author: WEBSTER, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Michael Anthony GOCKE, Appellant.
    No. 73-1888.
    United States Court of Appeals, Eighth Circuit.
    Submitted April 16, 1974.
    Decided Nov. 29, 1974.
    Certiorari Denied March 17, 1975.
    See 95 S.Ct. 1407.

      John C. Calhoun, Jr., Little Rock, Ark., for appellant.
    Fletcher Jackson, Asst. U. S. Atty., Little Rock, Ark., for appellee.
    Before MATTHES, Senior Circuit Judge, and ROSS and WEBSTER, Circuit Judges.
   WEBSTER, Circuit Judge.

Michael A. Gocke, convicted of counterfeiting Federal Reserve Notes with intent to defraud, in violation of 18 U. S.C. § 471, asserts three principal trial errors in this appeal: (1) the admission into evidence of a taped conversation of defendant with an accomplice made without defendant’s knowledge or consent and containing a reference to prior incarceration; (2) the admission of evidence of involvement in another counterfeiting activity; and (3) refusal of the trial judge to require disclosure of a confidential informant. Upon consideration of the full record, we affirm the judgment of conviction.

Gocke was convicted following a jury trial before the Honorable J. Smith Henley, Chief United States District Judge for the Eastern District of Arkansas. The evidence disclosed the acquisition of a printing plant and its subsequent use in a scheme to counterfeit twenty-dollar Federal Reserve Notes. First, Gocke, a printer formerly employed by Mid-State Printing Company in North Little Rock, Arkansas, introduced the company’s owner to Eugene Wesley Howard. Howard, with money borrowed from Bill Houston Carter, purchased the Mid-State plant on November 24, 1972, and soon thereafter various repairs were undertaken, including the construction of a divider wall between the printing machinery and the front of the plant. During this period, which continued into January, 1973, Gocke placed several orders for printing supplies including “ivory rising bond” paper, “husky index” paper, an assortment of black inks and green inks, “Dutch red” ink and “tulip tint” blue ink. Bing Priest, of the Fine Paper Company, with whom Gocke placed these orders, testified that Gocke was dissatisfied with the cut of the ivory rising bond paper and returned it for recutting. He explained to Priest that he intended to print stock certificates with two colors on one side and one on the other. The paper was recut and delivered back to Gocke on January 12, 1973.

On January 12, 1973, the Mid-State plant was placed under surveillance by law enforcement agents who were acting on a tip. They observed Goeke’s car parked at the plant at several intervals on that date. When the counterfeit items were ultimately seized from Eu-guene Wesley Howard, they were found packed in boxes stuffed with newspapers dated January 11 and 12,1973.

At trial, Bill Houston Carter testified that he had been present during the printing of the currency. He stated that Gocke had operated the press and had assisted in cleaning up the plant after completion of the job. Although Carter had been acting as an accomplice at that time, he agreed in March, 1973, to cooperate with the Secret Service. Wearing a recording device provided by the Secret Service, Carter conversed with Gocke about the counterfeit money. Gocke stated to Carter that he had thrown his share of the notes into the river. (A suitcase full of counterfeit currency was found in the Arkansas River by a fishing party in the early part of 1973.) Carter and Gocke also discussed ways to sell a quantity of counterfeit money which was part of Howard’s share and which Gocke proposed to borrow from Howard.

Eugene Wesley Howard was arrested on March 16, 1973, and large quantities of counterfeit twenty-dollar Federal Reserve Notes and counterfeit Arkansas drivers’ licenses were seized from his possession. The notes were printed on ivory rising bond with two colors on one side and one on the other. On one of these notes, a latent fingerprint of Gocke’s was discovered after the application of ninhydrin and acetone by a fingerprint expert. A print of Gocke’s similarly appeared on one of the notes turned over to the Secret Service by Bill Houston Carter. Sixty-three of the counterfeit drivers’ licenses, printed with ink resembling “Dutch red” and “tulip tint blue,” revealed Gocke’s fingerprints.

1. The Tape Recording.

(a) Reference to prior incarceration.

Appellant first contends that the playing of his tape-recorded conversation before the jury constituted prejudicial error since that conversation contained a reference to his prior incarceration. The actual remark involved his reference to a girl he had known “before I was in the penitentiary.”

In concluding that Gocke’s case was not unfairly prejudiced, we note first that the remark in question was barely audible. It was not contained in the transcript of the tape prepared by the government, nor was it heard by the court or counsel when it was monitored outside the jury’s hearing. The defendant heard the reference as it was played to the jury; again, neither the court nor counsel heard it. Only when it was played a third time, again outside the jury's hearing, was the remark detected. Judge Henley offered to caution the jury not to consider the remark, hut Gocke’s attorney requested that no such instruction be given.

Even if we assume that the jury did in fact hear the reference to a prior incarceration, we do not find a new trial to be warranted. In the past we have held that similar comments of a brief and passing nature, inadvertently made by witnesses, constitute harmless error. United States v. Carter, 448 F.2d 1245 (8th Cir. 1971), cert. denied, 405 U.S. 929, 92 S.Ct. 981, 30 L.Ed.2d 802 (1972); United States v. Christian, 427 F.2d 1299 (8th Cir.), cert. denied, 400 U.S. 909, 91 S.Ct. 153, 27 L.Ed.2d 148 (1970). See also United States v. Dillinger, 341 F.2d 696 (4th Cir. 1965). We reach the same conclusion here.

(b) Constitutional challenges.

Gocke also attacks the admission of the tape in general on the ground that it constitutes evidence seized in violation of his Fourth and Fifth Amendment rights. We reject these contentions. The Fourth Amendment claim must fail on the basis of United States v. White, 401 U.S. 745, 91 S.Ct. 1122, 28 L.Ed.2d 453 (1971). There, four Justices concluded that electronic transmittals and recordings of conversations do not violate the Fourth Amendment, provided that one party to the conversation is a willing participant in the surveillance plan. Justice Black, in a brief concurring opinion, referred to the views expressed in his dissenting opinion in Katz v. United States, 389 U.S. 347, 364, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967) — that the Fourth Amendment does not protect against eavesdropping and that all conversations lie outside the scope of its safeguards. We have likewise upheld such surveillances made with the consent of one of the parties. United States v. Skillman, 442 F.2d 542 (8th Cir.), cert. denied, 404 U.S. 833, 92 S.Ct. 82, 30 L.Ed.2d 63 (1971); see United States v. Howard, supra, 504 F.2d at 1287 n. 13. Here, Bill Carter testified that he willingly wore the recording device which recorded his conversation with Gocke.

We also reject appellant’s Fifth Amendment claim wherein he argues that he should have been given his “Miranda warnings” before participating in the self-incriminating conversation with Carter. Gocke voluntarily discussed the counterfeit currency with Carter and in no way was he unconstitutionally “compelled * * * to be a witness against himself.” The rules enunciated in Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), have no application in such circumstances. Hoffa v. United States, 385 U.S. 293, 303, 87 S.Ct. 408, 17 L.Ed.2d 374 (1966).

(c) Profane language.

In appellant’s final challenge to the admission of the tape, he contends that his use of profanities in his recorded conversation with Carter improperly prejudiced the jury. The court properly admonished the jury that this aspect of the recording was irrelevant and should be disregarded. Under such circumstances, the fact that the jury heard Gocke utter these profanities did not rise to the level of prejudicial error. See United States v. Howard, supra; Annot., 58 A.L.R.2d 1024, § 8 at 1040 (1958).

2. Evidence of Other Criminal Activity.

Appellant contends that admission of the counterfeit drivers’ licenses, sixty-three of which contained Gocke’s fingerprints, was prejudicial error. We disagree. The counterfeit drivers’ licenses were seized from Howard on March 16 or 17, along with a large quantity of counterfeit Federal Reserve Notes, one of which likewise bore Gocke’s fingerprint. Once again, we repeat our holding in United States v. Cochran, 475 F.2d 1080, 1082 (8th Cir.), cert. denied, 414 U.S. 833, 94 S.Ct. 173, 38 L.Ed.2d 68 (1973):

Well established rules have developed concerning the admission of evidence of other criminal conduct. Although this evidence is generally inadmissible since it suggests that the defendant has a propensity to commit crime, the trial court can in its discretion admit relevant evidence of other criminal acts and reversal is only commanded when ‘it is clear that the questioned evidence has no hearing upon any of the issues involved,.’ Wakaksan v. United States, 367 F.2d 639, 645 (8th Cir. 1966), cert. denied, 386 U.S. 994, 87 S.Ct. 1312, 18 L.Ed.2d 341 (1967). The trial court in determining admissibility weighs the prejudicial effect against the probative value of the evidence of the other criminal conduct. Drew v. United States, 118 U.S.App.D.C. 11, 331 F.2d 85, 90 (1964). In applying this weighing analysis, trial courts are aided by recognized exceptions to the admissibility of evidence of other crimes or criminal conduct. Such evidence is relevant to prove ‘(1) motive, (2) intent, (3) the absence of mistake or accident, (4) a common scheme or plan embracing the commission of two or more crimes so related to each other that proof of one tends to establish the other, and (5) identity of the person charged with the commission of the crime on trial.’ Drew v. United States, supra, 331 F.2d at 90 (footnote omitted), quoted in Love v. United States, supra, 386 F.2d at 266; United States v. Lewis, 423 F.2d 457, 459 (8th Cir. 1970); Proposed Rules of Evidence for United States Courts and Magistrates, Rule 404(b), 51 F. R.D. 315, 346. [Footnote omitted; emphasis supplied.]

See also United States v. Thompson, 503 F.2d 1096 (8th Cir. 1974); Sears v. United States, 490 F.2d 150, 152 (8th Cir. 1974); United States v. Olsen, 487 F.2d 77, 79-80 (8th Cir. 1973), cert. denied, 415 U.S. 993, 94 S.Ct. 1594, 39 L.Ed.2d 890 (1974); O’Reilly v. United States, 486 F.2d 208, 211-212 (8th Cir.), cert. denied, 414 U.S. 1043, 94 S.Ct. 546, 38 L.Ed.2d 334 (1973); C. McCormick, Law of Evidence, § 190 (2d ed. 1972).

The government offered direct testimony by an accomplice that Gocke had printed the counterfeit money. In addition, the government offered corroboration by way of Gocke’s fingerprints found on some of the counterfeit money which had been seized or recovered. The business relationship between Gocke and Howard was well established and it was no ground for exclusion of the drivers’ licenses that they were found in Howard’s possession.

A violation of 18 U.S.C. § 471 requires that the counterfeiting be undertaken “with intent to defraud.” Where specific intent and guilty knowledge are elements of the crime charged, evidence of related criminal activity tending to establish those elements is generally admissible. See United States v. Spica, 413 F.2d 129, 131 (8th Cir. 1969). The fingerprint evidence of Goeke’s prior possession of the drivers’ licenses was likewise admissible to show a participation in a common scheme or plan, United States v. Thompson, supra, as well as to negate “ ‘the likelihood that the crime [counterfeiting money] was committed as a result of inadvertence, accident or mistake.’ 29 Am.Jur.2d, Evidence § 321 (1967).” Atwell v. Arkansas, 426 F.2d 912, 914 (8th Cir. 1970).

Other evidence, including the taped conversation between Gocke and Carter, also supported the government’s contention that Gocke’s printing activity was carried out willfully and with intent to defraud. The evidence respecting the drivers’ licenses was in proportion to its place in the ease. There was testimony that Gocke had purchased some ink similar to that used on the licenses. Aside from that, the evidence came in with the evidence of the counterfeit money seized from Howard at the same time. The prejudicial effect was thus minimal in relation to the probative value of the evidence. The District Judge, both at the time the licenses were offered and in the final charge to the jury, carefully and correctly limited the jury’s consideration of the licenses to the issue of defendant’s knowledge, willfulness and intent to defraud, as well as “the location, the whereabouts and capabilities of the defendant to commit the crime with which he is charged in this indictment.” Cf. United States v. Olsen, supra, 487 F.2d at 80.

In so holding we do not depart from our view that evidence of separate and distinct prior or subsequent criminal activity should be plain, clear and conclusive. See United States v. Vaughn, 486 F.2d 1318, 1321 (8th Cir. 1973); cf. United States v. Sears, supra, 490 F.2d at 152-153. Nor will we permit mere evidence of bad character or evidence of suspicious conduct unrelated to a common scheme or plan, neither of which would be relevant to show knowledge or negate accident or mistake. See United States v. Clemons, 503 F.2d 486 (8th Cir. 1974). But we do not require in each case that evidence be that of an identical offense. It is enough that the evidence be of similar involvement reasonably related to the offending conduct and be presented in a manner in which prejudice does not outweigh its probative value. These requirements were met in this case.

3. The Informant.

Finally, appellant asserts that the District Court erred in failing to require disclosure of the identity of the confidential government informer upon whose information the investigation of Gocke began. We have thoroughly searched the record and have found no indication that this informant was the sole witness against Gocke or was an active participant in the crime for which he was charged. Therefore, this case is factually unlike Roviaro v. United States, 353 U.S. 53, 77 S.Ct. 623, 1 L.Ed.2d 639 (1957), wherein the Supreme Court held that under such circumstances the government must either disclose the informant’s identity or risk dismissal of the case. See Rosenthal, The Informer Privilege in Criminal Prosecutions, 11 Hastings L.J. 54 (1959). On the other hand, “[i]n cases involving the ‘tipster’ type of informant, who merely conveys information to the government but neither witnesses nor participates in the offense, courts generally hold that disclosure is not material and therefore not required.” United States v. Barnes, 486 F.2d 776, 778 n. 3 (8th Cir. 1973). See also McLawhorn v. North Carolina, 484 F.2d 1 (4th Cir. 1973); United States v. Clark, 482 F.2d 103 (5th Cir. 1973).

In his brief, appellant concedes that he sought the identity of an informant “whose tip originated this investigation.” No argument that the informer was a participant in or a witness to the crime is presented, instead only the contention that such a tipster may have had direct knowledge helpful to the defendant’s case. We find no error in the District Court’s refusal to require disclosure.

Affirmed.

      . Howard’s conviction on related charges was affirmed, see United States v. Howard, 504 F.2d 1281 (8th Cir. 1974).

      . The fingerprint expert testified that he would be unable to identify any latent fingerprints on the currency found in the Arkansas River.

      . Judge Henley stated in part:
      I hope you won’t be offended by the profanity in [this tape], or vulgarity, or crude expressions. But, to the extent that you are, you must clearly understand that this is not a part of your consideration of the case against the defendant, Mr. Gocke.

      . Appellant lias asserted in liis brief that the drivers’ licenses cannot now be said to have been introduced to show a common scheme or plan since the jury was never instructed to consider that evidence for that purpose. We must reject that argument. In the past, even where we have disagreed with the particular theory on which other crimes’ evidence was admitted at trial, we have nonetheless upheld its admission if an alternative theory would have justified the jury’s consideration thereof. See United States v. Buckhanon, 505 F.2d 1079 at 1084 (8th Cir. 1974).

      . Compare United States v. Broadway, 477 F.2d 991 (5th Cir. 1973).

      . Professor Wigmore writes :
      It is just this requirement of similarity which leaves so much room for difference of opinion and accounts for the bewildering variances of rulings in the different jurisdictions and even in the same jurisdiction and in cases of the same offence. Some judges incline to treat the judicial test of probative value as identical with the common-sense test, and to admit such instances as bear a similarity liberally interpreted by the standard of every-day reasoning. Other judges set their faces firmly against every instance which is not on all fours with the offence in issue, regardless of the consideration that justice consists quite as much in protecting the public against evil doers as in showing-mercy to those whose guilt lias been more or less skillfully concealed.
      2 J. Wigmore, A Treatise on Evidence § 302, at 200-01 (3d ed. 1940).

      . Each such case must be considered on its own facts, Roviaro v. United States, 353 U. S. 53, 77 S.Ct. 623, 1 L.Ed.2d 639 (1957). Where the significance of the informer’s role in the crime is not immediately apparent, some showing by the defendant of the possible value of the informant’s testimony should be required. See The Supreme Court, 1956 Term, 71 Harv.L.Rev. 94, 112 (1957). Thus, where we have been in doubt as to whether the circumstances of a particular case require disclosure, we have remanded for an in camera hearing for further factual development. See United States v. Barnes, 486 F.2d 776 (8th Cir. 1973) ; United States v. Hurse, 453 F.2d 128 (8th Cir. 1971). Where, as here, however, the appellant has failed to do more than suggest that the informant’s tip prompted an investigation of the crime, a remand is totally unwarranted.


source: Caselaw Access Project

author: ESCHBACH, District Judge. SWYGERT, Chief Judge

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. David D. JOHNSON, Defendant-Appellant.
    No. 73-1509.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 18, 1974.
    Decided Nov. 21, 1974.
    Rehearing Denied Dec. 18, 1974.
    Certiorari Denied April 28, 1975.
    See 95 S.Ct. 1682.

      Richard C. Moenning, Chicago, Ill., for defendant-appellant.
    James R. Thompson, U. S. Atty., Gary L. Starkman and Michael D. Monico, Asst. U. S. Attys., Chicago Ill., for plaintiff-appellee.
    Before SWYGERT, Chief Judge, PELL, Circuit Judge, and ESCHBACH , District Judge.

       District Judge Jesse E. Eschbach of the Northern District of Indiana is sitting by designation.

   ESCHBACH, District Judge.

Defendant-appellant David D. Johnson pleaded guilty on December 6, 1972, to both counts of a two-count indictment. The indictment charged in Count I that on November 18, 1971, Johnson violated Title 26, U.S.C. § 5861(d), by having in his possession a sawed-off shotgun which was not properly registered. Count II charged Johnson with possession of a different unregistered weapon on January 7, 1972, also in violation of Title 26, U.S.C. § 5861(d). On appeal, the defendant-appellant raises essentially three issues. We affirm.

The first question presented by this appeal is whether the trial judge followed the procedures mandated by Rule 11, Fed.R.Crim.P. when he accepted Johnson’s guilty pleas. We are satisfied that the procedures set forth in Rule 11 were followed.

I.

Defendant-appellant argues that the district court totally failed to explain the elements of the offense of knowingly and unlawfully possessing an unregistered sawed-off shotgun as set forth in Count I of the indictment. As a result, it is argued that the defendant-appellant did not understand the charge against him and that the district court failed to personally inquire whether the defendant-appellant understood the nature of the charge.

Rule 11 expressly directs the district judge to make a personal inquiry to determine whether a defendant who pleads guilty understands the nature of the charge against him and to determine whether he is aware of the consequences of his plea. McCarthy v. United States, 394 U.S. 459, 464, 89 S.Ct. 1166, 1170, 22 L.Ed.2d 418 (1969). Rule 11 also requires that the district judge satisfy himself that there is a factual basis for the plea. The judge must decide that the conduct which the defendant admits constitutes the offense charged in the indictment. McCarthy v. United States, Id. at 467, 89 S.Ct. at 1171. The character of the defendant’s understanding relates to the question of whether the plea was entered voluntarily while the requirement that the court be satisfied that there is a factual basis for the plea entered relates to the question of the guilt or innocence of the defendant. Arias v. United States, 484 F.2d 577, 579 (7th Cir. 1973). In this direct appeal we are concerned with both of these Rule 11 Requirements.

The transcript reflects that a clear and complete explanation of both charges in the indictment was made to the defendant-appellant and that he fully understood the essence of the indictment. In addition, the transcript reveals that the court by personal interrogation of the defendant-appellant did elicit from him a factual basis to support the guilty plea. The court first explained the indictment to the defendant-appellant who indicated that he understood it. The court then determined that the guns in question were not registered. The court next inquired of defendant-appellant whether he was in possession of the guns on the dates in question. The defendant implied that he had been in possession of the one gun charged in Count I but that he did not have actual possession of the gun involved in Count II at the time of his arrest. The court interrogated the defendant-appellant further to ascertain whether in fact the defendant did have possession of the gun charged in Count II and determined that he did have possession. The court informed the defendant-appellant of the possible penalties which he faced, informed him that he had a right to a trial, either before the court or to a jury, and asked the defendant-appellant if he understood his rights. The defendant-appellant indicated that his counsel had explained his rights to him, that he was pleading guilty because he was in fact guilty, that no promises had been made to him and that he was pleading guilty of his own free will. These explanations, coupled with the presence of competent counsel were sufficient to establish that he did understand the essence of the indictment. See, Arias v. United States, Id. at 579. On at least three occasions, the defendant indicated that he understood the charges and was pleading guilty of his own free will. We are, therefore, satisfied that the plea was voluntarily and understandingly entered and that the court accepted the plea after establishing a factual basis for the defendant-appellant’s guilt.

II.

The second issue presented is whether the district court erred in receiving testimony, after the plea was entered but before sentencing, relating to a crime with which the defendant had been charged in state court and to which he intended to plead not guilty.

After the plea of guilty had been entered and a presentence report had been prepared, a hearing was held for disposition on January 16, 17 and 19, 1973. Before sentencing, the court was informed that the defendant had been charged with an armed robbery that had occurred shortly before defendant-appellant’s arrest on November 18, 1972, for the violation charged in Count I of the federal indictment. The defendant-appellant had been identified in a lineup the next day as a participant in that armed robbery. The court decided that before disposition of the defendant-appellant it would be necessary to learn about the circumstances surrounding the robbery in order to determine the reason why the defendant-appellant had been in possession of the sawed-off shotgun.

It is an accepted principle that a federal trial judge has wide discretion in determining what sentence to impose on a convicted person. “It is also true that before making that determination, a judge may appropriately conduct an inquiry broad in scope, largely unlimited either as to the kind of information he may consider, or the sources from which it may come.” United States v. Tucker, 404 U.S. 443, 446, 92 S.Ct. 589, 591, 30 L.Ed.2d 592 (1972). See also, United States v. Trigg, 392 F.2d 860 (7th Cir. 1968), cert. denied, 391 U.S. 961, 88 S.Ct. 1863, 20 L.Ed.2d 874. It has been held that it is proper for the sentencing judge to consider evidence of other crimes for which appellant was neither tried nor convicted when determining the sentence to impose. See United States v. Cifarelli, 401 F.2d 512, 514 (2nd Cir. 1968), cert. denied, 393 U.S. 987, 89 S.Ct. 465, 21 L.Ed.2d 448; United States v. Doyle, 348 F.2d 715, 721 (2nd Cir. 1965), cert. denied, 382 U.S. 843, 86 S.Ct. 89, 15 L.Ed.2d 84. As Judge Friendly stated for the court in United States v. Doyle, supra at 721:

The aim of the sentencing court is to acquire a thorough acquaintance with the character and history of the man before it. Its synopsis should include the unfavorable, as well as the favorable, data, and few things could be so relevant as other criminal activity of the defendant, particularly activity closely related to the crime at hand. (Emphasis added).

Judge Friendly went on to point out that nothing warranted a distinction between considering the persons’ past criminal record or crimes not passed on by a court. Id. at 721.

It is undisputed that the sentencing function is a highly individualized one. The task of the sentencing judge is to determine the type and extent of punishment appropriate for a particular defendant after the issue of guilt has been determined. Williams v. New York, 337 U.S. 241, 245, 69 S.Ct. 1079, 1083, 93 L.Ed. 1337, rehearing denied, 337 U.S. 961, 69 S.Ct. 1529, 93 L.Ed. 1760 (1949).

It is clear that the trial court in this case could permissibly inquire into the circumstances surrounding the possession of the sawed-off shotgun. If the defendant-appellant was illegally in possession of such a weapon for use in the perpetration of a crime of violence, this would certainly have a bearing on the sentence to be imposed. Nor is the fact that the sentencing judge preferred to rely on the testimony of witnesses to ascertain the circumstances surrounding the possession .of this weapon prejudicial. The exercise of sound judicial discretion in performing the sentencing function compels a consideration of all of the circumstances surrounding the crime, whether mitigating or aggravating, in order for the judge to properly discharge his duty to impose a proper sentence. Williams v. Oklahoma, 358 U.S. 576, 585, 79 S.Ct. 421, 427, 3 L.Ed.2d 516, rehearing denied, 359 U.S. 956, 79 S.Ct. 737, 3 L.Ed.2d 763 (1959). The sentencing judge, as he stated several times in the record, called for a hearing not to determine the guilt or innocence of the defendant-appellant in regard to the armed robbery charge, but merely to find out whether there was any factual basis for the contentions advanced by the Government at the disposition hearing. The judge was informed that the defendant intended to plead not guilty to the armed robbery charge. The defendant freely took the stand to testify in his own behalf and the court heard his version of the circumstances surrounding the commission of the crime charged in Count I of the indictment. The defendant-appellant testified that he was not a participant in the armed robbery. The court then heard the testimony of one of the victims of the armed robbery who identified the defendant-appellant as one of the perpetrators of the robbery. The court also heard the testimony of the arresting officer who related that defendant-appellant had told him a different story concerning how he came into possession of the gun than defendant-appellant testified to in court. Several times during the course of the testimony, the court stated that this was an abbreviated hearing, not for the purpose of determining guilt or innocence, and admonished the Assistant United States Attorney not to go beyond showing a prima facie basis implicating the defendant with the armed robbery. Defendant-appellant’s attorney was given the right to cross-examine the witnesses and discredit their testimony. Certainly, the defendant-appellant, having been given the right to cross-examine these witnesses, was afforded greater protection than if such information had been presented only in the presentencing report. We are convinced that a limited hearing in the context of the facts of this case, held only to discover the circumstances and context of why the defendant-appellant was in possession of an illegal weapon, a charge to which he had pleaded guilty, where the defendant is allowed the right to cross-examine the Government witnesses and refute their testimony, is not erroneous. However, nothing in this opinion should be construed as authorizing the practice of admitting extensive testimony relating to another pending criminal action for which the defendant has not been convicted and to which he intends to plead not guilty. The sentencing judge, in conscientiously performing his sentencing duties, may consider other crimes which may be related to the charge for which he is imposing a penalty, but even in the context of a limited hearing, when one is deemed necessary, he must jealously safeguard the protections afforded an accused person.

III.

The final issue presented is whether the sentence imposed on the defendant was cruel and unusual in violation of the Eighth Amendment. The defendant-appellant was sentenced to imprisonment for a period of ten years on each count, the sentences to run concurrently. Title 26, U.S.C.A. § 5871, provides for a maximum sentence of ten years for one convicted of a violation of 26 U.S.C.A. § 5861(d). The proposition that a sentence within the statutory maximum provided by Congress is only subject to review on appeal for manifest abuse of discretion is well established. United States v. Tucker, supra, 404 U.S. at 447, 92 S.Ct. at 591; United States v. Willard, 445 F.2d 814 (1971); United States v. Melendez, 355 F.2d 914 (7th Cir. 1966). Clearly, the sentence imposed on the defendant-appellant was within the statutory limits and not in violation of any Constitutional provision. The defendant-appellant’s past record of criminal activity, involving eighteen arrests and four convictions demonstrates that no abuse of discretion was committed in sentencing him to the maximum on each count.

The judgment is affirmed.

SWYGERT, Chief Judge

(concurring in part and dissenting in part).

In my opinion the trial judge erred in receiving testimony relating to the armed robbery charge and, despite his avowal that he was not considering the guilt or innocence of the defendant with respect to the armed robbery, the testimony nonetheless could only have influenced his judgment in fashioning the ten year prison sentence pronounced against the defendant.

Section 201(d) of the National Firearms Act, under which the defendant was indicted, provides “It shall be unlawful for any person . . . (d) to receive or possess a firearm which is not registered to him in the National Firearms and Transfer Record.” The offense is limited to receipt or possession of an unregistered firearm. The statute is intended to regulate firearms and is not concerned with their use. There is a separate statutory provision relating to the use of a firearm to commit a felony. 18 U.S.C. § 924(c).

The record is clear that the trial judge wanted to hear evidence with respect to whether the defendant had used the gun in the armed robbery although he did say he would not take into consideration whether the defendant might be guilty or innocent of the robbery. While it is true that a sentencing judge has wide discretion in considering relevant data, it cannot be challenged that the sentence is imposed only with respect to the crime for which the defendant stands convicted. The other factors considered by the judge are relevant only in so far as they may aid him in determining what is the appropriate punishment for the specific violation. A practice cannot be condoned, however well intended, of convicting a person on one charge and then sentencing him additionally for another uncharged crime which happens to involve the same circumstances. Obviously, the use to which the gun here was put might be relevant in determining how “bad a person” the defendant is. But his sentence is not for being a “bad person”; it is for violation of a particular law.

The trial judge, in my judgment, confused two distinct aspects of sentencing. The prime consideration in imposing a sentence should be the seriousness of the offense actually committed. Other factors are then considered for the purpose of determining what degree of punishment is necessary for the individual person. The judge assumed that the prior use of the gun was relevant to the question of seriousness of the offense. It was not. The statute prohibits only the possession of unregistered weapons. The seriousness of an offense under the statute is dependent upon the number and kind of weapons illegally possessed, not on what their use may have been. Their use is only related to the secondary question concerning the individual defendant’s character and history.

The distinction is important in the instant case. The majority permits the abbreviated hearing only because it relates to the seriousness of the offense. Even assuming that there may be a second crime which is relevant to the seriousness of an offense for which there is a conviction, this is clearly not true in the instant case. The majority’s attempt to limit the opinion to “related” charges is grounded on fallacious reasoning. Since this armed robbery has no relevance to the issue of possession, I can see no analytical basis on which to distinguish the present case from a situation in which a pending charge on which a hearing is held is for a crime not even involving this particular weapon. The logic of the opinion would allow a hearing on all pending charges.

Thus, this case actually presents one of the questions raised but not answered in our recent opinion in United States v. Haygood, 502 F.2d 166 (7th Cir. 1974): Is it error for a sentencing judge to consider the facts underlying a separate charge pending against a defendant ? I believe it is error. I would favor a policy that totally prohibits the consideration of mere arrests or pending charges in reaching a sentencing conclusion. Surely, we should not countenance the practice employed in this case. Here the trial judge specified his interest in the pending robbery charge. Indeed, he held a hearing in order to reach a tentative conclusion concerning the factual basis for the robbery charge. While the sentencing judge’s desire to avoid predicating the sentence on the basis of an unproven charge is perhaps understandable, I do not agree that the solution is to hold a hearing on the matter. Instead, the charge should be totally ignored in view of the law’s presumption of innocence. To do otherwise is to infringe upon the basic rights and safeguards we provide a defendant in a criminal case. A defendant is entitled to a jury determination if he so desires. We should not permit a procedure that could result in allowing a judge’s broad sentencing discretion to be used by prosecutors as a means for increasing a defendant’s sentence on the basis of a factual determination as to other alleged criminal activity for which a jury conviction might not be possible. Such a procedure cannot be condoned.

I would remand for resentencing.

      . A defendant may plead not guilty, guilty or, with the consent of the court, nolo contend-ere. The court may refuse to accept a plea of guilty, and shall not accept such plea or a plea of nolo contendere without first addressing the defendant personally and determining that the plea is made voluntarily with understanding of the nature of the charge and the consequences of the plea. If a defendant refuses to plead or if the court refuses to accept a plea of guilty or if a defendant corporation fails to appear, the court shall enter a plea of not guilty. The court shall not enter a judgment upon a plea of guilty unless it is satisfied that there is a factual basis for the plea. Rule 11, Fed.R. Crim.P.

      . The defendant-appellant never affirmatively admitted possession of the gun charged in Count I of the indictment but his answer implied that he had such possession:
      The Court: Is that a fact that you did have in your possession these guns on these dates in question?
      The Defendant: The second one, I was not —-was not in my possession when I was arrested.
      The Court: But you knew where it was and it was available to you, is that right?
      The Defendant: Yes, it was available, but, you see, they arrested my mother and I admitted that the shotgun was mine.
      The Court: But it was a gun that you had control over, in effect, is that right?
      The Defendant: Yes, I had it in my home.

      . In the context of this case I believe we are presented with this question even though a specific objection to the hearing was not made. Unlike Haygood, we are confronted with a situation in which the pending charge was in state court. Thus, there could have been no hope by the defendant that if the federal judge considered the facts of this other charge, the state prosecutor would not pursue it. Moreover, here we have the direct appeal as opposed to what was in Hay-good primarily a double jeopardy claim raised as a bar to the prosecution of the second charge.

      . I recognize that present authority may permit a sentencing judge to consider hearsay statements even when they relate to other criminal activity for which there has not been a conviction. See Williams v. New York, 337 U.S. 241, 69 S.Ct. 1079, 93 L.Ed. 1760 (1949) ; 18 U.S.C. § 3577. See also United States v. Haygood, 502 F.2d 166, 171 n. 16 (7th Cir. 1974). It should be noted, however, that in Williams the defendant did not challenge the contention that he had committed these other crimes. The specific question of use of prior arrests or pending charges was not addressed in Williams and I believe the case should be strictly limited to its facts.


author: BRIGHT, Circuit Judge. HEANEY, Circuit Judge

text:
    UNITED STATES of America, Appellee, v. Charles HAMPTON, also known as Michael Byers, Appellant.
    No. 74-1416.
    United States Court of Appeals, Eighth Circuit.
    Submitted Oct. 15, 1974.
    Decided Dec. 11,1974.
    Certiorari Granted March 31, 1975.
    See 95 S.Ct. 1445.

      David A. Lang, St. Louis, Mo., for appellant.
    Frederick J. Dana, Sp. Atty. in Charge, U. S. Dept, of Justice, St. Louis, Mo., for appellee.
    Before HEANEY, BRIGHT and ROSS, Circuit Judges.
   BRIGHT, Circuit Judge.

Charles Hampton stands convicted after a jury trial on two counts of distribution of heroin in violation of 21 U.S.C. § 841(a)(1). The district court sentenced Hampton to five years’ imprisonment and a three-year parole term on each count, to be served concurrently, but suspended the prison sentence and placed him on probation for five years. Hampton brings this appeal. We affirm the conviction.

Hampton raises two errors on appeal: (1) The trial court erred in refusing to give defendant’s special instruction on entrapment, i. e., if the Government in fact provided Hampton with the heroin in question by its informer, the policy of the law forbids conviction, and (2) the trial court erred in permitting a special agent of.the drug enforcement administration to state that the substance which had been obtained from defendant “contained heroin.”

I.

We turn first to the entrapment defense as it is presented to us on this appeal. Hampton and the Government’s informer, one Jules Hutton, became pool-playing friends in St. Louis. According to Hampton, he (Hampton) proposed a plan for selling a “pollutant” —a non-narcotic compound closely resembling heroin in appearance — to gullible acquaintances of Hutton. Hampton testified that the plan was carried out. Informer-Hutton supplied Hampton with packets containing alleged pollutants rather than narcotics and Hampton effected two sales to friends of Hutton. These friends turned out to be federal narcotics agents. The alleged pollutant turned out to be genuine heroin.

Hutton, as a Government witness, testified that Hampton had initiated the idea of selling heroin. He specifically denied giving Hampton the substances that Hampton sold to Government agents.

On this appeal, appellant makes the following statement of his entitlement to the special entrapment instruction:

[That request] is' based on what has been termed the “Government Conduct Theory” of entrapment which has its origins in the separate opinion of Mr. Justice Roberts for himself and two other Justices in Sorrells v. United States, 287 U.S. 435 [53 S.Ct. 210, 77 L.Ed. 413] (1932) and the concur.ring opinion of Mr. Justice Frankfurter, for himself and three other Justices, in Sherman v. United States, 356 U.S. 369 [78 S.Ct. 819, 2 L.Ed.2d 848] (1958).

Appellant recognizes that the Supreme Court has recently rejected a “Government conduct” theory of entrapment in United States v. Russell, 411 U.S. 423, 93 S.Ct. 1637, 36 L.Ed.2d 366 (1973), but he neverthless argues that such a theory may represent a proper basis for an entrapment defense where, as here, the defendant’s version of the evidence discloses that the Government supplied the contraband without which there would be no crime.

In United States v. Russell, supra,, an undercover narcotics agent supplied essential ingredients needed in the manufacture of an illegal drug, methamphetamine (“speed”). Russell and his co-defendants were charged with unlawful manufacture, processing, and sale of that drug. Russell offered a defense of entrapment as a matter of law. He was convicted upon a jury trial. On appeal, the Ninth Circuit reversed the conviction for “an intolerable degree of governmental participation in the criminal enterprise.” United States v. Russell, 459 F.2d 671, 673 (9th Cir. 1972). The Supreme Court on writ of certiorari reversed and, in doing so, reaffirmed that the entrapment defense focuses essentially “on the intent or predisposition of the defendant to commit the crime.” United States v. Russell, 411 U.S. at 429, 93 S.Ct. at 1641.

The respondent-Russell contended that the Ninth Circuit had properly expanded the traditional notion of entrapment to require dismissal because of the extensive Government participation in perpetrating the alleged crime. Russell rested his claim on two theories: (a) that entrapment exists whenever the Government supplies contraband to the defendants or (b) that entrapment exists when a Government investigator becomes enmeshed in criminal activity to such a degree that prosecution of the defendants is repugnant to the American criminal justice system. The Court rejected these theories in Russell and refused to set aside the theory of the entrapment defense as based solely on predisposition and as explicated in the majority opinions in Sorrells v. United States, 287 U.S. 435, 53 S.Ct. 210, 77 L.Ed. 413 (1932), and Sherman v. United States, 356 U.S. 369, 78 S.Ct. 819, 2 L.Ed.2d 848 (1958).

Justice Rehnquist, speaking for the majority in Russell, said:

This Court’s opinions in Sorrells v. United States, supra, and Sherman v. United States, supra, held that the principal element in the defense of entrapment was the defendant’s predisposition to commit the crime. Respondent conceded in the Court of Appeals, as well he might, “that he may have harbored a predisposition to commit the charged offenses.” 459 F.2d, at 672. Yet he argues that the jury’s refusal to find entrapment under the charge submitted to it by the trial court should be overturned and the views of Justices Roberts and Frankfurter, in Sorrells and Sherman, respectively, which make the essential element of the defense turn on the type and degree of governmental conduct, be adopted as the law.

We decline to overrule these cases. Sorrells is a precedent of long standing that has already been once reexamined in Sherman and implicitly there reaffirmed. [411 U.S. at 433, 93 S.Ct. at 1643.]

We believe that the Supreme Court’s opinion in Russell forecloses us from considering any theory other than predisposition with respect to Hampton’s entrapment defense.

We recognize that the Fifth Circuit in United States v. Bueno, 447 F.2d 903 (1971), held that entrapment is established as a matter of law to a charge of possessing or distributing contraband where such contraband was supplied to the defendant by a Government agent or a paid informer. In that circuit the following rules are applied: (1) Where the Government does not rebut defendant’s testimony that an informer in the employ of the Government furnished the defendant the contraband, entrapment as a matter of law is established. United States v. Bueno, supra, 447 F.2d at 906. (2) Where the Government disputes that a Government agent or informer has furnished the contraband to the defendant, the issue is left to the jury under a special instruction to the effect that in order to convict “the jury must find beyond a reasonable doubt that the defendant did not obtain the contraband in question from the undercover agent.” United States v. Mosley, 496 F.2d 1012, at 1015 (5th Cir. 1974). See United States v. Oquendo, 490 F.2d 161 (5th Cir. 1974). The Fifth Circuit believes that its rulings pertaining to entrapment have not been eroded by the Supreme Court decision in Russell. United States v. Oquendo, supra, 490 F.2d at 163.

Prior to the decision in Russell, the Seventh Circuit, in common with the Fifth Circuit, had applied the entrapment defense in a case of extensive Government participation in the crime. It held entrapment applicable to a defendant charged with counterfeiting when the evidence disclosed that federal agents participated in the scheme to the extent of arranging for and supervising the actual printing of counterfeit bills, and also determining how and when those bills would be delivered to the defendant. United States v. McGrath, 468 F.2d 1027 (7th Cir. 1972). The Supreme Court granted certiorari, vacated the judgment, and remanded for reconsideration in light of United States v. Russell. United States v. McGrath, 412 U.S. 936, 93 S.Ct. 2769, 37 L.Ed.2d 395 (1973). On remand, the Seventh Circuit applied Russell as controlling law on appeal and held that the defense of entrapment was not available to the defendant. The court added: “We also conclude that the government agents’ involvement here does not amount to the type of outrageous conduct, ‘shocking to the universal sense of justice,’ which Russell suggests might preclude prosecution on due process principles.” United States v. McGrath, 494 F.2d 562, 563 (7th Cir. 1974).

In the present case, even under the theory offered by Hampton, Hampton made sales to third parties of substances which he represented as heroin. In light of the Supreme Court’s decision in Russell, and the Seventh Circuit’s decision in McGrath, we do not think that the extent of Government participation in the commission of the crime, under the facts claimed by Hampton, warrants an entrapment defense based upon Government conduct, apart from defendant’s predisposition.

We believe this is a case where classic entrapment principles as explicated in Russell, Sherman, and Sorrells should apply, for even under Hampton’s testimony, Hampton carried out the crucial acts of selling the heroin substantially on his own. The district court, however, gave no instruction whatsoever on entrapment. Appellant has not urged the failure to give the standard entrapment instruction as error, conceding on oral argument the existence of predisposition in this case. Thus, in this appeal we are not called upon to determine whether the trial court erred in failing to give an entrapment instruction different from that which Hampton requested.

II.

We have reviewed the record relating to testimony by Government agent James D. McDowell in which the agent described the substance delivered to him by Hampton as containing heroin. The trial court properly overruled the objection to the testimony for lack of foundation and hearsay. Agent McDowell related an extensive background of experience in training and performing field tests to determine the presence of heroin in a substance suspected of containing contraband. McDowell described the chemical test performed and the chemical reaction obtained from the test. From this reaction, he concluded that the tested substance contained heroin. Clearly, the trial court required the Government to lay an adequate foundation for McDowell’s expert testimony, which was defined and limited in scope. His opinion thereafter was properly received into evidence. We find no error. United States v. Atkins, 473 F.2d 308, 313-314 (8th Cir.), cert. denied, 412 U.S. 931, 93 S.Ct. 2751, 37 L.Ed.2d 160 (1973).

Affirmed.

HEANEY, Circuit Judge

(dissenting).

I would have this Circuit adopt the Fifth Circuit rule that entrapment is established as a matter of law to a charge of possessing contraband or distributing contraband to a government agent, where such contraband was supplied to the defendant by a government agent, including a paid informer. See United States v. Oquendo, 490 F.2d 161, 162-164 (5th Cir. 1974); United States v. Bueno, 447 F.2d 903 (5th Cir. 1971). Since the government here came forward with sufficient evidence contradicting the defendant’s allegations, the jury-ought to have been instructed that it must find beyond a reasonable doubt that the defendant did not obtain the contraband from the government agent. Accordingly, I would reverse and remand for a new trial.

I cannot agree with the majority that the Supreme Court’s opinion in United States v. Russell, 411 U.S. 423, 93 S.Ct. 1637, 36 L.Ed.2d 366 (1973), “forecloses us from considering any theory other than predisposition.” For that case explicitly acknowledged that there may be cases where government conduct is “so outrageous that due process principles would absolutely bar the government from invoking judicial processes to obtain a conviction.” Id. at 431-432, 93 S.Ct. at 1643. Predisposition is emphatically not a bar to the invocation of this due process defense.

On the contrary, I agree with the Fifth Circuit that the Bueno rule survives Russell because that rule is aimed precisely at the outrageous situation where

* * * the government buy[s] heroin from itself, through an intermediary, the defendant, and then charg[es] him with the crime. * * *

United States v. Bueno, supra, 447 F.2d at 905.

To hold, as the majority seems to say, that Russell emasculated Bueno, is to overlook the fact that the Russell Court specifically noted that the facts in Russell did not fall within the Bueno rationale because the chemical supplied to defendant Russell was not itself' contraband. United States v. Russell, supra, 411 U.S. at 432, 93 S.Ct. 1637.

Not even the Supreme Court has focused so rigidly and exclusively on predisposition as this Court does today. In the future, it is difficult to see how any defendant in this Circuit can possibly raise the due process defense which the Russell Court sought to leave open. I respectfully dissent.

      . Appellant requested the following special instruction:
      The defendant asserts that he was a victim of entrapment as to the crimes charged in the indictment.
      If you find that the defendant’s sales of narcotics were sales of narcotics supplied to him by an informer in the employ of or acting on behalf of the government, then you must acquit the defendant because the law as a matter of policy forbids his conviction in such a case.
      Furthermore, under this particular defense, you need not consider the predisposition of the defendant to commit the offenses charged, because if the governmental involvement through its informer reached the point that I have just defined in your own minds, then the predisposition of the defendant would not matter.

      . See United States v. Bueno, 447 F.2d 903 (5th Cir. 1971) ; United States v. Chisum, 312 F.Supp. 1307 (C.D.Cal.1970).

      . See Greene v. United States, 454 F.2d 783 (9th Cir. 1971).

      . Here, the jury in effect rejected Hampton’s factual predicate for an entrapment defense based either upon a theory of Government conduct or upon a theory of lack of predisposition. Such defense would rest solely on Hampton’s testimony. The court submitted the question of Hampton’s intent to the jury. Hampton testified that he lacked criminal intent because Hutton had supplied a substance which the latter had represented as a pollutant. I-Iutton disputed that version of the facts. The jury, by returning a guilty verdict, necessarily accepted Hutton’s testimony and rejected that of Hampton, and, in effect, rejected any basis for an entrajjment defense.

      . Appellant’s counsel on appeal, who was also counsel at trial, has made it very clear that he does not seek a new trial for Hampton on the basis of any error in the failure to give the standard entrapment instruction, but only for failure by the trial court to give tlie special instruction requested during the trial. In light of defendant’s concession on oral argument that predisposition existed, a standard entrapment instruction would not have materially assisted Hampton in his defense. We note that the trial court has dealt leniently with Hampton. While imposing five-year prison sentences to be served concurrently, the court has stayed the imposition of the sentences and placed Hampton on probation while he serves a prison term under a Horth Carolina state conviction for armed robbery. Consequently, the failure to give any entrapment instruction will not be deemed error here.


author: HEANEY, Circuit Judge.

text:
    James R. WILLIAMS, Appellant, v. GLOBE INDEMNITY COMPANY, Appellee.
    No. 74-1287.
    United States Court of Appeals, Eighth Circuit.
    Submitted Oct. 14, 1974.
    Decided Oct. 30, 1974.
    Rehearing and Rehearing En Banc Denied Dec. 5, 1974.
    Certiorari Denied April 28, 1975.
    See 95 S.Ct. 1679.

      Richard H. Mays, Mays & Landers, El Dorado, Ark., for appellant.
    Francis L. Kenney, Jr., St. Louis, Mo., and William S. Arnold, Crossett, Ark., for appellee.
    Before HEANEY, BRIGHT and ROSS, Circuit Judges.
   HEANEY, Circuit Judge.

Appellant Williams embezzled approximately $50,000 from his employer, Monsanto. The embezzlement was discovered by March 12, 1970, and Williams confessed in detail to his employer on that date. The employer made a claim against its insurer (Globe), the appellee, on a blanket crime policy, and Globe paid the employer the amount embezzled, minus a deductible, on August 31, 1970. Globe brought this diversity action against Williams on June 7, 1973, to recover the sum paid. Summary judgment was granted in favor of Globe. The sole issue presented on appeal is whether or not the District Court erred in denying Williams’ motion for summary judgment based on a statute of limitations defense. We hold that Globe’s action was barred by the statute of limitations and, therefore, reverse and remand with directions to enter judgment in favor of appellant Williams.

Both parties agree that the applicable statute of limitations is Arkansas Statute 37-206, which provides:

The following actions shall be commenced within three [3] years after * * * the cause of action shall accrue: First, all actions (of debt) founded upon any contract, obligation, or liability, (not under seal [and not in writing],) excepting such as are brought upon the judgment or decree of some court of record of the United States, of this, or some other State; * * * fourth, all actions (of account, assumpsit, or on the ease,) founded on any contract or liability, expressed or implied; * * * sixth, all actions for taking or injuring any goods or chattels.

This statute has been held to apply to actions based upon common law fraud, deceit, or conversion. See, Air Leases v. Baker, 167 F.Supp. 145, 148 (W.D. Ark.1958); Conditt v. Holden, 92 Ark. 618, 123 S.W. 765 (1909); Vanderboom v. Sexton, 422 F.2d 1233 (8th Cir.), cert. denied, 400 U.S. 852, 91 S.Ct. 47, 27 L.Ed.2d 90 (1970) (dictum). Globe does not deny that it applies to the embezzlement here. The statutory period under this enactment commences to run at the time of the discovery of the fraud. See, Wrinkles v. Brown, 217 Ark. 393, 230 S.W.2d 39, 41 (1950); Metropolitan Life Ins. Co. v. Williams, 197 Ark. 883, 125 S.W.2d 441, 448 (1939); Wright v. Lake, 178 Ark. 1184, 13 S.W.2d 826, 827 (1929). Since the employer discovered the embezzlement on March 12, 1970, the statute of limitations barred the employer’s cause of action for recovery of the money after March 12, 1973.

Globe contends that, notwithstanding foreclosure of the employer, its 'own cause of action did not “accrue” under the statute until its payment to Monsanto. Since suit was brought within three years of that date, it argues that the District Court was correct in holding that its action was not barred. The appellant contends, on the other hand, that Globe is suing solely in its capacity as subrogee of the rights of the employer, and that it is settled law that a subrogee can acquire no more rights against a third party than are held by its subrogor. Hence, he argues, Globe is subject to the identical bar under the statute as was its subrogor, Monsanto, and having failed to bring the action within three years of the discovery of the embezzlement, Globe's cause of action is barred. We agree with the latter view.

The theory of subrogation is that the subrogee steps into the shoes of his subrogor. As such, he takes subject to all defenses which the third party could have asserted against the subrogor, including the statute of limitations:

Since the insurer’s claim by sub-rogation is derivative from that of the insured, it is subject to the same statute of limitations as though the cause of action were sued upon by the insured. * * *

16 Couch, Insurance 2d, § 61:230 at 367 (1966) (footnotes omitted).

This general rule of subrogation law was recognized by the Arkansas Supreme Court in Ogden v. Watts, 186 Ark. 500, 54 S.W.2d 292 (1932):

It is the law, however, as is very clearly stated in Charmley v. Charm-ley, [125 Wis. 297, 103 N.W. 1106 (1905)] that the right acquired by the party thus subrogated is to use the security just as the original holder thereof might have done, and that “the devolution of such cause of action does not interrupt the running of the statute. Upon the termination of the full statutory period measuring the life thereof, it is destroyed. * * * To enable a person to see what interest one has in the property of another by the right of subrogation, he must look at the matter from the viewpoint of the original owner before the devolution.” [Id. at 1111.]

Ogden v. Watts, supra at 292.

Admittedly, the Ogden case is distinguishable since the statute of limitations had already expired on the subrogor’s claim before the subrogation took place, and, therefore, the subrogor had no viable cause of action to convey to the subrogee. But the Charmley case, which it quoted, involved a subrogation which took place before the statute had expired, and the court there held that the act of subrogation had not affected the running of the statute:

* * -» As we have said, where once the statute of limitations has commenced to run on a cause of action, no circumstance, not expressly provided by statute — and we have no statute applying to the circumstances here — will interrupt it. * * *

Charmley v. Charmley, supra 103 N.W. at 1111.

Two recent cases in other jurisdictions have reached the same result where an insurance company became subrogat-ed to its insured by paying off an uninsured motorist claim, and then proceeded to sue the uninsured motorist after the statute of limitations would have barred a direct action by the insured. See, American States Ins. Co. v. Williams, 278 N.E.2d 295 (Ind.App. 1972); Insurance Co. of North America v. Carnahan, 446 Pa. 48, 284 A.2d 728 (1971). In each instance, the court held that the statute began to run from the date of the accident, rather than the date of the award or payment to the insured. We agree that this is the proper rule and, therefore, hold that since the subrogor, Monsanto, was barred by the statute, Globe, as its subrogee, was also barred.

We turn briefly to Globe’s alternate contention that an implied or “quasi” contract of indemnity arose upon payment by Globe to the employer, under which contract Williams only then became obligated to reimburse Globe. The cases cited by Globe do not support this argument.

For example, Wolverine Ins. Co. v. Tower Iron Works, Inc., 370 F.2d 700 (1st Cir. 1966), was an action for allocation of loss between two tortfeasors. There, a person injured while diving into a swimming pool settled with the pool owner’s insurance company. The insurer then sued the installer of the pool for indemnification, and the installer claimed that it could no longer be sued because the pool had been installed eight years earlier. The Court made it clear that it permitted suit only on a theory of common law indemnity which was triggered because the owner and installer were “two tort-feasors not in pari delicto.” Id. at 703. Here, on the other hand, no joint tortfeasors are involved, and there is but classic subro-gation.

Federal Ins. Co. v. Summers, 330 F.Supp. 1041 (D.Mass.1970), also fails to support Globe’s theory. In that case, a customer made a deceitful misrepresentation, in 1958, to a brokerage house (Hutton). He claimed that he had not received certain securities. New securities were delivered to the customer and an indemnity bond was entered into by an insurance company in reliance on the customer’s proof of loss statement. The fraud was concealed until 1966; on discovery, the insurer paid Hutton for the loss and promptly brought a successful action against the customer. That case can be distinguished from the present one on two grounds: (1) the customer had made a direct misrepresentation to the insurer in submitting the false proof of loss; and (2) the statute of limitations had not expired against the subro-gor (Hutton), because the fraudulent concealment had tolled its running. Thus, Federal Insurance is fully consistent with the rule that a subrogee is barred by the same limitation period as is the subrogor.

Globe’s contention that it is not suing solely on a narrow theory of subrogation, but has some broader right to indemnity, is similar to a claim rejected by the court in American States Ins. Co. v. Williams, supra, 278 N.E.2d at 299-300:

The point of departure between the parties is not whether the right of subrogation existed but rather the exact nature of the right. Appellant argues that the insurer acquires the right of indemnification against Ap-pellee when actual payment is made to its insured, thereby implying that an insurer has some type of implied contract or liability imposed by law vis-a-vis the uninsured motorist * * *.
* x x X x- x
As a general rule, indemnity is not allowed absent an express or implied contract. There are, however, certain exceptions as between joint tort-fea-sors, one of whom was liable only because of his relationship to the other joint tort-feasor, or because of a specific statute where the right is imposed. None of these exceptions are applicable to this case.
The duty of the insurer to pay damages arises solely out of its contract with its insured and not by reason of any special relationship between the insurer and the uninsured motorist. The rights acquired by the insurer upon payment to the insured • are solely derivative rights of subro-gation. * * *
X X X -X X X
x x x ThUS) the insurer stands in the shoes of the insured and takes no rights other than those which the insured had, and this is true regarding the applicable statute of limitations. * * *

We conclude that Globe had no separate right to indemnification on the facts of this case. The only rights it asserted against Williams were subrogation rights derived from Monsanto. Therefore, since Globe’s subrogor would have been barred by the statute of limitations, it was error for the District Court to refuse to grant- summary judgment in favor of defendant Williams. The judgment below is accordingly reversed and the cause remanded with directions to enter judgment in favor of Williams and against plaintiff Globe.


author: PER CURIAM.

text:
    Kenneth A. BALDWIN et al., Plaintiffs-Appellees, v. BURGER CHEF SYSTEMS, INC., Defendant-Appellant.
    No. 74-1296.
    United States Court of Appeals, Sixth Circuit.
    Dec. 10, 1974.
    See also, D.C., 365 F.Supp. 1229.
    Glenn F. Doyle, Smith & Brooker, Carl H. Smith, for appellant.
    John A. Picard, Saginaw, Mich., for appellee.
    Before PHILLIPS, Chief Judge, PECK, Circuit Judge, and CECIL, Senior Circuit Judge.
   PER CURIAM.

In October 1971, Burger Chef Systems, Inc., and Baldwin, Inc., entered into a lease and franchise agreement for the operation of a fast food restaurant. Acting in their individual capacities, members of the Baldwin family, appel-lees here, guaranteed the performance of Baldwin, Inc., under the agreement. In May 1973, Burger Chef filed a demand for arbitration, seeking to recover from Baldwin, Inc., and from the guarantors arrearages due under the contract in the amount of $21,365.16. Shortly thereafter, the Baldwins filed a complaint against Burger Chef in the Circuit Court for Saginaw County, Michigan, asking that Burger Chef be enjoined from pursuing the arbitration remedy and praying for a declaration that the individual guaranties are invalid. The complaint made no reference to the amount sought by Burger Chef in the arbitration proceeding.

Burger Chef subsequently filed a petition to remove the case to the District Court on the basis of diversity of citizenship. However, the District Court granted the Baldwins’ motion to remand on the ground that the requisite amount in controversy was not established by the Circuit Court complaint. The court also awarded $750 to the Baldwins for attorneys’ fees incurred because of the removal. Burger Chef now appeals from this award.

As a general rule, a federal court may not award attorney’s fees to the prevailing party unless a statute or a binding contract authorizes such a recovery. Hall v. Cole, 412 U.S. 1, 4-5, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973); Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 717, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967). There is, however, one rather broad exception to this rule. A court exercising its equitable powers may award attorney’s fees in certain extraordinary circumstances. For example, when an adversary has acted in bad faith or vexatiously, attorney’s fees may be recovered. See Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402 n. 4, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968); Monroe v. Board of Comm’rs, 453 F.2d 259 (6th Cir.), cert. denied, 406 U.S. 945, 92 S.Ct. 2045, 32 L.Ed.2d 333 (1972). Similarly, attorney’s fees may be allowed when a litigant’s efforts confer “a substantial benefit on the members of an ascertainable class, and . . . the court’s jurisdiction over the subject matter of the suit makes possible an award that will operate to spread the costs proportionately among them.” Mills v. Electric Auto-Lite Co., 396 U.S. 375, 393-394, 90 S.Ct. 616, 626, 24 L.Ed.2d 593 (1970); see Sprague v. Ticonic Nat’l Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184 (1939).

The present case comes within none of these exceptions. We find no basis in the record for the award of attorney’s fees made in the case at bar. No statute or contract authorizes the Baldwins to recover their attorney’s fees, nor is this one of the exceptional cases in which a court of equity may order such a recovery in the interest of justice.

The judgment of the District Court is reversed insofar as it awarded $750 in attorney’s fees to the Baldwins.

No costs are taxed. Each party will bear his own costs on this appeal.


text:
    Jan J. WEXLER, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
    No. 74-1828.
    United States Court of Appeals, Sixth Circuit.
    Dec. 3, 1974.
    Jan J. Wexler, pro se.
    Meade Whitaker, Chief Counsel, I.R.S., Washington, D. C., Scott P. Crampton, Asst. Atty. Gen., Gilbert E. Andrews, Acting Chief, Gary R. Allen, Stephen M. Gelber, App. Section, Tax Div., Dept, of Justice, Washington, D. C., for respondent-appellee.
    Before EDWÁRDS, MILLER and EN-GEL, Circuit Judges.
   This appeal is before a panel by this Court designated pursuant to Rule 3(e), Rules of the Sixth Circuit.

Appellant, a resident of Michigan, appeals from an order of the Tax Court denying his refund claim for portions of his income taxes for the years 1971 and 1972. The issue involved is whether taxpayer was entitled to claim as defendants for those years, his father and stepmother who were, at all relevant times, residents of either Romania or Israel. They were never citizens or nationals of the United States. The Tax Court denied the refund claims under Section 152(b)(3) of the Internal Revenue Code of 1954 which excludes from the definition of “dependents” any persons who are not citizens or nationals of the United States.

The taxpayer challenges the constitutionality of this section on two grounds: 1) that it is a denial of the equal protection of the law; and 2) that it is unreasonable and arbitrary in excluding from the definition of “dependents” persons who are not citizens or nationals of the United States.

Upon consideration of the contentions of the taxpayer, we find that they are so unsubstantial as to need no further argument.

Accordingly, the taxpayer’s appeal is hereby dismissed and the judgment of the Tax Court is affirmed. See Rule 8, Rules of the Sixth Circuit and Labay v. C.I.R., 55 T.C. 6 (1970), aff’d on other grounds, 450 F.2d 280 (5th Cir. 1971); C.I.R. v. Anderson, 371 F.2d 59 (6th Cir. 1966).


author: KASHIWA, Judge:

text:
    ALABAMA DISPLAYS, INC. v. The UNITED STATES. KENTUCKY DISPLAYS, INC. v. The UNITED STATES. TUSCALOOSA ADVERTISING, INC. v. The UNITED STATES.
    Nos. 155-70 to 157-70.
    United States Court of Claims.
    Dec. 18, 1974.
    Leonard D. Van Slyke, Jr., Hatties-burg, Miss., for plaintiff; James P. Knight, Jr., Jackson, Miss., attorney of record.
    Kenneth R. Boiarsky, Washington, D. C., with whom was Asst. Atty. Gen. Scott P. Crampton, for defendant. Gilbert E. Andrews, Washington, D. C., of counsel.
    Before COWEN, Chief Judge, and NICHOLS and KASHIWA, Judges.
   OPINION

KASHIWA, Judge:

Plaintiffs are three corporations related through common stock ownership and the three suits were consolidated. These suits are for the recovery of federal corporate income taxes and interest, plus statutory interest, in the amounts and for the fiscal years below:

Fiscal Year Assessed
Ended Tax Interest Total
Alabama ....................... July 31, 1967 $6,244.03 $629.52 $6,873.55
Displays ....................... July 31, 1968 585.70 23.91 609.61
$6,829.73 $653.43 $7,483.16
Kentucky....................... Oct. 31, 1967 $ 309.80 $ 26.74 $ 336.54
Displays ....................... Oct. 31, 1968 3,183.37 83.77 3,267.14
$3,493.17 $110.51 $3,603.68
Tuscaloosa ..................... Oct. 31, 1966 $1,342.57 $196.44 $1,539.01
Advertising ..................... Oct. 31, 1967 2,705.79 233.55 2,939.34
Oct. 31, 1968 749.66 19.73 769.39
$4,798.02 $449.72 $5,247.74

We hold for the plaintiff in each of the suits for the reasons hereinafter stated. The material facts are jointly stipulated by all parties to the suits.

All plaintiffs are in the business of erecting, maintaining, and renting outdoor advertising displays, commonly known as billboards. These billboards are of the type commonly seen along public highways. The billboards display advertising of the products and services of plaintiffs’ customers, who rent billboard space from plaintiffs. The billboards owned by plaintiffs are constructed on property leased to plaintiffs by the property owners. These leases provide for the erection and maintenance of billboards on the subject property in exchange for an annual consideration to the property owner. The terms of the leases range from an initial period of one to five years with a renewal provision of a similar term to a period of indefinite duration which may be terminated by the property owner with 15 to 60 days’ notice when the space is required for other uses, or may be terminated by the lessee under certain conditions or at any time with 15 to 60 days’ notice. The leases provide for the removal of the billboards by the lessee upon termination.

Plaintiffs’ contractual arrangement with their advertising customers is made on a standard form which basically provides for the display of an advertising message of a certain design on plaintiffs’ billboards in exchange for a specified monthly consideration. The advertising portion of plaintiffs’ billboards ranges in dimensions from six feet by twelve feet to twelve feet' by fifty feet, and each billboard houses from one to four advertisements. The dimensions of the most commonly used advertisement, referred to in the trade as “standard size,” are twelve feet by twenty-five feet.

The billboard base structures consist of three types:

(1) Wood poles. These poles range in height from 25 feet to 50 feet and for the standard size are customarily 40 feet in height. All are treated with creosote to protect the wood. The 40-foot poles are about 23 to 25 inches in circumference (7 to 8 inches in diameter) at the tip and about 37 to 40 inches in circumference (11 to 12 inches in diameter) at a distance of 6 feet from the butt. The poles are set between 7 and 8 feet in the ground. Three of them are used in a typical poster board (25 feet in width) and six of them in a typical paint board (40 to 50 feet in width). The poles in some of the displays are strengthened by the addition of concrete mixture in the hole into which each pole is inserted.

(2) Steel I beams. Such beams are usually 40 feet in length and extensions are sometimes added by varying lengths up to 20 feet, depending upon the desired height of the board. The width of the beams ranges from 14 to 16 inches. The 40-foot beams are set in concrete foundations between 8 and 10 feet deep. Between two and four beams are used in a typical structure.

(3) “A” frames. These frames consist of 17-foot lengths of angle iron measuring 2 inches x 2 inches x Vi inch for the support of the display, and these supports meet at one point to form a rough letter “A.” The supports are welded to eight anchors consisting of 2-inch pipe driven 3 to 4 feet into the ground.

Of the billboards purchased or constructed during the years at issue, the following are the approximate percentages mounted by using the above methods:

Plaintiff Wood Poles I Beams "A" Frames
Alabama ............................ 99% 1% ..............
Kentucky ........................... 15% 22% 63%
Tuscaloosa .......................... 99% 1% ..............

The removal of plaintiffs’ billboards is accomplished in the following manner, The sign portion of the billboards is disassembled prior to the removal of the supporting poles or beams and the salvageable parts are removed to the shop and inserted where practicable into other signs. All wood poles or steel beams set in concrete mixture or in concrete foundations are either cut off at or just below' ground level or are left standing for use by the property owner, if requested. Wood poles not set in concrete mixture or in concrete foundations are pulled from the ground. “A” frames are removed by severing the support poles from the anchor by acetylene torch.

Plaintiffs filed corporate income tax returns for each of the years in issue and claimed the investment credit on the billboards described above. Adjustments were made by the Internal Revenue Service disallowing, inter alia, the investment credit so taken; and deficiency assessments were thereupon made and collected. Timely claims for refund were filed and formally rejected by the Internal Revenue Service on December 12, 1969. The petitions in these cases were filed on May 15, 1970.

The cases were ably briefed and argued by the respective counsel and the issue before us is one of construing a section of the investment credit provision of the Internal Revenue Code of 1954. The question before us is, as the Government puts it:

Whether plaintiffs’ advertising displays are inherently permanent structures and therefore fail to qualify for the investment credit as “tangible personal property,” and if so, whether these advertising displays also fail to qualify for the investment credit as “other tangible property” since they are not used as an integral part of furnishing communications services.

Provisions dealing with the investment credit have been a part of the federal tax law since 1962. Those involved here are sections 38, 46, and 48. The amount of the credit has been 7 per cent of the qualified investment. This qualified investment is the applicable percentage of section 38 property placed in service by the taxpayer during the taxable year, the percentage varying with the useful life. In determining whether the advertising displays in issue are qualified for the investment credit, we have to look at § 48(a)(1) to determine if they are section 38 property. To be such property they have to fall under either § 48(a)(1)(A), tangible personal property, or § 48(a)(1)(B), other tangible property. Section 48 as pertinent herein reads as follows:

§ 48. Definitions; special rules.
(a) Section 38 property.—
(1) In general. — Except as provided in this subsection, the term “section 38 property” means—
(A) tangible personal property, or
(B) other tangible property (not including a building and its structural components) but only if such property—
(i) is used as an integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services, * * *.
******
Such term includes only property with respect to which depreciation (or amortization in lieu of depreciation) is allowable and having a useful life (determined as of the time such property is placed in service) of 4 years or more.

We hold that these displays fall under § 48(a)(1)(A) as “tangible personal property” for the reasons stated below. Therefore, it is not necessary to rule whether the displays are “other tangible property” under § 48(a)(1)(B) and whether this business involves furnishing communications services.

The term “tangible personal property” is not defined in the statute. In the usual case there is no difficulty with relation to what “tangible personal property” means. For example, in a recent case where the property involved was motion picture negatives, the court had no difficulty in determining that such property was “tangible personal property.” But problems have risen where personal property is attached to realty, as in the present case. Fortunately, we are aided by recent decisions interpreting what the language means with relation to personal property attached to realty.

In Morgan v. Commissioner, 52 T.C. 478, 482-483 (1969), aff’d per curiam, 448 F.2d 1397 (9th Cir. 1971), involving floating docks attached to pilings, the court stated as follows:

The only issue for decision is whether the floating docks and the pilings on which they ride with the tides qualify as “tangible personal property” within the meaning of sections 48 and 179.
* * * * * *
Respondent contends that the floating docks, together with the pilings, are inherently permanent land improvements within the meaning of the foregoing provisions in respondent’s regulations. We do not agree. The reference to docks in respondent’s regulations does not contemplate structures such as the floating docks under consideration in the case at bar.
The evidence presented at the trial established that the floating docks are not inherently permanent structures. The Court reached the same conclusion upon making a personal inspection of the docks. They float on the water as independent units, rising and falling with the tide. The purpose of the pilings is only to limit lateral motion of the docks. The docks are portable. They can readily be removed and placed in other locations or configurations. For instance, finger units of different lengths can be interchanged. An existing section of walkway and accompanying finger units can be moved to a new location in the same basin while remaining part of the same complex of floating docks. As for moving the docks to new locations, that can be accomplished by towing them on the water. Most of the pilings would not necessarily have to be first removed.
Respondent takes the position that the floating docks are inherently permanent structures because they are permanently attached or affixed to land. Respondent sets forth three methods in which the docks are so attached. The first is by gangways which are hinged to permanent piers on shore and rest on the floating docks by means of rollers. The second method is the connection of electrical and plumbing utilities to the doeks from land-based sources. The third is the attachment of the docks to pilings.
Respondent mistakenly assumes that annexation to land precludes classification of property as “tangible personal property” under section 48. Respondent’s regulations even describe various kinds of property which are considered “tangible personal property” even though they are annexed to the ground:
“Thus, such property as production machinery, printing presses, transportation and office equipment, refrigerators, grocery counters, testing equipment, display racks and shelves, and neon and other signs, which is contained in or attached to a building constitutes tangible personal property for purposes of the credit allowed by section 38. * * * ” [Emphasis supplied.]

In Minot Federal Savings and Loan Ass’n v. United States, 435 F.2d 1368, 1371 (8th Cir. 1970), the Eighth Circuit holding that movable non-load bearing building partitions retained their character as tangible personal property instead of being part of the building with which used stated as follows:

* * * It is argued that because these partitions are movable they only serve the same purpose as an inner wall and, therefore, constitute a structural component of the building. We do' not agree as we can find nothing in the language Congressused or in the Treasury Regulations that supports this approach. It would seem at least to us that, when Congress in the Act separated “tangible personal property” from “other tangible property” in the disjunctive and then made each “section 38 property,” the plain intendment of the Congress was to include all tangible personal property and some tangible property that might not ordinarily or by state law be included in “section 38 property.”
This would be the most logical conclusion and the most reasonable one in the light of the object of the Act which is to increase investments and encourage modernization of the facilities so as to improve the country’s economic potential by reducing the net costs of acquiring new equipment, all of which would help unemployment, tend to alleviate our balance of payment problem and by reducing costs help our industries’ competition in markets at home and abroad.
The Act of 1962 which conceives the investment credit provision with which we are concerned was amended in 1964 by adding subparagraph (C) to § 48(A) and (B) of the Act. The effect of this amendment was to include escalators and elevators in the property to be included as eligible for investment credit. See 1964-1 (Part 2) Cum.Bull. 159-160. This gives a clear insight into the Congress’ view as to what should be included in section 38 property. Certainly if escalators and elevators are to be included, there can be no doubt that movable wall partitions should be likewise included.

We agree with the court in Minot that, with relation to the question of whether structures are inherently permanent improvements, the provision must be liberally construed especially where Congress by subsequent amendment specifically extended the investment credit to include elevators and escalators. Furthermore, the Senate Report No. 1881, 87th Cong., 2d Sess., 1962 — 3 Cum.Bull. 703, 722, specifically states that “Tangible personal property is not intended to be defined narrowly here, nor to necessarily follow the rules of State law.”

Treas.Reg. § 1.48 — 1(c) (1964) states that “ * * * the term ‘tangible personal property’ means any tangible property except land and improvements thereto, such as buildings or other inherently permanent structures * * *. Thus, buildings, swimming pools, paved parking areas, wharves and docks, bridges, and fences are not tangible personal property.” The regulation continues by stating that “ * * * such property as * * * neon and other signs * * * contained in or attached to a building, constitutes tangible personal property for purposes of the credit allowed by section 38.”

The defendant refers to the Technical Explanation of the Bill, H.R.Rep.No. 1447, 87th Cong., 2d Sess., 1962-3 Cum. Bull. 501, 517, which states that:

* * * Thus, for example, section 38 property would ordinarily not include such assets as pavements, parking areas, advertising displays, outdoor lighting facilities, or swimming pools which, although used as a part of the overall business operation, are not used directly in the specified activities. [Emphasis supplied.]

Defendant’s position is that the advertising displays are not tangible personal property because the Technical Explanation refers to “section 38 property” instead of limiting itself to “other tangible property” and the grouping of advertising displays with the other items indicates that Congress considered them to ‘be of a permanent nature.

We do not agree with the defendant. The explanation above quoted is presented in the context of what constitutes “other tangible property.” Also this sentence is preceded in the Technical Explanation by the sentence, “In order to qualify for the credit, property (other than tangible personal property and research or storage facilities used in the specified activities) must be used as. an integral part of one or more of the specified activities.” [Emphasis supplied.] Treas.Reg. § 1.48 — 1(d)(4) (1964) refers to property other than tangible personal property and in listing the items of property not falling in this category, the regulation does not refer to “section 38 property.” The regulation states that property such as that listed is not ordinarily used as an integral part of the types of activities indicated in Treas.Reg. § 1.48 — 1(d)(1) (1964), such as furnishing communications services. We think that the mention of advertising displays here is in the context of what constitutes “other tangible property.”

Defendant also argues that the wooden poles here are similar to the pilings in Morgan on which no investment credit was allowed. The standard size 40-foot poles here are about 23 to 25 inches in circumference at the tip and about 37 to 40 inches in circumference at 6 feet from the butt. They are set between 7 and 8 feet in the ground. The pilings in Morgan were approximately 38 inches in circumference and set as deep as 15 feet into the mud. We do not think the two fact situations are similar. The pilings were of a permanent nature, to be left for a long period of time. They improved the land in 'that the land with the water above it could be used for docking. The taxpayers owned the land as well as the pilings so also there was no agreement for removal of the pilings. In the present case, the signs were on other person’s properties and there was an express written understanding of remova-bility. These facts distinguish the Morgan case with reference to its pilings from the case before us.

The stipulation of facts indicates that the signs are movable, that a lessor’s action could necessitate plaintiffs’ relocation of a sign, and that signs have been regularly moved in the past. Referring to inherently permanent structures, the items listed in Treas.Reg. § 1.48-l(c) (1964), buildings, swimming pools, etc., are all items placed in the ground in a permanent fashion. They seem to encompass a much longer span than the useful lives of these signs and much more permanent attachment than is made here. The displays are not inherently permanent structures and do not otherwise improve the land.

As an added argument on the question of whether the displays lost their character as personal property when affixed to real estate, plaintiffs cite the case of Helvering v. Atlas Life Insurance Co., 78 F.2d 166 (10th Cir. 1935). There the taxpayer wished to avoid income tax on rents received from tenants occupying a building constructed by the taxpayer on land leased from a state agency. The lessee’s argument was that the building became part of the real estate and since the owner of the land was a state agency, the rental income should be tax exempt. The Tenth Circuit held that since the taxpayer and the state agency had agreed that the structure remained the property of the lessee, that agreement was controlling. The building would be treated as personal property of the taxpayer even though affixed to the real estate. In the case before us, the displays remained at all times plaintiffs’ property with the obligation to remove the displays upon termination of their leases. See, also, Bangor-Hydro Electric Co. v. Johnson, 226 A.2d 371 (Sup.Ct.Me. 1967); Garrison General Tire Service, Inc. v. Montgomery, 75 N.M. 321, 404 P.2d 143 (1965); Zangerle v. Standard Oil Co. of Ohio, 144 Ohio St. 506, 60 N.E.2d 52 (1945); and Western Union Telegraph Co. v. Burlington & Southwestern Ry., 11 F. 1 (8th Cir. 1882).

Various revenue rulings indicate types of property which the Commissioner has accepted as qualifying as tangible personal property. Propane tanks installed on customers’ premises, bank vault doors and drive-up teller’s windows, fuel tanks, a diesel generator, exhaust equipment, wall-to-wall carpeting in a motel’s public and guest rooms were section 38 property if the useful life requirement was met. These types of property are more inherently permanent than the displays because of their relation to the overall and continued use of the property to which they were attached. The court in Minot was much influenced by the fact that Congress deemed elevators permanently attached to the building as tangible personal property in holding that the walls in issue in that case must be tangible personal property.

For the foregoing reasons, we hold that all of plaintiffs’ advertising displays in all three cases are tangible personal property under § 48(a)(1)(A) and, therefore, the investment credit should be allowed. The amount of recovery will be determined in further proceedings under Rule 131(c).

CONCLUSION OF LAW

Upon the foregoing opinion, the facts as stipulated by the parties, the briefs and oral argument of counsel, the court concludes as a matter of law that the plaintiffs are entitled to recover in each of their respective suits and judgment is entered to that effect. The amount of recovery in each case will be determined in subsequent proceedings pursuant to Rule 131(c).

      . All statutory references are to the Internal Revenue Code of 1954, as amended.

      . Walt Disney Prods. v. United States, 480 F.2d 66 (9th Cir. 1973), cert. denied, 415 U.S. 934, 94 S.Ct. 1451, 39 L.Ed.2d 493 (1974). Also, see Madison Newspapers, Inc., 47 T.C. 630 (1967); Millers Nat’l Ins. Co., 54 T.C. 457 (1970); and Lockhart Leasing Co., 54 T.C. 301 (1970).

      . Rev.Rul. 69-602, 1969-2 Cum.Bull. 6.

      . Rev.Rul. 65-79, 1965-1 Cum.Bull. 26.

      . Rev.Rul. 70-103, 1970-1 Cum.Bull. 6.

      . Rev.Rul. 67-349, 1967-2 Cum.Bull. 48.