author: ROBERT P. ANDERSON, Circuit Judge:

text:
    Harry LEWIS, Plaintiff-Appellant, v. George L. VARNES, Defendant-Appellee, and Eli Lilly and Company, Defendant.
    No. 65, Docket 74-1293.
    United States Court of Appeals, Second Circuit.
    Argued Oct. 2, 1974.
    Decided Oct. 30, 1974.

      Morris J. Levy, New York City, for plaintiff-appellant.
    Merton Sarnoff, New York City (Shaw, Bernstein, Scheuer, Boyden & Sarnoff, New York City, on the brief), for defendant-appellee George L. Yarnes.
    L. Robert Fullem, New York City (Dewey, Ballantine, Bushby, Palmer & Wood, New York City, on the brief), for Eli Lilly and Co.
    Before HAYS, ANDERSON and MANSFIELD, Circuit Judges.
   ROBERT P. ANDERSON, Circuit Judge:

George L. Varnes, appellee, was for several years a director and officer of Eli Lilly and Company (Lilly); on January 31, 1971, he retired from these positions. It is undisputed that he has maintained no significant contact with Lilly since that date.

Prior to his retirement, Lilly had granted Varnes various options to purchase its common stock at stated per share prices, but, under the terms of the agreements, the right to exercise the options expired two months after Varnes’ retirement. On December 22, 1970, Varnes, exercising some of the options, purchased 1,600 shares of Lilly common stock. He used the remaining options after his retirement, but within six months of his pre-retirement (December 22nd) acquisitions. Between February 2, 1971 and March 26, 1971, he purchased a total of 21,400 shares of Lilly common stock at option prices which ranged between $30.50 and $65.25 a share below the prevailing market.

Varnes solicited and received on various occasions, both before and after his retirement, legal advice from his personal counsel and from Lilly’s general counsel concerning the applicability of § 16(b) of the Securities Exchange Act of 1934, 48 Stat. 896, 15 U.S.C. § 78p(b), to stock transactions by a retired officer-director. The consensus of counsel, based in large part upon Feder v. Martin Marietta Corp., 406 F.2d 260 (2 Cir. 1969), was that profits could be recovered from a retired ‘insider’ only if a purchase or sale took place within six months of a matching pre-retirement transaction. Because Varnes, while an active officer-director, had last exercised his stock options on December 22, 1970, counsel advised him that any impediment under § 16(b) to a sale by him of Lilly stock would expire six months thereafter, i. e. June 22, 1971.

On July 6, 1971 — more than six months after his last purchase of Lilly stock while an active employee of that company, but less than six months after his retirement and within six months of his last stock acquisitions at option prices— Varnes sold 6,300 shares of Lilly stock. The total net proceeds of such sale were $781,631.29; the difference between the net proceeds and the actual acquisition cost of the shares in question amounted to $499,706.29.

The appellant, Harry Lewis, a Lilly stockholder, requested that the company institute an action to recover the profits realized by Varnes, but it refused to do so. Lewis then filed a complaint in the district court seeking recovery under § 16(b) for the profits made by Varnes on the July 6th sale.

Varnes moved for summary judgment, which the district court granted. It held that § 16(b) does not apply where both the purchase and sale within six months of each other occur after an officer has left the employ of the issuer. Lewis has appealed and the question before this court is whether, on the facts of this case, the profits derived from the post-retirement short-swing transaction are recoverable under § 16(b) on behalf of the corporation. We hold that they are not.

Section 16(b) provides, inter alia, that the profits realized from a purchase and sale of a firm’s securities within any six month period by a director or officer of the issuer are recoverable on behalf of the corporation. It imposes liability for profits realized by a director or officer from a matching purchase and sale of corporate securities completed within a six month period regardless of motive or intent and regardless of the presence or absence of any improper use of inside information. See, Bershad v. McDonough, 428 F.2d 693, 696 (7 Cir. 1970). It is an objective rule and does not reach every transaction in which an investor actually relies on inside information, or in which the potential for such reliance is great. Unlike other provisions of the Act, the most noteworthy being § 10(b), 15 U.S.C. § 78j(b), Congress drafted § 16(b) with limited areas of clear and unambiguous liability in order to create a “prophylactic” effect. Blau v. Lehman, 368 U.S. 403, 414, 82 S.Ct. 451, 7 L.Ed.2d 403 (1962). See Smolowe v. Delendo Corp., 136 F.2d 231, 235 (2 Cir.), cert. denied, 320 U.S. 751, 64 S.Ct. 56, 88 L.Ed. 446 (1943). Liability cannot be imposed, therefore, solely because the officer or director structured his transaction to avoid § 16(b) liability, provided the method used conforms to the statute. Reliance Electric Co. v. Emerson Electric Co., 404 U.S. 418, 422, 92 S.Ct. 596, 30 L.Ed.2d 575 (1972).

Section 16(b) is applicable to any short-swing transaction effected by an individual who must disclose his stock transactions under the provisions of § 16(a) of the Act. For the purposes of § 16(b), therefore, an “insider” is one who is required to report his transactions under § 16(a). Subsection 16(a) requires any beneficial owner of more than 10% of any class of certain described equity securities, or a director or an officer to file with the Securities Exchange Commission a statement setting forth the extent of his equity interest within ten days of his reaching that status or assuming such office and also, thereafter, within ten days of the close of each calendar month within which there has been a change in such ownership. In Federal v. Martin Marietta Corp., supra, this court extended § 16(b) liability to the purchase and sale by a director of the issuer's securities within a six-month period spanning his retirement, where the purchase occurred while he was a director and the sale after his retirement. In response to this decision the Securities and Exchange Commission adopted Rule 16a-l(e) which requires a retired director or officer to report any change in his ownership of an equity interest in the issuer that occurs within six months after a preretirement change in his beneficial ownership of such securities.

While appellant is correct in arguing that the § 16(a) disclosure requirements applied to Varnes’ post-retirement acquisition of 21,000 shares, because such purchase effected a change in his beneficial ownership of Lilly common stock within six months of his purchase on December 22, 1970, § 16(a), as extended in Commission Rule 16a-l(e), “does not specifically require” Varnes to report his July 6, 1971 sales, because no change in his ownership interest was effected within six months o'f his pre-retirement purchase. In light of the fact that § 16(b) parallels the § 16(a) disclosure requirement, such post-retirement sales were not “specifically” subject to the profit forfeiture provision either.

The district court decision, therefore, is clearly in line with the literal terms of the statute. Appellant seeks a reversal of the judgment, however, on the ground that the purpose of § 16(b) can only be effectuated if the appellee is forced to forfeit the profit from the July 6th sale; the reason for this, he asserts, is that the same danger of unfair use of information inheres in the present situation where the short-swing transaction took place within six months of retirement, as arises in similar pre-retirement transactions, because inside information does not “evaporate” from the mind of the insider.

It is true, as this court noted in Feder v. Martin Marietta Corp., supra, that “the judicial tendency, especially in this circuit, has been to interpret Section 16(b) in ways that are most consistent with the legislative purpose, even departing where necessary from the literal statutory language.” 406 F.2d at 262. Thus, the policy considerations which are presumed to underlie § 16(b) have guided this court and others in determining whether the profit forfeiture provision extends to a purchase and sale within a six month period which spans the director’s retirement, Feder v. Martin Marietta Corp., supra, and in determining whether an exchange of stock pursuant to a corporate merger constitutes a “sale,” Kern County Land Co. v. Occidental Petroleum Corp., 411 U.S. 582, 93 S.Ct. 1736, 36 L.Ed.2d 503 (1973); Champion Home Builders Co. v. Jeffress, 490 F.2d 611 (6 Cir. 1974); Gold v. Sloan, 486 F.2d 340 (4 Cir. 1973).

The courts, however, are free to adopt such a flexible approach in construing § 16(b) only in those cases where the relevant provision is either intrinsically ambiguous or in which there are alternative plausible applications of the provision to a particular factual situation. Kern County Land Co. v. Occidental Petroleum Corp., supra, 411 U.S. at 594, 93 S.Ct. 1736.

The Supreme Court in Reliance Electric Co. v. Emerson. Electric Co., supra, refused to extend § 16(a) liability to the profits realized on a sale by an individual who owned 9.96% of a corporation’s stock, even though there was evidence that the defendant had in fact traded on the basis of inside information and that he had reduced his holdings below the 10% level for the specific purpose of avoiding § 16(b) liability. The statute clearly defined an “insider” as someone who owned more than 10% “both at the time of the purchase and sale.” The Court said, “Liability cannot be imposed simply because the investor structured his transaction with the intent of avoiding liability under § 16(b). The question is, rather, whether the method used to ‘avoid’ liability is one permitted by the statute.” As applied to the present case, this question must be answered in the affirmative. It is true that the statute does not expressly preclude from its application such a case and the policy arguments by the plaintiff-appellant are consistent with the general and laudatory purpose of eliminating the evils of insider trading in a company’s securities. But Congress evidently was of the opinion that the most effective means of achieving this end was through “a relatively arbitrary rule capable of easy administration,” Bershad v. McDonough, 428 F.2d 693, 696. In Reliance Electric Co., supra, just before quoting Bershad, 404 U.S. p. 422, 92 S.Ct. p. 599, the Court said “ . . . the only method Congress deemed effective to curb the evils of insider trading was a flat rule taking the profits out of a class of transactions. . . .” For the courts to use a flexible approach to the cases arising under it and, in effect, to bring within the scope of the statute, persons whose actions do not fit squarely and literally within its terms, would actually contravene the congressional purpose and imply ambiguities in the statute which do not exist.

Section 16(b), in referring to purchases or sales by directors or officers, clearly relates to transactions in which at least one end (the purchase or sale) occurred while the director or officer held office. The fact that this case involves an implementing Rule of the Securities and Exchange Commission as well as the statute itself does not alter or modify this requirement. The reporting requirements of Rule 16a-l (e) serve to bring clearly within the statute sales by former officers and directors of stock which they acquired during the time they held office, and the Rule does not violate the intendment of the Act, cf. Feder v. Martin Marietta Corp., supra, 406 F.2d at 267-269. That Rule 16a-l(e) also requires reporting of stock purchases occurring after retirement but within six months of a former director’s last pre-retirement transaction does not, however, provide a basis for extending § 16(b) to transactions both ends of which occur after the termination of a person’s officership or directorship.

This statute is not ambiguous and we are bound to apply its terms literally. Because Varnes was neither an officer nor director during the short-swing transaction in question and he did not effect the sale of stock within six months of a purchase which was made while he was an officer or director, we conclude that § 16(b) does not apply to Varnes’ sale of Eli Lilly & Company stock on July 6,1971.

The judgment of the district court is affirmed.


source: Caselaw Access Project

author: CHOY, Circuit Judge:

license: Public Domain

text:
    FEDERAL DEPOSIT INSURANCE CORPORATION, etc., Plaintiff and Appellee, v. Santino D. MEO, Defendant and Appellant.
    No. 73-2100.
    United States Court of Appeals, Ninth Circuit.
    Oct. 21, 1974.

      Sidney F. DeGoff (argued), of Field, DeGoff, Huppert & MacGowan, San Francisco, Cal., for defendant-appellant.
    Charles A. Legge (argued), of Bronson, Bronson & McKinnon, San Francisco, Cal., for plaintiff-appellee.
   OPINION

Before MERRILL, KILKENNY and CHOY, Circuit Judges.

CHOY, Circuit Judge:

Meo appeals from a judgment of the district court holding him liable on a promissory note he, as maker, gave to a now-closed national bank. We reverse.

Statement of Facts

In December, 1962 Meo and three associates executed a promissory note to San Francisco National Bank (“SFNB”) to enable them to acquire 1000 shares of SFNB’s common stock. Instead of properly executing the order SFNB directed its brokers to issue and transmit 1000 voting trust certificates in the name of the purchasers. Appellant and his associates never saw the trust certificates, which were held by SFNB as security for the loan, and were not aware of the manner in which their order had been executed.

In 1963, appellant and the co-makers became apprehensive over the affairs of the bank and sought to sell their stock and discharge their debt. While the other three signers of the note did liquidate their positions, appellant did not do so. Still unaware of the mis-execution of his order, he instead signed a new note (the subject of this litigation) for his share of the balance due, $15,776.87.

Appellant’s note remained an asset of the bank until January 22, 1965, when SFNB was closed due to insolvency. At that time, the Federal Deposit Insurance Corp. (“FDIC”) was appointed receiver and assumed control of its assets, including appellant’s note. When appellant refused to pay the note, FDIC filed this action. Not until after the litigation had begun did appellant learn that his order for common stock had not been executed and that instead voting trust certificates had been acquired and were held by the bank.

The district court, sitting without a jury, entered judgment on the note for the receiver.

Equitable Estoppel

The district court based its decision solely on its determination that public policy favors bank depositors over bank borrowers. Noting that FDIC, the representative of depositors, is a “public official charged with a special responsibility to round up assets for the benefit of depositors who presumable [sic] were led in part to make their deposit by express or implied reliance upon the assets of the bank,” the court concluded that the “status of the depositor is superior to the status of the borrower.” (Tr. 253) Thus, according to the court, regardless of the borrower’s innocence, he may not after the bank’s collapse avoid the note.

The question raised by this appeal is whether a purchaser of bank stock, unaware that the stock order has been improperly executed, is estopped from avoiding his note to the bank for failure of consideration after the bank has collapsed and gone into receivership.

Arguing that the estoppel doctrine should apply in this case, FDIC relies exclusively on D’Oench, Duhme & Co., Inc. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), and its progeny. D’Oench, however, is inapposite. It involved a note, regular on its face, executed by the defendant, an accommodation maker. The note was given to the bank to conceal certain irregularities from the bank examiners, and at the time the note was executed the bank agreed that the note would not be collected and that all interest payments made would be repaid. After the bank closed, FDIC acquired its assets and sued to collect on the note. At trial, the maker contended that the note was given without consideration, and that the secret agreement by the bank was enforceable against FDIC. Noting that federal policy protects FDIC and the public funds which it administers against misrepresentations as to bank assets, the Supreme Court held that the accommodation maker was estopped from asserting either of these defenses. Id. at 461, 62 S.Ct. 676.

Appellee argues that D’Oench stands for the broad proposition that FDIC and the depositors it represents are protected from losses due to reliance upon the notes of insured banks which are later subject to the claim of some undisclosed defenses. And, according to appellee, this broad policy applies against all makers who are responsible for the creation and continued existence of a note. (Appellee’s Brief at 7) We disagree.

D’Oench was decided on the very narrow ground that an accommodation maker who executes a secret agreement may not take “advantage of an undisclosed and fraudulent arrangement which [public policy] condemns and which the maker of the note made possible.” Id. at 461, 62 S.Ct. at 681 (emphasis supplied). Although this estoppel doctrine may apply even though the maker did not intend to deceive creditors or depositors, there at least must be a showing that “the maker lent himself to a scheme or arrangement whereby the banking authority . . . was or was likely to be misled.” Id. at 460, 62 S.Ct. at 681.

A mere recitation of the facts in this case demonstrates the inapplicability here of D’Oench and its equitable estop-pel rationale. Appellant was a bona fide purchaser-borrower; he did not enter into any scheme or secret agreement whereby the assets of the bank would be overstated; he was wholly innocent of the wrongful action of SFNB in issuing voting trust certificates instead of common stock shares; he was not negligent in failing to discover the manner in which the stock order was actually executed; and, most importantly, appellant had no knowledge whatsoever of the failure of consideration until after the bank was closed and appellee instituted this suit.

On these facts, the district court found that appellant was a completely innocent party with respect to the bank’s improper execution of the stock sale agreement. We agree. Thus, appellant appears in a totally different light from the note maker in D’Oench or any of the other estoppel cases cited by appellee.

This case is much closer to Camerer v. California Savings & Commercial Bank, 4 Cal.2d 159, 48 P.2d 39 (1935), than to D’Oench In the California case, Camerer deposited certain bonds in a safe deposit box, access to which he gave the bank president, Irwin. Irwin used these bonds from time to time to inflate the assets of the bank, and the banking authorities were thereby misled. Although Irwin paid Camerer for use of the bonds, Camerer was unaware of the purpose for which Irwin used them. Noting that the trial court’s findings exonerated Camerer from connivance and collusion in fraud and from negligence, the California Supreme Court held that he was not estopped from recovering his bonds from the bank’s receiver. 4 Cal.2d at 170-172, 48 P.2d at 44-45.

Similarly in this case, Meo is innocent of any wrongdoing or negligence. The special facts present in D’Oench, 315 U.S. at 474, 62 S.Ct. at 687 the equitable estoppel doctrine should not apply. As Justice Jackson stated, concurring in D’Oench, “where ordinary and good-faith transactions are involved,” the FDIC succeeds “only to the rights which the bank itself acquired.” D’Oench, 315 U.S. at 474, 62 S.Ct. at 687 (Jackson, J., concurring) (emphasis supplied). See also Deitrick v. Standard Surety Co., 303 U.S. 471, 479, 58 S.Ct. 696, 82 L.Ed. 962 (1938); Camerer, 4 Cal.2d at 170, 48 P.2d at 44.

A bona fide borrower, like Meo, is not an insurer of financial representations of the bank with whom he conducts business. We conclude that a bank borrower who was neither a party to any deceptive scheme involving, nor negligent with respect to, circumstances giving rise to the claimed defense to his note is not estopped from asserting such defense against the bank’s receiver.

Reversed and remanded for determination of reasonable attorneys’ fees to be awarded Meo against FDIC.

      . See Federal Reserve Act, 12 U.S.O. § 264 et seq.

      . Appellee disputes the district court’s finding that appellant was an “innocent” party. Appellee finds wrongful conduct in appellant’s failure to avoid the note after he learned that the bank loan was illegal. In late 1964, Meo was informed that the loan may have been illegal because a bank may not loan money on its own bank stock. 12 U.S.O. § 83. He then questioned SFNB’s president about the legality of the transaction, and the president, who had encouraged the loan and stock purchase in the first place, assured Meo everything done was proper. Although the bank president said he could not issue a collateral receipt for the stock held, Meo took no action to obtain his collateral or avoid the note.
      Failure at an early date to avoid the note on grounds of the loan’s illegality, appellee argues, estops Meo from raising the defense of failure of consideration. This contention is without merit. In the first place, it is open to question whether Meo in fact could have avoided the note. The defense of illegality was not available to him because only a governmental agency has standing to challenge a bank loan made in violation of 12 U.S.C. § 83. Dorsey v. RFC, 197 F.2d 468, 470 (7th Cir. 1952); cf. First Nat’l. Bank of Xenia v. Stewart, 107 U.S. 676, 2 S.Ct. 778, 27 L.Ed. 592 (1883). Furthermore, the district court found, as a matter of fact, that Meo would have had difficulty in persuading the bank to rescind the transaction.
      In any event, appellee’s estoppel argument is fatally flawed because the defense based on the loan’s illegality is totally unrelated to the defense asserted in this case — failure of consideration. Appellant’s failure to assert one defense, even if that failure amounts to negligence, does not preclude him from asserting a wholly different, defense to the note. Cf. C. E. Carnes & Co. v. Employers’ Liability Assur. Corp., 101 F.2d 739, 742 (5th Cir. 1939).

      . Each of the cases cited by appellee to support his estoppel argument involved accommodation or surety notes and secret agreements that tire notes would never be collected. See FDIC v. Alker, 151 F.2d 907 (3d Cir. 1945), cert. denied, 327 U.S. 799, 66 S.Ct. 901, 90 L.Ed. 1025 (1946); Wood v. Kennedy, 117 Cal.App. 53, 3 P.2d 366 (1931); FDIC v. Wainer, 4 Ill.App.2d 233, 124 N.E.2d 29 (1955); FDIC v. Motorlease, Inc., 56 Misc.2d 306, 288 N.Y.S.2d 356 (Sup.Ct.1967).

      . Although federal law controls in cases involving the rights of the FDIC [D’Oench, 315 U.S. at 457, 62 S.Ct. 676], the precise issue raised here has not been decided by any federal court. In determining federal common law, “federal courts are free to apply the traditional common-law technique of decision and to draw upon all the sources of the common law in eases such as the present.” D’Oench, 315 U.S. at 472, 62 S.Ct. at 686 (Jackson, J., concurring). Consideration of California law is particularly appropriate here because “many questions as to the liability of parties to commercial paper which comes into the hands of the [FDIC] will best be solved by applying the local law with reference to which the makers and the insured bank presumably contracted.” Id. at 474, 62 S.Ct. at 687 (.Tack-son, J., concurring).

      . Appellee’s argument that there was no failure of consideration because there is no material difference between common stock and voting trust certificates is without merit. At the time appellant purchased the bank stock, he knew that the common stock which he ordered carried voting rights and that voting trust certificates carried no such rights. It is irrelevant that appellant never attempted to vote; there was failure of consideration simply because appellant did not receive that for which he specifically bargained. See, e. g., Lonergan v. Buford, 148 U.S. 581, 589, 13 S.Ct. 684, 37 L.Ed. 569 (1893); J. R. Simplot Co. v. L. Yukon & Son Produce Co., 227 F.2d 67, 71-72 (8th Cir. 1955); Gray v. Ellis, 164 Cal. 481, 129 P. 791 (1913). See generally R. Nordstrom, Law of Sales § 102 (1970) ; Uniform Commercial Code §§ 2-301, 2-601. And even if the substantial performance rule applied in this case, Meo may avoid his note on the ground that SFNB’s mis-execution of the sales-loan contract, which deprived Meo of an important part of the bargained for performance, constituted a material breach. See generally S. Williston, Law of Contracts § 841 (3d ed. 1962).


author: PELL, Circuit Judge.

text:
    In the Matter of BROOKS & WOODINGTON, INC., Bankrupt. Appeal of CARNCROSS, SCHROEDER, STEIN, WILLIAMS, YOUNG & COMPANY, and David M. Johnson, C.P.A.’s.
    Nos. 73-1119, 73-1120.
    United States Court of Appeals, Seventh Circuit.
    Resubmitted Nov. 5, 1974.
    Decided Dec. 3, 1974.
    Thomas G. Ragatz, James F. Lorimer, David F. Grams, Madison, Wis., for appellant.
    Before CUMMINGS, PELL and STEVENS, Circuit Judges.
   PELL, Circuit Judge.

These are consolidated appeals arising from bankruptcy proceedings and essentially involve the matter of the correctness of the disallowance of fees claimed by accountants and rendered for the trustee in bankruptcy for Brooks & Woodington, Inc.

The bankruptcy proceedings were initiated in 1965, first under Chapter XI of the Bankruptcy Act but shortly thereafter becoming a regular bankruptcy administration case. William T. Rieser was appointed as trustee and thereupon petitioned the referee for authority to hire an accountant and “to secure a certified audit, internal and external, so that the trustee may have and use full and comprehensive financial reports on the assets and liabilities of the above bankrupt corporation.” An order was entered authorizing the retention requested. However, the accountants selected apparently developed conflicts of interest and in March 1966, an order was entered authorizing the trustee to retain Gordon, Carncross & Associates and David M. Johnson, C.P.A., one of its partners, the present appellants, to bring the books up to date and to audit the same, “at the compensation rate set forth in the attached petition.”

The petition on which the referee’s order was based had indicated that Johnson would work one week on the books and would then estimate the cost and time to accomplish the task at hand. The schedule of fees specified $12.00 per hour for certified public accountants, $9.00 per hour for senior accountants, and $7.00 per hour for junior accountants. The appellants submitted in response to the order -based upon this petition their recommendations as to the work to be done and estimated the cost to be $7,500.00.

The trustee then filed a petition requesting authorization to proceed to perform the work of bringing the books up to date and auditing the same. The referee entered an order authorizing the retention of the appellants for the purposes indicated “at the same rate of compensation as previously ordered.” In addition, however, the order extended the authorized services to include auditing the books of subsidiary, affiliated and related corporations, partnerships, and trusts of the corporation and of Neil A. Woodington.

The picture of the situation which then developed, and which appraisal is not refuted in the record before us, as presented by the appellants is as follows: Appellants then proceeded with the tedious and enormously time-consuming task of reconstructing the records. The evidence disclosed that there was no conceivable way the total extent of the necessary services could have been originally estimated, without some great intimacy into the affairs of the bankrupt and all related parties, as the expanding chain of complexity continued to unfold as the interrelationships with other entities were explored. What was finally found to be essential, was the reconstruction from scratch of records from as far back as nine years for the bankrupt and ten related corporations, partnerships, and trusts. This reconstruction was based upon an analysis of incomplete, inaccurate, misleading, and fundamentally unsound records through third party records (e. g., bank records) relating to thousands of interwoven accounting transactions. The trustee in bankruptcy for Allied Development Corporation whose affairs were grossly intertwined with those of the bankrupt and who was by far its largest creditor, testified that the status of the records as to the intercompany account “were a mess. . . . hopelessly entangled.” The testimony further disclosed that the principals of the bankrupt and its related entities engaged in extensive check kiting and other transactions and fund transfers between entities that made their tracks nearly impossible to follow, probably purposely so. Appellants’ expert witness, Gordon Volz, a prominent and experienced C.P.A., testified that he had never seen a worse mess and the Trustee stated he did not believe “anything could have beat” the situation for complexity. It is now common knowledge and a matter of public record in this community that the tangled web spun by Mr. Woodington and his associates deceived many people and precipitated the extensive losses involved in this and related bankruptcy proceedings, and that Mr. Woodington went to prison after conviction of charges pertaining to his activities in connection with an affiliated corporation.

It further appears that bills were submitted regularly and these bills were accumulated in the referee’s file. Periodic payments with the approval of the referee were made to the appellants totaling some $34,000.00. At no time was there any limitation of the authority of the trustee to continue obtaining the services of the appellants. The trustee, in reliance upon the authority of the 1966 orders, continued to require the services of the appellants in attempting to reach solid ground in what was apparently a bottomless pit. There appears to be no claim of lack of quality of the work or that any of it was performed unnecessarily or in bad faith. When the services were substantially completed, the referee in letters and oral communications indicated an unfavorable attitude toward the payment of the remaining unpaid bills. The appellants thereupon petitioned the district court for an order to transfer the matter of the disposition of the claim for fees to another referee. This was denied and is the basis of appeal No. 73-1119. We do not, because of the disposition of appeal No. 73-1120, need to determine this issue.

When the matter came before the referee who had issued the original orders, the total of the unpaid accounting claims was approximately $23,000.00. Upon determining that the amount remaining for distribution to unsecured creditors was insufficient for any payment to that class of creditors if the balance of the accountants’ claims was allowed, the referee denied payment of the remainder of the claim. This was affirmed by the district court and this appeal followed.

The delay in the disposition of this appeal is regretted. However, the case as it is before us is an eloquent testimonial to the value of the adversary system. In April 1973 no brief in opposition to the appellants’ brief having been filed, this court ordered that the parties show cause why the appeal should not be submitted for decision without the filing of a brief in opposition by the appellees. No briefs were filed and in December 1973 it was ordered that the appeal be submitted to the court for decision without oral argument and without the filing of an appellees’ brief pursuant to Rule 2 of the Federal Rules of Appellate Procedure.

Again, however, because of the desirability of having opposing views presented to an appellate court, an order was entered in September 1974 notifying the trustee in bankruptcy and any other known interested parties that the court would accept opposing briefs.

On two occasions the trustee in bankruptcy by letter advised this court that he did not intend to file a brief as he fully supported the position of the appellants. A brief was filed pursuant to the September 1974 order by the trustee in bankruptcy for Allied Development Corporation which was the principal creditor of the present bankrupt. This brief was filed notwithstanding that upon the occasion of the hearing on fees before the referee, the trustee of Allied stated that he did not take a position either of supporting or opposing the fees in that he had an obligation as an attorney and trustee of Allied Corporation but also he stated he was “a decent human being and wanted to see that justice was done.”

Because of the policy underpinnings of this case, despite the fact that it was ordered considered in December 1973 without the filing of an appellees’ brief and despite the belatedness of the filing of the opposition brief, we have in rendering this opinion given full consideration to the brief in opposition as well as the opinions of both the referee and the district court. Although the case is being disposed of pursuant to Rule 2 without oral argument, it is not being handled on what amounts to a default basis.

In so doing, however, we also note the lack of contravention of appellants’ assertions as follows: The evidence disclosed that without such extensive accounting services the assets and obligations of the bankrupt could not have been ascertained, and but for such ascertainment the Trustee could have not realized the approximately $700,000.00 of assets actually collected, or determined the correct and legitimate claims. The existence of multiple security devices on various properties necessitated extensive accounting merely to straighten out the secured claims. The Trustee testified that the secured creditors would not have been paid in full without the accounting services.

The referee in his dispositive opinion stated he had “no reason to doubt that the subsequent accounting work of Carn-eross was done expertly and in good faith.” The motivational factor of the referee’s decision thus appears not to be that some benefit from the services was not realized by creditors, albeit secured ones, nor that the services were make-work but rather that an allowance of the claimed fees would mean, insofar as general creditors were concerned, administration expenses would consume the available estate, a result that might have been reachable in a Dickens’ novel but to be eschewed in bankruptcy court.

However, by the disposition the referee did reach, the general creditors will receive a 3.61% dividend. We have difficulty in regarding this as being little else than a token and as such adding no real deference to what has sometimes been termed the economical spirit of the bankruptcy act.

The district court in its opinion stated that “[i]t would not have been unreasonable ... if the referee had concluded that the petitioner’s entire claim be allowed,” but further the district court declined to conclude that it was unreasonable for the referee “to limit the petitioner to a fee which was about five times as great as petitioner’s initial estimate, and which equalled the sum estimated by petitioner after it had been deeply involved in the assignment for more than 10 months.”

While we agree with the district court that the scope of review of the referee’s decision is of limited scope and that it should not be overruled absent of error of law or a clearly erroneous finding of fact, we are of the opinion that the law here has been erroneously applied.

We also agree with the contention of the principal creditor asserted on this appeal that an appellate court not be quick to revise an allowance or disallowance of fees involving the exercise of discretion of the bankruptcy court, which has been concurred in by the district court, 3 Collier on Bankruptcy, Sec. 62.12(4), p. 1488. Our reluctance, inter alia, has been demonstrated by the continuing attempts to secure views in opposition to the appellants’ position and we have not hastily or lightly reached the decision we have but we are bound to do so as a matter of law.

Order No. 45, General Orders in Bankruptcy, provides in relevant part:

“No accountant shall be employed by a trustee . . . except upon an order of the court expressly fixing the amount of the compensation or the rate of measure thereof . . . ”

Here the trustee was authorized to have the services performed which were in fact performed at his direction. Those services were performed over a number of years time at the rate fixed by the court. There is no indication that the rate increased as we are aware professional hourly rates did during the period of time. At no time did the referee, as he readily could have, amend or rescind the standing order for the retention and utilization of the services. The district court would place the burden on the accountant to protect his rights by requesting a maximum level of compensation be inserted in the authorizing order. Order 45, however, is in the alternative of the amount of compensation or the rate or measure. Here the latter course was chosen and remained in ef-feet at all pertinent times. We do not read the Order as mandating both the rate and the maximum even though the referee presumably could impose in the authorizing order both controls.

The district court also would place the duty on the accountant, when it becomes apparent that cost estimates are to be exceeded, to secure the express approval of the referee before continuing work. This duty has greater arguable merit and it is noted here that the original estimate was woefully inadequate. However, the original estimate was based only upon the books of the bankrupt corporation and even upon those following an abbreviated period of one week of examination. The order subsequently entered extended the scope of the inquiry as we have noted and when despite the mounting costs, which were no secret to the referee or trustee, the trustee continued to require the accounting services, we do not find that duty arose to go to court to see if the unamended and rescinded order of authorization was still effective, particularly when the excess billings had been routinely paid.

We adopt the reasoning of the court in Killoren v. Boyd, Cronk & Co., 119 F.2d 1, 3 (8th Cir. 1941) in allowing compensation to the appellee accounting firm:

“He [the trustee] should not have permitted the firm to continue rendering services which he knew, or ought to have known, were being performed with the expectation that they would be paid for at the rate fixed by the court.”

In Killoren, as in the present case, a time-equated rate was fixed. On the other hand, in that ease there is some suggestion that the work or at least some of it was permissively performed insofar as the trustee was concerned while here the request for continuing services was that of the trustee. The Killoren trustee opposed the additional fees, here the trustee heartily approves of payment. We do note another difference between the two cases as we find no indication that in Killoren the payment of the fees would have eliminated a dividend to general creditors. Nevertheless, the court in Killoren did recognize the importance of economical administration as a factor for consideration :

“While it is of great importance that the expense of administering an insolvent estate should be kept to a minimum, it is equally important that those administering such an estate should live up to the letter and the spirit of engagements lawfully made with those whom they employ.” 119 F.2d at 4.

Counsel for the principal creditor in its brief argues that Killoren is not controlling. We agree but have accepted its reasoning. Counsel also argues that the reasoning should not be followed because Killoren involved a Chapter X Reorganization where by analogy the payment of the fee was in an attempt to keep the patient alive whereas in the present case there was a decedent and the fees were in the nature of funeral arrangements. While this is an interesting analogy, it fails to persuade us as the apparent purpose of the fees here obviously was to have an accountant work through the morass in an endeavor to secure and recover greater assets for ultimate distribution. In either case the reasoning of Killoren is applicable.

Turning to the question of whether the equality of importance continues in the situation where an administrative cost would prevent any general credit distribution, we are satisfied that it may, and upon the particular facts of the case before us, it does do so. In the present area of consideration, only general guidelines may be set, bearing in mind the spirit and purposes of the bankruptcy act and that the bankruptcy court within the jurisdiction granted by the Act operates as an equity court and upon equitable principles. See Southern Bell Telephone & Telegraph Co. v. Caldwell, 67 F.2d 802 (8th Cir. 1933).

Essentially, in this type of case, the particular facts of the ease, on a case-by-case approach, will control. On the narrow facts of the present case, and we do not determine whether it should have any wider application, we hold as a matter of law that the desire for some dividend to creditors, if that dividend is only of a token nature, should not override the commitment lawfully made with those employed on specific terms by the bankruptcy court. We do not agree with the district court in its suggestion that there was any ambiguity in the present commitment.

As stated by the court in Jacobowitz v. Double Seven Corp., 378 F.2d 405, 408 (9th Cir. 1967), “[w]e think that the economical spirit of the Bankruptcy Act does not require, nor justify, reducing a requested fee where, as here, by all other proper standards it is a fair and reasonable one.”

Finally, as we have noted hereinbe-fore, the claimant with the largest claim failed in the bankruptcy court to take a position in opposition of the allowance of the claim and as noted by the district court, “[n]o objections to the fees requested were filed.”

It is not our intent in any way to find fault with the referee who displayed a conscientious and commendable devotion to an important concept of bankruptcy administration; it is merely that we find that the concept, on the facts of this particular case, must give way to the court commitment.

In the original brief of the appellants, they sought “full allowance of the Appellants’ requested unpaid fees.” No mention was made of interest. In the 22 page reply brief filed in response to the belated brief of the principal creditor, the subject of interest was first mentioned as a part of the final paragraph of the reply brief:

“Thus, it is respectfully requested that the Opinion and Order from which this appeal was taken be reversed, and that the Appellants be determined to be entitled to the full fees requested, plus interest thereon and their costs and disbursements on this appeal.”

The brief contains no discussion of the law which might be applicable to the disposition of the interest issue.

There has been an informal indication that the assets here involved have been invested in interest-bearing securities or an interest-bearing account pending the outcome of this appeal. If this is indeed the fact, we recognize the existence of some equities for the allowance of interest. In general, where a fund in litigation is deposited in court, interest may be recoverable to the extent that the fund earns interest during such time. 47 C.J.S. Interest § 54.

This is not the ordinary case, however, of a fund deposited in court. This is a bankruptcy proceedings and rules of ordinary application may, and often do, give way before the Act. Our own examination of bankruptcy law has reflected no authority precisely in point. We find help, however, in the analogous situation of the allowance of interest on claims filed in bankruptcy. See Collier on Bankruptcy, 14th Ed. ft 63.16 (1972). Even though the claim is interest-bearing, “to cope in the most convenient and equitable manner with the debtor’s apparent insolvency,” the “law selects as decisive the date of the filing of the petition in bankruptcy,” and “disregards, for the purpose of liquidation, interest accruing beyond that date.” Id. at 1858. Of course, a different situation might exist if the estate were solvent. 8A C.J.S. Bankruptcy § 422.

In the light of the generally prevailing bankruptcy rule applicable to interest-bearing claims and particularly in view of the manner in which the claim for interest has been asserted in this particular appeal, we hold that the appellants are not to be allowed interest on the amount of their claim. They will, as the prevailing party, be entitled to costs of appeal.

Accordingly, the judgment affirming the referee’s action with regard to the accountants’ fees claimed by the appellants is vacated and the cause is remanded for the entry of an appropriate order allowing the claim in full.

Reversed and remanded.

      . “[W]lien he came to Westminster Hall, we found that the day’s business was begun. Worse than that, we found such an unusual crowd in the court of chancery, that it was full to the door, and we could neither see nor hear what was passing within . . . It appeared to be something interesting for every one was pushing and striving to get nearer . . . ‘Mr. Kenge,’ said Allan, appearing enlightened all in a moment. ‘Excuse me, our time presses. Ho I understand that the whole estate is found to have been absorbed in costs?’ ‘Hem! I believe so,’ returned Mr. Kenge. ‘Mr. Vholes, what do you say?’ T believe so,’ said Mr. Vholes. ‘And that thus the suit lapses and melts away?’ ‘Probably,’ said Mr. Vholes.”— Charles Dickens, Bleak House.


author: PER CURIAM.

text:
    Eugene WHIPP, Plaintiff-Appellee, v. Caspar WEINBERGER, Secretary of Health, Education and Welfare, Defendant-Appellant.
    No. 74-1475.
    United States Court of Appeals, Sixth Circuit.
    Dec. 2, 1974.
    William W. Milligan, U. S. Atty., Arthur D. Jackson, Jr., Dayton, Ohio, Leonard Schaitman, Richard A. Older-man, Donald Etra, Carla A. Hills, Morton Hollander, Dept, of Justice, Washington, D. C., for defendant-appellant.
    Eugene F. Whipp, in pro per.
    Before PHILLIPS, Chief Judge, and PECK and McCREE, Circuit Judges.
   PER CURIAM.

On September 8, 1972, the Appeals Council of the Social Security Administration, Department of Health, Education and Welfare, denied the appellee’s application for disability benefits under the Social Security Act, 42 U.S.C. §§ 416(i) and 423. This became the final decision of the Secretary. On November 8, 1972, sixty-one days after notice of this decision was mailed to the appellee, the action was filed in the District Court to review the Secretary’s decision.

The District Court found that the sixty day filing limit for appeals from the Secretary’s decision, imposed by 42 U. S.C. § 405(g), ran from the time of actual receipt of the notice, rather than the time of mailing. Further, the District Court reversed the Secretary’s findings and granted benefits to the appellee. We reverse and remand for dismissal without prejudice on the ground that the District Court did not have jurisdiction.

Final decisions of the Secretary are reviewable in the courts under a specific statutory grant found in 42 U.S. C. § 405(g). This section provides:

“Any individual, after any final decision of the Secretary made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Secretary may allow.”

The following paragraph, § 405(h), further cautions: “No findings of fact or decision of the Secretary shall be reviewed by any person, tribunal, or governmental agency except as herein provided.” It is well established in this Circuit that the sixty day time limit is jurisdictional and that, as said by Judge Shackelford Miller, Jr.:

“The right of action here sought to be enforced is one created by statute and is limited by the provisions thereof as to the time within which the right must be asserted. Such conditions- operate as a condition of liability rather than as a period of limitation and there can be no recovery unless the condition precedent is fulfilled.” Bomer v. Ribi-coff, 304 F.2d 427, 429 (6th Cir. 1962).

If the request for review has not been filed within sixty days “the right provided by the statute cease[s] to exist, and the present action [would be] properly dismissed.” Id,.; see Johnson v. Railway Express Agency, Inc., 489 F.2d 525, 528 (6th Cir. 1973); Jamieson v. Folsom, 311 F.2d 506, 508 (7th Cir.), cert. denied, 374 U.S. 487, 83 S.Ct. 1868, 10 L.Ed.2d 1043 (1963). Other courts have dismissed applications for review of the Secretary’s final decisions when the filing was one day late; Gaither v. Gardner, 295 F.Supp. 458 (D.Md.1969); Satterfield v. Celebrezze, 244 F.Supp. 190 (W.D.S.C.1965); Frost v. Ewing, 13 F.R.D. 432 (W.D.Pa.1953); or two days late, Tate v. United States, 437 F.2d 88 (9th Cir. 1971); but see Johnson v. Flemming, 264 F.2d 322 (10th Cir. 1959) (one day delay permitted if sixtieth day was a Sunday).

It is recognized that strict application of the time limit works a hardship on the unfortunate applicant who misses the deadline by one day. In other contexts a delay in filing might be tolerated. For example, Rule 6(e), Fed.R. Civ.P., adds three additional days to the length of a prescribed period if notice is served by mail. However, this provision has no application where, as in the present case, an extension of a time limit in effect would extend the jurisdiction of the court. Rule 82, Fed.R.Civ.P., makes it clear that the rules of procedure cannot be construed to reach such a result. Robinson v. Celebrezze, 237 F.Supp. 115 (E.D.Tenn.1964).

The Chairman of the Appeals Council stated in an affidavit that on September 8, 1972, the claimant was sent notice by certified mail of his right to commence a civil action within sixty days. The District Court emphasized the fact that the claimant did not receive this notice until September 11, 1972, “which if taken as the proper date on which the sixty day period in the statute began to run, would make plaintiff’s action timely filed.”

Unfortunately the notice to appellee of the sixty day time limit is not free from ambiguity. Instead of 'using the statutory language “sixty days after the mailing ... of notice”, appellee was advised that review must be initiated “within sixty (60) days from this date.” Appellee may well have construed the notice to mean that the sixty day period began to run on the day the notice was received by him.

Although recognizing that it was the obligation of the Appeals Council to give accurate notice, we hold that the plain meaning of the statute cannot be altered by an ambiguity in the language of the letter mailed by the Appeals Council to appellee.

The harshness which might be created by the strict application of this time limit is mitigated to some extent by a separate Social Security regulation. The Appeals Council, in the exercise of its discretion, may grant an extension to the filing period, upon the applicant’s request, pursuant to the following provision :

“Any party to a reconsidered determination, a decision of an Administrative Law Judge, or a decision of the Appeals Council . . ., may petition for an extension of time for filing a request for hearing or review or for commencing a civil action in a district court, although the time for filing such request or commencing such action . . . has passed.” 20 C.F.R. § 404.954.

The dismissal in this case is made without prejudice to the right of appellee to file a request with the Appeals Council for an extension of the period in which to refile his application for review, which counsel for the Secretary conceded at oral argument the appeals council still has the authority to consider and grant.

The judgment of the District Court is reversed and the action is remanded for dismissal without prejudice. No costs are assessed. Each party will bear his own costs on this appeal.


text:
    Gary HARKINS et al., Appellants, v. Gary ELDREDGE and the Missouri Bar Association, Appellees.
    No. 74-1561.
    United States Court of Appeals, Eighth Circuit.
    Nov. 22, 1974.

      Clarence N. Cline pro se.
    Gary Harkins, pro se.
    Veryl L. Riddle and Thomas C. Walsh, St. Louis, Mo., filed motion for appellee, Missouri Bar Association, to dismiss appeal or affirm judgment.
    Before LAY, STEPHENSON and WEBSTER, Circuit Judges.
   PER CURIAM.

This appeal is taken from the district court’s dismissal of appellants’ 42 U.S.C. § 1983 (.1970) petition pertaining to attorney Eldredge’s professional conduct. A careful review of the record and appellants’ pro se brief discloses that the appeal is frivolous and wholly without merit. We dismiss the appeal. See Local Rule 9.

Appellants brought suit under § 1983 seeking damages and equitable relief from appellees due to attorney Eld-redge’s alleged mishandling of a variety of legal matters. Judge Collinson, in a February 21, 1974 order, granted, appellants leave to proceed in forma pauperis and dismissed the complaint as to The Missouri Bar Association. Subsequently the district court dismissed the complaint as to Eldredge as well, stating that his actions as attorney for appellants were not taken under color of law for purposes of § 1983. This appeal followed that dismissal.

The district court was clearly correct in dismissing the claim as to Eldredge. The conduct of counsel, either retained or appointed, in representing clients does not constitute action under color of state law for purposes of a § 1983 violation. Glasspoole v. Albertson, 491 F.2d 1090, 1091-1092 (8th Cir. 1974); Barnes v. Dorsey, 480 F.2d 1057, 1060-1061 (8th Cir. 1973.)

We also agree with the trial court’s dismissal of the claim against The Missouri Bar Association. Under Missouri law the association has no independent power to investígate members or to instigate such investigations. See Missouri Supreme Court Rule 7.06, V.A. M.R. All power to suspend or remove attorneys is vested in the Supreme Court, Y.A.M.S. § 484.190, and delegated in part to a court-appointed committee, Supreme Court Rule 5. Since The Missouri Bar Association had no power to act, appellants’ claim that constitutional rights cognizable under § 1983 were violated by the bar’s failure to take action against Eldredge is wholly without merit. See Saier v. State Bar of Michigan, 293 F.2d 756, 758-760 (6th Cir.), cert. denied, 368 U.S. 947, 82 S.Ct. 388, 7 L.Ed.2d 343 (1961). Furthermore, appellants’ suggestion. that the bar association constitutes an “unconstitutional monopoly” which deprives them of protected rights is similarly frivolous.

It is also urged that the district court erred in dismissing the action as to the bar association for failure to state a cause of action without service of process and notice to the appellants. It is true that such procedures are required if the dismissal is granted pursuant to Fed.R.Civ.P. 12(b)(6). Remmers v. Brewer, 475 F.2d 52, 53-54 & n. 2 (8th Cir. 1973). However, because we believe that this complaint was properly dismissed as frivolous and without merit pursuant to 28 U.S.C. § 1915(b) (1970), such service and notice is not necessary. See Remmers v. Brewer, supra, at 53 n. 1. Dismissals of frivolous actions brought by indigents are appropriate in order to prevent abuses of the processes of the court. Duhart v. Carlson, 469 F.2d 471, 477-478 (10th Cir. 1972), cert. denied, 410 U.S. 958, 93 S.Ct. 1431 (1973).

Examination of the context in which the dismissal was entered in the instant case reveals that the action was taken pursuant to § 1915(d). The complaint against the bar association was dismissed in an order which initially granted appellants leave to proceed in forma pauperis. The language of the order strongly indicates the court’s view that the claim against the bar was wholly without merit. In addition, as our examination of the merits revealed, a § 1983 action against the bar association for failure to take disciplinary measures against an attorney was obviously frivolous since recovery was impossible as a matter of law.

These facts compel our determination that the claim against the bar association was properly dismissed as frivolous and without merit under § 1915(d) and thus did not require notice and service of process upon appellants.

We are convinced that the trial court correctly characterized appellants’ claims as frivolous. Accordingly, the appeal is dismissed. Local Rule 9(a).

      . Appellee Missouri Bar filed a motion for summary disposition of this case pursuant to Local Rule 9(b). However, since the timeliness of that motion is in dispute, the court has decided to dispose of this case on its own motion. See Local Rule 9(a).

      . Appellants in their pro se brief seem to charge The Missouri Bar Association with a violation of the Sherman Act, 15 U.S.C. § 1 (1970). Assuming arguendo that they have sufficiently raised this antitrust issue, we find that allegation without merit. See Goldfarb v. Virginia State Bar, 497 F.2d 1, 6-12 (4th Cir. 1974).

      . In view of our finding that no grounds for a § 1983 claim against the bar association exist here, we do not reach the question of the bar’s possible judicial immunity or its status as a “person” under the Civil Rights Act. See Feldman v. State Board of Law Examiners, 438 F.2d 699, 705 (8th Cir. 1971).


author: JOHN W. PECK, Circuit Judge.

text:
    Sharon L. BATESOLE, Administratrix of the Estate of Lawrence L. Batesole, Deceased, Plaintiff-Appellant, v. Jack E. STRATFORD et al., Defendants-Appellees.
    No. 74-1261.
    United States Court of Appeals, Sixth Circuit.
    Decided Nov. 8, 1974.

      Alfred J. Cooper, Busick, Cooper & Hall, Fremont, Ohio, for plaintiff-appellant.
    John A. Pietrykowski, H. William Bamman, Toledo, Ohio, for defendants-appellees.
    Before WEICK, PECK and McCREE, Circuit Judges.
   JOHN W. PECK, Circuit Judge.

This appeal was perfected from a judgment entered upon a jury verdict for the defendant-appellees in an action brought by the personal representative of Lawrence L. Batesole to recover for her decedent’s conscious pain and suffering and his wrongful death. The principal question involved is whether, in spite of the failure by appellant’s counsel to comply with the objection requirement of Rule 51 of the Federal Rules of Civil Procedure, a new trial is required as a result of the district court’s alleged failure to fully and correctly instruct the jury on all the issues raised in the case.

The basic facts are as follows. At approximately 6:15 a. m. on April 11, 1972, the decedent, Lawrence L. Bate-sole, stopped to aid a motorist who had pulled her ear onto the right shoulder of the westbound lanes of US Route #20 in Sandusky County, Ohio, in order to repair a flat left rear tire. At this particular location, and for a considerable distance- in either direction, US Route #20 is a four lane divided highway with two westbound lanes and two eastbound lanes. Instead of pulling his pickup truck entirely off the traveled part of the roadway (as the evidence indicated was physically possible), decedent left it a few feet behind, and several feet to the left of the disabled vehicle so that the truck encroached upon the right lane of the highway by several feet. While he was engaged in replacing the “lug” nuts on the wheel of the disabled vehicle, his pickup truck was struck from behind by a tractor-trailer truck which was being driven west on US Route #20 in the right lane at between 45 and 50 miles per hour. The collision drove the pickup truck into the disabled vehicle and the decedent and the other motorist were struck by one or both of these vehicles. Two and a half hours later decedent died of his injuries.

Sharon Batesole, the widow and personal representative of the decedent (hereafter Appellant), originally filed this law suit in the Common Pleas Court of Sandusky County against the driver of the trailer truck, Jack Stratford, his employer, Shippers Dispatch, Inc., and others (hereafter collectively referred to as Appellees). Upon their motion the case was removed to the United States District Court for the Northern District of Ohio, where it was tried before a jury. After appellant’s counsel rested his case, which clearly set out the scene described above, the circumstances indicating that defendant Stratford was negligent, and the fact that Stratford had only a “ . . . fleeting glance of [decedent] down in front of the pickup truck” prior to the collision, appellees’ counsel made a motion for a directed verdict on the grounds that the decedent’s conduct amounted to contributory negligence and was a proximate cause of his injury and death. The district court reserved its ruling on this motion until the appellees concluded their case, which action occurred very shortly as their case consisted solely of a single stipulation concerning the location of the nearest highway patrolpost. The court then denied the appellees’ motion. Subsequently it instructed the jury that the defendant Stratford was negligent as a matter of law and thus their deliberations would be limited to deciding whether decedent’s conduct constituted negligence which proximately caused the collision and, if not, the amount of damages recoverable. Neither counsel made any objection to the district court’s charge as read to the jury when they were given the opportunity to do so, and the court permitted the jury to retire to deliberate. In due course they returned the verdict which precipitated this appeal.

In reviewing a federal district court’s charge to the jury in a diversity action, it is well settled that the substance of the instructions is controlled by the applicable state law while the method of objecting thereto is controlled by federal law. Lester v. John R. Jurgensen Co., 400 F.2d 393, 396 (6th Cir. 1968); Yol. 9, Wright & Miller, Federal Practice and Procedure: Civil § 2555 (1971). It is also clear that the failure to make a timely objection to “ . the giving or the failure to give . ” a particular instruction, as required by Rule 51 of the Federal Rules of Civil Procedure, generally precludes assigning the matter as error in a subsequent appeal. Gentry v. Louisville and Nashville R. R., 371 F.2d 829 (6th Cir. 1967); Cutter v. Cincinnati Union Terminal Co., 361 F.2d 637 (6th Cir. 1966); Vol. 9, Wright & Miller, Federal Practice and Procedure: Civil § 2558 at 670 (1971). Thus it initially appears that appellant is barred from challenging the substance of the district court’s charge due to counsel’s failure to make any objection at the trial. However, as appellant’s counsel correctly noted during his oral argument before this Court, the federal courts have recognized a narrow exception to the general prohibition of Rule 51 in cases where an objection would have been a mere “formality” under the circumstances, Sessions v. Union Savings and Trust Co., 338 F.2d 752 (6th Cir. 1964); Harlem Taxicab Ass’n v. Nemesh, 89 U.S.App.D.C. 123, 191 F.2d 459 (1951), or where the error was “obvious and prejudicial” and required action by the reviewing court “in the interests of justice.” O’Brien v. Willys Motors Inc., 385 F.2d 163 (6th Cir. 1967); McNello v. John B. Kelly, Inc., 283 F.2d 96 (3rd Cir. 1960). Thus the question before us is not only whether the district court’s instructions were erroneous as alleged by appellant, but also whether any such errors fall within the often stated but rarely applied exception to Rule 51. Morrison v. New York Central R. R., 361 F.2d 319 (6th Cir. 1966). See Vol. 9, Wright & Miller, Federal Practice and Procedure: Civil § 2558 (1971).

Of the numerous assignments of error presented in this appeal only three merit discussion herein. In the first of these appellant argues that the district court erred when it failed to instruct the jury on the law relative to the last clear chance doctrine. If this doctrine were applicable, the court’s failure to include it in the charge would constitute error, but such is not the case under the relevant state law. In Ohio the last clear chance doctrine does not apply where the plaintiff’s negligent conduct continues and, concurrently with the defendant's negligence, contributes to the accident, Lones v. Detroit, Toledo & Ironton R. R., 398 F.2d 914, 920 (6th Cir. 1968); Brock v. Marlatt, 128 Ohio St. 435, 191 N.E. 703 (1934), or where the defendant has not actually discovered the plaintiff’s peril in time to avoid the accident by the exercise of ordinary care. Lones v. Detroit, Toledo & Ironton R. R., supra; Peters v. B. & F. Transfer Co., 7 Ohio St.2d 143, 219 N.E.2d 27 (1966). In the case at bar, the decedent’s conduct continued and contributed to the collision; his truck remained exposed in the right lane of the highway and he was crouched in front of it screened from the view of westbound traffic. In addition, the evidence clearly showed that the defendant Stratford had only a brief glimpse of the decedent immediately prior to the collision. Thus it cannot be reasonably inferred from the evidence that he was actually aware of the decedent’s predicament in time to avoid the accident by the exercise of ordinary care. In view of the relevant Ohio law, it would have been incorrect for the district court to charge the jury on the last clear chance doctrine in this case, Brock v. Marlatt, supra; Pennsylvania Co. v. Hart, 101 Ohio St. 196, 128 N.E. 142 (1920), and therefore we conclude that the district court’s omission of any reference to the doctrine was not erroneous.

The second assignment of error requiring consideration concerns the portion of the district court’s charge dealing with Ohio Revised Code, Section 4511.66, Prohibition against parking on highways. As interpreted according to Ohio law, this section expresses a rule of conduct in general and abstract terms and thus its violation does not constitute negligence per se, nor does it generate any civil liability unless the conduct which violates the statute also violates the common law test for negligence. Lester v. John R. Jurgensen Co., 400 F.2d 393 (6th Cir. 1968); Eisenhuth v. Moneyhon, 161 Ohio St. 367, 373, 119 N.E.2d 440, 444 (1954). In instructing the jury on this subject the court read the pertinent parts of 2 Ohio Jury Instruction § 225.66, the section dealing with this particular statute, and then continued as follows:

“If you find that Plaintiff’s decedent, Lawrence L. Batesole, left his vehicle standing upon the paved part of the highway, and that it was practicable for him to have parked or left the vehicle off the paved part of the highway, even though it was left so that a lane of the highway was open, and so that it was visible for a distance of two hundred feet, then you will have found that Plaintiff’s decedent was negligent, and if so, you will reach the fourth issue for your determination, was such negligence a proximate cause of his death and injuries?”

Appellant contends that, particularly in the absence of any definition of the term “practicable” in the charge, this paragraph, in effect, instructed the jury that, if they found that it was physically possible to park the truck completely off the traveled part of the highway, decedent’s failure to do so constituted negligence per se regardless of what a reasonable person would have done under the circumstances. We cannot agree.

In determining if a challenged instruction is erroneous and requires a new trial, an appellate court must consider the charge in its entirety. Cobb v. Union Ry. Co., 318 F.2d 33, 37 (6th Cir. 1963). Such a consideration in this case reveals that not only did the court instruct the jury on negligence and ordinary care, it also specifically informed them, immediately before giving the part of the charge described above, that:

“The third question or issue, for your determination is whether the Plaintiff’s decedent, Lawrence L. Batesole, was guilty of negligence.”

The challenged paragraph neither altered nor negated these basic instructions. Neither did it instruct the jurors that they must find that the decedent was negligent if they found that there was sufficient space to accommodate the pickup truck on the shoulder of the highway. On the contrary, the paragraph involved here instructed that the jury should find that decedent was negligent if he did not do what was “practicable,” in spite of the fact that they might find that he had complied with the statute to the extent that he left his truck so that it was visible for more than 200 feet in either direction and was not blocking the westbound lanes entirely. Thus the challenged paragraph was neither inconsistent with a proper interpretation of the statute involved, nor incorrect.

Admittedly a definition of the term “practicable” might have obviated any possible misunderstanding which might arise out of the questioned paragraph. However, we cannot say that such an omission confused the meaning of the court’s instructions or misled the jury to the belief that the sole question they had to decide, in determining if decedent was contributorily negligent, was whether there was sufficient space to remove the pickup truck from the traveled part of the highway. Thus we are unable to conclude that this omission was an “obvious and prejudicial” error. In addition, an examination of the record reveals that not only did the court voice its adoption of a correct interpretation of the substantive law which was consistent with that presented by appellant here, it also indicated its clear understanding of the applicable law by its rejection of a negligence per se instruction request presented by appellees’ counsel. Thus, rather than being a mere “formality” or an exercise in futility, an objection by appellant’s counsel in this case would have fulfilled the basic purpose of Rule 51 by alerting the trial judge to a potential problem area, and would have aided him in his effort to clearly and correctly instruct the jury. Under these circumstances, the omission of a definition of “practicable,” even if considered error, does not fall within the exception to the general prohibition of Rule 51 noted above, and consequently appellant’s attempt to gain a new trial on that basis must fail.

The last assignment of error we will discuss herein concerns the omission of any instruction on the law as to the burden of proof of contributory negligence in the district court’s charge. In Ohio, as is true in a majority of jurisdictions, the burden of proof of contributory negligence rests upon the defendant throughout the proceedings. 29 Am.Jur.2d, Evidence § 135 (1967). However, where plaintiff’s evidence gives rise to an inference of contributory negligence, the plaintiff must counterbalance this inference by the tender of equal evidence or assume the risk of an adverse finding by court or jury, even though the burden of proof on the issue has remained on the defendant, who may have produced no evidence on it. Mikula v. Slavin Tailors, 24 Ohio St. 2d 48, 53, 263 N.E.2d 316, 320 (1970); Ziebro v. City of Cleveland, 157 Ohio St. 489, 492, 106 N.E.2d 161, 163 (1952); Tresise v. Ashdown, 118 Ohio St. 307, 160 N.E. 898 (1928). An unqualified instruction stating only that the defendant had the burden of proof on this issue clearly would have been erroneous under Ohio law, Mikula v. Slavin Tailors, supra; Greenawalt v. Yuhas, 83 Ohio App. 426, 84 N.E.2d 221 (Ct.App. 1947). Apparently recognizing this, appellant seems to advocate an instruction which would guide the jury in determining whether any inference raised by her evidence had been counter-balanced. Appellees respond with the argument that, since the inference of contributory negligence necessarily arose from appellant’s evidence and was not dispelled thereby, no instructions on the subject were necessary. In view of the evidentiary posture of this case we are constrained to agree with the appellees’ argument.

Although there is some conflict in the testimony of appellant’s witnesses concerning the exact location of the decedent’s pickup truck prior to the collision, it is undisputed that that vehicle was encroaching on the highway to some degree. In addition, there is clear evidence in the record to establish (quoted in appellant’s brief without disapproval) that the point of impact between the tractor-trailer rig and the pickup truck was “approximately four feet five inches south of the north edge of the right hand or driving lane of the westbound lanes.” Under these circumstances it cannot be said that there was no inference of contributory negligence, or that reasonable minds could differ on the issue of whether appellant had counterbalanced it by the presentation of equal evidence. Clearly she had not. Consequently we must conclude that this issue was not one for the jury, and thus we hold that the district court’s decision to omit an instruction on this matter was not error in this case.

Even if this omission were considered error, it also would not fall within the exception to the general prohibition of Rule 51 previously noted. The record discloses nothing which would support the “formality” rationale for excusing the Rule 51 objection requirement. More importantly, unlike the situation in O’Brien v. Willys Motors, Inc., 385 F.2d 163 (6th Cir. 1967) where, in spite of the lack of an objection by plaintiff’s counsel, we vacated a jury verdict for defendant when the district court failed to instruct on the burden of proof of contributory negligence, the alleged error in this case neither concerned an “essential” question at the “heart of the case” nor was prejudicial to appellant. The “essential” questions at the “heart” of this case were the location of decedent’s truck, and whether his leaving it in that position constituted contributory negligence under the circumstances. The omission of this burden of proof instruction did not alter the jury’s perspective of these issues or improperly shift the burden of proof since, under Ohio law, it was incumbent upon appellant to dispel or counterbalance the inference of contributory negligence clearly raised by her evidence. Thus we conclude that, even if this omission were to be considered error, it would not justify a disregard of the provisions of Rule 51 or a reversal of the judgment entered upon the jury verdict by the court below.

For the reasons stated above the judgment of the district court is affirmed.

      . Fed.R.Civ.P. 51 provides in pertinent part: “. . . No party may assign as error the giving or the failure to give an instruction unless he objects thereto before the jury retires to consider its verdict stating distinctly the matter to which he objects and the grounds of his objection. Opportunity shall be given to make the objection out of the hearing of the jury.”

      . “§ 4511.66 Prohibition against parking on highways. (GO § 6307-64)
      Upon any highway outside a business or residence district no person shall stop, park, or leave standing any vehicle, whether attended or unattended, upon the paved or main traveled part of the highway if it is practicable to stop, park, or so leave such vehicle off the paved or main traveled part of said highway. In every event a clear and unobstructed portion of the highway opposite such standing vehicle shall be left for the free passage of other vehicles, and a clear view of such stopped vehicle shall be available from a distance of two hundred feet in each direction upon such highway.”

      . 2 O.TI § 225.66 (1970). Parking on highway (standard instruction).
      “a. Statute. The law provides that upon any highway outside a business or residence district, no person shall stop, park, or leave standing any vehicle, whether attended or unattended, upon the paved or main traveled part of the highway if it is practicable to stop, park, or so leave such vehicle off the paved or main traveled jrart of the highway. In every event a clear and unobstructed portion of the highway opposite such standing vehicle shall be left for the free jmssago of other vehicles, and a clear view of such stopped vehicle shall be available from a distance of two hundred feet in each direction upon such highway.
      ”h. Off Traveled Portion. If you find that it was practicable to move the vehicle then it must be moved off the traveled portion of the highway.
      “c. On Traveled Portion. If you find that it was not practicable to move the vehicle off the traveled portion of the highway, then it must be moved and so parked that the opposite lane is open and the vehicle is visible to traffic approaching in both directions for a distance of two hundred feet.”

      . Parenthetically we note in this regard that nowhere in the standard instructions presented in Ohio Jury Instructions, the work repeatedly cited as authority by appellant’s counsel in his brief, is there any indication that a definition of “practicable” is necessary where this statute is involved.

      . Statement of Facts, Appellant’s Brief, p. 11, citing page 84a of the Appendix and, by reference, 145-46 of the Transcript.


author: STEPHENSON, Circuit Judge.

text:
    Raymond L. MOSS, Appellant, v. Charles L. WOLFF, Jr., Warden, Nebraska Penal and Correctional Complex, Appellee.
    No. 74-1517.
    United States Court of Appeals, Eighth Circuit.
    Submitted Oct. 18, 1974.
    Decided Dec. 4, 1974.

      James M. Kelley, Lincoln, Neb., for appellant.
    Harold Salter, Asst. Atty. Gen., Lincoln, Neb., for appellee.
    Before GIBSON, Chief Judge, and LAY and STEPHENSON, Circuit Judges.
   STEPHENSON, Circuit Judge.

Appellant, Raymond L. Moss, stands convicted in Nebraska state court for sodomy, robbery and the using of a firearm during a felony. The jury conviction was affirmed by the Nebraska Supreme Court. State v. Moss, 187 Neb. 391, 191 N.W.2d 543 (1971). Appellant’s initial 28 U.S.C. § 2254 proceeding was stayed pending state post-conviction relief proceedings. The state trial court’s denial of post-conviction relief was affirmed. State v. Moss, 191 Neb. 36, 214 N.W.2d 15 (1973). Subsequently, appellant instituted the instant § 2254 proceeding. The trial court held an evidentiary hearing at which appellant Moss testified. The court also considered the transcripts and opinions in the two state court proceedings. Relief was denied. Moss filed this appeal. We affirm.

Appellant’s appointed counsel raises several issues on appeal. Appellant has also filed a pro se brief urging some of the same contentions. We find it necessary to discuss fully only the issue concerning the admissibility of alleged improper identification testimony.

The evidence shows that on August 8, 1970, at about 6:30 A.M., a man forced his way into the home of Mrs. Matilda Mrkvicka. The assailant robbed Mrs. Mrkvicka, then ordered her to disrobe, and committed sodomy upon her. Between 7:30 and 8:00 A.M. while the assault was being perpetrated, Mr. Alva Sharp, a deliveryman, arrived at Mrs. Mrkvicka’s home. Mr. Sharp was ordered into the house and was robbed at gunpoint. He too was ordered to disrobe. Both victims were closed in the bathroom while the assailant fled.

The record shows that shortly after the assault Mrs. Mrkvicka examined many photographs from the police “mug” files. She was unable to make a positive identification of her assailant. However, two days after the assault, positive identification was made. In an unrelated incident the police had, by using tear gas, flushed the appellant from a house across the street from Mrs. Mrkvieka’s. Mrs. Mrkvicka made positive identification of the appellant as the person who had assaulted her two days earlier. Soon thereafter the police brought five colored pictures, including two of appellant, to Mrs. Mrkvicka for her examination. She again identified the appellant as her assailant. She repeated her identification at the preliminary hearing and trial. Mrs. Mrkvicka stated that her identification was based upon the fact that she recognized the appellant as her assailant because of the view she had of him during the crime.

It is settled that convictions based on eyewitness identification at trial following a pretrial identification by photograph will be set aside if it is shown that the photographic identification procedure was so impermissibly suggestive as to give rise to a very substantial likelihood of irreparable misi-Simmons v. United States, 390 U.S. 377, 384, 88 S.Ct. 967, 19 L.Ed.2d 1247 (1968). Even so, “an invalid photo display only taints an in-court identification where there is no independent basis for such identification.” Evans v. Janing, 489 F.2d 470, 474 (8th Cir. 1973), citing Simmons, supra; Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967); see Coleman v. Alabama, 399 U.S. 1, 5-6, 90 S.Ct. 1999, 26 L.Ed.2d 387 (1970). Mrs. Mrkvicka’s independent basis for identification on the day following the assault is well established in the record. We find no prejudice to appellant here.

The question of the in-court identification by Mr. Sharp is somewhat closer.

Mr. Sharp testified that on the day of the occurrence he examined many photographs at the police station. The photographs he picked at that time were not of the appellant. Subsequently, the police brought five colored photographs to Mr. Sharp’s home for his examination. Mr. Sharp identified the appellant by recognizing that two of the five photos were of the person that robbed him in Mrs. Mrkvicka’s home. At the preliminary hearing and at trial Mr. Sharp again identified the appellant as the person who robbed him.

It is true that the procedure here may have been somewhat suggestive. Compare Evans v. Janing, supra, 489 F.2d at 474-475. Nevertheless, upon careful examination of the record we are satisfied that Mr. Sharp recognized the appellant because of the opportunity he had to observe the appellant during the robbery and not by virtue of the photographs. See Coleman v. Alabama, supra, 399 U.S. 1 at 5-6, 90 S.Ct. 1999. Under these circumstances it cannot be said that the identification procedure was “so impermissibly suggestive as to give rise to a very substantial likelihood of irreparable misidentification.” Simmons, supra, 390 U.S. at 384, 88 S.Ct. at 971.

Petitioner’s remaining contentions pose alleged trial court error: in instructing the jury, improper limitation of cross-examination, sufficiency of corroborative evidence, and prosecutorial misconduct. We have reviewed the record concerning these allegations in light of the provisions of 28 U.S.C. § 2254. We agree with the district court’s determination that the evidence fails to reveal any basis for relief on these claims.

Affirmed.

      . The United States District Court for the District of Nebraska, Honorable Paul X Williams, Chief Judge, Western District of Arkansas, sitting by designation.


author: McENTEE, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Bernard H. ROMANOW, Defendant-Appellant.
    No. 74-1240.
    United States Court of Appeals, First Circuit.
    Heard Oct. 9, 1974.
    Decided Nov. 22, 1974.

      Peter J. Rubin, Portland, Me., with whom Jerome F. Goldberg and Bernstein, Shur, Sawyer & Nelson, Portland, Me., were on brief, for defendant-appellant.
    Rufus E. Stetson, Jr., Asst. U.S. Atty., with whom Peter Mills, U.S. Atty., Bangor, Me., was on brief, for ap-pellee.
    Before COFFIN, Chief Judge, ALD-RICH and McENTEE, .Circuit Judges.
   McENTEE, Circuit Judge.

Appellant, treasurer of the Romanow Furniture Company in Portland, Maine, was convicted on three counts of violating 26 U.S.C. § 7206(1) (1970), which proscribes willfully making any false material declaration on a tax form subject to the penalties of perjury. The tax form involved is the Employer’s Quarterly Federal Tax Return, IRS Form 941, which employers must file each quarter to report to IRS the amount of money withheld from employees’ wages and turned over to the Treasury Department to pay employees’ income and social security tax liabilities. Line 11a, which appears near the top of this form and is highlighted by being the only line in red type, reads “TOTAL TAXES DEPOSITED FOR THE QUARTER (See instructions on Page 4)” and is followed by a box for the appropriate amount. Further down the form, immediately above the line allotted for the employer’s signature, is the IRS perjury warning, which reads: “Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief it is true, correct, and complete.”

Appellant was charged with filing Form 941 for each of three quarters— the fourth quarter of 1969 and the first and third quarters of 1970 — while knowing that the deposit declared in line 11a had not actually been made. Appellant admitted that he had signed the three returns in question and that he knew at the time the returns were filed the deposits had not been made for any of the nine months involved except the first one, i. e., October 1969. Appellant raises three arguments why we should overturn his conviction.

First, he claims that the only evidence presented from which the jurors could infer that he knowingly made a false declaration that the liability had been paid was his signature on the quarterly returns, and that this was insufficient evidence to convict him of the act proscribed by § 7206(1). Appellant testified that he thought he was merely making an information return to IRS; he claims he was unaware that he was also affirming that the declared liability had been satisfied. Though appellant denies that he ever read the Form 941, it is clear that a jury could disbelieve him and conclude from nothing more than the presence of his uncontested signature that he had in fact read the Form 941. “[T]he signature at the bottom of the return is prima facie evidence that the signor knows the contents of the return.” United States v. Harper, 458 F.2d 891, 894-895 (7th Cir. 1971), cert. denied, 406 U.S. 930, 92 S.Ct. 1772, 32 L.Ed.2d 132 (1972); United States v. Bass, 425 F.2d 161, 163 (7th Cir. 1970); United States v. Wainwright, 413 F.2d 796 (10th Cir. 1969), cert. denied, 396 U.S. 1009, 90 S.Ct. 566, 24 L.Ed.2d 501 (1970); Lurding v. United States, 179 F.2d 419, 421 (6th Cir. 1950). See also Paschen v. United States, 70 F.2d 491, 498-499 (7th Cir. 1934). We reject appellant’s claim that the jury must have something more than his signature to infer that he read the returns.

Affirmed.

(The balance of this opinion, dealing with evidentiary exceptions, is of no precedential value and is not released for publication. See Local Rules, Appendix B.)

      . The relevant part of the statute reads :
      “Any person who—
      (1) Declaration under penalties of perjury. — Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter .
      shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not. more than 3 years, or both, together with the costs of prosecution.”


author: PER CURIAM:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Carl Melvin BURNETT, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Darrell Lester SEARS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Robert Bernard LYON, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Carl Louis MOLINE, Defendant-Appellant.
    Nos. 74-1647 to 74-1650.
    United States Court of Appeals, Ninth Circuit.
    Nov. 13. 1974.
    Certiorari Denied March 3, 1975.
    See 95 S.Ct. 1361.
    Kenneth L. Collins (argued) of Federal Public Defenders, Los Angeles, Cal., for defendant-appellant.
    Earl E. Boyd, Asst. U. S. Atty. (argued) Los Angeles, Cal., for plaintiff-appellee.
    Myron Roschko, Beverly Hills, Cal., on brief, for Carl Melvin Burnett.
    Alvin S. Michaelson, Los Angeles, Cal., on brief, for Robert Bernard Lyon.

      Ron Bain, Los Angeles, Cal., on brief, for Carl Louis Moline.
   OPINION

Before TRASK and GOODWIN, Circuit Judges, and ENRIGHT, District Judge.

PER CURIAM:

Appellants were charged under a 40-count indictment with conspiracy to commit offenses in violation of 18 U.S. C. § 1001 and the substantive violations of that section. Count One charged the conspiracy under 18 U.S.C. § 371; the remaining counts charged the substantive violations under 18 U.S.C. § 1001. That section proscribes willful misrepresentation to United States agencies. Defendants’ sole contention on appeal is that they should have been charged under 18 U.S.C. § 1919, which prohibits false statements to obtain unemployment benefits for prior federal service, and not under the general fraudulent statement provision, 18 U.S.C. § 1001 (which carries a greater penalty).

Defendants admit that the terms of both statutes apply to their conduct. Their claim that section 1919 precludes application of section 1001 to their conduct rests on three proffered rules of statutory construction: (1) that the specific statute takes precedence over the more general one, Robinson v. United States, 142 F.2d 431 (8th Cir. 1944); (2) that the more recent statute has priority over the earlier one, Shelton v. United States, 83 U.S.App.D.C. 32, 165 F.2d 241, 244 (1947); and (3) that any conflicts in statutory interpretation are resolved in favor of the defendant, United States v. Bass, 404 U.S. 336, 347-348, 92 S.Ct. 515, 30 L.Ed.2d 488 (1971). Congress enacted the specific misdemeanor offense of defrauding the United States of unemployment benefits for prior federal service after it had passed into law the general felony crime of willful misrepresentation to a federal agency.

Defendants’ principles of statutory construction are inapplicable to the instant case. As rules of construction they would only be useful in resolving legitimate doubts about Congress’ intent in passing overlapping statutes. They may not be used to create doubts. Callanan v. United States, 364 U.S. 587, 596, 81 S.Ct. 321, 5 L.Ed.2d 312 (1961). There is no indication in the legislative history that Congress intended to bar application of 18 U.S.C. § 1001 to conduct also punished by 18 U.S.C. § 1919 when Congress passed the latter provision. Absent evidence of such intent, cf. Kniess v. United States, 413 F.2d 752 (9th Cir. 1969), as this court recently stated in United States v. Brown, 482 F.2d 1359, 1360 (9th Cir. 1973),

“ . . . where a single act violates more than one statute, the government may elect to prosecute under either. United States v. Gilliland, 312 U.S. 86, 61 S.Ct. 518, 85 L.Ed. 598 (1941); United States v. Chakmakis, 449 F.2d 315 (5th Cir. 1971); Ehrlich v. United States, 238 F.2d 481 (5th Cir. 1956).”

To assume the opposite, that the mere passage of a specific statute covering an area of conduct also regulated by a more general statute limits enforcement of the general statute by carving out an exception to it, is, in effect, to accomplish a partial repeal of the general statute. Repeals by implication are not favored; effect should be given to overlapping statutes if possible. Posadas v. National City Bank, 296 U.S. 497, 503, 56 S.Ct. 349, 80 L.Ed. 351 (1936). In the present case the Government had the option of proceeding under either statute.

Defendants’ citation of United States v. Thompson, 493 F.2d 305 (9th Cir. 1974), is not apposite. In that case this court considered a claim that a criminal defendant was entitled to a jury instruction that the general conspiracy statute, 18 U.S.C. § 371, was a lesser included offense of the statute under which he was charged, conspiracy to smuggle marijuana, 21 U.S.C. § 176(a) (repealed) .

The question before us is not the propriety of a limiting instruction. None was requested and no issue was raised about it. Ours is a question whether the entire indictment was bad because the Government is alleged to have made an erroneous choice between two statutes the terms of each of which applied. We hold that the indictment was proper.

Judgment affirmed.

       Honorable William B. Enright, United States District Judge for the Southern District of California, sitting by designation.

      . Since the case must presumably be retried, we mention the appellant’s other contentions only to note that they have been considered and found unmeritorious.