, 1973. The first count of the indictment charged defendant with receiving, concealing and storing explosives known or believed to be stolen, and count two charged the illegal storage of explosives contrary to federal regulations. (18 U.S.C. § 842(h)(j)). The third count charged the illegal possession of a firearm.

The defendant filed a motion to suppress the physical evidence on the ground that the items were obtained by means of an illegal search and seizure. After a pretrial hearing on the motion, the district judge ruled that the explosives (dynamite and related materials) had been illegally seized and ordered their suppression. As to the firearm the motion was overruled. Because the seized explosives were an indispensable part of the prosecution’s case on the first two counts, the government has appealed the district court’s suppression ruling as to these items. (18 U.S.C. § 3731). The validity of the seizure of the firearm is not before us.

On the evening of October 30, 1973, Officer David Mullin of the Toledo Drug Enforcement Unit, received a telephone call from a confidential informant who claimed that he had seen heroin in the home of the defendant. Relying upon the tip of this previously reliable informant, the officer drafted a narcotics search warrant for the home of Richard Sanchez. The information about the drugs was received between 7 and 8 P.M. and the warrant was issued by a local judge at approximately 10 P.M. the same night. Having secured the warrant, Officer Mullin returned to his office to make arrangements for the raid. Shortly thereafter, he received another call from the same informant advising that there were also explosives at the Sanchez house. Mullin immediately contacted an agent of the Alcohol, Tobacco and Firearms Bureau (A.T.F.) of the Treasury Department; advised him of the explosives; and requested his assistance in the search.

Although some two hours elapsed between the time the federal government was notified and the time the warrant was served, an additional warrant for the explosives was not sought by either local or federal authorities. Sometime after 12 A.M. on the morning of October 31, 1973, several officers of the Toledo Drug Enforcement Unit, accompanied by one A.T.F. agent, executed the search warrant at the defendant’s house. A thorough search of the premises failed to uncover any narcotics. However, soon after entering the residence, the A.T.F. agent found in one of the rooms a box and a foot locker containing together seventy pounds of explosives. By comparing the “date shift code numbers” on the explosives with those on a master list, the agent was able to determine immediately that the entire quantity had recently been stolen from a company in another state. They were therefore seized without further ado and the federal indictment was returned some 30 days later.

Although the defendant was not entitled to possess explosives illegally, he was entitled to the protections of the Fourth Amendment with respect to any search and seizure. See Taylor v. United States, 286 U.S. 1, 6, 52 S.Ct. 466, 76 L.Ed. 951 (1932); Trupiano v. United States, 334 U.S. 699, 710, 68 S.Ct. 1229, 92 L.Ed. 1663 (1948); United States v. Jeffers, 342 U.S. 48, 52-54, 72 S.Ct. 93, 96 L.Ed. 59 (1951). To comply with the Fourth Amendment, every search and seizure must be made pursuant to a valid warrant unless an exception to this requirement is dictated by exigent circumstances. Coolidge v. New Hampshire, 403 U.S. 443, 454 — 155, 91 S.Ct. 2022, 29 L.Ed.2d 564 (1971) (plurality opinion); and see United States v. Gargotto, 476 F.2d 1009 (6th Cir. 1973); United States v. Nelson, 459 F.2d 884 (6th Cir. 1972).

The only warrant in this case was one directing the Toledo police to search the Sanchez house for narcotics. The simultaneous search by the federal agent for the explosives was admittedly conducted without a warrant. Nevertheless, the government’s position apparently is that the warrantless intrusion was justified by the state’s request for assistance and that the seizure of the explosives was constitutionally permissible under the plain view exception to Fourth Amendment protections.

Under certain circumstances police authorities are empowered to seize without a warrant articles in plain view. See Annot., 29 L.Ed.2d 1067 (1972). Unquestionably, in this case the two containers of explosives were not concealed and were clearly visible. The warrantless seizure of the explosives would not offend the United States Constitution so long as all of the requirements of the plain view doctrine were satisfied.

An essential requirement is that the police officer must have a right to be in the position from which he is able to view the property. Harris v. United States, 390 U.S. 234, 88 S.Ct. 992, 19 L.Ed.2d 1067 (1968) (per curiam). Standing alone, the existence of a “plain view” is insufficient to justify application of the plain view exception. Coolidge, 403 U.S. at 468, 91 S.Ct. 2022 (plurality opinion). The government contends that its agent was rightfully on the premises because he had accompanied local police at their request when they had executed a valid narcotics search warrant. We find this argument unpersuasive. We believe that the warrant authorized only the local officers to enter and search the Sanchez property for narcotics. It could not be used to validate the entrance of a federal officer having both probable cause and the opportunity to obtain a separate warrant to search for different items of property. Byars v. United States, 273 U.S. 28, 47 S. Ct. 248, 71 L.Ed. 520 (1927); United States v. Carney, 356 F.Supp. 855 (M.D. Tenn.1973).

On the facts of this case, there were two simultaneous but distinct intrusions, each conducted by separate agencies for the purpose of securing different types of property. Each search had to be authorized independently by a separate warrant unless the warrant requirement was excused by a valid exception. Here the federal agent had probable cause to suspect the presence of explosives in the defendant’s house, and he had the opportunity to procure a proper warrant. Instead of doing so, he chose to ignore the warrant requirement and to enter the premises with local officers who were conducting a search for unrelated property. Such action circumvents the safeguards of the federal Constitution.

. The Fourth Amendment provides that the essential elements of any warrant are that it issue only upon probable cause and that it particularly describe the place to be searched and the persons or things to be seized. The requirement that a judicial officer make a probable cause determination insures that there exists a legal basis for the search. McDonald v. United States, 335 U.S. 451, 455-456, 69 S.Ct. 191, 93 L.Ed.2d 153 (1948). The particularity provision “prevents the seizure of one thing under a warrant describing another. [Njothing is left to the discretion of the officer executing the warrant.” Marron v. United States, 275 U.S. 192, 196, 48 S.Ct. 74, 76, 72 L.Ed. 231 (1927). These constitutional requirements were designed to eliminate the pernicious general warrant. As stated in Weeks v. United States, 232 U.S. 383, 390, 34 S.Ct. 341, 343, 58 L.Ed. 652 (1914), the Fourth Amendment

took its origin in the determination of the framers of the Amendments to the Federal Constitution to provide for that instrument a Bill of Rights, securing to the American people, among other things, those safeguards which had grown up in England to protect the people from unreasonable searches and seizures, such as were permitted under the general warrants issued under authority of the government by which there had been invasions of the home and privacy of the citizens, and the seizure of their private papers in support of charges, real or imaginary, made against them. Such practices had also received sanction under warrants and seizures under the so-called writs of assistance, issued in the American colonies. See 2 Watson on the Constitution, 1414 et seq. Resistance to these practices had established the principle which was enacted into the fundamental law in the 4th Amendment, that a man’s house was his castle, and not to be invaded by any general authority to search and seize his goods and papers.

See also Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746 (1886). To uphold the search and seizure by the federal agent in this case without the interposition of any of the Fourth Amendment restrictions would come perilously close to reviving the long discredited general warrant. This step we are not willing to take.

When a law enforcement officer has prior knowledge of the existence and location of property which he has probable cause to believe is illegally possessed, as well as ample opportunity to obtain a judicially sanctioned search warrant, the Fourth Amendment mandates that he must follow this procedure. See Coolidge, 403 U.S. at 482, 91 S.Ct. 2022; Trupiano, 334 U.S. at 706-708, 68 S.Ct. 1229; cf. United States v. Lopez-Ortiz, 492 F.2d 109, 111 (5th Cir. 1974). If he fails in this duty, he may not proceed on the authority of another unrelated warrant to justify his intrusion. Because the A.T.F. agent had no right to be on the Sanchez premises during the raid, he did not satisfy the threshold requirement of the plain view doctrine and thus his warrantless seizure of the explosives was unconstitutional.

In its brief the government relies on the recent decision in United States v. Carwell, 491 F.2d 1334 (8th Cir. 1974), in which the court refused to suppress a revolver that had been seized by state authorities while executing a narcotics search warrant. In that case local police received information that drugs and possibly a gun were on the defendant’s premises. The police swore out a warrant only for the narcotics but informed a special agent of the Alcohol, Tobacco and Firearms Bureau about the gun. The federal agent was occupied with other matters and did not accompany the local officers on their raid. Nevertheless, the police seized the weapon and turned it over to the appropriate federal authorities.

We do not regard Carwell as controlling since the opinion does not focus on the crucial issue presented by this case— whether the federal agent had a right to be on the premises in order to justify his warrantless seizure of property under the plain view exception. Unlike the present case Carwell did not involve a simultaneous search for different articles by local and federal authorities.

Affirmed.

O’SULLIVAN, Senior Circuit Judge

(dissenting).

Respectful of the views of my colleagues who join in the majority opinion, I am constrained to record my dissent. If the facts of the case before us could be nicely fitted into the factual background of Coolidge v. New Hampshire, 403 U.S. 443, 91 S.Ct. 2022, 29 L.Ed.2d 564 (1971), it would be presumptuous of me to express disagreement with its holding. It is my view, however, that the facts of the case at bar cannot be so read. I do not consider that the Fourth Amendment would be offended by denial of the defendant’s motion to suppress.

      . The federal agent was an expert in the handling of explosives and apparently entered the premises for the specific purpose of searching for and seizing them.

      . The district court did not make a finding with regard to the adequacy of probable cause for the issuance of a warrant to search for explosives. However, neither party argued that the tip was insufficient for such a purpose. The crucial point remains that no attempt was made to seek a warrant.

      . There was testimony that the drugs may have been destroyed just before the officers entered the house.

      . This box was marked with a distinctive red symbol denoting that it contained explosive material.

      . There is some indication in the cases that the particularity requirements of a warrant may be relaxed when contraband is the subject of a search and seizure. See Stanford v. Texas, 379 U.S. 476, 485-486, 85 S.Ct. 506, 13 L.Ed.2d 431 (1965); United States v. DePugh, 452 F.2d 915 (10th Cir.), cert. denied 407 U.S. 920, 92 S.Ct. 2452, 32 L.Ed.2d 805, reh. denied 409 U.S. 898, 03 S.Ct. 101, 34 L.Ed.2d 157 (1972).

      . No contention is made that the explosives, because they were in containers, were not in “plain view.”

      . Amendment IV — Searches And Seizures
      The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.