author: PELL, Circuit Judge.

text:
    Richard J. SENNOTT and Joan Sennott, Plaintiffs-Appellees, v. RODMAN & RENSHAW, Defendant-Appellant.
    No. 71-1201.
    United States Court of Appeals, Seventh Circuit.
    Argued April 24,1972.
    Decided Jan. 18, 1973.
    Rehearing En Banc Denied March 28, 1973.

      Howard Lewis Fink, Robert Dunn Glick, Ira S. Kolb, Chicago, Ill., for defendant-appellant.
    Patrick W. O’Brien, James W. Gladden, Jr., Chicago, Ill., for plaintiffs-appellees.
    Before SWYGERT, Chief Judge, PELL, Circuit Judge, and LARAMORE, Senior Judge

       Senior Judge Don N. Laramore is sitting by designation from the United States Court of Claims.

   PELL, Circuit Judge.

. Appellant Rodman & Renshaw, a securities brokerage house and member of the New York Stock Exchange, appeals from an adverse judgment in the district court awarding appellees Richard and Joan Sennott damages of $99,600 plus prejudgment interest. Appellant was found vicariously liable for the damage caused Sennott and his wife by the fraudulent securities manipulations of Jordan Rothbart, a former associate of Rodman & Renshaw and son of a partner in the firm. Judgments were also entered against Jordan Rothbart and his father, William Rothbart. Only Rodman & Renshaw (Rodman) appealed.

Jordan Rothbart, a commodities speculator and securities dealer apparently possessed of persuasive sales ability but a lesser standard of integrity, had at one time but not subsequent to 1958, been an employee of Rodman. No express authority to act on behalf of that firm existed subsequent to 1958; indeed it fairly appears that he was at the times here involved persona non grata to Rodman notwithstanding his father’s status as a partner therein. In 1962, the Securities and Exchange Commission in an order had held that Jordan had between 1955 and 1957, while employed by another broker-dealer, violated certain anti-fraud provisions of the Securities Act. In 1958, his registration as a representative of a member of the National Association of Securities Dealers, Inc. had been revoked because of deceptive practices in the sale of securities. The Sennotts were unacquainted with this background at any material time here involved.

Jordan became a member of the Chicago Board of Trade in 1960 and engaged thereafter as a trader for his own account in commodities. Through his dealings at the Board of Trade, Jordan became acquainted with Richard Sennott who was also an active trader. Sennott traded both for himself and for the Hon-eymead Trading Corporation of which he was an officer.

As their relationship developed, Sen-nott, a more experienced commodities trader, recommended various transactions to Jordan who reciprocated by encouraging Sennott to take advantage of Jordan's father’s expertise in the securities market. Specifically, Jordan told Sennott that his father had made money in the stock market for several members of the Board of Trade and that if Sen-nott ever wished to open a stock trading account Jordan would have one opened for him at Rodman & Renshaw. Initially Sennott declined to act on Jordan’s recommendations, but in January 1964, in response to Jordan’s assertion that his father thought a particular stock was a good buy, Sennott asked Jordan to purchase a limited number of shares for him. Jordan immediately went to the special Rodman telephone located on the floor of the Board of Trade and arranged for the purchase of Sennott’s order through Rodman.

In the same month Jordan arranged for Sennott to open a trading account with Rodman in the name of his, Sen-nott’s, wife. Trading through that account and six others which he subsequently opened, Sennott’s trading volume with Rodman for the two-year period between 1964 and 1966 totalled more than $2,000,000. Approximately seventy per cent of this trading was done through accounts opened by Jordan Rothbart, and much of it was done on the recommendation of Jordan or his father. A typical transaction involved Jordan advising Sennott that his father believed a particular stock should be bought or sold, Sennott indicating a desire to purchase, and Jordan going to the Rodman phone on the Board of Trade floor and calling in the order. Shortly thereafter Sennott would receive a mailed confirmation slip from Rodman. Sennott, of course, paid brokerage fees on all of these transactions.

In February, 1964, Jordan and Sen-nott had a conversation on the floor of the Board of Trade during which Jordan told him that Skyline Homes, Inc. (Skyline) was about to be listed on the New York Stock Exchange but that the company needed more shares to be eligible. In an effort to meet the requirement, Skyline stock was made a secondary offering through Rodman & Renshaw at approximately $40 per share. Jordan’s offer to procure a portion of this offering for Sennott was accepted, and it was agreed that Jordan would place an order with Rodman for 2,000 shares of Skyline. Sennott received the shares in April and went immediately to the offices of Rodman & Renshaw to deliver a check for the shares. It was on this occasion that Sennott first met William Rothbart.

While there was nothing fraudulent or improper about this or the previous sales, it was the precursor for the deception which followed. In March 1964, shortly after the order for 2,000 shares of Skyline was placed but before Sennott met William Rothbart, Jordan approached Sennott with respect to the purchase of additional shares of Skyline stock, this time through stock options which allegedly had been made available to Jordan through his father’s dealings with Skyline. The district court’s Finding of Fact Number 9 correctly sets forth the representations made by Jordan Rothbart:

“. . . Rothbart told Sennott that a number of options for the purchase of Skyline Homes, Inc. stock had been made available to him, that the options had initially been offered to his father William Rothbart, a partner in Rodman & Renshaw, in return for services his father had rendered Skyline Homes, Inc. in the secondary public offering referred to above and also for helping Skyline Homes, Inc. become listed on the American Stock Exchange, but that, when Rothbart^ father turned down the offer because SEC regulations forbid such transactions on the part of broker-dealers, the options had been made available to him. Jordan Rothbart said that he was willing to exercise some of the options on behalf of Sennott. Jordan Rothbart also told Sennott that he was going to exercise some of the options for himself and that all the money for the options would be held in escrow in New York City until the time came for the exercise of the option rights. He told Sennott that the options would be exercised for shares of Skyline Homes, Inc. stock within seven months and that he would then deliver shares of said stock to Sennott at a price of $26.50 per share.”

At the time these representations were made, Skyline was selling for approximately $40 per share. Lured by a discount of that magnitude, Sennott agreed to purchase Skyline stock through the option plan. On seven separate occasions between March 18 and October 2, 1964, Sennott placed orders and delivered checks to Jordan Rothbart for Skyline stock at the option price. Payments for these orders totalled approximately $142,000. No stock options of the type described by Jordan ever existed and the representations were obviously designed to defraud Sennott. Instead of depositing the payments in an escrow account in New York, Jordan placed each check in his wife’s personal checking account at the First National Bank of Highland Park and subsequently used the money to pay his own substantial trading losses.

When Jordan Rothbart first proposed the purchase of Skyline stock through the option arrangement, it was agreed that neither party would divulge the nature of their dealings. In accordance with that agreement each of the seven payments was recorded only by handwritten cash receipts prepared by Sen-nott and signed by Jordan Rothbart.

When the stock which had been set for delivery on October 18, 1964, did not materialize, Sennott inquired as to the reason for the delay. He was told by Jordan that there was no reason for concern, that the temporary delay was caused by the S.E.C.’s refusal to list Skyline on the New York Stock Exchange until the company had more shareholders. Satisfied with this explanation and with Jordan’s assurance that the stock would be forthcoming soon, Sennott took no further action with respect to the Skyline options until early November 1964 when he was summoned to a meeting with the managing partner of Rodman & Renshaw, Vernon Carroll.

The circumstances of this meeting warrant detailed scrutiny. In October or early November, Jordan Rothbart approached Sennott on the floor of the Board of Trade and asked him to accompany him to a public phone to speak with William Rothbart. In the course of their conversation, William Rothbart told Sennott that Mr. Carroll wanted to meet with him to discuss the Skyline options but that the matters which Mr. Carroll wished to discuss were none of his business. Sennott was then advised not to cooperate with Carroll. Accompanied by Jordan, Sennott went to the offices of Rodman & Renshaw that afternoon to meet with Carroll. Jordan’s father met them at the door and again told Sennott the option transactions were none of Carroll’s business. At this time, he also added that Sennott should not worry, he would get his stock options. All three men then went to Carroll’s office where Carroll produced several of the checks Sennott had given Jordan Rothbart for the options. Carroll then sought to question Sennott with respect to how the cheeks happened to have been endorsed by Dolores Rothbart (Jordan’s wife) and deposited in her account in the First National Bank of Highland Park. Sennott, while admittedly shocked by this revelation, told Carroll it was none of his business and refused to disclose the nature of his dealings with Jordan. Immediately after the conference, Sennott asked Jordan Rothbart about the checks and was told that they were deposited in the Rothbart account so Jordan, who asserted he was purchasing equal amounts of Skyline stock, could pay for the total stock purchase with a single check. Apparently this explanation satisfied Sennott since he made no further inquiries on the matter. Indeed, when again summoned to Carroll’s office a few weeks later, he voluntarily signed a letter of indemnity protecting Rodman & Renshaw from liability for any failure on their part to investigate fully the signatures on the checks.

However, when several months had passed without delivery, Sennott again pressed Jordan for an explanation. On February 26, 1965, as a result of this inquiry, Jordan delivered 1,000 shares of Skyline common stock in street name to Sennott. This stock was purchased through Jordan’s own broker, not Rod-man & Renshaw, on the open market and merely signed over to Sennott in an effort to deceive him into believing he was receiving part of his “stock options.” The deception was effective for, although Sennott continued his requests for the balance of the stock, he made no further inquiry into the actual facts surrounding the late options.

Between February 26, 1965, and January 20, 1966, Jordan delivered an additional 2,200 shares of Skyline common stock to Sennott. Delivery of this stock was made in six installments. As before, each delivery consisted of stock purchased on the open market for the market price. As set forth in detail below, the value of the shares at the time received totalled $82,600.

In the spring of 1966, Sennott, who apparently had been oblivious to the waving banners of suspect practices of which he was the victim, learned that another member of the Board of Trade had filed a $75,000 claim against Jordan Rothbart with the Board of Directors alleging a fraudulent scheme remarkably similar to the circumstances of Sennott’s own transactions with Jordan. At approximately the same time, Sennott also learned that Jordan Rothbart had previously been expelled from the securities market. Until that time, Sennott had been unaware of Jordan’s prior fraudulent practices or his dismissal from Rod-man. In spite of these revelations, however, Sennott clung to the hope that the stock would be delivered, and, in an effort to facilitate that vain hope, when summoned before the Business Conduct Committee investigating Jordan Roth-bart, he refused to cooperate or disclose his dealings. Indeed, not until May 1966, after numerous delivery dates had passed without receipt of further shares of stock, did Sennott go to William Rothbart to inquire about the stock options. Sennott described his meeting with William Rothbart at the Rodman office. “I let Bill know exactly what was going on as far as no delivery of the Skyline Homes, that he [Jordan] was probably going to be expelled from the Chicago Board of Trade, at which time Bill Rothbart told me there was nothing he could do about it.”

Jordan was expelled from the Board of Trade in June 1966 for refusing to turn his financial records over to the Business Conduct Committee. At that point he ceased coming to the floor of the Board of Trade and Sennott discontinued his unsuccessful efforts to procure delivery of the stock by telephone. Only after all else had failed did Sennott approach Rodman with evidence of the scheme.

At the conclusion of a bench trial on the merits, the trial judge found Rod-man vicariously liable for the losses caused the Sennotts. Liability was based upon several theories set forth in the court’s conclusions of law. First, the court concluded that William Roth-bart “knowingly assisted and participated in the efforts of Jordan Rothbart to defraud plaintiffs,” in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 adopted by the Securities and Exchange Commission thereunder, Section 9(a)(4) of the Securities Exchange Act of 1934, and Section 17(a) of the Securities Act of 1933. The court then held that not only William Rothbart’s knowledge of the solicitation of stock business by Jordan at the Board of Trade but also his knowledge of the false representations to Sennott regarding Skyline was acquired within the scope of the Rodman partnership business and therefore was imputed to and binding upon Rodman. In addition, the judge concluded that because Rodman “knew or should have known” of the illegal conduct of William and Jordan Rothbart, it was equally liable with them for the false representations. The trial judge also held Rodman accountable for Jordan Rothbart’s action because it “aided and abetted” in the fraud in that, in breach of its broker-agent fiduciary duty, it failed to inform Sennott of Jordan’s background. Finally, the trial court imposed liability on Rodman on the ground that Rodman failed to act in good faith with respect to its duties as a “controlling person” over William and Jordan Rothbart, Section 20(a) of the 1934 Act, 15 U.S.C. § 78t(a).

The ground rules for our review are well-established and need not be repeated here. The applicable standards are collected and summarizd by Judge Hastings in Prince v. Packer Manufacturing Company, 419 F.2d 34, 36-37 (7th Cir. 1969). Assigning the matter of credibility to the district court we turn therefore to a determination of whether there is substantial evidence to support the findings of fact and whether the court erred as to the applicable law.

Taking the agency questions first, it is clear that Rodman must be deemed to have had knowledge of all of the securities transactions which Jordan solicited for his father prior to the inception of the fraudulent stock option scheme. In that situation, the knowledge of William Rothbart is, under general principles of agency, imputed to the partnership. Had plaintiff been defrauded in one of those transactions, Rodman’s liability would seem to be unquestionable. Those transactions, however, do not comprise the substance of this lawsuit. On the contrary, the facts upon which liability must be established in this case, if at all, are critically different. While the evidence leaves no doubt that William Rothbart, having processed the orders and his firm having received a broker’s fee, had knowledge of the solicitations of Jordan in the prior transactions, the record is silent as to a basis upon which the district court could properly have inferred that William had knowledge at any pertinent time of his son’s stock option deception.

We are at a loss as to the basis in the record for the district court’s conclusion that William Rothbart “knowingly assisted and participated” in the fraud. Indeed, the first contact the plaintiff had with William respecting the options took place in November 1964, after all of the payments for the stock had been made. This is not a pertinent time. There is no evidence that prior to the Carroll meeting William Rothbart did anything to induce Sennott to subject himself to Jordan’s defalcations, nor that he had any knowledge of what was transpiring until after the fact.

Further, we find no reason to belive that Sennott considered William Roth-bart to be any part of the transaction other than that he had been the original offeree of the mythical options. In fact, Sennott himself indicated that his understanding of Jordan’s stricture of confidentiality to be he should not say a word about the transaction to anybody including William Rothbart. Sennott also testified that it was never his understanding that the option shares were coming from or through Rodman but he imagined they would be coming from the Skyline corporation itself. Finally, Sen-nott admitted on cross-examination that he had testified in his deposition that when asked by investigators for the Illinois Securities Commission, which was looking into his complaint against Jordan, whether William Rothbart had ever participated or conspired with Jordan to perpetrate the option fraud, he had replied, “[N]o, not to my knowledge.”

Citing Crittendon v. State Oil Company, 78 Ill.App.2d 112, 115, 222 N.E.2d 561, 563-564 (1966), Sennott contends on this appeal that Rodman & Renshaw is estopped by its conduct from claiming that Jordan was not its representative. Again, we do not disagree as to the transactions handled through that firm, but those are not the ones with which we are now concerned. Sennott also speaks of “apparent agency” established by Rodman. Without becoming involved in the semantic niceties of distinctions, if any, between ostensible agency, apparent agency, and agency by estoppel, we note that Crittendon (78 Ill.App.2d at 116, 222 N.E.2d at 564) states that “[i]t is essential to the application of the doctrine of estoppel that such conduct or representations be relied and acted upon

Under Sennott’s theory of apparent authority or estoppel, therefore, plaintiff would be required to prove that he was relying upon Jordan’s apparent authority, and hence on Rodman, when he decided to purchase the Skyline options. Reliance is not evident from the record before us. Indeed, the converse is clearly demonstrated, for not only did the fraudulent representations never involve Rodman but both Sennott and Jordan Rothbart actively sought to prevent Rod-man from discovering the option transactions. Sennott agreed to keep the option plan secret, including from Rodman, and intentionally used personal payment receipts to record Sennott’s payments. The strongest evidence of the plaintiffs’ lack of reliance upon Rodman, however, is seen in Sennott’s refusal to cooperate with Carroll’s inquiry into the endorsements on Sennott’s checks. Had Sennott been relying on Rodman’s participation in the option plan, it is unlikely that he would have refused even to discuss the matter with a representative of Rodman. On the contrary, Sennott’s own statements belie such reliance. Responding to an inquiry by defendant’s attorney, Sennott observed, “[W]ith regard to this money that had been invested, I really felt that this thing would have completely gone undetected by Rodman & Renshaw had not that check been made out of the profit sharing.”

The Sennotts also place considerable reliance on Blackburn v. Dean Witter, 201 Cal.App.2d 518, 19 Cal.Rptr. 842 (5th Dist.Ct.App.1962), a case which they assert is “squarely in point.” There, a registered representative of the defendant brokerage house persuaded the plaintiff to invest in stock of a nonexistent company. The plaintiff then, as Sennott did here, sold some stock through the brokerage house to finance the purchase of the nonexistent stock. The brokerage house was subsequently found liable for the fraudulent acts of its representative. While Blackburn is factually similar to this case, a major distinction exists. The plaintiff in the Blackburn case was a customer who believed that he was purchasing stock through the brokerage house in the same manner as he had previously made purchases, and, as such, was relying on the expertise and integrity of the brokerage. Both the agency and the reliance elements were unquestionably present. Here, however, while some type of implied agency may well have existed as to other transactions, there was no reliance upon this agency in the transactions in question. Simply stated, the damage Jordan Rothbart inflicted upon the plaintiffs was a result of Sennott’s misplaced reliance upon Jordan Rothbart and not upon Rodman & Renshaw.

Having reviewed the record at length and found that the evidence supports neither plaintiffs’ theory that William Rothbart had knowledge of his son’s, reprehensible scheme which was imputable to Rodman nor their theory of apparent authority, we are forced to reject the trial court’s factual findings and legal conclusions with respect to these issues.

Our findings on these issues are also dispositive of plaintiffs’ other theories of liability. As to their position that Rodman was guilty of “aiding and abetting” in the option scheme, our conclusion that the evidence does not support the trial judge’s finding that William Rothbart had knowledge of the fraudulent scheme precludes imposition of liability on this basis. Without a showing that a Rodman partner or agent had knowledge of the fraudulent acts, and in the absence of a showing that here Jordan was purporting to act for Rodman, there is no basis for holding Rodman liable for acts of third parties.

Similarly, plaintiffs’ theory and the trial court’s finding that Rodman is liable under Section 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78t(a) as a “controlling person” over William and Jordan Rothbart is without merit. The trial judge found that Rod-man was in a position to control both men and that the partnership “did not act in good faith in exercising such control.” That finding, while sufficient to impose liability on Rodman for any of the pre-option scheme stock solicitations in which Sennott actually relied upon Rodman’s involvement in deciding whether to act, is not an adequate foundation upon which to base liability where Rodman was admittedly not considered to be involved in the transaction. Rodman’s duty to control its partners and agents, as well as its past employees, in situations such as this extends only to transactions with or by these parties where Rodman is itself involved. To extend it further would be to impose liability upon Rodman for virtually any act of its past or present employees and partners regardless of how remote and unrelated that act might be to Rodman & Renshaw. We are not inclined to read Section 78t so expansively.

For these reasons the judgment below is reversed as to Rodman & Renshaw, and the cause is remanded with instructions to dismiss the complaint as to Rod-man & Renshaw and to enter judgment for said defendant.

Reversed and remanded.

      . The district court made the additional finding that Jordan Rothbart solicited orders for Rodman & Renshaw from at least five other members of the Board of Trade. These orders and sales were accomplished by the use of the Rodmau telephone, and in each instance the member placing the order dealt exclusively with Jordan Rothbart.

      . $10,000 of the amount was paid by Honeymead and is not involved in this appeal.

      .
      Amounts Number of Closing Received Date Shares Price by Sennott
      2/26/65 1,000 $27.25 $27,250.00
      3/ 3/65 600 27.625 16,575.00
      5/ 4/65 200 29.50 5,900.00
      8/ 3/65 400 24.375 9,750.00
      8/ 5/65 300 24.00 7,200.00
      12/13/65 200 22.75 4,550.00
      1/20/66 500 22.75 11,375.00
      $82,600.00 3,200

      . This would seem consistent with Sen-nott’s description of his May 1966 meeting with William Rothbart at which he “let Bill know exactly what was going on as far as no delivery of the Skyline Homes. . . . ” When questioned about that meeting, Sennott stated in deposition:
      “And at this particular time is when I said, ‘Well, you know, Bill, whether you realize it or not, it was supposedly offered to you and that because you were a senior partner in Rodman & Renshaw, Jordie told me, under the 8EC rules you couldn’t accept it.’
      “He said, ‘Well, that’s not true.’ He said, T knew nothing of the stock options in Skyline.’
      “And again I asked him, ‘Why did you tell me before going to Carroll’s office not to worry? I’d get my stock options in Skyline.’
      “He said, ‘Because Jordie had assured me that you would.’ ”

      . In addition, Section 78t governing the liabilities of “controlling persons” provides in part:
      “(a) Every person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.”
      Liability is not imposed where the controlling person exercises good faith or does not induce the act which gives rise to the cause of action. Here, Rodman may not have acted in good faith with respect to the legitimate stock solicitation by Jordan Rothbart of which William Rothbart had knowledge but Rodman’s lack of knowledge of the fraudulent stock option scheme creates an entirely different situation. We do not see how Rodman can be found to have exercised bad faith with respect to a transaction of which it had no knowledge. It is equally clear that Rodman did not “induce” the acts of Jordan Roth-bart, and without bad faith or inducement there can be no liability under this section.


source: Caselaw Access Project

author: JAMES HUNTER, III, Circuit Judge.

license: Public Domain

text:
    UNITED STATES of America, Appellant, v. Frank GERVATO, Appellee.
    No. 72-1334.
    United States Court of Appeals, Third Circuit.
    Argued Nov. 14, 1972.
    Decided Jan. 26, 1973.

      Carl L. Melone, U. S. Atty., James J. Tansey, Criminal Division, Department of Justice, Washington, D. C., for appellant.
    Stanford Shmukler, Philadelphia, Pa., Richard P. Abraham, Philadelphia, Pa., of counsel, for appellee.
    Before ALDISERT, GIBBONS and HUNTER, Circuit Judges.
   OPINION OF THE COURT

JAMES HUNTER, III, Circuit Judge.

We review in this case the validity of a district court decision that a warrant to search a private dwelling cannot constitutionally be executed in the known absence of the occupant unless exigent circumstances exist. As far as we know, this question has not been decided by either the Supreme Court or any federal court of appeals.

On March 24, 1971, agent Glanz of the Federal Bureau of Narcotics and Dangerous Drugs (BNDD) obtained a warrant authorizing him to search appellee Frank Gervato’s apartment in the daytime for Dimethyltryptamine, a controlled dangerous drug, and chemicals and equipment used in its manufacture. About 5:30 p. m., Glanz and two BNDD chemists drove to appellee’s apartment which had been under surveillance by BNDD agents since approximately 12:30 p. m. that day. These agents had seen Gervato leave the premises sometime after 1:00 p. m. and not return, and Glanz was so informed by radio when he arrived around 6:00 p. an. Glanz then proceeded to appellee’s door, knocked, and announced his official identity and his reason for wanting to enter the apartment. When he received no reply he knocked again and then forced open the door. Once inside the apartment, Glanz and the other agents were met by the owner of the building and two young men, who had entered through a door connecting the apartment with a delicatessen. Glanz showed the owner a copy of the search warrant and agreed to the owner’s request to be present while the apartment was searched. The warrant was then executed with 78 items being seized. The agents departed about 9:00 p. m., leaving behind a copy of the search warrant and a list of the items seized. Ger-vato, who apparently knew nothing about the search, returned home a few minutes later.

On July 15, 1971, a two count indictment was returned charging appellee with illegally manufacturing and possessing lysergic acid amide, in violation of the Federal Food and Drug Act. On November 29, 1971, appellee filed a pretrial motion to suppress the evidence uncovered by the March 24 search. This motion was sustained by the district court on March 1, 1972 on the ground that the known absence of appellee made the search unreasonable and therefore in violation of the Fourth Amendment. United States v. Gervato, 340 F.Supp. 454 (E.D.Pa.1972). Specifically, the district court said that “[a] man’s home should not be forcibly entered in his absence to serve a search warrant, absent some exigent circumstance which it is up to the Government to show, especially in a case such as this where the house was under surveillance and the agents knew before going to the door that no one was home.” Id. at 463. The government has appealed this decision pursuant to 18 U.S.C. § 3731. We reverse because we do not believe that the Fourth Amendment requires the occupant to be present before his home can be searched under- a valid search warrant and because we do not think that the present search was unreasonable.

The Supreme Court has examined on many occasions the history and purposes of the Fourth Amendment. E. g., Warden v. Hayden, 387 U.S. 294, 301, 87 S.Ct. 1642, 18 L.Ed.2d 782 (1967); Stanford v. Texas, 379 U.S. 476, 481-485, 85 S.Ct. 506, 13 L.Ed.2d 431 (1965); Marcus v. Search Warrant, 367 U.S. 717, 724-729, 81 S.Ct. 1708, 6 L.Ed.2d 1178 (1961); Frank v. Maryland, 359 U.S. 360, 363-366, 79 S.Ct. 804, 3 L.Ed.2d 877 (1959); Boyd v. United States, 116 U.S. 616, 624-629, 6 S.Ct. 524, 29 L.Ed. 746 (1874). This history shows that the primary purpose of the Amendment was to put an end to the general warrants and writs of assistance under which officers of the Crown had been empowered to conduct general searches and seizures. James Otis denounced these writs as “ ‘the worst instrument of arbitrary power, the most destructive of English liberty, and the fundamental principles of law, that ever was found in an English law book’ since they placed ‘the liberty of every man in the hands of every petty officer.’ ” The historic occasion of that denunciation, at a famous 1761 debate in Boston, has been characterized as “perhaps the most prominent event which inaugurated the resistance of the colonies to the oppressions of the mother country. ‘Then and there,’ said John Adams, ‘then and there was the first scene of the first act of opposition to the arbitrary claims of Great Britain. Then and there the child Independence was born.’ ” Boyd v. United States, supra at 625, at 529 of 6 S.Ct.

In order to understand the Founding Fathers’ perspective on writs of assistance, it is instructive to consider the history of the controversial general warrant in England. As Stanford v. Texas, supra at 482-483 of 379 U.S., at 510 of 85 S.Ct. points out:

“What is significant to note is that the history is largely a history of conflict between the Crown and the press. It was in enforcing the laws licensing the publication of literature and, later, in prosecutions for seditious libel that general warrants were systematically used in the sixteenth, seventeenth, and eighteenth centuries. ... In later years warrants were sometimes more specific in content, but they typically authorized the arrest and search of the ¿remises of all persons connected with the publication of a particular libel, or the arrest and seizure of all the papers of a named person thought to be connected with a libel.”

In the Colonies, the hated writs of assistance were also frequently used to search for evidence of crime or of illegally imported goods.

A few years prior to the outbreak of the American Revolution, the use of general warrants to aid in prosecutions for seditious libel was judicially condemned in England in two landmark cases, Wilkes v. Wood, 19 How.St.Tr. 1153 (1763) and Entick v. Carrington, 19 How.St.Tr. 1029 (1765). In the former case, John Wilkes had boldly denounced the English government in issue No. 45 of the North Briton. By authority of a warrant issued by the Secretary of State, Wilkes was carried away, and his house was then searched and his papers indiscriminately seized. Wilkes sued and obtained a verdict of one thousand pounds against one of the perpetrators of the search and four thousand pounds against the Secretary of State. In his opinion, Lord Camden condemned the “general warrant, where no inventory is made of the things thus taken away, and where no offenders’ names are specified in the warrant, and therefore a discretionary power given to messengers to search wherever their suspicions may chance to fall.” 19 How.St.Tr. at 1167. However, while Lord Camden was obviously distraught at what he viewed as a “ridiculous warrant against the whole English nation,” there is no indication that he believed the warrant could not be executed in Wilkes’ absence.

In Entick v. Carrington, supra, a warrant based on a charge of seditious libel issued for the arrest of Entick, the author of a publication called Monitor or British Freeholder, and for the seizure of all his papers. The King’s messengers executing the warrant ransacked Entick’s home for four hours and carted away great quantities of books and papers. In an opinion which the Supreme Court has recognized as a wellspring of the rights now protected by the Fourth Amendment, Lord Camden declared the general warrant for the seizure of papers contrary to the common law, despite its long history. “This power,” he said, “so assumed by the secretary of state is an execution upon all the party’s papers, in the first instance. His house is rifled; his most valuable secrets are taken out of his possession, before the paper for which he is charged is found to be criminal by any competent jurisdiction, and before he is convicted either of writing, publishing, or being concerned in the paper.” 19 How.St.Tr. at 1064.

The district court in the present case placed great emphasis on one passage in Entick from which it concluded that the common law prohibited the execution of a search warrant if no one was on the premises. Upon examination of that passage in the context of the entire opinion, however, we do not believe that such a conclusion is justified. Lord Camden’s concern in both Wilkes and Entick was with the unrestricted discretion of those who executed the warrants and not with the presence or absence of either plaintiff. Consequently, after reviewing these two cases along with the other authorities cited by the district court, we do not think that the common law prohibited searches in the absence of the occupant at the time the Fourth Amendment was adopted.

Entick and Wilkes, when considered with the Supreme Court eases already discussed, show that the search and seizure provision of the Fourth Amendment was primarily designed to protect against warrantless searches and seizures and those conducted under an indiscriminate general authority. There is no indication that the Founding Fathers were also concerned that the power to search should be dependent on the presence of the occupant.

In light of this history, it is significant to note that neither the Supreme Court nor any court of appeals has ever hinted or suggested, despite many opportunities to do so, that a search warrant should be executed only in the presence of the possessor or occupant of the property searched. See, e. g., Stoner v. California, 376 U.S. 483, 84 S.Ct. 889, 11 L.Ed.2d 856 (1964); Chapman v. United States, 365 U.S. 610, 81 S.Ct. 776, 5 L.Ed.2d 828 (1961); Agnello v. United States, 269 U.S. 20, 46 S.Ct. 4, 70 L.Ed. 145 (1925); Spinelli v. United States, 382 F.2d 871 (8th Cir. 1971), rev’d on other grounds, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969); United States v. Ravich, 421 F.2d 1196 (2d Cir. 1970), cert. denied, 400 U.S. 834, 91 S.Ct. 69, 27 L.Ed.2d 66 (1970); United States v. Maroney, 339 F.2d 710 (3d Cir. 1965).

In addition, Rule 41, F.R.Cr.P. 18 U.S.C., does not provide, among its mandatory requirements, that a search warrant should be executed only in the presence of the occupant. Since this Rule was promulgated by the Supreme Court, it appears likely that the Court did not consider the presence of the occupant to be a common law or constitutional requirement. Rule 41(d) provides in part that an inventory “shall be made in the presence of the applicant for the warrant and the person from whose possession or premises the property was taken, if they are present. . . .” (Emphasis added). This “if” phrase also suggests that the Court did not believe that the Fourth Amendment requires presence. Cf. United States v. Scolnick, 392 F.2d 320 (3d Cir. 1968), cert. denied, 392 U.S. 931, 88 S.Ct. 2283, 20 L.Ed.2d 1389 (1968).

Parenthetically, we agree with the district court and appellee that 18 U.S.C. § 3109 has no bearing on the present case, either as an authorization justifying agent Glanz’s conduct or as an authority forbidding that conduct. United States v. Gervato, supra at 457, of 340 F.Supp. However, when the search is authorized as it was here, then the procedural requirements of § 3109, which are directed at avoiding breaches of the peace, must be followed. Those requirements were followed in this ease.

Having decided that the Fourth Amendment does not prohibit per se searches conducted in the absence of the occupant, we now hold that the present search was reasonable under the circumstances. In order to obtain a search warrant today, the government must show that it has probable cause for its issuance, and the warrant must identify the property to be seized and name or describe the person or place to be searched. Rule 41(c), F.R.Cr.P. 18 U. S.C. This provides an individual with considerably more protection than did the general warrant of the sixteenth, seventeenth and eighteenth centuries which permitted unrestricted searches and seizures. Rule 41(d) also requires that a person be given an inventory of goods seized or that it be left at the place where the property was taken, something which was not necessary with the general warrant.

Despite this, the district court indicated that a search warrant executed in the absence of the occupant constitutes an unreasonable search because there exists the possibility of a general search and “pilferage by officers of the law.” It is, of course, true that either or both of these abuses could occur. However, we agree with the government that the requirement for judicial supervision prior to issuance provides adequate protection against the general warrant. Rule 41(e), F.R.Cr.P. 18 U.S.C. With respect to pilferage, Rule 41(c) and 18 U.S.C. § 3105 restrict the execution of search warrants to certain civil officers of the United States. In addition, Rule 41(d) mandates that an inventory be made of items seized, and it requires that this inventory be made in the presence of the person from whose possession of premises the property was taken or in the presence of at least one credible person other than the applicant for the warrant.

In addition to the above considerations, it is unlikely that the presence of the occupant at the beginning of a search would significantly reduce the possibility of pilferage or a general search. Frequently he would be placed under arrest, handcuffed, and sometimes removed from the premises before the search is completed. Even if this does not happen, when the executing party involves several officers, a number of areas can be searched at once making it impossible for the occupant to observe everything that happens. The district court has not suggested that these procedures are impermissible, but only states that the occupant must be present before a search can begin. This requirement will not avoid the possibility of pilferage or a general search, however, since in most instances these abuses could just as easily occur whether or not the occupant is present when the search commences. Consequently, for this reason as well as for those stated in the above paragraph, we reject the district court’s finding that the execution of a search warrant in the absence of the occupant significantly increases the likelihood of a general search or pilferage and is therefore unreasonable.

The district court also indicated that a search begun in the absence of the occupant is unreasonable because of the possibility of unnecessary property damage in a broken lock and door. However, we do not believe that this alone is a sufficient detriment to make a search unreasonable where a warrant based on probable cause has been obtained.

There is also a second issue in this case which must be discussed. A few days after the search, a BNDD agent told appellee’s attorney that he would like to interview appellee. The attorney agreed, and on April 2, 1971, appellee went to the Philadelphia Regional Office with his attorney. While there, he made an unsigned statement which the district court ordered suppressed as the fruit of an illegal search. Since we have found that the search in this case was constitutional, however, there is no reason to suppress this statement.

For the foregoing reasons, the order of the district court sustaining the motion to suppress evidence will be vacated and the cause remanded for further consideration.

      . See Stanford v. Texas, supra at 484 of 379 U.S., 85 S.Ct. 506, and Boyd v. United States, supra at 626-627 of 116 U.S., 6 S.Ct. 524.

        . The district court refers to a passage in a different version of Entick v. Carring-ton, 95 Eng.Rep.R. 807, 817 (1765). This passage reads:
      “The warrant in our case was an execution in the first instance, without any previous summons, examination, hearing the plaintiff, or proof that he was the author of the supposed libels; a power claimed by no other magistrate whatever (Scroggs C. J. always excepted) ; it was left to the discretion of these defendants to execute the warrant in the absence or presence of the plaintiff, when he might have no witness present to see what they did; for they were to seize all papers, bank bills, or any other valuable papers they might take away if they were so disposed; there might be nobody to detect them.”

      . If anything, the Supreme Court has indicated in dictum that a search is permissible in the absence of the occupant. Alderman v. United States, 394 U.S. 165, 178, 89 S.Ct. 961, 22 L.Ed.2d 176 (1969). See also Blakey, Aspects of the Evidence Gathering Process in Organized Crime Cases: A Preliminary Analysis, in The President’s Commission on Law Enforcement and Administration of Justice, Task Force Report: Organized Crime 80, 97 (1967).

      . This position is supported by the American Law Institute Official Draft No. 1, Model Code of Pre-Arraignment Procedure (July 15, 1972), Part II, Search and Seizure, §§ 220.3(4) and (6), which provide :
      “(4) Service of Warrant. In the' course of any search or seizure pursuant to the warrant, the executing officer shall read and give a copy of the warrant to the person to be searched, or the person in apparent control of the premises to be searched, as the case may be. The copy shall be read and furnished before undertaking the search or seizure unless the officer has reasonable cause to believe that such action would endanger the successful execution of the warrant with all practicable safety, in which case it shall be read and furnished as soon as is practicable. If the premises are unoccupied by anyone in apparent and responsible control, the officer shall leave a copy of the warrant suitably affixed to the premises. (Emphasis added.)
      “(6) List of Things Seized. Upon completion of the search, the officer shall make a list of the things seized, and shall deliver a receipt embodying the list to the person from whose possession they are taken, or the person in apparent control of the premises from which they are taken, as the ease may be. The list shall be prepared in the presence of the person to whom the receipt is to be delivered. If the premises are unoccupied by anyone in apparent and responsible control, the executing officer shall, if practicable, secure the presence of one or more apparently credible persons to witness the preparation of the list, and shall leave the receipt suitably affixed to the premises." (Emphasis added.)

      . 18 U.S.C. § 3109 provides:
      “The officer may break open any outer or inner door or window of a house, or anything therein, to execute a search warrant, if, after notice of his authority and purpose, he is refused admittance or when necessary to liberate himself or a person aiding him in the execution of the warrant.”

      . See Miller v. United States, 357 U.S. 301, 313, 78 S.Ct. 1190, 2 L.Ed.2d 1332 (1958); see also Wong Sun v. United States, 371 U.S. 474, 83 S.Ct. 407, 9 L.Ed.2d 441 (1963).

      . Rule 41 (c) provides in pertinent part:
      “The warrant shall be directed to a civil officer of the United States authorized to enforce or assist in enforcing any law thereof or to a person so authorized by the President of the United States.”
      18 U.S.C. § 3105 provides:
      “A search warrant may in all cases be served by any of the officers mentioned in its direction or by an officer authorized by law to serve such warrant, but by no other person, except in aid of the officer on his requiring it, he being present and acting in its execution.”


author: PER CURIAM. KENT, Circuit Judge

text:
    Donald DAVIS, Jr., a minor by His mother and next friend, Mrs. Sadie Davis, et al., Plaintiffs-Appellees, v. SCHOOL DISTRICT OF the CITY OF PONTIAC, INC., et al., Defendants-Appellants.
    No. 71-1868.
    United States Court of Appeals, Sixth Circuit.
    Argued Oct. 10, 1972.
    Decided Feb. 13, 1973.
    Kent,' Circuit Judge, dissented and filed opinion.
    Robert E. Manley, Cincinnati, Ohio, on brief, for appellants; Dudley & Patterson by Harold W. Dudley and William R. Lightbody, Pontiac, Mich., of counsel.
    William Waterman, Elbert L. Hatch-ett, Pontiac, Mich., on brief, for appel-lees.
    Before EDWARDS, McCREE, and KENT, Circuit Judges.
   PER CURIAM.

Defendant School District appeals from an order requiring it to create a position for a third Assistant Superintendent and to hire a Negro to fill the position. Appellant contends that this order interferes with the pedagogical discretion of its officials and that the district does not require a third Assistant Superintendent and, indeed, cannot afford to hire one.

The order appealed from is supplementary to a comprehensive desegregation order entered by the District Court upon a finding of purposeful segregation of the school system. See Davis v. School District of City of Pontiac, 309 F.Supp. 734 (E.D.Mich.1970), aff’d, 443 F.2d 573 (6th Cir. 1971), cert. denied, 404 U.S. 913, 92 S.Ct. 233, 30 L.Ed.2d 186 (1971). In affirming this earlier order, we remanded the case to the District Court for continuing supervision of the desegregation of the system. In July 1971, the District Court conducted a hearing on motions for modification of the desegregation plan initially approved, and at the conclusion of that hearing, the court entered its order containing the provision attacked in this appeal.

It is clear that, when there has been segregation produced by government action, the power of district courts to shape appropriate remedies is broad, and if the creation of a particular administrative position appears to a district court to be useful in carrying out the constitutional mandate to desegregate a school system, appellate courts should not interfere with this discretionary exercise.

Accordingly, because the order in question in this appeal merely recited that the position was to be created by defendant and filled by a black person, we would have ordinarily assumed that it was made in the exercise of the discretion and for the purpose referred to above. However, in colloquy, the transcription of which was furnished the court, the District Judge gave some indication that he entered this part of the supplemental order either because he believed that the board had promised to make such an appointment earlier and had not kept its word with him or because some particular racial balance at the administrative level was desirable for reasons other than to accomplish the desegregation of the school system.

Because we are unable to determine the basis for the entry of the court’s order regarding the creation of this administrative position, we vacate this provision of the order to permit him to consider whether the creation of such a position and its filling by a black person in the light of current conditions within the school system is indicated to dismantle the unconstitutional condition that he found to exist.

Vacated and remanded for proceedings not inconsistent with this opinion. No costs will be allowed because a public question is involved.

KENT, Circuit Judge

(dissenting).

I find myself unable to join in the opinion of the majority. I recognize that the power of District Courts to shape appropriate remedies to eliminate school segregation deliberately imposed by Government action is broad, and if the record demonstrates a need for a particular administrative position to assist in carrying out the constitutional mandate to desegregate such school system, then the appellate court should not interfere if the trial judge in the exercise of his discretion orders the creation of such an administrative position. However, I cannot agree that an appellate court should ever “assume” that any portion of a broad desegregation order was necessarily made by the trial judge in the exercise of discretion and for the purpose of eliminating unconstitutional segregation of the races within the school without appropriate findings of fact and conclusions of law to support the exercise of such broad discretion.

The record in this case does not reflect any facts which would justify the conclusion that the composition of the administrative staff at the level concerned resulted from any unconstitutional segregation or that the desegregation of such staff or the creation of any new position on such staff would make any substantial contribution to the desegregation of the Pontiac schools. In fact, the undisputed record demonstrates that the school board determined a third assistant superintendent position to be unnecessary, particularly in the light of the financial straits in which the school district found itself. The district judge not only did not find any constitutional violation on the part of the school board because of its failure to have a black assistant superintendent, neither did he find that the creation of such a position was necessary to accomplish the desegregation of the schools. Rather, as stated by the district judge, prior to the entry of the order from which this appeal is taken, as the basis for the entry of the order, “and I don’t see how you can have integration at every other level and still not have it at the assistant superintendent level. I think it is good for the black children out there in terms of image. I think it is good for the white children out in Pontiac to see a black assistant superintendent of schools. I think it is good for people at the policy level to have a black person in there, sitting in, knowing precisely what is happening in that school system. I think it is healthy for the entire community.” (Supp.App., pp. 136-7). (Emphasis added).

As previously stated, the determination of the appropriate remedies to eliminate past wrongs is necessarily broad, but in the absence of a finding that specific steps are necessary to accomplish the elimination of such wrongs there is no authority in a court of equity to impose upon parties to the action remedies which the trial judge may think would be good policy. Policy is for the school authorities, except as and unless such policy creates a condition which offends the Constitution. As pointed out in Swann v. Board of Education, 402 U.S. 1, 15-16, 91 S.Ct. 1267, 1276, 28 L.Ed.2d 554 (1971):

“However, a school desegregation case does not differ fundamentally from other eases involving the framing of equitable remedies to repair the denial of a constitutional right. The task is to correct, by a balancing of the individual and collective interests, the condition that offends the Constitution.
“In seeking to define even in broad and general terms how far this remedial power extends it is important to remember that judicial powers may be exercised only on the basis of a constitutional violation. Remedial judicial authority does not put judges automatically in the shoes of school authorities whose powers are plenary. Judicial authority enters only when local authority defaults.
“School authorities are traditionally charged with broad power to formulate and implement educational policy and might well conclude, for example, that in order to prepare students to live in a pluralistic society each school should have a prescribed ratio of Negro to white students reflecting the proportion for the district as a whole. To do this as an educational policy is within the broad discretionary powers of school authorities; absent a finding of a constitutional violation,' however, that would not be within the authority of a federal court. As with any equity case, the nature of the violation determines the scope, of the remedy. In default by the school authorities of their obligation to proffer acceptable remedies, a district court has broad power to fashion a remedy that will assure a unitary school system.”

At the time of the oral argument in this court counsel informed the court that one of the [two] assistant superintendents had resigned and that there was a vacancy at this level of the administrative staff of the School District of the City of Pontiac. It may be that on remand, as ordered by the majority, the school board will consider the appointment of a black assistant superintendent not because the district judge thinks it would be good for the black children but rather because an honest, sincere effort to locate a competent black person qualified to be assistant superintendent of the Pontiac schools would clearly demonstrate that the defendant school board recognizes its obligation to desegregate the Pontiac schools and staff at all levels.

On this record, however, absent findings by the district judge that the failure to create a position for a third assistant superintendent to be filled by a black person was necessary to complete the elimination of segregation within the Pontiac schools, I cannot concur in the opinion of the majority. I would reverse.


author: EDWARDS, Circuit Judge.

text:
    BASTIAN-BLESSING, DIVISION OF GOLCONDA CORPORATION, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
    No. 72-1456.
    United States Court of Appeals, Sixth Circuit.
    Feb. 21, 1973.

      Paul F. Gleeson, Chicago, Ill., Arthur B. Smith, Jr., Van H. Yiot, Chicago, Ill., on brief; Vedder, Price, Kaufman & Kammholz, Chicago, Ill., of counsel, for petitioner-appellant.
    Allison W. Brown, Jr., N.L.R.B., Mar-eel Mallet-Prevost, Asst. General Counsel, Steven C. Kahn, Atty., N.L.R.B., Washington, D. C., Jerome H. Brooks, Director, Region 7, N.L.R.B., Detroit, Mich., on brief, for respondent-appellee.
    Before EDWARDS and CELE-BREZZE, Circuit Judges, and HAST-IE, Senior Circuit Judge.

       Honorable William H. Hastie, Senior Judge, U. S. Court of Appeals for the Third Circuit sitting by designation.

   EDWARDS, Circuit Judge.

Bastian-Blessing petitions to set aside and the Board seeks enforcement of an order of the National Labor Relations Board finding the employer guilty of 8(a)(5) and 8(a)(1) violations of the National Labor Relations Act, 29 U.S.C. § 158(a)(5) and (1) (1970), by unilaterally terminating an employee health insurance plan which had previously been in force through insurance with Aetna Life Insurance Company.

The employer, purporting to maintain the same benefits, undertook self-insurance. Subsequent to the termination of the Aetna coverage, it informed the union as to what it had done and discussed the reasons for the change, but declined to go back to the Aetna insurance contract when requested to do so.

The Board found that the Aetna termination materially affected mandatory subjects of bargaining in relation to health insurance in that two material changes were made in benefits under the company self-insurance program and in that, in addition, the enforceability, administration and funding of the plan were affected. The Board’s order required Bastian-Blessing to restore the status quo by reinstating the contract with Aetna.

The Board Decision and Order of December 16, 1971, is reported at 194 N.L.R.B. 95 (1971), and its Supplemental Decision of March 30, 1972, is reported at 195 N.L.R.B. 167 (1972).

The material facts of this case do not appear to this court to be in dispute. Petitioner does dispute the inferences which the Trial Examiner and the Board drew from those facts, along with the legal conclusions drawn therefrom. Specifically, Bastian-Blessing claims that after termination of the Aetna insurance contract, it engaged in good faith negotiations with the union concerning its health insurance program, which served to satisfy the bargaining obligation under the Act. It also claims that the Board was without authority to order it to reinstate the insurance contract between it and Aetna Life, since it claims that the identity of the insurance carrier is not a mandatory subject for bargaining.

Petitioner, Bastian-Blessing, is a division of a conglomerate, Golconda Corporation, which merged with Astro Controls, Inc., the previous parent corporation of Bastian-Blessing, while this controversy was going on. Local 893 of the Brotherhood of Carpenters has been bargaining agent since 1953 only for 165 employees of the Bastian-Blessing Division. Aetna Life Insurance Company had been the Bastian-Blessing group insurance carrier since World War II. It issued a group insurance policy containing the benefits negotiated between Local 893 and Bastian-Blessing in 1959. This policy was continued in effect, with some changes resulting from collective bargaining, up until August 1, 1970, when the company canceled the contract unilaterally, without prior notice to the union.

The group health insurance plan was a contributory plan. Each employee paid $1.00 per week toward its cost and the employee contributions represented approximately 40% of the premium cost, with the employer paying the rest.

The Trial Examiner found a relationship between increasing benefit costs and the sudden termination of the Aetna contract:

In the fiscal year ending April 20, 1967 (as reported on Form D-2 to the Department of Labor), the total premiums paid Aetna (for over 1,500 employees) amounted to $395,318. Aetna paid out benefits, and put in reserves, a total of $312,696, and refunded over $56,000 to the Company. By fiscal 1969, with somewhat fewer employees, the total premiums had increased almost $100,000, to $493,372, and the total benefit charges had increased over $229,000 (73 percent) to $541,852. Instead of a cash rebate as in 1967, there was a deficit in 1969 of $92,883. (The 1969 Form D-2 shows that Aet-na retained $30,053 for expenses, as compared to fiscal 1968 expenses of $28,765 — an increase of less than $1,500. In fiscal 1967, which included a period of time when the Company’s own employees were processing claims for Aetna, the Aetna expenses were $15,559. The amount of commissions decreased from $3,756 in 1967 to $2,625 in 1969, whereas taxes increased from $6,776 to $11,725.)
Despite the increased costs, the Union negotiated further health benefits in its new 3-year collective-bargaining agreement, effective from December 1, 1969, through November 30, 1972. Nothing was said in the negotiatioñs about canceling the Aetna policy or changing carriers. * * * Thus, I find that although the reference to the old Aetna employee booklet was' deleted, the Company and the Union still bargained for a continuation of the Aetna plan. (Following these 1969 negotiations, the Company contracted with Aetna to amend Group Policy GC-40,636 to provide the increased benefits.)

The Trial Examiner and the Board found also that when Bastian-Blessing instituted its self-insurance plan as described in its “Company Insurance Certificate,” it omitted entirely two significant employee benefits: a conversion privilege without evidence of insurability, and the certainty of coverage of new-born babies under the $20,000 major medical benefit.

The Board further found that Bas-tain-Blessing’s cancellation of the Aetna contract deprived its employees of enforceability of the prior master contract and of Aetna’s administration of that contract:

In the negotiations for the current 1969-1972 collective-bargaining agreement, as previously found, the Company and the Union bargained for a continuation of the Aetna plan, with various increased benefits which the Company thereupon contracted with Aetna to provide. Under this union-negotiated plan, not only was the payment of the employees’ health benefits ensured in writing by the 56-page Aetna Group Policy GC-40,636 (the master contract), but also the interpretation and application of the group policy was placed in the hands of the well-known group insurance carrier, Aetna.
The Company’s unilateral and irrevocable August 1 cancellation of the Aetna group policy, and the January 7 issuance of its “Company Insurance Certificate,” deprived the employees of both the protection of the enforceable master contract, and (as discussed later) Aetna’s interpretation and application of it.
The January 7 “Certificate” did not contain all the pertinent provisions governing the payment of benefits. It was a modified copy of the most recent Aetna “Group Insurance Certificate” (employee booklet), and was thus only a “summary of the essential features” of the previous Aetna insurance coverage. It failed to set out such provisions in the Aetna master contract as (a) what employees are eligible (permitting coverage of full-time employees working temporarily on a part-time basis), (b) eligibility after 3 months of continuous service, (c) requirement of written request, etc., for coverage of dependents, (d) effective date for dependent’s coverage if application is made within 31 days, and if made thereafter, (e) the specific amount of nonoccupational disability weekly benefit ($52, as set out in bargaining agreement), (f) method of computing “average weekly earnings” for determining 70 percent limitation on weekly benefit, (g) exclusions and limitations applied in the event a family member is disabled when the maximum benefit is increased, (h) no benefits if prohibited in jurisdiction of residence, and (i) employer shall not “discriminate unfairly between individuals in similar situations” in administration of the provisions.
In many places where the January 7 Certificate is copied from the Aetna employee booklet, the Company has substituted the words, “the Plan,” for the words, “the group policy.” For example, on the cover page of the Certificate, the sentence from the Aetna employee booklet containing the words, “certain terms of the Group Policy,” was changed to read, “The kinds of coverage and certain terms of the Plan applicable thereto are described on this and the following pages of this Certificate.” (Emphasis supplied.) In other places in the Certificate, there still remain repeated references to “the group policy.” Thus former references in the Aetna “employee [booklet”] sic to “the group policy” now appear in the January 7 Certificate in such phrases as: “subject to the terms of the Plan,” “payable under the Plan,” “subject to the terms of the group policy,” “if included in the Plan,” “benefits provided under the Plan,” “coverage under the Plan,” “subject to the limits provided in the Plan,” “Employee’s insurance under the group policy,” and “coverage under the group policy.” These references in the Certificate to “the Plan” and “the group policy” are evidently made (as were the references in the Aetna employee booklet) to the detailed provisions in the now-canceled Aetna Group Policy GC-40,636. Therefore the Certificate issued on January 7 is not a self-contained document setting out all the provisions of the self-insured health program. Furthermore, there appears not to be in existence any such document, which would be enforceable as the Aetna group policy was.

Finally, the Board noted that Bas-tian-Blessing’s witnesses left unanswered questions concerning funding of the self-insurance program. The Board considered this uncertainty over funding an adverse impact on the employees’ previously-negotiated benefits.

HOLDING

We believe that the history of collective bargaining between these parties, including the negotiations which resulted in the level of benefits under the insurance plan which was in effect prior to August 1, 1970, indicates clearly that there was substantial evidence on this record taken as a whole to support the finding of the Board as described in its Supplemental Decision of March 30, 1972:

In our Decision and Order herein, we found that the Aetna insurance plan for active employees was a provision of the contract between the Union and Respondent, and we therefore held that Respondent’s mid-term unilateral change to a self-insured plan for its active employees was a violation of Section 8(a)(5). Benefits for retired employees were not involved.

Health insurance benefits clearly represent mandatory subjects for bargaining. NLRB v. Scam Instrument Corp., 394 F.2d 884 (7th Cir. 1968); McLean v. NLRB, 333 F.2d 84 (6th Cir. 1964); Inland Steel Co. v. N.L.R.B., 170 F.2d 247 (7th Cir.), cert. denied, 336 U.S. 960, 69 S.Ct. 887, 93 L.Ed. 1112 (1948).

Where, as here, these benefits have been determined by an existing collective bargaining agreement, a unilateral change violates the express language of both Section 8(d) and Section 8(a)(5).

We believe the controlling case on this issue, is NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962), wherein the Supreme Court said:

The duty “to bargain collectively” enjoined by § 8(a)(5) is defined by § 8(d) as the duty to “meet and confer in good faith with respect to wages, hours, and other terms and conditions of employment.” Clearly, the duty thus defined may be violated without a general failure of subjective good faith; for there is no occasion to consider the issue of good faith if a party has refused even to negotiate in fact — “to meet . . . and confer” —about any of the mandatory subjects. A refusal to negotiate in fact as to any subject which is within § 8(d), and about which the union seeks to negotiate, violates § 8(a)(5) though the employer has every desire to reach agreement with the union upon an over-all collective agreement and earnestly and in all good faith bargains to that end. We hold that an employer’s unilateral change in conditions of employment under negotiation is similarly a violation of § 8(a)(5), for it is a circumvention of the duty to negotiate which frustrates the objectives of § 8(a)(5) much as does a flat refusal.
* * * Unilateral action by an employer without prior discussion with the union does amount to a refusal to negotiate about the affected conditions of employment under negotiation, and must of necessity obstruct bargaining, contrary to the congressional policy. It will often disclose an unwillingness to agree with the union. It will rarely be justified by any reason of substance. It follows that the Board may hold such unilateral action to be an unfair labor practice in violation of § 8(a)(5), without also finding the employer guilty of over-all subjective bad faith. NLRB v. Katz, supra at 742-743, 747, 82 S.Ct. at 1111, 1114. (Footnotes omitted.)

In McLean v. N.L.R.B., 333 F.2d 84 (6th Cir. 1964), this court relied upon the Katz case in upholding a finding of a Section 8(a)(5) violation by an employer’s unilateral change of a health insurance plan:

In our opinion, Katz compels a finding of an § 8(a)(5) violation here. Blue Cross insurance was an alternative plan, as opposed to the union’s health insurance plan, which should have been negotiated with it. This is part of the statutory duty to bargain collectively. McLean v. NLRB, supra at 87.

We do not think that BastianBlessing’s meetings with the union after it had, without notice, effected the unilateral changes described above served to excuse its violations of its duty to bargain. This record contains substantial evidence to support the Trial Examiner and the Board’s rejection of the petitioner’s good faith argument based on subsequent bargaining and over-all conduct. In addition, there is clearly no union acquiescence in or failure to protest the unilaterally wrought changes here as is found in the cases relied upon by petitioner. Cf. Georgia Pacific Corporation, 150 N.L.R.B. 885 (1965); Hartman Luggage Co, 145 N.L.R.B. 1572 (1964); NLRB v. Cone Mills Corp., 373 F.2d 595 (4th Cir. 1967).

To this court, however, the most difficult question pertains to the explicit order of the Board to reinstate “the Aetna Life Insurance Company group health insurance which was terminated August 1, 1970.” Both parties seem to interpret this order as requiring not just the identical contract with its identical benefits, administration, and funding, but the identical company as well. We have found, however, no case law which squarely supports the proposition that the specific insurance carrier for a group health plan is a mandatory subject for bargaining. This identical issue was the subject of a motion for rehearing of the instant case before the NLRB after the Supreme Court decided Allied Chemical Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157, 92 S.Ct. 383, 30 L.Ed.2d 341 (1971). The Board analyzed petitioner’s argument relying on Chemical Workers as follows:

In Pittsburgh Plate Glass, the Supreme Court held that retired employees are not “employees” within the meaning of the Act, and are not included in the “bargaining unit,” and therefore that the employee group health insurance plan negotiated by the Company and the Union was only a permissive and not a mandatory subject for bargaining with respect to the Company’s retired employees. For these reasons, the Court concluded that the Company’s unilateral midterm modification “ . . . of a permissive term such as retirees’ benefits . . . ” did not violate the Act. On the other hand, the Court affirmed well established prior holdings of the Board and the Courts that “ . . . mandatory subjects of collective bargaining include pension and insurance benefits for active employees, and an employer’s mid-term unilateral modification of such benefits constitutes an unfair labor practice.”
In our Decision and Order herein, we found that the Aetna insurance plan for active employees was a provision of the contract between the Union and Respondent, and we therefore held that Respondent’s mid-term unilateral change to a self-insured plan for its active employees was a violation of Section 8(a)(5). Benefits for retired employees were not involved.
It may be that, as respondent attempts to demonstrate by analogy, benefit levels are in some circumstances severable from their source of “brand name.” We need not decide that broad question here. In our previous decision in this case, we found that Respondent’s change from Aetna involved a substantive loss, at least in terms of Aetna’s administration and funding. Thus, under the facts of this case, the identity of the carrier was a mandatory subject of bargaining, and the benefit to be restored is a single “ball of wax” — the preexisting Aetna plan. (Footnote omitted.)

We have sought to find a way to separate the carrier from the benefits in this case, and we have failed. The peculiar terms of the bargaining contract here obviously incorporate by reference or necessary implication important sections of the Aetna contract. The history of this bargaining relationship shows that bargaining on health insurance historically was related to the Aetna contract. The employees, by terms of the labor-management contract, were made major contributors to the costs of the Aetna contract. Under these facts, the Board’s remedy that the benefits be restored by restoring “the preexisting Aetna plan” as a single “ball of wax” appears justified.

We emphasize that the conclusion reached herein is governed by the facts of this case and is not to be interpreted as a ruling by this Court that the naming of an insurance carrier for an employee group benefit plan, in the absence of other considerations, is a mandatory subject for bargaining.

Enforcement is granted.

      . Local 893, United Brotherhood of Carpenters & Joiners of America, AFL-CIO.


author: PER CURIAM:

text:
    UNITED STATES of America, Appellee, v. John MACKEY, Appellant. UNITED STATES of America, Appellee, v. James KING, Appellant.
    Nos. 72-1749, 72-1925.
    United States Court of Appeals, Fourth Circuit.
    Feb. 26, 1973.
    Certiorari Denied June 11, 1973.
    See 93 S.Ct. 2782.
    George Beall, and Paul M. Rosenberg, Baltimore, Md., on brief for appellees.
    Robert B. Bamhouse, and Jonathan A. Azrael, Baltimore, Md., for appellants.
    Before BOREMAN, Senior Circuit Judge, WINTER and CRAVEN, Circuit Judges.
   PER CURIAM:

John Mackey and James King appeal from their convictions by a jury, on pleas of not guilty, of robbery of a federally insured federal savings and loan association by intimidation, larceny from said association and assault committed during the commission of the robbery, in violation of 18 U.S.C. § 2113(a), (b), and (d), respectively. They complain that (1) their constitutional rights were denied when the Government showed photographs to certain witnesses without the attendance of counsel; (2) the trial court denied their motion to compel a preliminary hearing; (3) sentences were imposed on all three counts of the indictment; (4) there were no blacks on the jury which convicted them; (5) a prosecution witness was permitted to testify as to his reasons for not attempting to prevent the robbers from taking the money; and (6) the evidence was insufficient to support their convictions. Except as to (3) above, we find no merit in these assignments of error and therefore affirm the judgments of conviction and remand the case for imposition of a single sentence.

Mackey and King were charged with being two of four persons involved in the armed robbery on November 5, 1971, of the National Permanent Federal Savings and Loan Association in Langley Park, Maryland. They were arrested in the vicinity of the loan association’s parking lot within minutes of the robbery and at that time each was carrying a pillowcase full of money. The serial numbers of some of the stolen currency had been prerecorded, and the money recovered from one of the pillowcases was shown to include this “bait money.”

The loan association was equipped with movie cameras which operated during the robbery. None of the perpetrators wore masks. The developed film and sets of photographic prints were subsequently introduced into evidence. Certain of these prints were also shown to government witnesses prior to trial. It is this showing which Mackey and King allege violated their constitutional rights.

It is not disputed that defense counsel were not present when these prints were shown to the prosecution witnesses. Mackey and King argue that the rule of United States v. Wade, 388 U.S. 218, 87 S.Ct. 1926, 18 L.Ed.2d 1149 (1967) requiring the presence of counsel at post-indictment lineups, should be extended to include postindictment photographic identification procedures.

This precise issue was argued before the Supreme Court on January 10, 1973, in United States v. Ash, 149 U.S.App.D.C. 1, 461 F.2d 92 (1972), cert. granted, 407 U.S. 909, 92 S.Ct. 2436, 32 L.Ed.2d 682. But that issue is not pertinent in the instant case since the use of photographs here did not result in identification. The pictures were not shown to the witnesses in an attempt to have them identify someone from a number of choices. Rather, pictures of the robbery itself, depicting scenes which the witnesses had actually observed, were used to clarify, explain and demonstrate the events as they occurred, and to refresh the witnesses’ recollections thereof. There was no possibility of impermissibly suggestive procedures being used to influence any identifications by the witnesses, for they were not making identifications. Therefore no right to counsel existed during this procedure. Cf. United States v. Hines, 147 U.S.App.D.C. 249, 455 F.2d 1317 (1971), cert. denied, 406 U.S. 975, 92 S.Ct. 2427, 32 L.Ed.2d 675 (1972); United States v. Ware, 147 U.S.App.D.C. 249, 455 F.2d 1317 (1971), cert. denied, 406 U.S. 969, 92 S.Ct. 2427, 32 L.Ed.2d 669 (1972) (no right to counsel when pictures of a lineup, at which counsel was present, were used only to refresh witnesses’ memories.)

Mackey and King have failed to advance any arguments which persuade us to reconsider our long-standing rule that the return of an indictment by the grand jury eliminates the requirement of holding a preliminary hearing. The purpose of both is to insure the existence of probable cause before an accused is brought to trial. That purpose is fully effectuated by either. United States v. Chase, 372 F.2d 453 (4 Cir. 1957), cert. denied, 387 U.S. 907, 87 S.Ct. 1688, 18 L.Ed.2d 626; Barber v. United States, 142 F.2d 805 (4 Cir. 1944), cert. denied, 322 U.S. 741, 64 S.Ct. 1054, 88 L.Ed. 1574.

Mackey and King, both black, claim that their constitutional rights were violated since there were no blacks on the petit jury. It is true, of course, that the Government may not purposefully or deliberately deny-to Negroes participation as jurors in the administration of justice due to racial prejudice and discrimination. Alexander v. Louisiana, 405 U.S. 625, 92 S.Ct. 1221, 31 L.Ed.2d 536 (1972); Swain v. Alabama, 380 U.S. 202, 85 S.Ct. 824, 13 L.Ed.2d 759 (1965). However, the mere fact that a defendant in a particular case is tried by an all-white jury is not sufficient to establish a denial of his constitutional rights. Swain v. Alabama, supra; United States v. Canty, 422 F.2d 358 (4 Cir. 1970). No fact tending to show racial discrimination other than the absence of blacks on the jury has been alleged or shown.

Mackey and King-are correct in their claim that the sentences on two counts of the three-count indictment under 18 U.S.C. § 2113 must be vacated, since all counts stem from the same oc-, currence. The case is therefore remanded to the district court for vacating the sentences on two counts once the judgments of conviction have become final. United States v. Spears, 442 F.2d 424 (4 Cir. 1971).

We have carefully considered the additional claims advanced by Mackey and King and have found them to be without merit.

Affirmed and remanded.

      . 41 U.S.L.W. 3335 (Jan. 16, 1973).


author: SWYGERT, Chief Judge.

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Arnold F. HABIG and Jerome M. Schroering, Defendants-Appellees.
    No. 71-1654.
    United States Court of Appeals, Seventh Circuit.
    Argued Sept. 14, 1972.
    Decided Jan. 24, 1973.
    Certiorari Denied May 7, 1973.
    See 93 S.Ct. 2145.

      Stanley B. Miller, U. S. Atty., Indianapolis, Ind., Fred B. Ugast, Tax Division, John P. Burke, Atty., U. S. Department of Justice, Washington, D. C., for plaintiff-appellant.
    Fred P. Bamberger, Evansville, Ind.; John W. Houghton, Indianapolis, Ind., for defendants-appellees.
    Before SWYGERT, Chief Judge, and KILEY and FAIRCHILD, Circuit Judges.
   SWYGERT, Chief Judge.

This appeal is from an order by the district court suppressing the use of certain evidence in a criminal tax evasion prosecution. The evidence was obtained by Government agents during the prein-dictment investigation. Entered pursuant to a motion under Fed.R.Crim.P. 41(e), the order followed an evidentiary hearing and was based on findings of fact and conclusions of law made by the district judge. The hearing was conducted in conformity with the remand ordered by this court in an earlier appeal. United States v. Habig, 413. F.2d 1108 (7th Cir., 1969).

The issues in this appeal differ materially from those presented when the case was before us initially. The Government now contends that the decision in United States v. Dickerson, 413 F.2d 1111 (7th Cir., 1969), does not control the disposition of the issues here despite its earlier concession to the contrary. This shift of position requires that we first decide a corollary issue: whether the “law of the case” doctrine precludes our resolution of the main issue. A separate question relates to whether any fourth amendment violations occurred during the Government’s investigation which would require suppression of the questioned evidence. It was not necessary for us to reach this last issue in the earlier appeal because we were of the view that an application of the Dickerson rule was sufficient to resolve the question.

Briefly, the relevant facts developed at the hearing are as follows. On February 15, 1963 Charles E. Lawrence, an agent of the Internal Revenue Service, was assigned the routine civil audit of a consolidated income tax return filed by the Jasper Corporation for the year ending June 30, 1961. The consolidated return covered eleven corporations, ten of them subsidiaries of the Jasper company. The agent was also assigned the civil audit of the separate tax returns of three of the subsidiary companies for the year ending June 30, 1960. During its progress, the audit was expanded to include other fiscal years.

On the recommendation of a firm of independent certified public accountants which had prepared the returns, Seid-man & Seidman, the agent in February 1963 visited Jerome M. Schroering, the comptroller of the Jasper company and each of its subsidiaries. After identifying himself and stating his assignment, Lawrence secured Sehroering’s cooperation for an examination of the records of Jasper and its subsidiaries at their respective offices.

Lawrence spent from March to July of 1963 examining the records of Jasper and four subsidiary companies. As a result of his examination, Lawrence discovered certain discrepancies which led to his belief that a tax fraud had been perpetrated through records of fictitious intercompany sales of lumber. Lawrence thereupon submitted a referral report “for potential fraud cases” to his group supervisor, and at the end of March, 1964 the ease was accepted by the Intelligence Division of the_ Internal Revenue Service for a full-scale investigation. Special Agent Russell C. Hicks was assigned to conduct the investigation with the aid of agent Lawrence. The district judge found that the investigation “from its inception was upon Arnold F. Habig and Jerome M. Schroering.” Habig was the largest single stockholder of the corporations and their chief executive officer. After Hicks’ assignment, Lawrence at Hicks’ direction obtained and examined numerous corporate records. On September 21, 1964 Hicks and Lawrence met by appointment with Schroering at the Jasper corporation offices. Hicks, upon being introduced to Schroering, stated: “I am a Special Agent with the Intelligence Division; Mr. Kelly [of Seidman] knows what my job is. I am here to determine if there is [sic], any criminal aspects involved in the case.” Hicks then requested and received permission from Schroering to examine additional books and records of the corporations, which the agents subsequently spent considerable time examining. They also copied some of the documents being examined.

The investigation continued into 1965, when Hicks requested that Schroering provide him with additional documents. Schroering complied, and had the assembled records delivered to the offices of the Evansville company where Hicks and Lawrence examined them. During September 1965 the two agents met with Schroering and Habig in the offices of the Intelligence Division of the IRS. At the meeting, which was Habig’s first personal contact with either of the agents, both Habig and Schroering were interrogated regarding the affairs under investigation. The district court found that no warnings of constitutional rights were given nor was either defendant advised that he was the subject of a criminal investigation. Subsequently, between November 1965 and February 1966, the agents copied numerous documents and records of the corporations. The district court found that this copying was undertaken in a secretive manner and without the consent of either Sehroering or Habig. In August an indictment was returned against these two defendants.

The district judge found that the agents had acted improperly in their conduct of the investigation after January, 1964:

The plaintiff’s agents after February 11, 1964 had the duty upon the first contact with defendants to advise them of their constitutional rights and advise them that they were the subject of a criminal investigation. The statements, information and leads to evidence obtained by the plaintiff’s agents from the defendants after February 11, 1964 were illegally obtained by reason of the failure of the plaintiff’s agents to fulfill such duty as the criminal investigation was focused on the two (2) defendants from and after February 11, 1964.

Moreover, the district judge inferred “that the corporations and the defendants would not have consented to the criminal investigation had they known of the deceit practiced by plaintiff’s agents prior to September 21, 1964,” in failing to warn the defendants of the changed nature of the ongoing investigation.

I

The “law of the ease” doctrine comes typically to bear when an appellate court has before it for a second time a controversy in which it has previously made a ruling of law. Strictly applied, the doctrine serves to bar an attack on the prior ruling by either party to the suit, much like the doctrine of res judicata. This court, however, has not adhered to a rigid application of the doctrine. Many years ago, Judge Evans wrote:

[T]he view that appeals to us, and which we adopt, merely recognizes the law of the case as one of public policy and private peace, and one to be followed generally, and departed from rarely. It is, however, not an inexorable rule, and should not be applied where the law as announced is clearly erroneous; and establishes a practice which is contrary to the best interests of society, and works a manifest injustice in the particular case. Luminous Unit Co. v. Freeman-Sweet Co., 3 F.2d 577, 580 (7th Cir., 1924).

See also Kaku Nagano v. Brownell, 212 F.2d 262 (7th Cir., 1954); Bowles v. Good Luck Glove Co., 150 F.2d 853 (7th Cir.), cert. denied, 326 U.S. 794, 66 S.Ct. 484, 90 L.Ed. 483 (1945); LeBold v. Inland Steel Co., 136 F.2d 876 (7th Cir.), cert. denied, 320 U.S. 787, 64 S.Ct. 196, 88 L.Ed. 473 (1943). This view is peculiarly appropriate here. The Government in the first appeal conceded that the rule we would fashion in Dickerson should apply to the instant prosecution. The concession was improvident and led us to imply that the rule announced in Dickerson controlled this case. As we shall demonstrate, that implication was erroneous.

II

In Dickerson we held that “Miranda warnings must be given to the taxpayer by either the revenue agent or the special agent at the inception of the first contact with the taxpayer after the case has been transferred to the Intelligence Division.” 413 F.2d at 1116-1117. The question before us here is whether the rule announced in Dickerson applies to corporate records and leads obtained by internal revenue agents for use as evidence in a criminal prosecution. We hold that it does not.

It is well established that a corporate officer or other custodian of corporate books has no constitutional right to refuse production of corporate records in response to a lawful request therefor even though the records may incriminate him personally. Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771 (1911). A corporation must submit its books and records whenever properly required to do so, and, since the privilege against self-incrimination is a purely personal one, it cannot be utilized on behalf of a corporation. United States v. White, 322 U.S. 694, 699, 64 S.Ct. 1248, 88 L.Ed. 1542 (1944). It necessarily follows that a corporate officer, even though he is a prospective criminal defendant, is not entitled to Miranda warnings when requested to produce corporate records. In such a situation Dickerson does not apply.

In support of their position, the defendants rely on Curcio v. United States, 354 U.S. 118, 77 S.Ct. 1145, 1 L.Ed.2d (1957). That case held that a custodian of a union’s books cannot be compelled by contempt order to reveal the whereabouts of the books after he had testified that his refusal to produce the books was based on the fact that he did not then possess them. The case is inappo-site here. No claim is made that either Habig or Schroering ever asserted that the corporate records requested by the agents were not possessed by them and that the deception found by the trial court to have been practiced served subsequently to induce their unknowing revelation of the location of absent records. Indeed, the fact that all the records requested by the agents were produced leaves the defendants no room to argue that the situation here falls within the ambit of Curcio.

III

The defendants contend that the fourth amendment rights of their corporations were violated because they, as corporate officers, were not given Miranda-type warnings required under the fourth amendment to assure a knowing and intelligent consent to search. We reject this contention. This court only recently held that warnings required by the fifth and sixth amendments under Miranda are not sine qua non to a valid waiver of fourth amendment rights. United States v. Young, 471 F.2d 109 (7 Cir. 1972). In that case the defendant had invited police officers into his home and invited them to “look around.” They found and seized incriminating evidence in the personal possession of the defendant. We held that the fourth amendment required no Miranda-type warnings in advance of the search in that situation; a fortiori, no such warnings need be given to custodians of corporate records during a criminal tax investigation.

IV

The district judge held that “deceit” had been practiced by agents Lawrence and Hicks prior to September 21, 1964; on that date Hicks informed Schroering that he was a Special Agent of the Intelligence Division and that a criminal investigation was underway. The deceit referred to by the judge encompassed the period from March 27, 1964, when the Intelligence Division started a full-scale criminal investigation, to the September 21 meeting. The judge found that neither defendant was aware during that period that a criminal investigation was then in progress or that Hicks had been assigned as a Special Agent to conduct the investigation. He further found that the true nature of the investigation was actively concealed from the defendants and all others eon-nected with Jasper and its subsidiaries: “Mr. Hicks . . . remained submerged from the view of the taxpayers and secretly conducted the search for evidence of crime through the facade of Mr. Lawrence who was accepted and known to everyone as the civil agent of the Internal Revenue Service.” Finally, the judge found that the corporate records assembled by Schroering for the agents' inspection in a private room of the Evansville Veneer & Lumber Company offices were photocopied by the agents “behind closed doors without the permission or authorization or knowledge of anyone, including the defendants.” The last finding has no relevance to the issue before us. The undisputed fact is that these records were assembled and made available to the agents at the direction of Schroering for the acknowledged purpose of inspection. Whether they merely looked at the records or copied them, even clandestinely, is beside the point.

It is not to be gainsaid, nonetheless, that corporations do have rights under the fourth amendment that may be asserted under certain circumstances. In a Clayton Act civil prosecution, this court held in Knoll Associates v. FTC, 397 F.2d 530 (7th Cir., 1968), that the theft of corporate documents which were turned over to the Government for its use constituted an unreasonable search and seizure within the meaning of the fourth amendment and that the corporate defendant was entitled to invoke this constitutional protection. Similarly, corporate officers may have fourth amendment rights with respect to corporate records. In Mancusi v. DeForte, 392 U.S. 364, 88 S.Ct. 2120, 20 L.Ed.2d 1154 (1957), a union officer was protected from a warrantless search of a union office (jointly shared by the officer) from which union records were seized. Also see United States v. Rosenberg, 416 F.2d 680 (7th Cir., 1969).

In the case before us there was no theft of corporate records nor any other form of trespass on corporate property. The fact that a criminal investigation had been started was concealed from the defendants for a period of time did not make involuntary the otherwise voluntary consent of Schroering to inspection of the corporate records. Schroering was aware of Lawrence’s identity as an Internal Revenue agent, and Schroering had no constitutional privilege to refuse the production of corporate records when Lawrence so requested, provided the records requested were relevant to tax matters under investigation. It was his duty to make the records available regardless of whether the investigation had shifted from a civil to a criminal emphasis or whether he might himself be incriminated. Wilson v. United States, supra; see Curcio v. United States, supra; United States v. Sclafani, 265 F.2d 408, 415 (2d Cir.), cert. denied, 360 U.S. 918, 79 S.Ct. 1436, 3 L.Ed.2d 1534 (1959). The same is true with respect to Habig. It is irrelevant that no summons, subpoena, or search warrant was used. If production of the records had been refused, the agents could have obtained them by summons under 26 U.S.C. §§ 7602, 7604. The fact that the agents did not resort to this measure does not mitigate against the consensual production of the records. Greene v. United States, 296 F.2d 841, 843 (2d Cir., 1961).

The order of suppression is vacated insofar as that order covered the corporate records of Jasper and its subsidiaries and any leads which the Government agents obtained from those records during their investigation. In all other respects the order is affirmed, and the case is remanded for trial.

      . The ten subsidiaries were: The Borden Cabinet Company; Evansville Veneer & Lumber Company; Cabinet Manufacturing Corporation; Jasper American Manufacturing Company; Jasper Style Masters, Inc.; S. S. & S. Manufacturing Company; Lafayette Manufacturing Company; W. W. Kimball Company; Kimball Piano, Ine.; and Habig Manufacturing, Inc.

        . The Government concedes that Dickerson serves to bar the admission into evidence of all oral statements made by Schroering and Habig after Hicks came into the case. We do not, therefore, modify that portion of the district court order suppressing oral statements.

      . Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966).