text:
    UNITED STATES of America, Plaintiff-Appellee, v. Charles L. MILLER, Defendant-Appellant.
    No. 73-1931.
    United States Court of Appeals, Tenth Circuit.
    June 17, 1974.

      Richard Meyer, Asst. U. S. Atty (Robert J. Roth, U. S. Atty., Bruce E. Miller, and E. Edward Johnson, Asst. U. S. Attys., on the brief), for plaintiff-appellee.
    Ernest C. Ballweg, Prairie Village, Kan., for defendant-appellant.
    Before HILL, SETH and DOYLE, Circuit Judges.
   WILLIAM E. DOYLE, Circuit Judge.

This is an appeal from a conviction for assault with intent to commit murder, in violation of 18 U.S.C. § 113(a).

Appellant Charles L. Miller and his co-defendant, Curtis Allen Kochis, were indicted by a federal grand jury and charged with assaulting a fellow inmate in the federal penitentiary at Leavenworth with the use of a dangerous weapon, i. e. an incendiary device. Both appellant and his co-defendant Kochis pleaded not guilty to the charge. Following an Omnibus Hearing on February 8, 1973, they were tried by a jury in the United States District Court for the District of Kansas. Appellant was found guilty. Kochis was found not guilty. Appellant was sentenced to a maximum of ten years to be served consecutively to any other sentence- which he was serving.

The government’s evidence showed that the victim of the attempted murder, one Johnny Bourgeois, was set on fire while asleep in his prison cell at Leavenworth. Bourgeois testified that he woke up on fire. His bunk bed and body were in flames and he jumped out of bed so that his cellmate could put out the fire. As he jumped out of the bed, two nearby containers which looked like “Tang” jars and which apparently contained a flammable liquid immediately spilled, causing the fire to spread throughout the cell. Bourgeois testified that when the door of his cell was opened, he saw appellant Miller running away from the cell,

Bourgeois’ cellmate, one Daniel Enoch, testified that, on the morning of the fire, he was awakened by Bourgeois’ screams and that he jumped out of bed, knocked the cell door open and pulled the burning victim into the hallway to beat out the flames. Enoch further testified that the cell door appeared to have been tied and that, as he struggled to open it, he saw appellant Miller squatting down, holding the door.

Frederick Thomasser, also an inmate, testified that appellant had asked him to get some liquid paint thinner from the prison machine shop, where Thomasser worked. Thomasser obtained the solvent, put it in a glass “Tang” jar and gave it to another inmate, one Lester Meddy. Meddy testified that on the morning of August 16, 1972, appellant asked him to go to the machine shop and pick up a jar of “liquid” from Thomasser. Meddy did so and subsequently gave the liquid to appellant at about 8:30 A.M. on August 16, less than an hour before the fire.

Another government witness, inmate Burl Gene Maret, testified that immediately before the fire, he saw appellant and another inmate approach the victim’s cell, throw something inside it, light a torch-like object and throw it afterwards inside the cell. Maret also testified that, on the night before the fire incident, he had had a conversation with appellant in which appellant related that he and Johnny Bourgeois had been in an argument and that appellant wanted Maret to give him a knife. Maret testified that he did not give appellant a knife.

Other government witnesses, correctional officers at Leavenworth, testified that on the morning of the fire, appellant had been found “fooling” around with a control lever device which locked certain cell doors, including that of the victim, Johnny Bourgeois, and that after the fire, pieces of charred glass from a container were found inside the burned-out cell.

The defense was that of alibi. A fellow inmate testified positively that he saw appellant in the prison mess hall about 15 seconds after the fire broke out and that he waved and yelled at appellant at that time.

Another inmate testified that he saw two men, who were either Mexican or black, running from the direction of the burning cell; that he had never seen these men before and that neither of these men was appellant Miller.

Appellant denied any involvement in the fire and also denied that he had requested either paint thinner from Thomasser or a knife from Maret.

Thus, the salient facts of the case were in dispute so that the result was based on the credibility of the witnesses.

In seeking a reversal appellant’s reliance is on the following:

1. Alleged error of the trial court in taking judicial notice of the fact that the penitentiary at Leavenworth is under the jurisdiction of the United States Government.

2. The alleged error resulting from the district attorney asking a witness on cross-examination whether he was a member of the “Church of the New Song.”

3. The alleged error of the trial court in not striking the testimony of a government witness, an inmate of the penitentiary named Maret, who appellant claimed was an informer; inasmuch as the government failed to identify him as an informer, appellant claims that he is entitled to have this sanction imposed.

4. The alleged error of the trial court in denying appellant’s motion for a mistrial based on allowing the government witnesses to be kept together during the trial.

5. The failure of the government to make a pretrial disclosure of photographs depicting the scene and circumstances of the alleged offense. It is said that this violates the Omnibus Hearing order.

I. Judicial Notice of United States Jurisdiction

We perceive no error in the trial court’s taking judicial notice of the fact that the United States Penitentiary at Leavenworth is within the special territorial jurisdiction of the United States. The thrust of appellant’s objection to •this is that the trial court did it on its own motion.

The assault and the fire unquestionably occurred inside the walls of the penitentiary, and where this is true the court may properly take judicial notice. See United States v. Floyd, 477 F.2d 217 (10th Cir. 1973); United States v. Carter, 430 F.2d 1278 (10th Cir. 1970); Hall v. United States, 404 F.2d 1367 (10th Cir. 1969); Markham v. United States, 215 F.2d 56 (4th Cir. 1954).

In Hayes v. United States, 367 F.2d 216 (10th Cir. 1966), we considered a similar case involving the prosecution of a prisoner at Leavenworth for murder of a fellow inmate. In determining whether the United States had exclusive jurisdiction over the Leavenworth penitentiary, we traced the history of the property on which the penal facility is presently located and found that a 1927 statute passed by the Kansas Legislature ceded to the United States exclusive jurisdic-' tion over the land and institution at Leavenworth. This statutory enactment renders judicial notice of jurisdiction appropriate in the case at bar, even though such notice was taken upon' the court’s own motion.

II. Cross-Examination of Defense Witness On Inflammatory Subject

Appellant’s next point that there was prejudice in the cross-examination of the defense witness as to his being a member of the “Church of the New Song” is also insubstantial. It is a contention which rests on the fact that Leavenworth and other penitentiaries have had riots which had been reputedly incited and precipitated by a group known as the “Church of the New Song.” It is argued that the jurors were probably aware of the connotations arising from the name of this organization and that this created prejudice.

But the trial court sustained an objection to the form of the offensive question. This was followed by proceedings outside the hearing of the jury immediately following which the court admonished the jury a) to disregard all mention of the “Church of the New Song” and b) to withdraw from their consideration both the question posed and the response elicited. The court repeated this instruction at the conclusion of the evidence.

In view of the fact that the objectionable conduct of the district attorney was neither persistent nor prolonged, and in light of the protective measures followed by the trial court to disregard any evidence concerning the “Church of the New Song,” we conclude that the judge’s admonition was sufficient. The trial court was in a position to evaluate the effect of the question in the minds of the jury and to determine whether an admonition would effectively cure the problem. See United States v. Goodwin, 455 F.2d 710 (10th Cir.), cert. denied, 409 U.S. 859, 93 S.Ct. 146, 34 L.Ed.2d 105 (1972); Rogers v. United States, 411 F.2d 228 (10th Cir. 1969); Walton v. United States, 334 F.2d 343 (10th Cir. 1964).

III. Failure to Strike the Testimony of an “Informer”

Unquestionably the government took the position that there was no informer in the case. This is evidenced by the Omnibus Order which was signed on February 8, 1972. There was a further hearing in court which was precipitated by the appellant's request of the court to review the statements of all government witnesses so as to ascertain whether the government was relying on information supplied by informers and, if so, to direet the disclosure of their identities. A hearing was held on appellant’s motion on February 26, 1973, and at that time the government reasserted its position that there were no informers and the court subsequently denied appellant’s request.

Then, at the trial, during the defense counsel’s cross-examination of the witness Maret, the following colloquy occurred :

Q: Mr. Maret, when were you first contacted by F.B.I. or prison officials with regard to this occurrence ?

A: I contacted them.

Q: You went to them ?

A: Yes.

Q: What did you advise them ?

A: I advised them that I’d like to speak to Mr. Sharp.

Q: This gentleman here ?

A: Yes sir.

Q: Now, was it at this time that you offered this story to him ?

A: At that time I told him what I saw.

Q: And this was done of your own volition? You weren’t requested to do this?

A: No.

The defense counsel did not object to Maret’s testimony, but at the completion of it and outside the presence of the jury moved to strike the entire testimony on the contention that Maret was an informer, contrary to previous statements made by government counsel.

Appellant defines an informer as a person who voluntarily furnishes information to authorities as contrasted to persons who merely supply information after being interviewed and after a request for that information has been made. Based on the fact that Maret voluntarily contacted the F.B.I., appellant says that he is an informer, notwithstanding that he never actually stated that he was.

We disagree with appellant’s contention that the sole criterion for determining whether a witness is an informer is whether he comes forward voluntarily. True, Gordon v. United States, 438 F.2d 858 (5th Cir. 1971) gives some limited support to this contention. However, the fact that the witness has come forward voluntarily should not in our view be the sole criterion for classifying him as an informer.

In Roviaro v. United States, 353 U.S. 53, 77 S.Ct. 623, 1 L.Ed.2d 639 (1957), the alleged informer was an active participant in the illegal activity, and it was assumed in that case that this was an important criterion. The entire question in Roviaro was one of whether the government justifiably withheld the identity. The Court did not deal directly with the issue of definition.

There are numerous judicial definitions of the term “informer,” none of which is definitive or binding upon this court. See, for example, Gordon v. United States, 438 F.2d 858 (5th Cir. 1971); Black v. Sheraton Corp., 47 F.R.D. 263 (D.C.D.C.1969); Howard v. Allgood, 272 F.Supp. 381 (D.C.La.1967); United States v. Koon Wah Lee, 74 F.Supp. 449 (D.C.Hawaii 1947); State v. Oliver, 222 A.2d 761, 92 N.J.Super. 228, 222 A.2d 761 (1966). We express no opinion upon these definitions. We do conclude, however, that the witness Maret cannot be considered an “informer” as that term has been defined in any of the cases.

The voluntary submission of information or report of a crime to a government agency does not, without more, make an individual an informer, in the absence of some connection between the individual and the government agency. To be an informer the individual supplying the information generally is either paid for his services or, having been a participant in the unlawful transaction, is granted immunity in exchange for his testimony. In the case at bar, there is no showing that the witness Maret was in complicity with the authorities. He was not in their employ. He may have hoped for advantage, but no such agreement was demonstrated.

-Although the appellant sought to establish that the witness Maret had set him up, so to speak, he was unable to accomplish this. The trial court ruled that the government in the case at bar was not obligated to disclose Maret’s identity. Our view is that there is no obligation to identify Maret as an informer because it does not appear that in the usual understanding of that term he occupied such a position.

The trial court here recognized that the government was not required to reveal the names of all the witnesses in noncapital eases. See United States v. Hughes, 429 F.2d 1293 (10th Cir. 1970); United States v. Gleeson, 411 F.2d 1091 (10th Cir. 1969); see also 18 U.S.C. § 3432. The court further ruled that to identify the witnesses would imperil their lives inside the penitentiary.

Finally, we note that this is a case in which the witness was not absent from the trial. Rather, he was present. He testified and was cross-examined fully.

IV. Government’s Failure to Separate its Witnesses

Appellant would have us rule that allowing these inmate witnesses to be together was per se error. We disagree. While it does call for most careful scrutiny by the trial court, we do not see it as a basis for reversal in the absence of a showing of prejudice.

True, the witnesses had been ordered in to testify, had been admonished not to discuss the case and had disobeyed, apparently while they were celled together at the county jail in Kansas City, Kansas. The court noted that it had not ordered that the witnesses be physically separated and said that under the particular circumstances where the witnesses were inmates the government counsel “did probably all that counsel could do except take [the prisoners] home with them” and considered also the fact that the jury was aware that the government witnesses had discussed the case together and could take that into account in weighing their testimony.

The matter of separation of witnesses is left to the discretion of the trial court subject to review where there has been abuse of discretion or manifest injustice. McCrossen v. United States, 339 F.2d 810 (10th Cir. 1965); Johnston v. United States, 260 F.2d 345 (10th Cir.), cert. denied, 360 U.S. 935, 79 S.Ct. 1454, 4 L.Ed.2d 1547 (1958); Mitchell v. United States, 126 F.2d 550 (10th Cir.), cert. denied, 316 U.S. 702, 62 S.Ct. 1307, 86 L.Ed. 1771 (1941).

Where there has been a violation of the exclusionary rule it is not-error to deny a motion for mistrial when no prejudice has resulted from the violation. United States v. Stidham, 459 F.2d 297 (10th Cir.), cert. denied, 409 U.S. 869, 93 S.Ct. 168, 34 L.Ed.2d 118 (1972); United States v. Sluder, 457 F.2d 703 (10th Cir. 1972).

Noncompliance can, of course, lead to citation for contempt. See Holder v. United States, 150 U.S. 91, 14 S.Ct. 10, 37 L.Ed. 1010 (1893); United States v. Suarez, 487 F.2d 236 (5th Cir. 1973).

In view of the fact that there is no prejudice demonstrated, indeed there were many discrepancies in the testimony of the various inmate witnesses, we must conclude that the trial court did not err in denying the motion for mistrial.

V. Noncompliance With the Omnibus Hearing Report

In the Omnibus Hearing Report, the government stipulated: 1) that it would allow the defendants to inspect and/or copy prior to trial any “books, papers, documents, photographs or tangible objects . . . which will be used at the trial,” and 2) that “information concerning a prior felony conviction of persons whom the prosecution intends to call as witnesses at trial will be supplied to defendants, so far as known to the prosecution.”

Appellant contends that the government failed to comply with these stipulations. He asserts that he was never advised prior to trial that the government intended to introduce into evidence several photographs of the burned-out cell. Nor was he provided with the criminal records of each of the government’s inmate witnesses, despite counsel’s repeated requests for such information.

At the trial, after the government had completed presentation of its case, defense counsel moved for the production of all evidence favorable to the accused. This motion was granted. In addition, counsel requested the government to produce the prior criminal records of its inmate witnesses. The prosecution argued that such written records were unavailable, and that all of the prior convictions of its witnesses had been brought out on direct examination, at least as far as those facts were known to the prosecution.

The district court rebuked the prosecution for its failure to produce the witnesses’ official criminal records, stating:

[T]here isn’t any excuse for the government not having this information available because it is something that would aid the jury in passing on the credibility of the witnesses and the Omnibus Order did require it, and the government isn’t just the individual U. S. Attorney who stands in court at any time. The government is the government, and you should have had this.

Nevertheless, the district court denied appellant’s motion on the grounds that a) the government “didn’t present [the witnesses] as lily white individuals who were brought here from some seminary” and b) the government allegedly brought out the complete criminal record of each witness during direct examination. The court added: “If that’s not the case, the Court of Appeals will probably take a very dim view of the government’s failure to produce.”

Under Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), the prosecution’s suppression of evidence favorable to an accused upon request violates due, process where the evidence is material either to guilt or punishment, irrespective of the good faith or bad faith of the prosecution.

Moore v. Illinois, 408 U.S. 786, 92 S.Ct. 2562, 33 L.Ed.2d 706 (1972), a recent decision of the Supreme Court, held that the Brady rule is applicable only when the following factors exist: (a) suppression by the prosecution after a request by the defense; (b) the evidence’s favorable character for the defense; and (c) the materiality of the evidence. 408 U.S. at 794-795. The Moore decision further held that, although the defendant had requested pretrial disclosure of all written statements, the prosecution did not violate defendant’s due process rights by not producing evidence of one witness’ misidentification of the defendant, where such evidence was not material to the issue of guilt. Nor are defendant’s due process rights violated where the evidence which was not produced does not actually benefit the defendant’s case. United States v. Brumley, 466 F.2d 911 (10th Cir. 1972), cert. denied, 412 U.S. 929, 93 S.Ct. 2755, 37 L.Ed.2d 156 (1973).

Under some circumstances, the government’s suppression of beneficial impeachment evidence affecting the credibility of a key prosecution witness may result also in such unfairness as to violate due process. United States v. Harris, 462 F.2d 1033 (10th Cir. 1972). If the prosecution’s failure to produce was not deliberate, the test for reversal on appeal is whether the trial was not merely imperfect but rather “unacceptably unfair.” United States v. Harris, supra. And where the evidence allegedly suppressed is not material to the question of the guilt or innocence of the accused but is admissible only for the purpose of attacking the credibility of a government witness, the prosecution’s failure to produce must be inherently significant and favorable to the defense in order to be “unacceptably unfair.” Cf. Link v. United States, 352 F.2d 207 (8th Cir.), cert. denied, 383 U.S. 915, 86 S.Ct. 906, 15 L.Ed.2d 669 (1965). The salient inquiry is whether production-of the requested information might have led the jury to entertain a reasonable doubt about the defendant’s guilt. See Kotteakos v. United States, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557 (1946); Levin v. Clark, 408 F.2d 1209 (D.C.Cir.1967). The nondisclosure must itself be prejudicial to the defense. United States v. Brumley, supra.

At bar, there is no question as to the prosecution’s nondisclosure of the witnesses’ prior criminal records constituting noncompliance with the Omnibus Hearing Report. In light, however, of the Supreme Court’s pronouncement in Moore v. Illinois, it is our conclusion that reversal pursuant to Brady is not called for. The information which the government failed to produce was not material to innocence or guilt. Moreover, the prosecution did bring out the prior convictions of its witnesses during direct examination, and appellant has not shown that this testimony was inaccurate.

Regarding the government’s failure to make pretrial production of photographs, the record reveals that defense counsel made a timely objection to their introduction on the basis of the government’s nondisclosure. The trial court overruled the objection.

The photographs in question were taken by one Clarence R. Bice, a correctional counselor at Leavenworth, several hours after the fire on August 16, 1972. The photographs depict the charred mattress, bunk bed and blackened wall of the victim’s cell. Appellant alleges that the introduction of these photographs violated his rights to due process.

We were confronted with a similar contention in United States v. Dowdy, 455 F.2d 1253 (10th Cir. 1972), which was an appeal, from a conviction for knowingly transporting a forged cheek in interstate commerce. The appellant there objected to the prosecution’s introduction into evidence of bank deposit slips, deposit slip tallies and a photocopy of the original check, none of which had been disclosed to the defendant in advance of trial. This constituted noncompliance with the pretrial discovery order and Omnibus Hearing Report. We held in Dowdy that the prosecution’s failure to comply with the order was “inexcusable.” Nevertheless, it. was concluded that the decision to reject or accept the documents was properly within the trial court’s discretion. His determination that the admission was not prejudicial was not an abuse of his discretion in view of the fact that 1) the other evidence adduced at trial had already established the elements of the offense; 2) the exhibits introduced were not of a sensitive nature; and 3) such evidence did not involve a new and sensational mode of proof. 455 F.2d at 1255.

The controlling factors in Dowdy are applicable to the case at bar. The photographs introduced by the prosecution were of cumulative evidentiary import and did not constitute a new manner of proof. Under these circumstances, the trial court did not abuse its discretion in overruling the objection to their admission. Nor was this violative of appellant’s constitutional right to due process.

The judgment is affirmed.

      . We note liere that the taking of judicial notice may have been superfluous since both appellant and appellant’s counsel signed the Omnibus Hearing Report, which stipulated that the United States District Court for the District of Kansas “has jurisdiction to try the defendant for the offense charged.”

      . In Roviaro, the government did not dispute that the undercover employee who participated in the narcotics transaction was, in fact, an “informer.” Generally, the cases involving the use of informers are concerned with the government’s privilege to withhold the identity of a paid government agent. In these cases the government has not argued that an agent should not be classified as an informer, so that a definition of the term “informer” has neither been sought by the parties nor expressed by the court. See On Lee v. United States, 343 U.S. 747, 72 S.Ct. 967, 96 L.Ed. 1270, rehearing denied, 344 U.S. 848, 73 S.Ct. 5, 97 L.Ed. 659 (1952); Hoffa v. United States, 385 U.S. 293, 87 S.Ct. 408, 17 L.Ed.2d 374 (1966).

      . See Devitt and Blackmar, 1 Federal Jury Practice and Instructions § 12.02:

        Testimony of Informer — Interested Witness

      The testimony of an informer who provides evidence against a defendant for pay, or for immunity from punishment, or for personal advantage or vindication, must be examined and weighed by the jury with greater care than the testimony of an ordinary witness. The jury must determine whether the informer’s testimony has been affected by interest, or by prejudice against defendant.


source: Caselaw Access Project

author: WATERMAN, Circuit Judge:

license: Public Domain

text:
    GEMINI NAVIGATION, INC., Plaintiff-Appellee, v. PHILIPP BROTHERS DIVISION OF MINERALS & CHEMICALS PHILIPP CORPORATION and Royal Insurance Company, Limited, Defendants-Appellants.
    No. 962, Docket 73-2775.
    United States Court of Appeals, Second Circuit.
    Argued May 2, 1974.
    Decided July 1, 1974.
    Donald B. Allen, Cichanowicz & Callan, New York City, for plaintiff-appellee.
    Joseph J. Magrath, 3rd, Thomas J. Hanrahan, Bigham, Englar, Jones & Houston, New York City, for defendants-appellants.
    Before WATERMAN, FRIENDLY and MULLIGAN, Circuit Judges.
   WATERMAN, Circuit Judge:

. Defendants-appellants Philipp Brothers and Royal Insurance Company Limited appeal from a judgment of the United States District Court for the Southern Distript of New York entered after a trial by the court without a jury, holding defendants liable to plaintiff-appellee Gemini Navigation Inc. for contribution in general average. Invoking the “clearly erroneous” standard of Rule 52 of the Federal Rules of Civil Procedure, appellants implore us to hold that the findings of fact upon which the judgment below was predicated are unsupported by the evidence which was before the district court. As a rule, we are unwilling to disturb the factual determinations reached by an able and experienced trial judge. However, after a careful review of the findings here, we conclude, without hesitation, that the district court’s findings are clearly erroneous. Accordingly, we reverse the decision below and order that judgment be entered in favor of defendants-appellants.

Plaintiff-appellee Gemini Navigation Inc. (“Gemini”) was the owner of the vessel S.S. Ionic Bay (“Ionic”). Philipp Brothers (“Philipp”) is the owner of a particular cargo which was conveyed by the Ionic from Costanza, Roumania to Charleston, South Carolina. Royal Insurance Company Limited (“Royal”) is the cargo owner’s insurer and was a defendant in the district court by virtue of its guarantee to pay any contribution due from the cargo owner.

This case concerns the effort of a vessel owner to obtain from a cargo owner contribution in general average for which the cargo owner is alleged to be legally liable. What emerges from a close inspection of the events which comprise the final odyssey of the Ionic, however, is an audacious attempt to foist onto the cargo owner expenses which legitimately should be borne by the vessel owner alone.

Our tale begins in the Far East on June 28, 1966, well before the Ionic had loaded the cargo owned by Philipp. On that date the Ionic departed from Singapore and set out for its déstination of Ancona, Italy. This departure was accomplished barely two days before the June 30th expiration date of the Ionic’s International Load Line Certificate. This impending expiration was postponed, however, by an extension of the expiration date. An extension is automatically granted to a vessel whose Certificate would otherwise expire if that vessel is at sea, but the Certificate does expire upon the vessel’s arrival at the first port reached after the original time for expiration has passed. In this case the Ionic’s first port of call after June 30 was Aden, at which port the Ionic applied for and was granted a formal extension of the International Load Line Certificate until August 31, 1966. After proceeding to Ancona, Italy and unloading her cargo there in early August 1966, the Ionic requested a further extension of the Certificate from the American Bureau of Shipping (“ABS”). Acting upon this application, the Bureau sent one of its expert surveyors to inspect the ship while it was still at Ancona. The surveyor, Mr. Passalacqua, discovering that extensive repairs were necessary before a further extension of the Certificate could be authorized, denied the request. The master of the Ionic then advised Mr. Passalacqua that it was his intention to sail to Piraeus where the necessary repair work could be performed. Yet, despite what the surveyor had been told, the Ionic did'not sail for Piraeus but rather, at the instructions of its owners, sailed directly to Costanza, Roumania. The vessel reached Costanza on August 16 and immediately began to load the cargo owned by Philipp.

From August 16 until August 27, the stevedore, working twenty four hours a day, continued to load the cargo, which consisted of ponderous steel ingots of irregular shape. Closely supervising the loading, the master of the Ionic, Captain Varias, was sufficiently disturbed by the carelessness of the stevedore’s workers in stowing the ingots that he twice, on August 24 and again on August 26, wrote to the stevedore complaining that the improper stowage was compromising the ability of the vessel to proceed safely at sea. Also, the master noted in the ship’s log for the 26th and 27th of August:

Friday 26th “Loading in No. 5 hold continues.- Letter sent to Stevedores stating that the safety of the vessel was in danger owing to bad stowage of cargo.
24:00 Loading continues.
Sat. 27th
10:15 All loading completed. . . .
* 1 * * ■* * *

As can be seen, the loading was completed within one day after the master sent the second of his two protests to the stevedore. Furthermore, there was no log entry which would indicate that subsequent to the master’s letters of complaint the dangerous condition of the stowage was rectified by the stevedore. Despite the passage of so little time between the second complaint and the cessation of loading, and despite the absence of a log entry noting that the stevedore had employed satisfactory corrective measures, Captain Varias now claims in his deposition in this litigation that the stevedore had satisfactorily remedied all defects in the stowage of the steel ingots by the time the ship sailed.

The Ionic left Costanza at 4:50 P.M. on the 27th of August, roughly four days before its International Load Line Certificate (for which it had already been denied an extension at Ancona due to the ship’s deteriorating condition) was due to expire once again. There was only one way in which the Ionic could complete her voyage to Charleston without having to incur the significant costs of the repairs which the surveyor at Ancona had informed Captain Varias would be necessary before an extension of the Certificate could be granted; if the Ionic could clear Augusta, Sicily, its next intended port of call, by midnight of August 31, 1966, the vessel’s Certificate would be automatically extended until she reached Charleston, her ultimate destination. Should the ship be unable to leave Augusta by that time, the cleverly conceived plans of the vessel’s owners would be frustrated, for the Italian authorities would, under the terms of the International Load Line Convention, be required to prevent her departure.

The vessel owner’s scheme aborted, for the race against the clock, which commenced with the frenetic loading of the ingots at Costanza, was lost somewhere in the Aegean Sea, either because it became apparent that the condition of the cargo had become precarious, if it had not been precarious before, or, perhaps, as Philipp in its brief here appears to intimate, simply because the time the voyage would take had been miscalculated. In any event, it was now obvious, if it had not been obvious before, that the cargo should be restowed before the vessel could safely attempt a crossing of the Atlantic Ocean. The Ionic arrived at Augusta, which, as we have said, was its next port of call, at 7:25 P.M. on August 31, 1966, only hours before the expiration of her Certificate.

The principal point of dispute in this case is the cause of the precarious state of the cargo discovered at Augusta. Gemini attributes this condition of the cargo to a shift caused by what it claims were rough seas and high winds encountered on the voyage from Costanza to Augusta. Philipp, on the other hand, claims that the condition of the cargo at Augusta and the resultant need for re-stowage emanated from improper stowage of the cargo at Costanza, for which Gemini alone would be responsible. Before we address this issue, we must return to our narrative.

Upon her arrival at Augusta, the Ionic was subjected to an inspection by three ABS surveyors who authorized her to make one direct voyage to another Mediterranean port for the purpose of making the repairs necessary for an extension of her Certificate. On Sept. 2 and Sept. 3 a surveyor employed by Gemini itself boarded the ship and inspected the cargo. The conclusion of this surveyor, one Santangelo, contained in a report dated September 7, 1966, was that.“there had been an irregular stowage distribution.” (Emphasis inserted). That this conclusion refers to the stowage at Costanza is confirmed by a letter sent by Gemini immediately after it had received the results of Santangelo’s cargo survey. This letter advised the vessel’s time charterers that the Ionic would have to proceed from Augusta to another port for repairs and restowage necessitated by “the failure to stow the cargo properly at Costanza.” (Emphasis inserted). Additional proof that the report referred to the manner of stowage at Costanza is supplied by Santangelo’s concession in his 1971 deposition in this case that his inspection had revealed that the initial stowage achieved at Costanza had not been “very good.”

It was decided that the Ionic would be repaired and the cargo restowed at Naples. Once there she was inspected by another three experienced cargo surveyors, two of whom were employed by Gemini. The report, to which we shall henceforth refer as Exhibit 12, filed by the two Gemini surveyors after an exhaustive investigation found categorically that the cargo had been stowed improperly at Costanza. For the moment we defer extended discussion of this report which the district court apparently believed concluded no more than that the cargo, as observed at Naples, was improperly distributed and would have to be restowed.

While the ship was in Naples, another team of ABS surveyors examined the vessel to ascertain what hull repairs were required for extension of the ship’s Certificate. Their findings comported with the earlier findings which we have referred to supra, those reached by ABS surveyor Passalacqua in Ancona in early August 1966. The deficiencies discovered in these surveys, inasmuch as they existed prior to the time when Philipp’s cargo was brought aboard ship, were therefore, defects for which the vessel owner alone was responsible.

After the necessary restowage and repair work had been performed at Naples, the Ionic’s Certificate was extended to allow one voyage to Charleston, with an admonition that further repairs would have to be performed there before any subsequent voyages would be permitted. The voyage to Charleston was successfully completed, but before Philipp was allowed to remove its cargo it was compelled to sign a general average agreement. Interestingly, Gemini’s adjuster described'the cause of the casualty which purportedly gave rise to Philipp’s liability for general average: “[T]he cargo shifted due to improper stowage.” Not surprisingly, after the discharge of this cargo the Ionic was sold for scrap.

The legal theory that governs the disposition of this case is not complex and is not in dispute here. The contract between the parties, the bill of lading, incorporated the terms of a voyage charter. The significant clauses of that charter are:

“Clause 13 — Any averages occurring under this charter to be settled in New York according to York-Antwerp Rules, 1950.
******
Clause 40 — “New Jason Clause . to be considered fully incorporated . . . . ”

The New Jason Clause provides:

“In the event of accident, danger, damage, or disaster, before or after commencement of the voyage resulting from any cause whatsoever, whether due to negligence or not, for which, or for the consequences of which, the Carrier is not responsible by statute, contract or otherwise, the goods, shippers, consignees, or owners of the goods shall contribute with the Carrier in general average to the payment of any sacrifices, losses, or expenses of a general average nature that may be made or incurred, and shall pay salvage and special charges incurred in respect of the goods.”

The function which this clause performs is to make the cargo owner liable for contribution. in general average in any instance in which the vessel owner would have a valid legal defense to any claim brought against him by the cargo owner for damage to the cargo. Thus, if the vessel owner would not be legally responsible for the peril to which the cargo is, or might be, exposed, the vessel owner is entitled to contribution for any sacrifices made or expenses incurred to insure the safe carriage of the cargo. Inasmuch as a shipment in foreign commerce was involved in this case, the parties were subject to the United States Carriage of Goods by Sea Act (“COG-SA”), 46 U.S.C. § 1300 et seq., the pertinent portions of which are found in 46 U.S.C. § 1304(2) (c), (q):

(2) Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from
X X X X X X
(c) Perils, dangers, and accidents of the sea or other navigable waters;
X X X X X X
(q) Any other cause arising without the actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier,

In this cáse the danger to which the cargo was exposed was the precarious condition of the stowage discovered at Augusta, which condition made restowage essential. The issue here then is whether the vessel owner is legally responsible for allowing this state of peril to develop or, more specifically, was the perilous condition found to exist in Augusta due to an initial improper stowage at Costanza? If the stowage at Costanza, which all parties acknowledge was the responsibility of the vessel owner, was proper, then the vessel owner would not be responsible for any shifting of the cargo caused by rough seas between Costanza and Augusta and would consequently be entitled to contribution from the cargo owner for the costs incurred in eliminating the danger that developed without the vessel owner’s fault.

The issue of whether the cargo was properly stowed at Costanza is an issue of fact. Resolving this issue, the district court found that “[t]he cargo was completely secured and properly stowed for the voyage to Charleston, South Carolina.” This conclusion was reached, however, after a trial in which there were only two live witnesses, both of whom were outside experts. The remainder of the evidence, and by far the most important portion of it, consisted of documents and deposition testimony. On the evidence before us we are of “the. definite and firm conviction that a mistake has been committed,” Iravani Mottaghi v. Barkey Importing Co., 244 F.2d 238, 248 (2 Cir.), cert. denied, 354 U.S. 939, 77 S.Ct. 1402, 1 L.Ed.2d 1538 (1957), quoting United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746 (1948). The bulk of that evidence is contained in written material, and “this court, on review, is in as good a position as the trial court to examine, interpret and draw inferences from [the documents and depositions offered into evidence].” J. Gerber & Co. v. S.S. Sabine Howaldt, 437 F.2d 580, 586 (2 Cir. 1971); accord, Severi v. Seneca Coal & Iron Corp., 381 F.2d 482, 488 (2 Cir. 1967).

As noted, the district court was of the opinion that the cargo had been properly stowed at Costanza and that the dangerous condition discovered at Augusta was a direct result of a shifting of the cargo caused by severe turbulence that the court found the Ionic experienced on the voyage from Costanza to Augusta. In finding that the cargo had been carefully and properly stowed at Costanza, the trial court relied on two pieces of evidence — the deposition testimony of Varias, the master of the Ionic during the loading at Costanza and during the voyage to Augusta, and the live testimony of an expert witness, Captain Merle Allen. The court either totally disregarded all the other evidence or dismissed what was termed “[t]he testimony of the surveyors adverted to by the defendant^ ” as but references “to the condition of stowage at the time the cargo was examined at Augusta or Naples, not at the time of departure from Costanza.” In addition, the district court declared that “[t]he expiration of the Loadline Certificate has no bearing on the resolution of the issues presented by this claim.”

The finding that the cargo was properly stowed at Costanza, an issue on which the carrier has the burden of proof, see G. Gilmore & C. Black, Jr., The Law of Admiralty § 3-43, at 162-63 (1957), is clearly erroneous. The only fragments of evidence which the district court could summon to support this finding were the deposition testimony of the ship’s master, Captain Varias, and the live testimony of an expert witness who had no firsthand knowledge of any of the events involved. To be sure, the master did testify by deposition in 1970 that by the time the Ionic had left Costanza on August 27, 1966, he was personally satisfied that the stowage “realized” there was a proper and safe one. This 1970 declaration would appear to be a self-serving assertion of late invention, for he had transmitted written protests, referred to supra, to the stevedore on August 24 and August 26, and the only inference that can be drawn from the fact that these protests were made is that the carelessness in loading began on or before the 24th of August and continued into the 26th. Thus the workers had been loading the bulk cargo haphazardly for at least three days. Yet the master, some years later, asserts that the improper stowage flowing from this protracted negligence on the part of the stevedore’s workers was remedied before all loading was completed at 10:15 on the morning of August 27. The master’s claim seems preposterous. It is a virtual certainty, given the unwieldy nature of the cargo and the length of time the careless loading had continued, that the condition could not have been effectively corrected in one day. Exhibit 12, to which we have already alluded and to which we shall return shortly, makes this precise point. Furthermore, this minimum span of at least three days of careless loading comports perfectly with the conclusion on that point reached by Exhibit 12’s authors, both of whom were not employed by the cargo owner but by the vessel owner. These surveyors found that of the 13,000 tons of the steel ingot cargo, about 3,000 tons had been badly stowed at Costanza. Moreover, in view of the presence of a log entry noting the carelessness in stowing the cargo, the master’s deposition testimony is further weakened by the absence of a subsequent log entry showing that the dangerous condition had been corrected. The testimony of the master should thus be accorded minimal, if any, weight.

The district court also relied on the live expert testimony of Captain Merle Allen. As noted, the captain had no firsthand familiarity with the Ionic’s adventures of 1966. It is true that upon questioning by plaintiff’s attorney he initially indicated basic approval of the general manner in which he had been apprised the cargo had been stowed at Costanza. He stated that while it is best to have as flat a distribution of the ponderous pieces as possible, so that dangerous shifting toward the skin of the ship does not occur, this was not always possible because the bulk and irregular shape of the huge ingots made loading inside the confines of a hull of a ship a difficult chore. As a result, the “regular stow for that type [of cargo] would appear to be a bit towards the center, to a degree, because of height of decks and the ability to move and stow outboard with anything weighing from two to ten tons .... It would not be flattened out to the point that it would be level floor across any given area.” While this testimony, again based on what the expert was told and not on any factual observation on his part of the stowage of the Ionic’s cargo, gives some support to the vessel's claims, Captain Allen made three concessions on cross-examination which render his direct testimony of little worth. First of all, the captain admitted that he had never been shown Exhibit 12, in which, as we have mentioned, expert surveyors, who did have the benefit of firsthand observation of the stowage, concluded that the irregular cargo distribution, pitched at the center, was a totally inexcusable and dangerous method of stowing the cargo at Costanza. Secondly, Captain Allen agreed that the surveyors who compiled Exhibit 12, referred to swpra, should have been able to determine whether the cargo had been badly stowed at Costanza. Lastly, on reeross-examination the captain conceded that the difficulties he had said would be encountered in attempting to achieve a flat nonconical distribution of the ponderous, irregularly shaped ingots were not insurmountable ones. In fact, the captain acknowledged that he himself would have employed the special loading techniques set forth in Exhibit 12, procedures which the surveyor-authors of that report declared should have been, but were not, utilized at Costanza. Although on redirect Gemini’s attorney then extracted from the witness an acknowledgment that “[t]here are several [proper] ways’’ to stow a cargo, the testimony of this witness who had been retained solely for purposes of this litigation lends as much support to the defendants as it does to the plaintiff. Moreover, Captain Allen’s testimony should be weighed in relation to the quantity and quality of evidence emanating from sources in a much more advantageous position than he to enlighten the trier of fact about the way the cargo was stowed at Costanza.

We now turn to the evidence to which it appears the district court did not assign any weight.

After the Ionic had arrived at Augusta, Gemini, in claiming against the time charterers of the vessel, itself recognized that there had been a “failure to stow the cargo properly at Costanza, as a result of which damage and faulty stowage the vessel must proceed from Augusta to another port [for] repairs and restowage of cargo.” The district court’s opinion does not even mention this candid admission on the part of Gemini.

In the general average agreement, prepared on behalf of Gemini and which Philipp was required to sign upon the ship’s arrival at Charleston and before the cargo could be discharged, the cargo was said to have “shifted due to improper stowage.” (Emphasis inserted). Thus this Gemini-prepared agreement concludes what Gemini now denies, namely, that the improper stowage at Costanza caused the shifting, if any, of the cargo. The district court does not mention this piece of evidence.

Most importantly, the finding that the district court did make, that “[t]he testimony of the surveyors adverted to by the defendant [s] refers to the condition of stowage at the time the cargo was examined at Augusta or Naples, not at the time of departure from Costanza,” is contrary to the conclusion of all the surveyors to whom the judge alludes. Their conclusion 'was that there had been improper stowage at Costanza.

Surveyor Santangelo examined the cargo at Augusta shortly after the Ionic arrived there. His determination was: “It was evident that there had been an irregular stowage distribution.” The use of the past perfect tense “had been” demonstrates that he was referring to the distribution of the stowage at a time prior to his inspection of the cargo at Augusta. That time must have been while the ship was being loaded in Costanza. Indeed, this is exactly how San-tangelo’s conclusion was interpreted by Gemini itself, for, apparently on the basis of the information provided to it by Santangelo, Gemini advised the time charterers of the vessel, as we quoted supra, that there had been a “failure to stow the cargo properly at Costanza.” Moreover, any doubt as to whether San-tangelo was referring to the stowage at Costanza is dispelled by his 1971 admission by deposition that the stowage at Costanza had not been “very good.”

The conclusions of the surveyors employed by Gemini who conducted the comprehensive investigation while the ship was in Naples are contained in Exhibit 12. We cannot understand how the district court could have misconstrued the meaning and significance of this report. In short, the principal conclusion of the report was that “[t]he stowage conditions of the cargo upon departure from Costanza could have compromised the vessel’s safety especially in trans-atlantic navigation.” (Emphasis inserted). The report noted that the quantity of cargo which the surveyors at Naples found to have been Stowed in a disorderly manner was the very same amount which had been loaded during the period at Costanza when the master was complaining to the stevedore about the lack of care taken by the stevedore’s workers. Commenting on the difference in time taken to load this cargo at Naples from that taken to load the cargo at Costanza, the surveyors remarked: “The difference is enormous but so is the qualitative difference between the stowage realized at Naples and that not taken care of at Costanza.” (Emphasis inserted). The surveyors even explored the reason “why at Costanza the last goods to be loaded were stowed in a disorderly manner and without any preoccupation for safety of the vessel”:

“Be it clear that what follows are deductions convalidated by the difficulties encountered at Naples in putting the goods back aboard with sound stowage principles.
“Premised that the TONIC BAY’, being a Liberty vessel, had a ’tween deck and as the breadth of the hatches was relatively narrow if compared to the breadth of the vessel, it is clear that the grab of a crane loaded with a big piece could easily be deviated up to the side when the said piece had to be put on the hold bottom but this manoeure became more difficult as the height of the goods arose until it became practically impossible when the goods were 4 or 5 metres high from the bottom unless of course special measures were taken as they were at Naples (snatch block rings welded onto the ribs for pulling to the sides, by means of vessel’s derricks, the pcs. on the crane). This was not done at Costanza and the pcs. had piled, up at the hatch areas creating the situation which was noted at inspection of the 5th September.
“In brief the vessel had been loaded without thinking that it had to go to sea (the Atlantic) in a season when weather broke.”

Beyond peradventure, this report establishes that the stowage at Costanza was improper, and we have a firm and definite conviction that a mistake was committed below in failing so to find.

Finally,- the district court was further unable to perceive how the impending expiration of the International Load Line Certificate had any “bearing on the resolution of the issues presented by this claim.” The bearing, we believe, is obvious. The Ionic was racing against the clock to clear Augusta by midnight of August 31, 1966. If she were successful in meeting this deadline, her Certificate would be automatically extended and would remain in force until she reached Charleston. Failure would mean that extensive, and expensive, repairs would have to be undertaken in order to obtain an extension. The impending expiration of the Certificate explains why the ingots were stowed so hurriedly and, as it turns out, so negligently, at Costanza. When the Ionic failed to meet the deadline it had set for itself, the vessel-owner then attempted to force Philipp to share in the costs of correcting the perilous condition of the stowage and also in the costs of “a series of verifications and works which the vessel should have done before loading at Costanza but which were not done.” Exhibit 12. (Emphasis inserted).

Reversed.

      . The concept of “general average” is an ancient one based on the principle “that loss for the common benefit which is incurred by one who partakes in a maritime venture should be shared ratably by all who participate in the venture.” Cia. Atlantica Pacifica, S.A. v. Humble Oil & Refining Co., 274 F.Supp. 884, 891 (D.Md.1967). “The question of whether or not all or any part of the loss suffered by ship or cargo or both [or extraordinary expense incurred to avert such a loss] is a general average loss [or expense] depends upon bow much, if any, of the damage [or extraordinary expense] was sustained in connection with efforts for the common good of both ship and cargo.” . Id.

      . At all times during its last voyage, the Ionic was subject to the provisions of the International Load Line Convention (1930), an agreement which has since been superseded.

      . The letters of August 24th and August 26th read:
      s/s “Ionic Bay”
      Messrs
      Romtrans and Stevedoring
      Department
      Constanza,
      Constanza, August 24th 1966
      Dear Sirs
      This is to draw your attention to the following matter, your workers loading ingots, moulds, on the above state vessel, they are careless concerning to the stowage of cargo leaving unsual spaces untrimed, therefore the safety of vessel coming in a dangerous position owing to the nature of cargo.
      Please advise your workers to be more carefull with the above matter to avoid troubles and delays.
      Yours faithfully
      6. Varias, Master
      s/s “Ionic Bay”
      Messrs
      Bomtrans and
      Stevedoring department
      Constanza,
      Constanza, August 26th 1966
      Dear Sirs
      Due to the fact that yours workers continue to stowage the cargo very uncarefully, I would like to draw your attention to the matter that after the completion of loading of loading the safety of vessel should be came in very dangerous point in ease, to refuse the sailing of vessel.
      In connection with the above situation you will kept liable and full responssible for any damage, delay or expenses, during loading, after the completion of loading or during the voyage and for any claim will be raised against concerned parties.
      Yours faithfully
      G. Varias, Master

      . If these officials failed to prevent the Ionic’s departure after the expiration of her Certificate her hull insurance would be void.

      . The parties here and the court below have devoted considerable attention to the velocity of the winds and the turbulence of the sea which the Ionic encountered on its voyage from Costanza to Augusta. We are convinced, and Gemini does not now appear to dispute, that the weather and sea conditions, while not benign, did not approach those whi^h would constitute a “peril of the sea.” Gemini’s present contention is that, despite careful stowage at Costanza, rough seas caused a shift of the cargo and the creation of the disarray discovered at Augusta. The evidence before us does indicate that there was some “shifting” of the cargo during the crossing of the Aegean Sea, although that evidence is inconclusive as to the extent of the shifting. As will be seen, it seems that the stowage conditions observed at Augusta and Naples could well have been the stowage condition when the ship left Costanza rather than have been the product of any shifting of the cargo en route. Indeed, some of the objectionable stowage, with heavy ingots piled on top of each other in the center of the hold instead of being dispersed toward the sides of the vessel, could under no stretch of the imagination have been a product of “shifting.” Even if we accept as a fact that the stormy seas did cause some significant shifting, the validity of Gemini’s present position, one not predicated on a “peril of the sea” theory, must still turn on the care with which the cargo was stowed at Costana. There is copious evidence on this point. Therefore; it is unnecessary for us to delve into the factual issue of the extent of the shifting, and we instead focus our inquiry on the manner in which the cargo had been stowed at Costanza.

      . The following colloquy took place on Allen’s cross-examination:
      Q Would you agree, sir, that two experienced marine engineers who were in daily attendance upon the vessel from September until December in connection with the discharge and re-stowing of cargo would be in an excellent position to give an opinion as to whether the cargo had shifted or had been very badly stowed at the outset?
      A If they were in constant attendance I would rather imagine they should be able to issue a report.

      . Plaintiff cites and quotes Cia. Atlantica Pacifica, S.A. v. Humble Oil & Refining Co., supra, 274 F.2d at 898, for the proposition that
      a general average statement is prima facie proof of (1) the losses, damages and expenses .... (2) the values attaching to such losses . . . , and (3) the computations proportioning these losses . . between . . . ship and cargo.
      That case involved a general average agreement identical to the one signed by Philipp here. Gia. Atlántica makes clear, however, that whatever evidentiary value may be assigned to the general average agreement once the cargo owner’s underlying liability for some general average has been independently established, the signing of that general average agreement does not in any way preclude the cargo owner, as that owner does here, from denying all liability for general average on the grounds that the shipowner’s fault produced the expense alleged to be subject to general average, and that, under COGSA, that fault would make the shipowner liable for any damage to the cargo. Furthermore, Gia. Atlántica appears consistent with Navigazione Generale Italiana v. Spencer Kellogg & Sons, Inc., 92 F.2d 41 (2 Cir.), cert. denied, 302 U.S. 751, 58 S.Ct. 271, 82 L.Ed. 580 (1937), where, despite the existence of a virtually identical general average agreement, this court conducted an independent examination of whether the vessel owner had been negligent and should therefore be denied recovery for general average under the terms of the contract between the parties. The general average agreement here thus has no bearing on our resolution of the seminal issue of Gemini’s fault.

      . In the court below appellant Philipp Brothers filed a counterclaim for $10,000 with interest which was represented to have been an advance by it toward the vessel repair and restowage costs incurred at Naples, but which had been made pursuant to an agreement with appellee that it was advanced “without prejudice.” The court below awarded appellant Philipp Brothers the sum claimed, and this award was not appealed. Our judgment order reversing plaintiff-appellee’s award does not affect the award on the counterclaim.


author: DONALD RUSSELL, Circuit Judge: BOREMAN, Senior Circuit Judge

text:
    OF COURSE, INC., (Formerly: the Isaac Hamburger & Sons Company), a Maryland corporation in Dissolution, Appellee, v. COMMISSIONER OF INTERNAL REVENUE, Appellant.
    No. 73-1495.
    United States Court of Appeals, Fourth Circuit.
    July 2, 1974.

      David English Carmack, Atty., Tax Div., U. S. Dept, of Justice (Scott P. Crampton, Asst. Atty. Gen., Ernest J. Brown and Elmer J. Kelsey, Attys., Tax Div., U. S. Dept, of Justice, on brief) for appellant.
    George W. Liebmann, Baltimore, Md. (George Gump, Shale D. Stiller and Frank, Bernstein, Conaway & Goldman, Baltimore, Md., on brief) for appellee.
    Before HAYNSWORTH, Chief Judge, BOREMAN, Senior Circuit Judge, and WINTER, CRAVEN, BUTZNER, RUSSELL, FIELD and WIDENER, Circuit Judges, sitting en banc on resubmission.
   DONALD RUSSELL, Circuit Judge:

This appeal poses for determination the deductibility as a business expense, qualifying under Section 162(a), 26 U.S.C. (Internal Revenue Code of 1954) of attorneys’ fees incurred in connection with the sale of capital assets in a Section 337(a), Internal Revenue Code of 1954, corporate liquidation. The corporate taxpayer involved adopted its plan of liquidation on January 18, 1968 and made the sale of its assets on February 5, 1968. It realized a capital gain in excess of $10,000 on this sale. It, however, made no report of such gain as income on its tax return for the year of liquidation, because of the non-recognition provisions of Section 337. Within twelve months after the adoption of its plan of liquidation, the taxpayer distributed the proceeds of the sale to its stockholders, less amounts retained to meet claims. On its tax return for the year of liquidation, the taxpayer claimed as an ordinary and necessary business expense under the provisions of Section 162(a), Internal Revenue Code, 1954, $9,500 which concededly had been incurred by the taxpayer for legal services performed directly in connection with the sale of its capital assets. The Commissioner denied the deduction and determined a deficiency accordingly. On appeal, the Tax Court, feeling bound by Pridemark, Inc. v. Commissioner (4th Cir. 1965) 345 F.2d 35, sustained the taxpayer. The Commissioner has appealed. He concedes that Pridemark supports the result reached by the Tax Court but argues that Pridemark is against the decided weight of authority and represents an inadmissible application of Section 337. Oral argument of the Commissioner’s appeal was heard by a panel of this Court but, some doubt developing in the panel with reference to the correctness of Pridemark, the appeal was certified for en banc consideration. Since the issue presented by the appeal wa's legal and not factual and the record of the oral argument of the parties before the panel was available to the en bane court, it was concluded that oral argument might be dispensed with and the cause disposed of on the record, written briefs of the parties and the tape of the oral argument before the original panel. On the basis of that record, we reverse.

After a careful review of the authorities, we are persuaded that, contrary to the rule stated in Pridemark, attorneys’ fees directly related to a sale of capital assets, as concededly the attorneys’ fees claimed as a business expense in this case were, are not deductible as a business expense under Section 162(a) of the Internal Revenue Code. The fact that a corporation is in liquidation does not change or alter the manner in which its profits or losses, incurred during the twelve-month period allowed under 337 for liquidation, are to be calculated for tax purposes, save in the particular later discussed. Thus profits arising from normal operations during such period are to be calculated and taxed as ordinary income. Pridemark, Inc. v. Commissioner, supra, at p. 45, n. 14; Central Building & Loan Assn. v. Commissioner (1960) 34 T.C. 447, 7 Mertens, Law of Federal Income Taxation, Sec. 38.27 at p. 82. Similarly, if the liquidating corporation has expensed certain materials or assets purchased in earlier years and sells the same in the year of liquidation, in line with the general rule prevailing in such cases, the proceeds of the sale are not recognized as qualifying for capital gains treatment but are taxable as ordinary^ income realized in the year of liquidation. Citizens Federal S. & L. Ass’n of Cleveland v. United States (1961) 290 F.2d 932, 936, 154 Ct.Cl. 305; Commissioner v. Anders (10th Cir. 1969) 414 F.2d 1283, 1287; Citizens’ Acceptance Corporation v. United States (3d Cir. 1972) 462 F.2d 751, 756. Accepting the premise, then, that the established rules for computing taxes prevail during the period of liquidation, it follows that attorneys’ fees directly related to a sale of capital assets made in the course of liquidation are not to be considered business expenses under Section 162 but, were it not for Section 337, discussed later, are to be treated as capital expenditures. See United States v. Cumberland Pub. Serv. Co. (1950) 338 U.S. 451, 452, 70 S.Ct. 280, 94 L.Ed. 251. This is true, because “[S]inee the inception of the present federal income tax in 1913,” the rule has been that costs, including attorneys’ fees, directly incurred in either the acquisition or disposition of a capital asset, have been considered capital expenditures, to be treated as offsets against selling price, relative only to the determination of capital losses or gains and “cannot be deducted as ‘ordinary and necessary,’ either as a business expense under § 162 of the Code [of 1954] or as an expense of ‘management, conservation, or maintenance’ under § 212.” Woodward v. Commissioner (1970) 397 U.S. 572, 574-575, 90 S.Ct. 1302, 1305, 25 L.Ed.2d 577; and Spreckels v. Commissioner (1942) 315 U.S. 626, 627-628, 62 S.Ct. 777, 86 L.Ed. 1073.

It is suggested, however, that the result reached in Pridemark may be justified on two grounds. First, reference is made to the provision in Section 337, which declares expressly that “no gain or loss shall be recognized to such corporation from the sale or exchange by it of property within such 12-month period.” Since “no gain or loss” is recognized on sales of capital assets during the period of liquidation, it is urged that expenditures connected with such sales are to be disregarded as offsets against a capital gain which is not recognized and that, under those circumstances, they must necessarily be treated as a business expense. This argument lacks appeal. If, under Section 337 no gain is recognized on the sale, it would seem logical that no offsets of expenses connected with such sale should be recognized. That is, the non-recognition of a gain should carry with it the non-recognition of any expenditures directly related to that gain. And such was the reasoning adopted in Connery v. United States, supra (460 F.2d at p. 1134), where, the court said that “since capital gain is given no recognition and has no tax incidence to the corporation under the statute, legal fees paid to establish that gain should be likewise disregarded.” We find that reasoning compelling.

The argument of the taxpayer would disregard the clearly, stated legislative purpose behind the enactment of Section 337. Congress did not intend in Section 337 to grant a tax-exemption; it was directed at correcting a very definite inequity and no more. Commissioner v. McDonald (5th Cir. 1963) 320 F.2d 109, 112; Hawaiian Trust Company, Limited v. United States (9th Cir. 1961) 291 F.2d 761, 762. The legislative purpose behind the enactment of Section 337 was correctly stated in Pridemark itself, (pp. 44-45):

“Section 337 was embodied in the Internal Revenue Code of 1954 to allow liquidating corporations to avoid a double incidence of capital gains taxation — once when capital assets are sold by the corporation, and again.on distribution of the proceeds to the shareholders.”

It sought to accomplish this purpose and to avoid the inequity of double taxation by eliminating the tax at the corporate level and by imposing only a single tax at the stockholder level. The fact that, in such shift of tax liability, “the gain to the shareholders may be measured by a different basis than the gain to the corporation is of no significance. The gain realized when a liquidating corporation sells assets at a profit is promptly-passed on to the shareholders and becomes part of the gain which they realize and are taxed-upon when they surrender their shares for redemption.” Commissioner v. McDonald, supra (320 F.2d at pp. 112-113). It nowhere appeared, though, that Congress intended to go beyond this very definite and limited purpose and give to expenditures that consistently and uniformly had been treated as capital expenditures, only allowable as offsets against selling price, the qualification of a business expense, to be deducted from ordinary income derived from sources and activities wholly unrelated to the sale. Cf., Winer v. Commissioner (1st Cir. 1967) 371 F.2d 684, 686. Such a result would mean that, in addition to the intended benefit of non-recognition of any gain on the sale of capital assets, the liquidating corporation and its distributee stockholders would obtain an unintended tax. benefit, i.e., the right to deduct expenses relating to a non-taxable transaction from other unrelated income earned by the corporate taxpayer. It has often been ruled that a deduction from income, such as that claimed here, is allowable only if there is “clear provision therefor”. Deputy v. DuPont (1940) 308 U.S. 488, 493, 60 S.Ct. 363, 84 L.Ed. 416. Beyond question Section 337 cannot be said to be “clear” statutory warrant for the deduction claimed by the appellees; in fact, as we have seen, its whole thrust is contrariwise. As the Court said in Lanrao, Inc. v. United States, supra (422 F.2d at p. 485):

“* * * For the Courts to thus create a tax inequity from legislation designed to correct a tax inequity would be not only to disregard the express terms of the statute but to read into the statute a purpose expressly contrary to that stated at the time of its enactment.”

Secondly, it seems to have been the thought of Pridemark that a corporate liquidation is to be treated as an entity, of which the sale of capital assets is an integral part, and, just as other expenses of the liquidation are coneededly deductible as business expenses, so should the expenses, including attorneys’ fees or brokerage commissions connected with the sale of capital assets in the course of that liquidation. The reasoning behind this theory was set forth succinctly in United States v. Mountain States Mixed Feed Co. (10th Cir. 1966) 365 F.2d 244, 245-246:

“It is difficult to determine any reason in the authorities or in the statutes for any distinction as to the type or purpose of the legal work involved. It is probable that the attorneys could account for the time they devoted to the corporate dissolution as compared with the sale of assets, but there is no reason why this sale of assets is not as much a part of the liquidation as the dissolution of the corporation. Certainly if the costs of distribution in kind may be deducted as ordinary expenses, the legal cost of the sale of assets should likewise be deductible. Thus it is all a- part of the liquidation-dissolution of the corporate entity.”

It is true, as Pridemark and Mountain States hold, that expenditures connected with the dissolution and liquidation of a corporation have been found deductible as a business expense. Such characterization, however, has been characterized as “sui generis”. The reason commonly given for this “sui generis” result is stated in a leading text to be that, “[A]mounts expended, including legal and accounting fees, in connection with the dissolution and liquidation of a corporation, do not create a capital asset and are deductible as business expenses” ; but the text-writer hastens to add, “[T]his principle has no application where the expenses involved were not costs of dissolving the corporation but arose in connection with the sale of its principal asset.” 4A Mertens, Law of Federal Income Taxation, sec. 25.35, at pp. 173-4 and 182-3 (1972 rev.) As the Court said in Lanrao, Inc. v. United States, supra (422 F.2d at p. 484):

“ * * * That expenses incurred in the dissolution of a corporation may be rationalized as being both ordinary and necessary business expenses, as was demonstrated in the Pacific Coast Biscuit Co., case, supra, [32 B.T.A. 39] does not furnish a rational basis for the argument that capital selling expenses are converted into ordinary and necessary business expenses if they are incurred at the time of a corporate dissolution.”

Indeed, the very reason assigned for allowing normal costs of liquidation to be treated as a business expense (i. e., because they are related neither to the acquisition nor disposition of a capital asset) would seemingly have as its logical corollary that, if the expense did qualify as a capital expenditure, it was not deductible as a business expense. And this is what we conceive to be the proper view.

As a commentator has suggested, any decision to the contrary could give rise to a wholly irrational situation. Suppose, in order to make a profitable sale of a capital asset during the liquidation period, considerable sums were expended in renovating or repairing that asset. Could the sums so expended be deducted as business expenses because they were made as an incident to liquidating the asset? Obviously, they could not. In similar fashion, attorneys’ fees incurred specifically in connection with the sale of a capital asset during the period of liquidation may not qualify as a business expense.

To sum up, we feel constrained to abandon the rule announced in Pride-mark and to adopt the rule supported by the weight of authority that the claim to a deduction for attorneys’ fees incurred by the corporate taxpayer in connection with the sale of capital assets in a Section 337 liquidation as a business expense must be disallowed.

Finally, the taxpayer urges that, even should we conclude to depart from the ruling made in Pridemark, we should do so only prospectively. We might find such argument persuasive were it evident that the rule in Pride-mark had been a determining factor in the procedure followed by the taxpayer in the corporate liquidation. It seems plain that the taxpayer was not influenced in any action taken by it by our decision in Pridemark. Its decision to liquidate and the procedure followed would have been the same whether Pride-mark prevailed or not. Moreover, it should have known that Pridemark had not been acquiesced in by the Commissioner and was contrary to the majority of the Circuits. It unquestionably proceeded with full appreciation that the Commissioner would contest the deduction and our ruling in Pridemark. Under these circumstances, we perceive no reason to give only a prospective application to our decision. Cf., Dixon v. United States (1965) 381 U.S. 68, 72-73, 85 S.Ct. 1301, 14 L.Ed.2d 223; Hartman Tobacco Company v. United States (2d Cir. 1973) 471 F.2d 1327.

The decision of the Tax Court sustaining the claim herein is accordingly reversed.

Reversed.

BOREMAN, Senior Circuit Judge

(concurring in part and dissenting in part);

Somewhat reluctantly and not without ■ some hesitation I concur and join my brothers in the decision to overrule our earlier holding in Pridemark, Inc., v. Commissioner, 345 F.2d 35 (4 Cir. 1965). However, I respectfully state my disagreement with the majority in its denial of prospective application of the change in the rule.

Rule 35 of Fed.R.App.P. provides that an appeal may be heard by the Court of Appeals in banc and a party may suggest the appropriateness of a hearing in banc. This Circuit has deemed it unseemly, presumptuous and an unacceptable practice for one panel to assume to overrule a decision of another panel of this court; the decision of a panel becomes the law of the Circuit until it is overruled by the court sitting in banc.

Until 1970 the Tax Court of the United States had not followed automatically the decisions of the Court of Appeals to which its determination would be appealable. But that practice was abandoned by the Tax Court in its decision in Golsen v. Commissioner, 54 Tax Court 742, 757 (1970):

[W]e think that where the Court of Appeals to which appeal lies has already passed upon the issue before us, efficient and harmonious judicial administration calls for us to follow the decision of that court.

Consistent with that pronouncement the Tax Court, while criticizing Pridemark, recognized that decision as representing the law of this Circuit and admittedly felt bound to follow it.

The Government, too, recognized the fact that Pridemark represented the law of this Circuit but it was obvious from the Government’s approach to the prosecution of its appeal that its real objective was to persuade this court that Pridemark had been incorrectly decided, that it was against the weight of authority and that it should be overruled. It now appears that the Government has been successful in attaining its objective.

But at the same time the Government interposes strenuous objection to prospective application of the the new rule. It would fault the taxpayer for following the law of the Circuit as determined and established by this court. Ordinarily, where there has been a division of the Circuits on a question with which the Government is concerned it properly seeks resolution of the conflict by the Supreme Court of the United States.

In this court’s positive indication of its willingness to overrule a prior decision in a tax matter adverse to the Government, in the absence of a clearly supervening determination by Congress or the Supreme Court, the effect of the determination will be to drastically accord weight on the side of the Government in the process of negotiation and settlement of tax cases, even including cases where the Circuit in question has declared clearly controlling law adverse to the Government’s position. All questions in tax cases in which there is a split among the Circuits (and there are many which develop under the Internal Revenue Code) will be considered open with respect to the affairs of all taxpayers, including those residing in Circuits which have already passed upon the question. The Government will be encouraged to use the possibility of such overruling of decisions in this Circuit, as it has in this instance, as a means to discourage the Supreme Court from resolving such conflicts among Circuits. Additionally, the possible availability to the Government of such overruling decisions in the Circuits (as a practical matter not available to private parties) will serve as an inducement or invitation to the Government to refrain from seeking resolution of these questions by Congress.

The Government’s approach to the precedential force of decisions in tax cases is strange, indeed. It has now been successful in its effort to have this court effectively hold that once a division of opinion arises between and among Circuits the rule announced in those Circuits rejecting the Government’s position should be open to attack in connection with each case that may subsequently arise in such Circuits.

This procedure favored and adopted by the Government opens up only a one-way street. Few, if any, taxpayers who are confronted with a pre-existing decision in their particular Circuit which supports the Government, will be intrepid enough or financially strong enough to carry a case seeking an overruling decision through the Tax Court, through a regular panel, and through the Court of Appeals in banc. In the instant case the Government could have sought initially a hearing of the appeal in banc, but it elected not to do so. Thus, the taxpayer has been subjected to a three-level proceeding with all the attendant delays, burdens, costs and expenses. I venture to say that the costs and expenses are times greater than the amount of tax liability in controversy.

Counsel for the Government has opposed the proposal that, if this court were to overrule Pridemark, its judgment should be prospective only, apparently considering that the additional tax and the costs and expenses of the litigation here and in the Tax Court appropriately penalize the taxpayer for its intransigence in relying upon an unreversed decision of this court which established the law of this Circuit.

■ It is my individual opinion that changing the established rules in the middle of the game is unjust, unfair, and inconsistent with the operation of a viable system of legal precedents, particularly to a taxpayer such as this one with a relatively small amount at stake. The controlling law of this Circuit, as it existed at the time of taxpayer’s transaction, should be applied and taxpayer should have the right to any tax benefit available to it under Pridemark. It is unconscionable to hold otherwise. In all fairness and justice I cannot be persuaded to join in placing the taxpayer in such an unfavorable and unreasonable position by a denial of prospective application of our decision which definitely changes the rules of the game.

      . Cf., however, Alphaco, Inc. v. Nelson (7th Cir. 1967) 385 F.2d 244, at p. 247.

      . See Connery v. United States (3d Cir. 1972) 460 F.2d 1130; Lanrao, Inc. v. United States (6th Cir. 1970) 422 F.2d 481, cert. den. 398 U.S. 928, 90 S.Ct. 1816, 26 L.Ed.2d 89; Alphaco, Inc. v. Nelson, supra; United States v. Morton (8th Cir. 1968) 387 F.2d 441; Great Lakes Pipe Line Company v. United States (D.C.Mo.1972) 352 F.Supp. 1159.

      . In re Central Railroad Company of New Jersey (3d Cir. 1973) 485 F.2d 208, 211; United States v. Lewis (5th Cir. 1973) 475 F.2d 571, 574; Insurance Agents’ International Union v. N.L.R.B. (1958) 104 U.S. App.D.C. 218, 260 F.2d 736, aff. 361 U.S. 477, 80 S.Ct. 419, 4 L.Ed.2d 454; United States v. United States Vanadium Corporation (10th Cir. 1956) 230 F.2d 646, 648, cert. denied 351 U.S. 939, 76 S.Ct. 836, 100 L.Ed. 1466.

      . Pridemark, commenting on the effect of Section 337 on profits during liquidation, states:
      “ ‘It is intended that, during the 12-month period, sales in the ordinary course of business shall result in ordinary gain to the corporation as if the corporation were not in the process of liquidating.’ * * * ff

      . It is generally recognized that the definition of the term “property”, as used in this section “is substantially the same as the definition of ‘property’ and ‘capital asset’ in 26 U.S.C.A. § 1221.” Calley v. United States (D.C.W.Va.1963) 220 F.Supp. 111, 114.

      . Cf., also, Towanda Textiles, Inc. v. United States (1960) 180 F.Supp. 373, 378, 149 Ct.Cl. 123:
      “ * * * Expenses necessarily incurred to realize a capital gain reduce the amount of that gain and partake of the nature of the gain to which they relate.”

      . In the Hawaiian Trust Case, at p. 772, the Court said:
      “It was not the intention of Congress, in enacting Section 337, to ‘exempt’ any gain from the tax, but rather to provide that the gain should not be taxed twice, both at the corporate and shareholder levels, where the taxpayer complies with the provisions of the Act.”

      . By this provision, Congress, as one commentator puts it, intended to make “the method by which a corporation that is undergoing liquidation” determinable “by business considerations rather than by a concern with tax assessments.” Note, 65 Mich.L. Rev. 1508, 1512-13 (1967).

      . To the same effect was the editorial comment in Note, 65 Mich.L.Rev., supra, at p. 1512:
      “ * * * The purpose of section 337 was to eliminate the double taxation that resulted when a corporation liquidated by selling its assets and distributing the cash received from that sale, rather than by distributing the assets themselves directly to the shareholders.”

      . See Alphaco, Inc. v. Nelson, supra (385 F.2d at p. 246) :
      “But if the corporation in such case is permitted to deduct the selling cost from ordinary income as an ordinary and necessary business expense when it sells the property, then the corporation (and through it, the shareholder) receives an additional tax benefit in the form of the deduction against the ordinary income (the earning of which had no connection with the capital sale transaction) reported in the corporation’s last return. The tax differential Congress sought to avoid would thus be re-created, and the purpose and objective of Section 337 wholly frustrated and defeated. Consequently, the allowance of the costs incident to the sale of capital assets as an ordinary and necessary business expense deductible from ordinary income was improper in the instant case.”

      . See, however, Fewell, Deductibility of Attorneys’ Fees, 8 Texas B..T. 72, 96 (1945).

      . Pridemark and Mountain States are the only Circuit authorities supporting this view. See Uzel & Marx, Selling Expenses in 337 Liquidation: Are they Deductible?, 33 Journal of Taxation, 290 (1970), supporting this view.

      . See 4A Mertens, Law of Federal Income Taxation, see. 26.35, at p. 174 (1972 rev.) :
      “Expenditures for organizing, recapitalizing, merging or dissolving a business enterprise may properly be said to be sui generis. On the other hand, none of them can hardly be considered as part of the cost of operating the business for the taxable year in which they were paid or incurred. On the other hand, it is arguable that no capital asset is acquired by the taxpayer which, as a business enterprise, is being organized, recapitalized, merged or dissolved.”

      . Gravois Planing Mill Company v. C.I.R. (8th Cir. 1962) 299 F.2d 199, 206.

      . Note, 65 Mich.L.Rev. 1508, 1513.