author: WIDENER, Circuit Judge:

text:
    AMERICAN HOT ROD ASSOCIATION, INC., Appellee, v. Robert L. CARRIER, Appellant. AMERICAN HOT ROD ASSOCIATION, INC., Appellant, v. W. R. LAND, Jr., et al., Appellees.
    Nos. 73-1964, 73-1965.
    United States Court of Appeals, Fourth Circuit.
    Argued Jan. 9, 1974.
    Decided July 17, 1974.

      Lloyd S. Heilman, Kansas City, Mo. (Keith E. Witten, Achtenberg, Sandler & Balkin, Kansas City, Mo., Louis A. Bledsoe, Jr., Berry, Bledsoe & Hoge-wood, Charlotte, N. C., on brief), for appellant in No. 73-1965 and for appellees in No. 73-1964.
    Richard M. Hutson, II, Durham, N. C. (Hofler, Mount, White & Long, Durham, N. C., Hugh A. Lee, Webb, Lee, Davis & Gibson, Rockingham, N. C., on brief), for appellees in No. 73-1965.
    Seawell, Pollock, Fullenwider, Van-Camp & Robbins, P. A., Southern Pines, N. C. (Gore, Ladd & Gillenwater, Bristol, Tenn., on brief), for appellant in No. 73-1964.
    Before HAYNSWORTH, Chief Judge, and WINTER and WIDENER, Circuit Judges.
   WIDENER, Circuit Judge:

This multi-count diversity case arises out of the alleged breach of a contract involving the sanctioning and promotion of major drag races at Rockingham, North Carolina.

The American Hot Rod Association, Inc. (AHRA) brought this suit against W. R. Land, Jr., L. G. DeWitt, Jerry L. Goodwin, Franklin McKay, and J. M. Long, doing business as the Rockingham International Dragway (Land, et al); the Rockingham International Dragway, Inc. (Rockingham); Robert L. Carrier; and the International Hot Rod Association (IHRA). Count I of the complaint alleged breach by the defendants, Land, et al, and Rockingham, of a written contract of October 5, 1968 giving AHRA certain sanctioning privileges over a period of five years at the Rockingham International Dragway. Count II claimed that Carrier and the IHRA had tortiously interfered with the October 5, 1968 Rockingham contract, and also that Carrier had breached its fiduciary duty as an agent of AHRA. Count III, alleging a conspiracy to breach the contract, was dismissed by AHRA. And Count IV, against Carrier solely, alleged breach of a written non-competition agreement given by Carrier in favor of AHRA.

These issues were tried before a jury which, on May 24, 1973, found by special verdict in favor of the defendants and against AHRA on Counts I and II. AHRA, in No. 73-1965, appeals both Counts. As to Count IV, the jury returned a special verdict in favor of AHRA and against Carrier in the amount of $100,000. Carrier, in No. 73-1964, appeals this judgment. We find no error in No. 73-1965 and affirm. But, in No. 73-1964, we reverse and remand with instructions.

I.

AHRA is a Missouri corporation engaged in the business of sanctioning and co-promoting drag races. The organization serves to provide a pool for the purchase of spectator liability and racers’ insurance; to formulate a standard set of rules regarding the construction of cars; to approve times and records set; and to use its name and reputation in sanctioning certain major races. AHRA also solicits participation by well-known drivers and advertises races in return for a portion of the net proceeds.

The defendant, Robert L. Carrier, is a Tennessee resident who has been involved in various aspects of the business of racing since 1960. As part owner of the Bristol International Speedway, he has constructed and operated a round track since 1961, and a drag track since 1965. Carrier has considerable experience in handling promotions, including advertising, of drag racing events.

James M. Tice, the President of AHRA, first met Carrier in 1964. In 1968, AHRA began sanctioning and co-promoting drag racing events at Carrier’s Bristol track. At approximately the same time, Tice appointed Carrier an honorary vice-president with AHRA in charge of sanctioning drag racing in the southeastern United States. For these services, Carrier was paid no salary.

In 1968, Carrier met with a group of investors, including Land and others, who wanted to develop a drag racing strip near Rockingham, North Carolina. None of the investors were experienced in the operation or promotion of major drag racing events. Carrier negotiated a contract, however, involving as separate parties AHRA, Carrier, and the investors, which was signed on October 5, 1968. Under this agreement, two drag racing events were to be held annually for a period of five years at Rockingham. AHRA, on the one hand, and Land and the other investors, on the other, were to share equally in the net profits (as defined by the contract) or losses of each race.

Land and the other investors were responsible for the entire financial investment in the construction of the race track, which included the drag strip, spectator stands, and buildings. AHRA’s duties were to sponsor, sanction, and promote two major races annually at the new track. Carrier, who signed the contract in an individual capacity as a third party, was given additional responsibilities, as noted in Item 2 of the Agreement.

“The Dragway agrees that Larry Carrier is retained in an advisory capacity to the Dragway, and shall be continually retained by the corporation, Rockingham International Dragway, Incorporated, under the assignment of this contract, in an advisory capacity, both in the construction of Rocking-ham international Drag way and in the operation of the Rockingham International Drag way . . . . ”

Carrier was to receive $5,000, plus expenses, from the gross receipts of each major race in return for serving in this capacity.

To avoid competition in the surrounding area which would endanger their large financial investment, Land and the other investors insisted that the following clause be inserted into the contract:

“ ‘AHRA’ agrees that it will neither sanction nor sponsor, nor directly or indirectly support any other major race event upon any race track in the State of North Carolina, nor within a radius of 150 miles.”

Paragraph 20 defined a “major race event” as

“[a]ny race for which ‘AHRA’ brings in a crew and manages the race, and/or for which ‘AHRA’ directly participates in securing the prize monies.”

Several months after the negotiation of the Rockingham contract, AHRA and Auto Racing Franchise Corporation (ARFCO) entered, on December 11, 1969, into a franchise agreement granting ARFCO exclusive sanctioning rights in certain areas of southeastern United States. ARFCO was a corporation formed to permit Carrier and his Bristol partner, Carl Moore, to share in the monies to be earned in representing AHRA throughout that area. Paragraph 6(e) of this agreement provided that ARFCO agreed to:

“Refrain from ... in any way aiding any other racing organization, race promoters, automobile sanctioning bodies, or other parties now or to be in competition in drag racing with AHRA. . . . ARFCO further agrees to obtain from any of its officers and key employees ... a non-competition covenant (copy of which is attached hereto) and ARFCO hereby agrees to make said non-competition covenant a prerequisite for employment. . . . ”

Pursuant to the AHRA-ARFCO agreement, Carrier executed a covenant not to compete with AHRA, on December 15, 1969, as follows:

“[T]he undersigned does hereby covenant, contract and agree that during the time he is an office holder of, a member of the Board of Directors of, or an employee of ARFCO, and for five (5) years after his total termination with ARFCO, he will not directly or indirectly, as principal, partner, agent, employee, or otherwise compete with AHRA, carry on or be concerned with, or be financially interested in drag race promotions, scheduling, or any other arrangements relating to drag racing, except as the owner of a single track, . . . . ”

During late 1968 and throughout much of 1969, Carrier supervised the development of the Rockingham track, both in the planning and construction stages. Three major drag events were held at Rockingham under the October 5, 1968 contract. These occurred in the fall of 1969, and the spring and fall of 1970. But major areas of disagreement soon developed between AHRA and the investors. Well-known race drivers, promised by AHRA, often failed to appear at Rockingham as advertised to the public. The large purses failed to materialize. Disputes arose over the proper accounting of receipts and expenses. And AHRA refused to allow representatives of the investors to operate or jointly staff the pit gates in accordance with provisions in their contract. AHRA also scheduled another major event to conflict with the Rockingham date. During the September 1970 race, when Land and Carrier complained, Tice allegedly explained that if Land and the others were not satisfied they could tear up the contract. Finally, it was learned in November or December of 1970 that, in violation of the terms of the October 5, 1968 agreement, Tice and AHRA, on December 16, 1969, had contracted to sanction and sponsor two major drag races annually in Myrtle Beach, South Carolina, located within less than 150 miles of Rockingham, North Carolina.

Shortly after the September 1970 race, Carrier informed Land and the other investors of his decision to form a sanctioning body. On November 12, 1970, Carrier incorporated the International Hot Rod Association (IHRA) for the purpose of operating and sanctioning racing events of all kinds. On November 19, 1970, Land advised Tice that Rockingham was repudiating the contract of October 5, 1968. On November 23, 1970, however, Land’s attorney wrote Tice, stating that his clients intended to abide by the contract and also that they expected Carrier and AHRA to do the same. Later, on December 10, 1970, Tice, his attorney, and the investors met at the track site in an unsuccessful attempt to reach an accommodation. But, by letter of December 14, 1970, Land and the other investors again repudiated the October 5,1968 contract.

On December 17, 1970, Rockingham entered into a sanctioning contract with Carrier’s IHRA. Under this agreement, IHRA was to share in the net profits or losses of each race by 25%. And Carrier was to receive no fee of $5000 per major drag event as he did under the AHRA contract. Rockingham has continued to operate under IHRA sanctioning since the execution of the contract.

AHRA brought this suit on September 22, 1971. The various claims were tried before a jury which, by special verdict, found that the plaintiff, AHRA, had failed to substantially perform and abide by the stipulations and conditions of the October 5, 1968 contract; that Carrier was an agent of AHRA, but that he had not violated his fiduciary duty in representing AHRA in its business relationships with Rockingham and Land, et al; that the covenant not to compete was valid and enforceable; that Carrier had breached this covenant, and AHRA was entitled to recover $100,000 from Carrier because of this breach. Accordingly, judgment was entered May 24, 1973 for the defendants on Counts I and II, and for the plaintiff in the amount of $100,000 on Count IV. AHRA appeals the judgment in favor of the defendants on Counts I and II; Carrier appeals judgment in favor of the plaintiff on Count IV.

II.

In Count I, the plaintiff sought to prove that the defendants, Land, et al, and Rockingham, had breached their contract of October 5, 1968 with AHRA. The defendants contended, and the jury found, that AHRA had failed to substantially perform and abide by the stipulations and conditions of the contract. Accordingly, judgment was entered for the defendants. AHRA has appealed, asserting the court committed reversible error by (1) admitting irrelevant and incompetent evidence; (2) failing to instruct the jury that Land, et al, had waived their right to rescind the contract by failing to rescind in a timely manner; and (3) erroneously instructing the jury as to an alleged oral release given by AHRA when there was no evidence of a valid and binding release.

The defendant’s view of the case is supported by North Carolina law under which one party to a contract cannot maintain an action for its breach without alleging and proving a performance of his own antecedent obligations arising out of the contract. Edgerton v. Taylor, 184 N.C. 571, 115 S.E. 156, 159, et seq (1922); McCurry v. Purgason, 170 N.C. 463, 87 S.E. 244, 246, et seq (1915), citing Ducker v. Cochrane, 92 N.C. 597 (1885). The defendants adduced evidence that, in violation of Item 5 of the October 5, 1968 contract, AHRA had entered into a contract to sanction and sponsor two major drag races annually in Myrtle Beach, South Carolina, which is located within 150 miles of Rockingham, North Carolina; that AHRA had failed to make an accurate accounting of all receipts and expenses in accordance with Item 15 of the contract ; that the accounting procedures at the pit gate were either non-existent or poorly organized; that AHRA had refused to allow the defendants to operate or jointly staff the pit gate in accordance with Item 13 of the contract; that AHRA had failed to meet its duties under Item 3 of the sponsorship, since repeatedly top race drivers and prize money, both assured by AHRA, failed to appear at Rockingham; and that AHRA had at least on one occasion scheduled another major event to conflict with a Rockingham date.

The issue of whether AHRA had substantially performed its obligations under the contract was well within the province of the jury, which found against AHRA on this issue by special verdict. Because the jury’s finding.precluded further inquiry under Count I, the questions of the special verdict relating to the existence of a release allegedly given by AHRA were necessarily unanswered. Thus, we do not reach plaintiff’s claims of error in the court’s instructions relating to the release, since, even if erroneous, they would, not create grounds for reversal.

AHRA also claims that the court erred in admitting irrelevant evidence. We need not even consider this claim in light of F.R.Civ.P. 61, which provides that “[n]o error in either the admission or the exclusion of evidence ... is ground for granting a new trial . unless refusal to take such action appears to the court inconsistent with substantial justice.” The evidence admitted was related to the conduct of the parties in their performance of the agreement. In our view, the trial court’s determination of relevancy was an act of discretion which should not be disturbed absent a clear showing of abuse. Beaty Shopping Center, Inc. v. Monarch Ins. Co., 315 F.2d 467, 470 (4th Cir. 1963); United States v. 25,406 Acres of Land, 172 F.2d 990, 995 (4th Cir. 1949). We find none here. The rulings of the trial court were well within its province.

AHRA further contends the court erred in permitting the defendant Carrier to testify as an expert witness to public reaction to the repeated failure of advertised race drivers to appear in Rockingham. Carrier testified that continued false advertising “hurts your attendance.” In view of Carrier’s experience in racing promotions dating back to 1960, we see no abuse of the court's discretion in admitting this testimony. The competency of an expert witness is a matter resting within the sound discretion of the trial judge. United States v. 25,406 Acres of Land, 172 F.2d 990, 995 (4th Cir. 1949).

III.

Count II of the complaint alleged that Carrier and IHRA had tortiously interfered with the Rockingham contract. It 'further alleged upon amendment that Carrier had breached his fiduciary duty in representing AHRA in its business relationships with Rockingham, and Land, et al. The special verdict resulted in judgment for the defendants on both issues, and AHRA has appealed.

In the case of Childress v. Abeles, 240 N.C. 667, 84 S.E.2d 176 (1954), the North Carolina Supreme Court summarized the elements of tor-tious interference with a contract. In such an action, the plaintiff must allege and prove, “First, that a valid contract existed between the plaintiff and a third person, conferring upon the plaintiff some contractual right against the third person.... “Second, that the outsider had knowledge of the plaintiff’s contract with the third person;” “Third, that the outsider intentionally induced the third person not to perform his contract with the plaintiff;” .... “Fourth, that in so doing the outsider acted without justification;” .... and “Fifth, that the outsider’s act caused the plaintiff actual damages.” Childress, at 181-182.

In the instant case, the court instructed the jury that if they found that AHRA had failed to perform its obligations under the contract, then Carrier and IHRA could not be guilty of wrongfully interfering with the plaintiff’s contract since the contract was no longer in existence. Because the jury found that AHRA had indeed failed to perform its obligations under the contract, it necessarily found for the defendants in accordance with the court’s instructions.

In this appeal, AHRA contends the court erred in denying a proposed amendment to AHRA’s complaint permitting a recovery for tortious interference with a business relationship as contrasted to a contract. But we have been cited to no North Carolina case which so holds. Childress requires the existence of a valid and enforceable contract. An extension of this requirement is mentioned in Johnson v. Gray, 263 N.C. 507, 139 S.E.2d 551 (1965), where the court said that “ [m] aliciously inducing a person not to enter into a contract with another, which he would otherwise have entered into, is actionable if damage results.” Johnson, supra, at 553. See also Spartan Equipment Co. v. Air Placement Equipment Co., 263 N.C. 549, 140 S.E.2d 3, 11 (1965). Even should we consider that the law in North Carolina may be decided as contended by AHRA, that mere business relationship will suffice and neither an existing or prospective contract is required, see Restatement, Torts § 766(b), we may not overlook the fact that in the instant case an enforceable contract did not exist nor did the Rockingham defendants contemplate entering into a new agreement or relationship.

It should also be noted that both the pleadings and the pre-trial order were framed in terms of “tortious interference with a contract.” No attempt was made to amend the pleadings until after three days of trial and at the close of the evidence. The court properly treated the proposed amendment as an amendment to conform to the evidence under F.R.Civ.P. 15(b). Rule 15(b) provides that if issues “not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.” In this case, AHRA does not place itself within either the letter or spirit of the rule. The issue sought to be raised by late amendment was not “tried by express or implied consent of the parties.” Far from it, for almost two years of pleading, amendments, interrogatories, requests for admission, pre-trial orders and briefs, and all the other trappings of a multi-party, multi-issue (26) trial, including the trial itself, the issue .was whether or not the contract had been interfered with, not whether there had been an interference with a business relation. This was quite clear to everyone and indeed AHRA never contended in the district court that the sought for issue had been tried at all. Under the circumstances, the district judge properly ruled that he did not think the amendment “would be fair.” In our opinion, this was not an abuse of discretion. It has been held, on facts similar to these, that courts may properly reject an amendment offered at or after the evidence has closed, purportedly to conform to the evidence. See, e. g., United States v. An Article of Drug, 320 F.2d 564 (3d Cir. 1963); Caddy-Imler Creations, Inc. v. Caddy, 299 F.2d 79, 84 (9th Cir. 1962); Chesapeake & Ohio Ry. v. Newman, 243 F.2d 804, 812 (6th Cir. 1957); Gaines W. Harrison & Sons, Inc. v. J. I. Case Co., 180 F.Supp. 243, 248 (E.D.S.C.1960).

AHRA further contends that, since the jury found Carrier was an agent of AHRA, it necessarily should have found a breach of Carrier’s fiduciary duty to AHRA in the conduct of its relations with Rockingham and Land, et al. Nevertheless, there was ample evidence from which the jury could have found that Carrier was performing his duties to the investors independent of his relationship with AHRA. The Rockingham contract is signed by Carrier as a third party. His duty ran both to AHRA and the Rockingham defendants. Moreover, his duties in promoting and insuring the future success of the Rockingham venture were extensive. AHRA knew of these duties and that they could quite easily conflict with the interests of AHRA. The jury was properly instructed and the evidence was fully and fairly presented on this point, and, since whether or not Carrier breached his duty to AHRA was a factual question, the finding of the jury on the basis of the. conflicting evidence presented here binds the court. Lavender v. Kurn, 327 U.S. 645, 652, 66 S.Ct. 740, 90 L.Ed. 916 (1946); RFC v. Bankers Trust Co., 318 U.S. 163, 170, 63 S.Ct. 515, 87 L.Ed. 680 (1943).

IV.

In Count IV, AHRA alleged that Carrier had violated a restrictive covenant not to compete given by Carrier to ARF-CO in favor of AHRA. Executed on December 15, 1969, the agreement between Carrier and ARFCO provided as follows:

“WHEREAS, a contract for an exclusive territory exists between the American Hot Rod Association, Incorporated . . . and Auto Racing Franchise Company . . ., and
“WHEREAS, the officers and1 employees of ARFCO will receive valuable information, knowledge, and contracts in performing their duties under the aforesaid contract.
“NOW, THEREFORE, in consideration of the benefits derived by ARF-CO, the undersigned’s employer, and in consideration of the moneys coming to the undersigned from ARFCO, the undersigned does hereby covenant, contract and agree that during the time he is an office holder of, a member of the Board of Directors of, or an employee of ARFCO, and1 for five (5) years after his total termination with ARFCO, he will not directly or indirectly, as principal, partner, agent, employee, or otherwise compete with AHRA, carry on or be concerned with, or be financially interested in drag race promotions, scheduling, or any other arrangements relating to drag racing, except as the owner of a single track, and will not directly or indirectly solicit or endeavor to obtain promoters, racers, sponsors, or any other person, partnership or corporation, under contract or agreement that relates or is connected with drag race promotions.
-X- * * -X- -X-

The issue as to the existence of the covenant and whether supported by consideration was given to the jury which found it in effect and assessed damages of $100,000 against the defendant Carrier for his breach. Carrier has appealed, claiming the.restrictive covenant is void as a matter of law. We agree.

In Welcome Wagon v. Morris, 224 F.2d 693, 698 (4th Cir. 1955), we observed that modern courts have employed three criteria in passing on these contracts: “(1) Is the restraint, from the standpoint of the employer, reasonable in the sense that it is no greater than is neeessary to protect the employer in some legitimate business interest ? (2) From the standpoint of the employee, is the restraint reasonable in the sense that it is not unduly harsh and oppressive in curtailing his legitimate efforts to earn a livelihood? (3) Is the restraint reasonable from the standpoint of a sound public policy” ?

North Carolina law, which is controlling here, appears to follow the general trend of modern authority. Initially, we note that restrictive covenants not to compete in employment contracts, as here, are scrutinized more rigorously than similar covenants incident to a sale of business. Seaboard Indus., Inc. v. Blair, 10 N.C.App. 323, 178 S.E.2d 781, 787 (1971); Harwell Enterprises, Inc. v. Heim, 6 N.C.App. 548, 170 S.E.2d 540 (1969) (rev’d. on other grounds); 14 Williston on Contracts § 1643 (3d ed. 1972). And the burden is on the party seeking to enforce the contract to establish its reasonableness. Noe v. McDevitt, 228 N.C. 242, 45 S.E.2d 121, 123 (1947); Kadis v. Britt, 224 N.C. 154, 29 S.E.2d 543, 545 (1944).

It is generally observed in North Carolina that restrictive covenants not to engage in competitive employment are in partial restraint of trade; thus, to be enforceable they must be (1) in writing, (2) entered into at the time and as a part of the contract of employment, (3) based on valuable consideration, (4) reasonable both as to time and territory embraced in the restrictions, (5) fair to the parties, and (6) not against public policy. And it has been said that a failure in either requirement is fatal. James C. Greene Co. v. Kelley, 261 N.C. 166, 134 S.E.2d 166, 167 (1964); Asheville Associates, Inc. v. Miller, 255 N.C. 400, 121 S.E.2d 593, 594 (1961).

The reasonableness of the time and' territory restrictions imposed in such contracts has been much litigated in North Carolina courts. As noted in Beam v. Rutledge, 217 N.C. 670, 9 S.E. 2d 476, 478 (1940), “[t]he test to be applied in determining the reasonableness of a restrictive covenant is to consider whether the restraint affords only a fair protection to the interest of the party in whose favor it is given, and is not so broad as to interfere with the rights of the public.”

In Engineering Associates, Inc. v. Pankow, 268 N.C. 137, 150 S.E.2d 56 (1966), the North Carolina Supreme Court construed a covenant in which the employee, a “Project Engineer” of the plaintiff, promised not to work for any competitor of his employer for five years following termination. The covenant, as here, contained no territorial limitations. It was held invalid and unenforceable as being “unreasonable in view of the time and territory involved.” The court noted that “[i]t may be that in some instances and under extreme conditions five years would not be held to be unreasonable, but when it is coupled with no restrictions whatever as to territory there can be no doubt of its unreasonableness.” 150 S.E.2d at 58.

In Henley Paper Co. v. McAllister, 253 N.C. 529, 117 S.E.2d 431 (1960), the court refused to enforce a similar covenant which prevented the employee from engaging in the manufacture, sale or distribution of paper or paper products in a territory extending in a 300 mile radius from any of the employer’s divisions. The court took note of the fact that the territory extended “from Delaware to Alabama; from Indiana to the Atlantic,” and found it excessive. “The contract excludes the defendant from too much territory and from too many activities. It is, therefore, void and unreasonable.” 117 S.E.2d at 434.

In Noe v. McDevitt, 228 N.C. 242, 45 S.E.2d 121 (1947), the plaintiff, a supplier of beauty salon equipment, sought to restrain its former employee for five years from engaging in any similar business in both North and South Carolina. The court found the contract unenforceable. “Giving the plaintiff the benefit of very generous inferences, while he may have shown the conduct of a business to some extent in eastern North Carolina, he has not definitely shown any clientele throughout the much broader territory here involved such as would correlate the protection sought with any need of his business.” 45 S. E.2d at 123.

In Comfort Spring Corporation v. Burroughs, 217 N.C. 658, 9 S.E.2d 473 (1940), the court refused to enforce a covenant restraining a former employee from selling for five years any product similar to those marketed by the employer “within the entire United States.” The territory was found to be excessive. “[I]n the absence of any allegation or proof as to the territory over which the plaintiff’s business extends, we are impelled to hold that the restriction upon the defendant to engage as a salesman for the Spring Products Corporation ‘within the entire United States’ is unnecessary for the protection of the plaintiff, and unreasonable and oppressive upon the defendant, and is, therefore, in restraint of trade and illegal and void.” 9 S.E.2d at 475-76.

In a number of cases, North Cai’olina courts have upheld restrictive covenants. But in each the time and area restrictions were limited and no broader than necessary to protect the employer’s legitimate interests. See, e. g., Beam v. Rutledge, 217 N.C. 670, 9 S.E.2d 476 (1940) (physician not permitted to practice medicine within 100 miles of the City of Lumberton, N. C., for five years); Sonotone Corp. v. Baldwin, 227 N.C. 387, 42 S.E.2d 352 (1947) (former district sales manager not permitted to sell competitors’ products in 40 North Carolina counties and 9 South Carolina counties for one year); Welcome Wagon International, Inc. v. Pender, 255 N.C. 244, 120 S.E.2d 739 (1961) (former representative not permitted to engage in similar activities in Fayettevile, N. C., for five years); Asheville Associates, Inc. v. Miller, 255 N.C. 400, 121 S.E.2d 593 (1961) (insurance salesman not permitted to engage in similar business for one year in 14 county area of former representation); Harwell Enterprises, Inc. v. Heim, 276 N.C. 475, 173 S.E.2d 316 (1970) (employee of manufacturer, who was engaged in all phases of its business throughout the nation, not permitted to engage in the business of competitor for two years within the United States. -In this case the covenant was, on demurrer, held not necessarily invalid.)

We are now called upon to construe the validity of a covenant which purports to prohibit the defendant from engaging in any aspect of the drag racing business for five years. According to its terms, he may not become in any way interested in drag race promotions, scheduling, or any other arrangements relating to drag racing. The covenant contains no territorial restraints limiting its application to particular cities, states, regions, or even countries where AHRA’s business interests might be threatened. The covenant is not to so engage in drag racing anywhere in the world for a period of five years.

Moreover, as in both Noe and Comfort Spring, there has been no allegation as to the territory over which AHRA’s activities extend, or in which it needs protection. Thus, there is no basis on which the court could properly determine whether the restrictive covenant in question is reasonably necessary for the protection of AHRA’s business. The only state in the Southeast, for example, where AHRA has actively engaged in co-promoting races would appear to be North Carolina. Yet the restriction in the covenant applies not only throughout the Southeast, it covers the entire country, even the world. Nor does the covenant by its terms purport to apply solely to the area of the defendant’s past representation, as did the agreement upheld by the court in Asheville Associates.

Because the covenant is drawn broader than necessary for the protection of the plaintiff, and is therefore unreasonable, it is in restraint of trade and void. Comfort Spring Corp. v. Burroughs, 217 N.C. 658, 9 S.E.2d 473 (1940). Whether part of the contract might be deemed reasonable and enforceable is not the question. It comes to us as a single document. We must construe it as the parties made it. “The Court cannot by splitting up the territory make a new contract for the parties. It must stand or fall integrally.” Henley Paper Co. v. McAllister, 253 N.C. 529, 117 S.E.2d 431, 435 (1960) ; Noe v. McDevitt, 228 N.C. 242, 45 S.E.2d 121, 123 (1947).

The judgment of the district court is accordingly

Affirmed in part; reversed in part.

      . The use of the word valid here has no relation to its legal import. The issue put to the jury by the charge was whether or not the covenant was in fact in existence and whether it was supported by consideration.

      . Not involved in this appeal are two counterclaims brought by the defendants. In the first, Carrier alleged that AHRA and its officers, James M. Tice and Ruth E. Tice, had breached an oral agreement to pay him a yearly salary and to transfer to him 20% of the stock of AHRA in return for Carrier’s services. In the second, Land, et al, and Rockingham sought damages, alleging that AHRA had breached the October 5, 1968 contract in failing to make an accurate accounting of receipts. The jury found for, AHRA on both claims; neither have been appealed.

      . The evidence complained of was to the effect that AHRA’s officers and agents were difficult to deal with; that AHRA sanctioned races elsewhere; that AHRA over-advertised racers and purses; that AHRA failed to produce certain racers; and that AHRA refused to allow representatives of Land, et al, to man the pit gate.

      . Caveat. Nothing we say here should intimate an opinion that a party to a contract may be found guilty of a tortious interference with it.

      . Not argued by either party in the district court was the applicability of Tennessee law in determining the validity of the restrictive covenant. AHRA injects it into the case for the first time on appeal, although in its trial brief it relied solely on the law of North Carolina. While federal courts in diversity cases apply the choice of law rules prevailing in the forum state, Klaxon Co. v. Stentor Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), we note that Tennessee law as regards restrictive covenants of employment, e. g., Allright Auto Parts, Inc. v. Berry, 219 Tenn. 280, 409 S.W.2d 361 (1966), a case involving facts at least as favorable to the employer as those presented here, is substantially the same as North Carolina’s. See also Barner v. Boggiano, 32 Tenn.App. 351, 222 S.W.2d 672, esp. 675 (1948). Thus, we would reach a similar result regardless of which law is applied. In all events, since AHRA raises the question for the first time on appeal, we would not ordinarily be disposed to consider it. McGowan v. Gillenwater, 429 F.2d 586 (4th Cir. 1970).

      . The covenant was also invalid as lacking in consideration and being unsigned.

      . There is a passing reference in the testimony that AHRA operated in 35 States. But the extent of the operation was not otherwise pleaded or proved. In 1969, AHRA co-promoted seven major races, as distinguished from mere sanctioning, which consists generally of selling insurance, accepting advertising in its publication, and apparently lending the race its approval. Ten races were similarly co-promoted in 1970. The extent of the operation of IHRA and the area of conflict is not shown in the record except at Rockingham. And the extent of AHRA operation in any State in which it operates is also not shown.


source: Caselaw Access Project

author: McCREE, Circuit Judge.

license: Public Domain

text:
    Elizabeth MILBURN et al., Plaintiff-Appellant, v. Gail HUECKER, Commissioner, Kentucky Department of Economic Security and Daniel R. Tierney, etc., Defendants-Appellees. Mariann WEISENBERGER, etc., et al., Plaintiff-Appellant, v. Gail S. HUECKER, Commissioner, Kentucky Department of Economic Security and Daniel R. Tierney, et al., Defendants-Appellees.
    Nos. 73-1259 and 73-1430.
    United States Court of Appeals, Sixth Circuit.
    Argued Oct. 15, 1973.
    Decided Aug. 5, 1974.

      Legal Aid Society of Louisville, Inc., Kurt Berggren, Graham B. Cooke, Dennis E. Bricking, Louisville, Ky., on brief, for plaintiff s-appellants.
    Paul E. Tierney, Paul M. Cupp, Kentucky Dept, of Economic Security, Frankfort, Ky., on brief, for defendants-appel-lees.
    Before EDWARDS, CELEBREZZE and McCREE, Circuit Judges.
   McCREE, Circuit Judge.

This appeal presents the question whether a United States district court has jurisdiction to order a state to pay past due welfare benefits that were withheld from applicants in violation of federal law. We hold that the Eleventh Amendment prohibits the entry of an order directing a state that has not consented to suit to pay such benefits.

In No. 73-1259 appellant Milburn applied for Aid to Permanently and Totally Disabled (APTD), on November 30, 1971. More than five months later, on April 5, 1972, her application was denied. Thereupon, Milburn requested a hearing and on June 1, 1972, the hearing officer determined that Milburn was permanently and totally disabled and directed the payment of APTD payments commencing May 1972, six months after the date when Milburn had ap'plied for aid. It is uncontested that the disability existed at the time of the application and that Milburn at all times cooperated with government and medical personnel. Mil-burn brought this action, on behalf of herself and all other persons similarly situated, requesting: (1) declaratory relief and an order enjoining defendants from not acting on APTD applications within sixty days and from not paying benefits from the date of application; and (2) an award to plaintiff class of all APTD benefits wrongfully withheld. She also sought an award of costs and reasonable attorneys’ fees. The district court, holding that defendants’ practices violated federal law and the Constitution, granted prospective injunctive relief requiring the APTD welfare program to be administered in the future in compliance with federal law. Specifically, the court ordered applications to be acted upon within sixty days and upon determination of eligibility, payment to be made from the date of application. However, the court held that the Eleventh Amendment deprived it of jurisdiction to award benefits retroactively. The court also denied plaintiffs’ request for costs and attorneys’ fees.

In No. 73-1430, appellant Weisenberger was denied Aid to Families for Dependent Children (AFDC) benefits solely because she had not filed a paternity action against the putative father of her children, although she was otherwise qualified. Subsequently, she initiated the paternity action, and benefits were approved commencing about seventy days after her application was first made. Weisenberger then brought this action for herself and a class of persons similarly situated and requested: (1) declaratory relief and an order enjoining defendants from not acting on AFDC applications within thirty days and from not paying benefits from the date of application, and to declare all inconsistent practices illegal; and (2) an award of all AFDC payments wrongfully withheld, and costs and attorneys’ fees. In this case, too, the district court granted the prayer for prospective relief, but denied the request for retroactive payment of welfare benefits and for costs and attorneys’ fees.

Plaintiffs in both cases appeal from the denial of retroactive benefits, costs and attorneys’ fees.

Because these cases raise identical questions of law, the appeals were consolidated and we consider them together.

Three questions are presented: (1) whether a state that has withheld welfare benefits from applicants in violation of federal law, in the absence of waiver, is shielded by the Eleventh Amendment from a judicial order requiring it to pay past due benefits; (2) if the Eleventh Amendment would otherwise be a jurisdictional bar to such relief, whether the state, by its participation in a welfare program funded, in part, by the federal government, .thereby waived its immunity from suit; and (3) whether the denial of plaintiffs’ requests for costs and attorneys’ fees was erroneous.

The first two questions have been considered by other circuits and by the Supreme Court. The Second Circuit, in Rothstein v. Wyman, 467 F.2d 226 (1972), cert. denied, 411 U.S. 921, 93 S.Ct. 1552, 36 L.Ed.2d 315 (1973), held that the Eleventh Amendment deprives a district court of jurisdiction to award retroactive welfare benefits, even though the benefits had been withheld in violation of federal law and even though prospective injunctive relief was permissible and appropriate. The Second Circuit also held that a state’s receipt of federal funds for use in its welfare program did not constitute a waiver of the immunity afforded by the Eleventh Amendment. The opposite result was reached in Jordan v. Weaver, 472 F.2d 985, cert. granted sub nom., Edelman v. Jordan, 414 U.S. 1301, 94 S.Ct. 13, 38 L.Ed.2d 15 (1973), where the Seventh Circuit held that the Eleventh Amendment did not preclude a United States district court from remedying a defiance of federal law by ordering the retroactive payment of welfare benefits, and, further, that Illinois had constructively consented to suit and had thereby waived Eleventh Amendment immunity by participating in a federal welfare program. The Fourth Circuit, in Dawkins v. Craig, 483 F.2d 1191 (1973), agreed with the Second Circuit’s holding in Rothstein.

After this appeal was argued and before our opinion issued, the Supreme Court answered the first two questions presented here, resolving the differences among the circuits, by holding that the Eleventh Amendment deprived a federal court of jurisdiction to award past due welfare benefits payable from a state’s treasury and that a state’s mere participation in a federal welfare program does not, without more, constitute an implied consent by the state to be sued in the federal courts. Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed. 2d 662, 1974. And we therefore respectfully follow the Supreme Court’s decision in Edelman.

There remains to be considered appellants’ contention that the district court erred in denying their requests for costs and reasonable attorneys’ fees since they prevailed in obtaining prospective relief and this determination was not challenged on appeal. Appellants urge that a trial court’s denial of attorneys’ fees must be accompanied by findings of fact sufficient to permit review of its exercise of discretion. Lee v. Southern Home Sites Corp., 429 F.2d 290, 296 (5th Cir. 1970). We agree. And we hold that the findings of the trial courts here were insufficient to support their denial of costs and fees. In No. 73-1259, the court gave no reason for denying costs and fees. In No. 7.3-1430, the court staed:

Payments were also asked for attorneys’ fees and costs. In Alexander v. Weaver, 345 F.Supp. 666 (N.D.Ill. E.D.1972), where retroactive benefits were allowed, the court held that attorneys’ fees and costs are especially inappropriate in view of the fact that the various services and the costs incurred were provided by a Legal Aid Bureau which is primarily funded by the federal government and the litigants were not required to incur any personal costs. That same reasoning is applicable here.

But we have found no evidentiary support in the record for the court’s implied finding that the Legal Aid office involved here in “primarily funded by the federal government” or that the litigants here “were not required to incur any personal costs,” even assuming, argu-endo, that these factors are controlling. Accordingly, both cases will be remanded for a reconsideration of the appropriateness of awarding costs and attorneys’ fees, and the entry of an order accompanied by sufficient findings of fact to permit meaningful review.

In their consideration of the appropriateness of awarding costs and attorneys’ fees the district courts should be cognizant of the recent guidance from the Supreme Court. In Hall v. Cole, 412 U.S. 1, 4-9, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973), the Supreme Court indicated that such relief is appropriate, in general, where “overriding considerations indicate the need for such a recovery.” 412 U.S. at 5, 9, 93 S.Ct. at 1946, quoting Mills v. Electric Auto-Lite Co., 396 U.S. 375, 391-392, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970). The Supreme Court discussed two examples of such “overriding considerations”: first, where the unsuccessful party has acted in “bad faith”, 412 U.S. at 5, 93 S.Ct. 1943; and, second, where the litigation confers a “common benefit” to a class and the award of fees spreads the costs proportionately among the members of the bene-fitting class. 412 U.S. at 5-7, 93 S.Ct. 1943. In a footnote the Court mentioned as a third possible ground for awarding attorneys’ fees the situation where a party acts as a “private attorney general” to vindicate a strong Congressional policy.

Citing our decisions in Mills, supra, and Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968), respondent contends that the award of attorneys’ fees in this case might also be justified on the ground that, by successfully prosecuting this litigation, respondent acted as a “ ‘private attorney general,’ vindicating a policy that Congress considered of the highest priority.” Id., at 402, 88 S.Ct. 964, at 966. See also Knight v. Auciello, 453 F.2d 852 (CA 1 1972); Lee v. Southern Home Sites Corp., 444 F.2d 143 (CA 5 1971). In light of our conclusion with respect to the “common benefit” rationale, however, we have no occasion to consider that question, 412 U.S. at 6, n. 7, 93 S.Ct. at 1947.

See also Amos v. Sims, 409 U.S. 942, 93 S.Ct. 290, 34 L.Ed.2d 214, aff’g, 336 F.Supp. 924, 340 F.Supp. 691 (M.D.Ala. 1972).

The judgments in No. 73-1259 and No. 73-1430 are affirmed insofar as they denied the relief of retroactive welfare benefits and are reversed and remanded for proceedings not inconsistent with this opinion insofar as they denied the relief of costs and attorneys’ fees.


author: HASTINGS, Senior Circuit Judge.

text:
    In re SPECIAL SEPTEMBER, 1972 GRAND JURY, NO. 71 GJ 4509. Eugene LUFMAN, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
    No. 73-1916.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 21, 1974.
    Decided Aug. 7, 1974.
    Frank G. Whalen, Chicago, 111., for petitioner-appellant.
    James R. Thompson, U.S. Atty., Jeremy D. Margolis, Asst. U.S. Atty., Chicago 111., for respondent-appellee.
    Before SWYGERT, Chief Judge, HASTINGS, Senior Circuit Judge, and CUMMINGS, Circuit Judge.
   HASTINGS, Senior Circuit Judge.

This appeal concerns matters arising out of a criminal contempt proceeding where the Government sought to compel a grand jury witness to produce voice exemplars for a grand jury. The grand jury was investigating gambling activities. The relevant facts are undisputed and will first be set out herein to properly frame the issues upon which review is sought.

On February 8, 1973, petitioner Eugene Lufman was granted immunity pursuant to Title 18, U.S.C. §§ 6002-6003, and was ordered to appear and testify before the Special September, 1972 Grand Jury in the United States District Court for the Northern District of Illinois, by the Honorable Richard J. Austin, Judge presiding. Lufman’s testimony was sought in an attempt to secure evidence of criminal activity by other persons. Lufman refused to comply with the court’s order after the grant of immunity had been given and persisted in invoking his rights under the Fourth and Fifth Amendments. Thereafter, on the same day, Judge Austin adjudged Lufman to be in civil contempt of court and remanded him to the custody of the United States Marshal until such time as he obeyed the February 8, 1973 order. The validity of this order of civil contempt and the finding of civil contempt were not further challenged by Lufman and are not in issue here. At the time of briefing and oral argument before our court Lufman was still serving his sentence under Judge Austin’s order.

On July 17, 1973, Lufman was brought before the same grand jury in an attempt to secure identification evidence which could be used against Lufman himself, and for that purpose the Government sought to compel Lufman to give voice exemplars for the grand jury. Lufman’s counsel’s law partner, Mr. Reiff, appeared before the Honorable Edwin A. Robson, chief judge of the district court, at 10:30 a.m. that day, and informed him .that Lufman’s attorney, Mr. Frank G. Whalen, was currently in court before District Judge McMillen. Chief Judge Robson put the matter over until 2:00 p.m. that day so that Mr. Whalen could be present. Af 2:00 p.m., Mr. Whalen was present in court and requested that the matter be continued in order that he might confer with his client. It was conceded that Lufman’s counsel had received at least three weeks’ notice of the Government’s intended action concerning the giving of voice exemplars. Lufman was present and the chief judge offered to recess the hearing for 15 or 20 minutes to allow counsel to confer with Luf-man. Counsel rejected this offer.

That same afternoon, Lufman, with his counsel present, was personally interrogated by the chief judge in open court and advised of the nature of the proceeding and warned of the penalty which might be imposed. In answer to a direct question by the court, Lufman expressly stated that he refused to give voice exemplars before the same grand jury, after a direct order of the court to do so had been given to him, and persisted in invoking his rights under the Fourth and Fifth Amendments. The chief judge thereupon found Lufman to be in direct criminal contempt of court and sentenced him to 177 days of confinement. Execution of sentence was stayed until Lufman had completed serving his term under Judge Austin’s judgment of civil contempt.

Lufman subsequently filed an amended motion to vacate .the order of July 17, 1973, and this motion was denied. Petitioner has appealed only from the judgment committing him for criminal contempt. We affirm.

The issues presented for review are (1) may a grand jury witness who has been held in civil contempt for refusing to testify about the criminal activity of other persons under a grant of immunity, be held in criminal contempt for refusing, five months later, to give voice exemplars which could be used against himself to the same grand jury; and (2) whether the trial court prejudicially erred in denying Lufman a continuance at the time of the criminal contempt hearing.

I.

The civil contempt was predicated upon Lufman’s refusal to give evidence before the grand jury relating to possible criminal activity by other persons. The second refusal, to furnish voice exemplars to the same grand jury, more than five months later, related to Lufman’s own possible criminal activities. In our considered judgment, and we so hold, these two refusals constituted separate and distinct acts of contempt and could properly be punished as such under the well established authority hereinafter set out.

A decision of our own court generated the latest pronouncements by the Supreme Court concerning the production of voice exemplars for identification purposes before a grand jury.

In Dionisio v. United States, 7 Cir., 442 F.2d 276 (1971), we considered an appeal from the same district court and its chief judge. Dionisio and Smith had each been subpoenaed, with 18 others, to give voice exemplars for identification purposes before a grand jury. On Fourth and Fifth Amendment grounds, each refused to comply. The district court rejected both claims and adjudged them in contempt. On appeal, we affirmed the rejection of the Fifth Amendment claim but reversed on the Fourth Amendment claim for the reason that it required a preliminary showing of reasonableness before a grand jury witness could be compelled to furnish a voice exemplar. We further held that the proposed “seizures” would be unreasonable because of the large number of witnesses subpoenaed to produce the exemplars.

In United States v. Dionisio, 410 U.S. 1, 93 S.Ct. 764, 35 L.Ed.2d 67 (1973), the Court agreed that the compelled production of voice exemplars would not violate the Fifth Amendment privilege against compulsory self-incrimination since they were to be used for identification purposes only, and not for the testimonial or communicative content of the utterances. However, the Court held the Fourth Amendment claim to be invalid and reversed. It held that such subpoenas did not constitute a “seizure” within the meaning of the Fourth Amendment, and that the grand jury’s directive to make the voice recording infringed no valid Fourth Amendment interest. It necessarily followed that our requirement of a preliminary showing of reasonableness was in error.

In a companion case on the same day, concerning a grand jury subpoena to require a witness to furnish handwriting exemplars to determine whether he was the author of certain writings, the Supreme Court in United States v. Mara, 410 U.S. 19, 93 S.Ct. 774, 35 L.Ed.2d 99 (1973), held that the specific and narrowly drawn directive to furnish a handwriting specimen, like the compelled speech disclosure upheld in Dionisio, supra, involved production of physical characteristics and violated no legitimate Fourth Amendment interest. Accordingly, our decision in the same case, 454 F.2d 580 (1971), in which we felt bound by our prior decision in Dionisio, was reversed. The district court’s order requiring the witness to comply with the grand jury’s request was held to be correct.

In .the landmark case of United States v. United Mine Workers, 330 U.S. 258, at 298-299, 67 S.Ct. 677 at 698, 91 L.Ed. 884 (1947), a sharply divided Supreme Court said: “Common sense would recognize that conduct can amount to both civil and criminal contempt. The same acts may justify a court in resorting to coercive and to punitive measures.” The Court held that a union and its president were each properly found guilty of both civil and criminal contempt and, except for modification of the fine imposed on the union, upheld the fines imposed on each contempt. Id. at 303-307, 67 S.Ct. 677. The Court followed the oft-cited case of Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 441, 448-449, 31 S.Ct. 492, 55 L.Ed. 797 (1911), to the effect that “[sjentences for criminal contempt are punitive in their nature and are imposed for the purpose of vindicating the authority of the court,” 330 U.S. at 302, 67 S.Ct. at 700; and at 303-304, 67 S.Ct. at 701, that “□Judicial sanctions in civil contempt proceedings may, in a proper case, be employed for either or both of two purposes : to coerce the defendant into compliance with the court’s order, and to compensate the complainant for losses sustained.”

Our court took notice of both United Mine Workers and Gompers in Tobin v. Pielet, 7 Cir., 186 F.2d 886, 888-890 (1951), written by the late Chief Judge Major. Pielet was cited in Bullock v. United States, 6 Cir., 265 F.2d 683, 695, cert. denied, 360 U.S. 909, 79 S.Ct. 1294, 3 L.Ed.2d 1260 (1959), where Chief Judge Allen stated: “Successive and separate contempts are punishable as separate offenses,” citing Jennings v. United States, 8 Cir., 264 F. 399, 406 (1920). Further, in United States v. Gebhard, 9 Cir., 426 F.2d 965, 968 (1970), the court held a plea of double jeopardy to be groundless since “[ijt is well established that separate successive con-tempts are punishable as separate offenses,” citing Bullock and Pielet, supra.

Finally, in Yates v. United States, 355 U.S. 66, 74-75, 78 S.Ct. 128, 133, 2 L.Ed. 2d 95 (1957), Mr. Justice Clark, speaking for the majority, wrote:

“Though there was but one contempt, imposition of the civil sentence for the refusals of June 26 is no barrier to criminal punishment for the refusals of June 30. The civil and criminal sentences served distinct purposes, the one coercive, the other punitive and deterrent; that the same act may give rise to these distinct sanctions presents no double jeopardy problem. Rex Trailer Co. v. United States, 350 U.S. 148, 150, 76 S.Ct. 219, 220, 100 L.Ed. 149 (1956); United States v. United Mine Workers, 330 U.S. 258, 299, 67 S.Ct. 677, 698, 91 L.Ed. 884 (1947). Clearly, if the civil and criminal sentences could have been imposed simultaneously by the court on June 26, as the United, Mine Workers case holds, it scarcely can be argued that the court’s failure to invoke the criminal sanction until June 30 was fatal to its criminal contempt powers. Indeed, the more salutary procedure would appear to be that a court should first apply coercive remedies in an effort to persuade a party to obey its orders, and only make use of the more drastic criminal sanctions when the disobedience continues. Had the court imposed a civil sentence and found petitioner guilty of criminal contempt on June 26, it could have postponed imposition of a criminal sentence until termination of the principal case. The distinction between that procedure and the one followed here is entirely formal.” (Footnote omitted.)

As above stated, we affirm on this issue.

II.

Lufman complains that the trial court prejudicially erred in denying him a continuance at the time of the criminal hearing. He contends that he was deprived of his Sixth Amendment right to counsel. We have read the transcript of the proceedings held before the chief judge at that time and find that this contention is without merit.

It appears that Lufman’s counsel, Frank G. Whalen, conceded that he had received more than three weeks’ notice of the hearing date and of the Government’s intention to seek the voice exemplars before the grand jury at that time. We have hereinabove set out in detail the events that occurred in this proceeding at 10:30 a. m. and 2:00 p. m. on July 17, 1973.

Counsel summarily rejected the court’s offer to allow him 15 to 20 minutes for consultation with his client. Counsel was heard at length by the court; Luf-man was available for immediate consultation; and no attempt was made by counsel to take advantage of this offer. Counsel’s principle excuse for not having further conferred with his client during the three week period prior to the hearing was that counsel had been too busy. No showing was made as to why the time allotted was insufficient to talk further with his client. No showing was made as to how much additional time was needed. No showing was made as to why a protracted conference or delay was necessary. Finally, no showing was made as to any detriment his client would otherwise suffer or sustain. On this appeal, counsel merely stands on his statement that he was a busy lawyer and required more time because he said so.

It is well settled that the granting of a continuance rests within the sound discretion of the trial court. Finding, as we do, that no adequate justification was presented requiring a continuance of the hearing, and in the absence of any demonstrated prejudice to the client, we hold that there was no denial of due process. The district court did not abuse its discretion in denying a further continuance at the time of the criminal contempt hearing.

In light of the foregoing, the finding of criminal contempt and sentence in the judgment appealed from is affirmed.

Affirmed.


author: FEINBERG, Circuit Judge:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Thomas BELL, Defendant-Appellant.
    No. 1147, Docket 74-1391.
    United States Court of Appeals, Second Circuit.
    Argued June 27, 1974.
    Decided July 17, 1974.

      David M. Brown, Buffalo, N. Y. (Jaeckle, Fleisehmann & Mugel, Buffalo, N. Y., on the brief), for defendant-appellant.
    Kenneth A. Cohen, Asst. U. S. Atty. (John T. Elfvin, U. S. Atty., W. D. N. Y., on the brief), for plaintiff-appellee.
    Before MOORE and FEINBERG, Circuit Judges, and PALMIERI, District Judge.

       Of the United States District Court for the Southern District of New York, sitting by designation.

   FEINBERG, Circuit Judge:

Thomas Bell appeals from a conviction of attempted bank robbery, 18 U.S.C. § 2113(a), after a jury trial before Chief Judge John T. Curtin in the United States District Court for the Western District of New York. Appellant was sentenced on March 18, 1974, and remanded to the custody of the Attorney General pending a study and recommendation under 18 U.S.C. § 4208(b). The principal issues on appeal concern the defense of insanity raised at the trial. For reasons stated below, we affirm the judgment of conviction.

I

In October 1973, an attempt was made to hold up the Marine Midland Bank in Buffalo, New York. A man handed a note to a teller, which read “Give me all your money or I kill you.” That employee, along with Sandra Witmer, another teller, left the teller’s cage and told the Assistant Manager what had occurred. He immediately called the police, who arrived a few minutes later. In the meantime, the man who passed the note had left the bank. Appellant was observed a short distance away and was questioned by an officer. He was then taken to the bank, identified by the tellers and placed under arrest.

At trial, Bell claimed that he was not the would-be robber and also raised the defense of insanity. The evidence that he was, in fact, the culprit was overwhelming, and on appeal Bell claims no insufficiency in this respect. Appellant does argue, however, that the evidence failed to establish beyond a reasonable doubt that he was sane on the date of the attempted holdup. He also asserts that the judge should have declared a mistrial because of the testimony of the government psychiatrist and that the reading of the prior testimony of Sandra Witmer constituted reversible error.

II

There can be no doubt, after reading the record, that appellant Bell is a disturbed man. Through the testimony of appellant’s expert witness, Dr. Michael J. Lynch, a psychiatrist, the jury was advised that appellant had been confined in psychiatric hospitals at various times over a period of many years. As late as 1972, he had received electric shock treatment at the Buffalo State Hospital. As will be seen below, he has had numerous brushes with the law. However, the issue before the jury was not whether appellant had suffered psychiatric problems. It was whether, at the time of his alleged commission of the crime,

as a result of mental disease or defect he lack[ed] substantial capacity either to appreciate the wrongfulness of his conduct or to conform his conduct to the requirements of law.

United States v. Freeman, 357 F.2d 606, 622 (2d Cir. 1966). That test was fairly put to the jury by Judge Curtin, and the defense made no objections to the charge. The jurors’ request for additional instructions and other guidance from the court shows that they understood the significance of the matter before them. And, contrary to appellant’s assertion, the testimony of the government psychiatrist, Dr. Richard F. Miller, did create a jury issue. Dr. Miller testified that appellant suffered from alcoholism and had an antisocial personality, but concluded that he was able to appreciate the wrongfulness of his conduct and to control it. The picture of 12 lay jurors listening to conflicting psychiatric evaluations and then deciding which is correct may raise fundamental questions, but it is the way we resolve such issues, at least for the present. Moreover, there is less chance of juror confusion in a case like this where the government psychiatrist suggested that Bell knew the legal advantages of appearing to be mentally ill — a matter on which laymen can use their common sense. In any event, as in United States v. Bohle, supra, note 3, on this record the insanity defense was a question for the jury.

Even so, appellant argues, a new trial is necessary because Dr. Miller’s testimony unfairly introduced prejudicial evidence into the ease. Dr. Miller was called as a rebuttal witness by the prosecution. In the course of his direct testimony, he stated that he had reviewed various medical records and defendant’s arrest record. The judge immediately instructed the jury that the doctor’s testimony was offered only with respect to the defendant’s mental capacity and criminal intent on the date of the crime. When Dr. Miller — outside the presence of the jury — told the judge that his diagnosis of the defendant was related to his prior arrest record, the judge explained to him the possible prejudice involved and directed him, whenever possible, to make his diagnosis without reference to this record. Thereafter, the doctor did not again mention that Bell had been arrested. Appellant complains, however, that the doctor did refer to a number of instances of defendant’s criminal conduct in support of the diagnosis, e. g., Bell’s use of drugs, his theft of household articles and his participation in a mugging. These were mentioned in a letter from the Acting Director of one hospital, where defendant had been confined, to the head of the Department of Psychiatry at another hospital in which he was given treatment.

Under the circumstances, no reversible error occurred. Mention of appellant’s prior arrest record was minimal and was promptly corrected by Judge Curtin. The references to his antisocial activity were contained in the medical records reviewed by Dr. Miller, and were part of the basis for his opinion. That some of it was criminal does not insulate it from mention in this context. Cf. United States v. Kohlman, 469 F.2d 247, 250-251 (2d Cir. 1972); Proposed Federal Rule of Evidence 404(b), H.R. 5463, 93d Cong., 2d Sess. (1974). The judge properly instructed the jury that it could not consider this evidence as indicating a propensity to commit the crime charged. Of course, there is an element of unreality in all of this, but that is inherent in the jury process which depends on the assumption that the jurors will follow the instructions given by the judge. The alternative here would be to allow the defendant to claim insanity and offer the expert evidence he chooses but to restrict the Government in presenting the basis for the contrary opinion of its own expert. This course simply does not make sense. Although we have found no precedent squarely in point, we feel that Judge Curtin handled an obviously difficult problem in a proper and fair manner, accommodating the interests of both defendant and the Government.

Finally, appellant claims that the Government should not have been allowed to read to the jury the prior testimony at a suppression hearing of Sandra Witmer, one of the identifying witnesses. Mrs. Witmer was not present at trial because of illness, as the judge specifically found. So far as the record in the court below reveals, appellant never contested the genuineness of her sickness or raised any issue as to its duration — matters which we would in any event be less equipped than the trial court to determine. 5 Wigmore, Evidence § 1406, at 159 (3d ed. 1940). Here, however, Bell relies on Peterson v. United States, 344 F.2d 419 (5th Cir. 1965), which held that the Government could not use former testimony when a continuance of several months would have permitted a witness suffering a difficult pregnancy to testify in person after the birth of her child.

Although appellant argues to us that in a case of temporary illness, “the convenience to the Government must give way to the rights of the accused,” we think that in the first instance it is up to the district judge to decide if the witness is truly “unavailable” — a finding that we would not be quick to overturn. Once this determination is made, the law is clear that prior testimony may be admitted when given — as here — in court, under oath, subject to cross-examination and on the very issue (identification) for which it was offered at trial. Mancusi v. Stubbs, 408 U.S. 204, 92 S.Ct. 2308, 33 L.Ed.2d 293 (1972) ; California v. Green, 399 U. S. 149, 165-166, 90 S.Ct. 1930, 26 L.Ed. 2d 489 (1970); Barber v. Page, 390 U. S. 719, 722, 88 S.Ct. 1318, 20 L.Ed.2d 255 (1968). See United States v. Singleton, 460 F.2d 1148 (2d Cir. 1972), cert. denied, 410 U.S. 984, 93 S.Ct. 1506, 36 L.Ed.2d 180 (1973) ; Proposed Federal Rule of Evidence 804(a)(4), supra (“unavailability” includes “then existing physical or mental illness or infirmity”) ; 804(b)(1). We disagree with Peterson, supra, if indeed it meant to imply that in every case where a witness is ill but will sometime recover, the prosecution must suffer a continuance (in this instance, one of several months; see note 5 supra) or forego entirely the use of the evidence. Under the circumstances presented here, we believe that the judge’s decision was proper.

Judgment affirmed.

      . E. g., not only was Bell identified by the bank employees (the testimony of Sandra Witmer is treated below) but evidence was given tliat the only fingerprints found on the note were his.

      . Several times during their deliberations, the jurors asked the court to let them view certain items in the jury room or listen again to testimony. Notably, on the insanity question, the jurors requested appellant’s medical records from 1972 on, as well as testimony about them. They also asked the judge to repeat his charge on the effect of drugs or alcohol on criminality.

      . See authorities collected in United States v. Bohle, 475 F.2d 872, 875 n. 3 (2d Cir. 1973).

      . Brief for Appellant at 13.

      . Here the judge’s finding is amply supported by the record, which contains a doctor’s letter to the effect that Mrs. Witmer had recently undergone surgery and would not be able to testify for at least two and a half months.

      . We note, too, that Peterson predated several important Supreme Court cases on the confrontation issue. See, e. g., Mancusi v. Stubbs, supra; California v. Green, supra.

      . Our task on this appeal would have been considerably lightened had the parties seen fit to refer to pages of the record or the appendix in their statements of fact in the briefs. (Appellant gave no citations at all while appellee in large part adopted appellant’s factual narrative.) See Fed.R.App.P., Rule 28(a) (3), (e).


author: OAKES, Circuit Judge:

text:
    OVERSEAS AFRICAN CONSTRUCTION CORP., Employer, and St. Paul Mercury Insurance Co., Carrier, Appellants-Cross Appellees, v. Eugene McMULLEN, Deceased, by George McMullen, Executor, and John D. McLellan, Jr., Deputy Commissioner, United States Employees Compensation Commission, Second Compensation District, Appellees-Cross Appellants.
    Nos. 948, 1064 and 1108, Dockets 74-1092, 74-1103 and 74-1538.
    United States Court of Appeals, Second Circuit.
    Argued May 17, 1974.
    Decided July 5, 1974.
    Rehearing and Rehearing En Banc Denied July 23, 1974.

      Irwin B. Silverman, Brooklyn, N. Y., (Jacowitz & Silverman, P. C., Brooklyn, N. Y., of counsel), for appellants-cross appellees.
    Angelo C. Gucciardo, New York City (Israel, Adler, Ronca & Gucciardo, New York City, of counsel), for appellee-cross appellant McMullen.
    Joshua T. Gillelan II, Atty., Dept, of Labor, Washington, D. C. (William J. Kilberg, Sol. of Labor, James G. Johnston, Asst. Sol. of Labor, George M. Lilly, Washington, D. C. of counsel), for appellee-cross appellant McLellan.
    Before MEDINA, HAYS and OAKES, Circuit Judges.
   OAKES, Circuit Judge:

The principal appeal is by St. Paul Mercury Insurance Co. (St. Paul) on behalf of itself and Overseas African Construction Corp. (Overseas African). St. Paul questions the jurisdiction of the deputy commissioner, United States Employees Compensation Commission, to make a $12,495.50 award, handed down June 22, 1972, on the behalf of claimant Eugene McMullen (claimant), a former employee of Overseas African, who died some five months prior to the awards being made. Jurisdiction was assumed and the award made by the deputy commissioner under the Defense Base Act, as amended, 42 U.S.C. § 1651 et seq. (the “Act”), which applies the provisions of the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U.S.C. § 901 et seq. (LHWCA), to certain types of employees. The deputy commissioner and the estate of the claimant have taken a cross appeal in connection with the district court’s refusal to assess attorney’s fees against St. Paul.

St. Paul filed its action to set aside the award on July 21, 1972, pursuant to 33 U.S.C. § 921. In a memorandum opinion and order dated November 21, 1973, on cross motions for summary judgment, the district court dismissed St. Paul’s challenge to the award and affirmed the award in claimant’s favor. The court also imposed a statutory penalty on St. Paul under 33 U.S.C. § 914(f). The court also denied claimant’s demand for payment by St. Paul of his legal fees spent in prosecuting his claim, a claim apparently based solely on 33 U.S.C. § 926, saying that the basis for St. Paul’s appeal was not so “frivolous or malicious” as to require such an assessment. The court did not comment on the possible impact of an amendment to 33 U.S. C. § 928 — which had become effective on November 26, 1972 — on the question of assessing legal fees against St. Paul. On November 30, 1973, claimant’s counsel wrote a letter to the district court which pointed out the possible relevance of the amended version of § 928 to the question of legal fees. The court, treating the letter as a motion to reargue, adhered to its prior determination (which had reached the question of attorney’s fees under § 926 but not § 928) and assessed legal fees in the sum of $1,800 against the claimant’s estate under § 928 as it existed prior to its amendment.

The claimant, was hired in New York by Overseas African and was assigned to a project at Chisimaio, Somalian Republic, Africa, during the period from May, 1968, to December, 1968, as project manager and chief accountant. The project was under the general supervision of the United States Army Corps of Engineers, which approved for acceptance the various parts of the construction project as they were completed. The project was funded by AID, the Agency for International Development, United States Department of State. The funds came from “Chisimaio Port and Municipal Facilities Loan No. 649-H-002 (Chisi-maio loan).” While working on this project, claimant contracted a skin disorder, diagnosed as neurodermatitis, which eventually forced his return to the United States and which all parties concede to be a legitimate basis for the compensation awarded by the deputy commissioner and approved by the district court. Claimant’s death on January 30, 1972, from unrelated causes, came about five days after the hearing on his claim before the deputy commissioner. There is no dispute whatsoever that claimant was temporarily totally disabled and, if the Act conferred jurisdiction on the deputy commissioner, was entitled to the award which was made together with the penalty assessed by the district court.

The claim of St. Paul is that the deputy commissioner and the court below were without jurisdiction to enter an award and judgment respectively under the Defense Base Act. The claim is evidentially based solely on a letter from AID bearing a date of February 22, 1972, which is set forth in the margin. The district court affirmed the deputy commissioner’s finding that this letter did not overcome the statutory “presumption” of jurisdiction. St. Paul argues that the construction contract was between the employer and the Republic of Somalia, and that while it may have been approved and financed by the United States, there is an exception as a matter of law to jurisdiction of employees’ compensation claims under the Defense Base Act as amended, 42 U.S.C. § 1651(a)(5), in the case of projects financed from the Development Loan Fund. Section 1651(a) does state that

the provisions of the Longshoremen’s and Harbor Workers’ Compensation Act . . . shall apply in respect to the injury or death of any employee engaged in any employment . (5) under a contract approved and financed by the United States or any executive department ... or agency thereof . . . where such contract is to be performed outside the continental United States, under the Mutual Security Act of 1954, as amended (other than title II of chapter II thereof unless the Secretary of Labor, upon the recommendation of the head of any department or other agency of the United States, determines a contract financed under a successor provision of any successor Act should be covered by this section)

(Emphasis added.)

St. Paul’s argument is, then, that since title II of chapter II of the Mutual Security Act of 1954 established a Development Loan Fund as an agency of the United States and body corporate authorized to make loans to promote the economic development of underdeveloped friendly countries, and since the letter from AID says that the work performed by Overseas African was “totally financed on a development loan basis,” the work here was not work to which the Defense Base Act and the LHWCA extended.

Apparently this highly technical argument is a bit of an afterthought, for both the employer and St. Paul thought that the Chisimaio project was a Defense Base Act project and respectively sought and supplied insurance coverage in relation to it. The contract of employment between Overseas African as employer and Mr. McMullen, the employee, provided that the employer would

procure and pay the premiums for such compensation insurance as will accord to Employee . . . the statutory benefits for death or injury to which the Employee may be entitled under the applicable Federal law of the United States including but not limited to the Defense Base Act and War Hazards Compensation Act. Said workmen’s compensation insurance shall also include coverage of Employee for illness due to endemic diseases of Somalia. . . .

St. Paul’s policy originally had provided in Section 2, Coverage A,

The company agrees to pay voluntarily on behalf of the insured, to the employees defined in Section 1 of this endorsement, the compensation, medical and other benefits specified in the Workmen’s Compensation Law and
Occupational Disease Law of the state designated in Item 3 of the declarations [New York] in the same manner as if such employees were covered under the provisions of said law or laws.

By endorsement the policy was amended to read “Policy includes employees working in Chisimaio, Somalia (estimated at eleven)” and another endorsement provided rather cryptically, “It is understood and agreed that Public Law 208 benefits apply as respects the A.I.D. Projects only.” “Public Law 208” is the Defense Base Act.

Certainly a prima facie showing of federal jurisdiction in this case is made out by the contract of insurance itself, especially in light of 0the apparently successful argument of St. Paul— after claimant had originally proceeded in the New York state courts to attempt to establish compensability under the relevant state statutes — that a federal forum was the appropriate one for resolution of the dispute. A strong argument can be made that St. Paul should be estopped from challenging federal jurisdiction over the dispute, or from raising the point that, as a factual matter, the contractual relationships involved a specific exception to jurisdiction over a dispute that is otherwise clearly a federal matter. Without rendering our decision on this basis, we would nevertheless remark that St. Paul’s actions during the course of this dispute can and should be weighed in connection with whether it has overcome the statutory-presumption of jurisdiction.

So doing, we agree with the deputy commissioner and with the court below that the AID letter of February 22, 1972, is insufficient to overcome the statutory presumption of jurisdiction. The rule, of course, is that so long as any reasonable inference from the facts supports jurisdiction under the statutory presumption that jurisdiction may be found. Cardillo v. Liberty Mutual Insurance Co., 330 U.S. 469, 474, 67 S.Ct. 801, 91 L.Ed. 1028 (1947); Michigan Mutual-Liability Co. v. Arrien, 344 F.2d 640, 645-646 (2d Cir.), cert. denied, 382 U.S. 835, 86 S.Ct. 80, 15 L.Ed.2d 78 (1965). But see Employers Mutual Liability Inssurance Co. v. Arrien, 244 F.Supp. 110, 113 (N.D.N.Y.1965) (distinction between presumption of coverage and presumption of jurisdiction). The AID letter does not indicate the relationship between the parenthetical exclusion in § 1(a)(5) of the Defense Base Act, 42 U.S.C. § 1651(a)(5), and the assertion that Overseas African’s contract “was totally financed on a development loan basis.” St. Paul did nothing to prove that relationship before the deputy commissioner, before the court belqw, or before us. For all that appears before us there are other foreign assistance act loans, and there are other forms of development loans than those made from the Development Loan Fund.

Thus it becomes unnecessary for us to pass upon the deputy commissioner’s assertion that this contract was covered by 42 U.S.C. § 1651(a) (4), or to pass upon the claim of the claimant’s estate that, because the employer appeared and conceded jurisdiction and under 33 U.S.C. § 935 the jurisdiction of the employer “shall be jurisdiction of the carrier,” the concession of the employer is ipso facto the concession of the carrier.

We pass then to the question of attorneys’ fees. To recapitulate, the deputy commissioner approved a fee of $2,500 for the services of the claimant’s attorney and directed that this be paid out of the total award. The district court fixed the value of the claimant’s estate’s attorneys’ services at $1,800 in addition thereto, and directed that this also be paid by the executor out of any funds received by him. These awards were clearly authorized by 33 U.S.C. § 928 as it existed prior to its amendment. On cross appeal here the deputy commissioner and the claimant’s estate raise two arguments concerning who should pay these fees. The first argument is that the district court erred in not finding that all counsel fees in that court should be chargeable to St. Paul by virtue of 33 U.S.C. § 926, which allows for the imposition of all costs upon a party that institutes or continues proceedings relative to workmen’s compensation “without reasonable ground. . ” The second argument is that at least those legal expenses incurred by claimant’s estate after November 26, 1972, are recoverable against St. Paul irrespective of whether “reasonable grounds” existed for St. Paul’s resistance to the claim under the provisions of § 928 as amended.

Considering first the argument under § 926, as it relates to legal fees in the district court, we believe the following factors to be determinative in claimant’s favor. On the appeal from the deputy commissioner’s order to the district court, St. Paul raised several issues concerning the award in its pleadings — the usual stock defenses in such cases — but pressed only the jurisdictional issue. The district court found the jurisdictional issue to be the “only serious issue” before it but, after stating that both St. Paul and Overseas African “both regarded the Chisimaio project as within the Defense Base Act . . .,” held that the jurisdictional argument was neither “frivolous [n]or malicious.” With that we may agree, but compensation acts generally and the LHWCA specifically contemplate the voluntary payment of compensation to the claimant upon receipt of notice of disability or injury. Here, legal proceedings were held before the New York State Workmen’s Compensation Board where, for all practical purposes, they were adjourned because of St. Paul’s refusal to “waive” its “admiralty or interstate commerce rights and remedies,” before the United States Employees Compensation Commission. For its own reasons, St. Paul resisted the jurisdiction of the deputy commissioner, the district court and now this court, even though there has never been any serious claim that the claimant (or his estate) was not entitled to relief at all times. The only claim consistently advanced by the carrier has been that relief has not been sought in the proper forum. On the facts, and in light of the policy for expeditious payment of claims, we feel the jurisdictional claim to be so insubstantial as to require the carrier to bear the expense of the legal fees in the district court, and the judgment of the district court in this respect is reversed. .

Legal fees in this court, which we set at $2,000.00, we find to be governed by the provisions of 33 U.S.C. § 928(a) & (c) as amended. Under § 928(a), a claimant, whose claim is resisted by a carrier, who successfully prosecutes that claim has an absolute right to recover his legal expenses incurred in that prosecution. The only serious dispute involving § 928(a) is whether, as a statutory matter, Congress intended that section to apply to cases pending in any forum on November 26, 1972 (the effective date of the amendments), and, if so, whether there be any constitutional impediment to such an application. These questions need not detain us long. In Virginia Hotel Co. v. Mills, BRB No. 133-73 (Ben Rev. Bd. Apr. 2, 1974), the Benefits Review Board of the Department of Labor, which, under 33.U.S.C. § 921(b)(3), replaces the district court for purposes of appealing a compensation order, held that the absence of any legislative history to the contrary indicated congressional intent that the amendments — here involving procedural and remedial aspects of workmen’s compensation disputes — should be applied to pending proceedings. There being no savings clause in the amendments, we fully concur with the Mills decision on this point. As was said by the Supreme Court in Sampeyreac v. United States, 32 U.S. (7 Pet.) 222, 238, 8 L.Ed. 665 (1833), “Almost every law, providing a new remedy, affects and operates upon causes of action existing at the time the law is passed.” See Ahmed’s Case, 278 Mass. 180, 179 N.E. 684 (1932). Cf. Bradley v. Richmond School Board, 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974). See generally 3 A. Larson, The Law of Workmen’s Compensation §§ 83.12, 83.17 (1973). As for any constitutional objections to such retrospective application of § 928(a) as is involved here, objections not raised directly by St. Paul in its briefs, we agree with the Mills decision to the effect that the date the right of action accrued has no constitutional significance. As of November 26, 1972, St. Paul was on notice that § 928(a) as amended might be applied to its case respecting legal fees should St. Paul fail to prevail on its appeal in both the district court and on further appeals it might choose to take.

For the reasons stated herein, the judgment of the district court to the extent that it affirmed the award of the deputy commissioner is affirmed; so much of the district court’s judgment as denied claimant’s entitlement to legal fees in that court is reversed and the cause remanded to the district court for entry of an order directing St. Paul to make good those expenses. Legal fees assessed in this court are to be paid in accordance with this opinion.

      . The award was for $11,250.00 on the basis of $70.00 per week from January 1, 1969, to January 30, 1972, plus $1,245.50 for documented medical expenses incurred during this period. A fee of $2,500.00 for claimant’s attorneys was fixed by the deputy commissioner to be paid out of the compensation awarded.

      . This Act was adopted to extend coverage to employees working on defense bases including originally particularly those acquired from Great Britain on a lend-lease basis. See Republic Aviation Corp. v. Lowe, 164 F.2d 18 (2d Cir. 1947) (Chase, J.), cert. denied, 333 U.S. 845, 68 S.Ct. 663, 92 L.Ed. 1128 (1948). As such it was a “remedial act” to be “interpreted to accomplish so far as is possible the purposes for which it was intended.” Id. at 20.

      . Under § 14(f) of the LHWCA, if payment of an award is not timely made (within 10 days) and no stay is sought or granted, a 20 per cent penalty “shall be imposed” by the district court. 33 U.S.C. § 914(f). Thus, the total amount of the award before this court is $14,994.60.

      . Longshoremen’s and Harbor Workers’ Compensation Act Amendments of 1972, Pub.L. No. 92-576, § 13, 86 Stat. 1251, 1259, 1265.

      . Overseas African was a wholly owned subsidiary of Reynolds Construction Co., which was the original overseas contractor for this project and to which the insurance policy originally underwritten by St. Paul ran as insured. The contract between the Somalian Republic and Reynolds was assigned by the latter to Overseas African and, by endorsement to the St. Paul-Reynolds insurance policy, it was agreed that the name of the insured was amended to include the interests of Overseas African.

      . On August 21, 1969, claimant settled a claim under a separate policy, # GR 1018, with AFIA-St. Paul Mercury Insurance Co., Overseas African and/or Reynolds, for $1,800.00. This policy involved compensation under the rubric of “Non-occupational Sickness Weekly Indemnity Benefits” and was found by the deputy commissioner to have no bearing on claimant’s rights under the Defense Base Act.

      . With $2,500.00 fixed as attorneys’ fees by the deputy commissioner and $1,800.00 by the district court, as the case comes to us $4,300.-00 is chargeable against the overall recovery of $14,994.60 exclusive of any fees which might be awarded in this appeal.

      . The pertinent portion of the letter is as follows:
      The following information is supplied in response to your inquiry to Mr. Barry Wallace concerning Overseas African Construction Corporation’s work on the Chisimaio Port project. The work performed by Overseas African was totally financed on a development loan basis. The applicable loan is designated as Chisimaio Port and Municipal Facilities Loan No. 649-H-002.

      . In any proceeding for the enforcement of a claim for compensation under the LHWCA “it shall be presumed, in the absence of substantial evidence to the contrary — (a) that the claim comes within the provisions of this chapter.” 33 U.S.C. § 920.

      . The original statute establishing the Development Loan Fund as a corporate agency was repealed by the Foreign Assistance Act of 1961, Pub.L. No. 87-195, pt. Ill, ch. 3, § 642(a)(2), 75 Stat. 460. That act established a new “Development Loan Fund” to be used by the President to make loans pursuant to the authority contained in the Act and the new fund provisions are set forth in 22 U.S.O. §§ 2161-2169 inclusive. Technically speaking, there is no longer any title II, chapter II, exception of the Mutual Security Act of 1954 as amended, 42 U.S.C. § 1651(a) (5), but the Development Loan Fund referred to in 22 U.S.O. §§ 2161-2169 must be read as continuing the exception to 42 U.S.O. § 1651(a) (5), since § 642(b) of the Foreign Assistance Act of 1961, 75 Stat. 460, provided that
      References in law to the Acts, or provisions of such Acts, repealed by subsection (a) of this section shall hereafter be deemed to be references to this Act or appropriate provisions of this Act . . .,
      and since old title II, chapter II, was replaced by the similar provisions of pt. I, ch. 2, title I of the 1961 Act (comprising §§ 201-205), 75 Stat. 426-427, now as amended, 22 U.S.C. §§ 2161 et seq.

      . We say “cryptically,” because it is now claimed by the insurer that the case falls within an exception to the Public Law 208 benefits because it was an AID “development loan” project.

      . Since tlie contract appears to have been executed solely by the Republic of Somalia and not by the United States as a party, it would not appear to fall within the provisions of 42 U.S.C. § 1651(a)(4). However, it is on a federal form and apparently a federal “contracting officer” approved the assignment from Reynolds Construction Co. to Overseas African.

      . Section 928(a), as amended, reads as follows :
      If the employer or carrier declines to pay any compensation on or before the thirtieth day after receiving written notice of a claim for compensation having been filed from the deputy commissioner, on the ground that there is no liability for compensation within the provisions of this chapter, and the person seeking benefits shall thereafter have utilized the services of an attorney at law in the successful prosecution of his claim, there shall be awarded, in addition to the award of compensation, in a compensation order, a reasonable attorney’s fee against the employer or carrier in an amount approved by the deputy commissioner, Board, . or court, as the case may be, which shall be paid directly by the employer or carrier to the attorney for the claimant in a lump sum after the compensation order becomes final.

      . Thus, if our judgment on the § 926 issue with respect to legal fees in the district court should be found erroneous by the Supreme Court, claimant’s estate would still be entitled to recovery of any legal expenses incurred in the district court after November 26, 1972, should our view of § 928(a) be sustained. AVe reach the § 928(a) question because we feel that the claim for legal fees made in this court should be decided under § 928(a), even though our views with respect to legal fees under § 926 in the district court would be equally applicable to fees in this court. The rationale for this position is that we see the 1972 Amendments to the LHWCA as superseding § 926 in that they provide for the first time what is clearly a congressional preference that attorneys’ fees not diminish the recovery of a claimant regardless of how close a case might be which is litigated but finally lost by a carrier. This appeal, because it was perfected after the effective date of the 1972 Amendments, should therefore be decided on the law most clearly applicable at that time.