author: ROSS, Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. James Arthur WILLIS, Appellant.
    No. 72-1704.
    United States Court of Appeals, Eighth Circuit.
    Submitted May 14, 1973.
    Decided June 29, 1973.
    Rehearing and Rehearing En Banc Denied Aug. 20, 1973.

      James R. Wyrseh, Kansas City, Mo., and Thomas E. Joyce, Kansas City, Kan., for appellant.

      Frederick W. Read, III, Atty., Dept, of Justice, Washington, D. C., for appel-lee.
    Before GIBSON, HEANEY and ROSS, Circuit Judges.
   ROSS, Circuit Judge.

This is an appeal from the judgment of conviction, after a jury verdict, finding James Arthur Willis guilty of violating the provisions of 18 U.S.C. §§ 2421 and 1952. We affirm.

Willis was tried on a two count indictment: 1) transporting two women, Rose Marie Williams and Ray dene Murray, in interstate commerce for the purpose of prostitution in violation of 18 U.S.C. § 2421, and 2) having traveled and caused travel in interstate commerce to facilitate prostitution enterprises illegal under state law in violation of 18 U.S.C. § 1952. The Government’s bill of particulars alleged with respect to count 2 that appellant transported Rose Marie Williams, Raydene Murray, Hattie Mae Diamond, and Sandy Terrazas interstate to facilitate unlawful prostitution enterprises. In general, the Government sought to prove transportation between Missouri, Kansas, Texas, and Louisiana. Willis was a nightclub operator in Kansas City, Kansas.

Willis rests his appeal on six asserted grounds of error:

1. Pre-indictment delay caused substantial prejudice to Willis’ right to a fair trial.

2. Certain cross-examination of Willis was prejudicial and improper.

3. The testimony of one witness (McCullough) was not relevant or material.

4. The witness Murray was improperly allowed to invoke her fifth amendment right not to answer incriminating questions in front of the jury.

5. It was error to admit into evidence the arrest record of Hattie May Diamond and a bail bond slip signed by Willis.

6. The statutes upon which the prosecution was based invidiously discriminate against males.

We have examined the first, third and sixth allegations of error, and after a full reading of the record and study of the applicable law conclude they are without merit. Discussion of these allegations would serve no useful purpose and would unduly extend the length of this opinion. Consequently we will limit discussion to the second, fourth, and fifth assertions of error.

Cross-examination of Willis

During the direct examination of Willis it was learned that he had employed Rose Marie Williams and Raydene Murray at the Casa Blanca Club in 1968. On cross-examination Willis stated that he had paid Williams $15 per day plus tips, but could not remember how much he had paid Murray. Government counsel asked Willis if he had paid either woman $8,000 in 1968. Willis could not recall as to Murray, and indicated doubt as to Williams. Willis also could not recall whether he had told his accountant to prepare 1968 individual income tax returns for the two women reporting income of $8,000 each. At this point defense counsel objected, indicating that the returns were not prepared by Willis, not filed, and not signed. The court overruled the objection.

Government counsel then handed to Willis two individual tax foxuns for 1969 made out for Williams and Murray. Willis examined the foxnns and indicated that he probably directed the accountant to prepare the return for Murray, but he could not be sure as to Williams. Willis further indicated that if the records indicated that he paid the women $8,000 that was what they were paid. The returns were never placed in evidence.

Willis’ main objection to this cross-examination is that it purportedly related to evidence of an unrelated crime. Of course, such cross-examination would have been improper. The simple answer to Willis’ contention is that there was nothing in the colloquy between Willis and the Government’s counsel which might conceivably raise an inference of tax evasion. In fact the whole thrust of the Government’s cross-examination was that the tax returns properly represented the sums paid to the women. Therefore, South v. United States, 368 F.2d 202 (5th Cir. 1966), is not “squarely on point with -the facts” as Willis argues. In South the Government used the defendant’s low reported income to buttress its claim that he must have engaged in gambling since he was able to support his family despite a meager income. The Court reversed the conviction, (for using the mails in furtherance of illegal gambling), partly because it was convinced that such evidence tended to demonstrate the defendant’s guilt of the unrelated crime of failing to report his true income. No such inference could possibly be drawn in this case.

Willis also argues that the cross-examination was improper because :

1. the cross-examination was based upon tax returns which were never introduced into evidence. See McKenna v. United States, 232 F.2d 431, 437 (8th Cir. 1956); United States v. Sawyer, 469 F.2d 450, 452 (2d Cir. 1972); Robbins v. Small, 371 F.2d 793, 795 (1st Cir.), cert. denied, 386 U.S. 1033, 87 S.Ct. 1483, 18 L.Ed.2d 594 (1967).
2. the cross-examination, and presumably the tax returns were, “irrelevant, incompetent, immaterial and collateral to .the issues”;
3. the cross-examination exceeded the scope of direct examination as the tax returns related to 1969, but the direct examination related only to 1968. See United States v. Hiken, 458 F.2d 24, 26 (8th Cir.), cert. denied, 409 U.S. 842, 93 S.Ct. 41, 34 L.Ed.2d 81 (1972).

We have serious doubts as to the propriety of this cross-examination which was based upon tax returns never admitted into evidence, particularly when the returns were never signed, never filed, and were unrelated to the taxable year under examination. However, this Court has long held that:

“The fact that the cross-examination of a defendant exceeded the bounds of propriety does not call for reversal unless it was prejudicial and amounted to a denial of some substantial right of the defendant.” Davis v. United States, 229 F.2d 181, 186 (8th Cir.), cert. denied, 351 U.S. 904, 76 S.Ct. 706, 100 L.Ed. 1441 (1956).

Assuming the cross-examination was improper, we believe beyond a reasonable doubt that it was harmless error for the trial judge to allow it. See generally Milton v. Wainwright, 407 U.S. 371, 92 S.Ct. 2174, 33 L.Ed.2d 1 (1972); Schneble v. Florida, 405 U.S. 427, 92 S.Ct. 1056, 31 L.Ed.2d 340 (1972); Harrington v. California, 395 U.S. 250, 89 S.Ct. 1726, 23 L.Ed.2d 284 (1969); Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967); Kotteakos v. United States, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557 (1946); F.R.Crim.P. 52(a); 3 C. Wright, Federal Practice and Procedure §§ 851-855 at 350-372 (1969).

First, with regard to Murray, the tax returns and the examination of Willis demonstrated no more than that she was paid $8,000 for full-time legal employment. The inference to be drawn from the examination is neutral, and perhaps beneficial to the defense. We fail to understand what the Government was trying to prove by this examination, but cannot conceive that it harmed Willis in any way.

Second, as to Williams, the Government apparently sought to suggest that she was paid an exorbitant amount of money for part-time work, thus tending to prove that she was paid by Willis for illicit activity. Williams had already testified at great length that she worked as a prostitute for Willis. Charles Hubbard, an employee of Willis during part of the time in question, testified that he saw Willis give Williams, Murray and a woman by the. name of Pat, money. He further testified that the women gave Willis money. Moreover, he testified that he had personal knowledge that prostitution was going on where Willis resided. In light of this strong eye witness testimony, it is a remote possibility, at the very best, that the cross-examination relating to the tax returns influenced the jury insofar as whether they believed Williams worked as a prostitute for Willis.

Furthermore, defense counsel could have obviated any impact, no matter how slight, this cross-examination might have had on the jury. The. Government’s argument was apparently that Mrs. Williams was paid an exorbitant amount of money in 1968 for part-time work, thus tending to prove payment by Willis for prostitution. The factual predicate for this suggestion was that the tax returns purportedly related to 1968. In fact, the tax returns related to 1969. Therefore, there was no valid basis upon which to analyze Williams’ income in 1968. Defense counsel saw the returns prior to their use during a bench conference. After the cross-examination was over, defense counsel approached the bench and informed the court that the tax returns were for 1969. The prosecutor indicated that he was genuinely surprised. The trial court asked whether defense counsel wanted the jury informed of this fact. Counsel said, “I just wanted to make a record on it because we asked for a mistrial.” Tr. 479. Had the jury been informed of this fact, at that time, whatever inference the Government sought to suggest would have been destroyed. While we do not fault counsel for making a “record”, we are somewhat hesitant to hear Willis’ complaint, since a strong argument could be made that a “defendant will not be heard to complain when he fails to avail himself of a proper remedy because he wanted more than offered.” United States v. Akin, 464 F.2d 7, 8 (8th Cir.), cert. denied, 409 U.S. 981, 93 S.Ct. 315, 34 L.Ed.2d 244 (1972). We have fully considered Willis’ argument, and as previously stated, in spite of the possibly erroneous use of the return by an overzealous prosecutor, we find the purported error to have been harmless beyond a reasonable doubt.

Murray’s invocation of self-incrimination privilege in front of the jury.

Raydene Murray was called by the Government in its case in chief as a witness. Her answers to the Government’s questions were apparently not what Government counsel expected to hear. Government counsel finally asked:

“Why did you take Rose Marie Williams to Leesville, Louisiana? All I want is the truth.” Tr. 290.

Defense counsel asked the question be stricken and the trial court so ordered. At that point defense counsel asked to approach the bench. A conference was held, and defense counsel asked the witness be informed of her privilege not to incriminate herself. The trial court, in the presence of the jury and without objection from defense counsel, then informed the witness of her privilege and asked if she wanted to consult with counsel. She requested the services of a lawyer. An attorney from the Federal Public Defender office was appointed to consult with Murray and he did. After that consultation the Government prepared to recall her, informing the trial court and the defense that the Government was prepared to offer Murray immunity. Counsel for the defense objected to such a procedure if it was to be held in front of the jury. The trial court indicated, “I think we are going to have it in front of the jury so they will understand what is going on.” Tr. 332. The court concluded that he could conceive of no prejudice to the defendant. Under the circumstances of this case we agree with the trial court’s conclusion.

Willis’ objection to this procedure is that the jury must have thought the witnesses’ invocation of the privilege was an admission of guilt tending to implicate Willis. It must be emphasized that there is no evidence and no contention that the Government expected the witness to invoke the privilege. In fact Government counsel indicated that Murray had been advised of her rights, and on every prior occasion had indicated that she would testify voluntarily. Perhaps most importantly Murray’s testimony dispelled any idea that her invocation of the privilege was an implicit indictment of Willis. After she had invoked the privilege and had been granted immunity she testified:

“Q. [M]r. Willis didn’t ask you to transport Marie — Rose Marie Williams to Leesville ?
A. It was her idea. Tr. 336
Q. All right, Did you work as a prostitute .
A. No.
Q. In Kelly’s bar?
A. No.
Q. Did you work as a prostitute in Leesville, Louisiana .
A. No.
Q. In January of 1968?
A. No. Tr. 349.
Q. Have you ever seen Rose Marie Williams give money to Jimmy Willis?
A. No.
Q. Have you ever given money to Jimmy Willis under any circumstances ?
A. No. Tr. 361
it

In closing argument defense counsel was quick to use the Government’s embarrassing position:

“And remember the other girl who was talked about by Rose Marie Williams, what was her name? Raydene Murray. She testified in here and was granted immunity, the government said, ‘Nothing can happen to you. You just sit up here and tell the truth.’ She was sworn and she denied that Jimmy Willis had anything to do with the prostitution activity and she had nothing to fear because the government said, ‘We are not going to go after you for these prostitution activities.’ ” Tr. 507.

Furthermore, had Murray’s testimony been damaging she was subject to being fully cross-examined. Finally, we note, without attaching a great deal of significance to the point, that it was defense counsel who precipitated informing Murray of her rights.

Willis primarily relies on United States v. King, 461 F.2d 53 (8th Cir. 1972). This case is far removed from the facts of King. In King the Government deliberately called two witnesses knowing they would invoke the privilege and no immunity was granted. This difference renders King totally inapplicable to the facts of this case. See generally Namet v. United States, 373 U.S. 179, 83 S.Ct. 1151, 10 L.Ed.2d 278 (1963); Gerberding v. United States, 471 F.2d 55, 59-60 (8th Cir. 1973); United States v. McKuin, 434 F.2d 391, 397-398 (8th Cir. 1970), cert. denied, 401 U.S. 911, 91 S.Ct. 875, 27 L.Ed.2d 810 (1971).

Admission of arrest record and bail bond receipt.

The Government, over a relevancy objection, was allowed to introduce into evidence the arrest record of Hattie Mae Diamond for investigation of soliciting prostitution and vagrancy, and a bail bond slip signed by Willis. The parties had stipulated that the records’ were business records of the Kansas City, Kansas, police department.

Willis objects to this evidence because of a lack of a proper foundation, although he did not specify this as a ground for objection at the time the evidence was offered. Foundation objections require specificity. Reversal is not required with regard to alleged improper admission of exhibits without sufficient foundation, in the absence of a specific objection on foundation grounds. United States v. Dixon, 446 F.2d 224 (9th Cir. 1971). See also Price v. United States, 464 F.2d 1217, 1218-1219 (8th Cir.), cert. denied, 409 U.S. 1040, 93 S.Ct. 522, 34 L.Ed.2d 489 (1972); 1 J. Wigmore, Wigmore on Evidence § 18 at 339-340 (3 ed. 1940).

The question of relevancy is properly presented, and we believe the evidence was relevant. It was obviously relevant for the Government to demonstrate a symbiotic or dependent relationship between Willis and the women involved. This evidence tends to prove just such a relationship. The arrest record by itself would not have been relevant. United States v. Davis, supra, 229 F.2d at 185. But the bail bond receipt and the arrest record establish Hattie Mae Diamond’s dependence upon Willis. In this sense, the documents taken together, are relevant.

Willis asserts that this evidence had the tendency of unfairly associating him with an unrelated crime. The simple answer to Willis’ argument is that Willis’ activity in signing the bail bond receipt was clearly not criminal. In any event the evidence, as we have said, was relevant. It was the trial judge’s duty to weigh the relevance of the evidence against the possibility of prejudice:

“This balancing of intangibles — probative values against probative dangers — is so much a matter where wise judges in particular situations may differ that a leeway of discretion is generally recognized.” C. McCormick, Evidence § 152 at 320 (1954). See also 1 J. Wigmore, Wigmore on Evidence § 28 at 409-410 (3 ed. 1940).

And as this Court has often said:

“Generally speaking the admissibility of evidence is a question within the discretion of the trial court, and a court of appeals will confine its inquiry to whether there was an abuse of that discretion.” United States v. Skillman, 442 F.2d 542, 551 (8th Cir.), cert. denied, 404 U.S. 833, 92 S.Ct. 82, 30 L.Ed.2d 63 (1971).

We find no abuse of discretion as to this evidence.

For the reasons hereinbefore expressed the judgment of conviction is affirmed.

      . Although Willis does not phrase his argument in such terms, we have approached this question as if he alleged error touching some constitutional deprivation as opposed to error lacking constitutional dimensions. Compare Kotteakos v. United States, infra, 328 U.S. 750, 66 S.Ct. 1239, 90 L.Ed. 1557 with Chapman v. California, infra, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705.

      . “The other objection that we have is to the probative value of ... an arrest record of Hattie May Diamond and a bond receipt allegedly signed by James Willis.” Tr. 261.

      . IVillis argues that the Government failed to establish that the Hattie Mae Diamond referred to in an arrest record was the same woman referred to in the Government’s bill of particulars, but Willis later testified that she was.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    SECURITIES AND EXCHANGE COMMISSION, Appellee, v. AMERICAN ASSOCIATED SYSTEMS, INC., et al., Robert Edwin Lee, Appellant.
    Nos. 73-1064, 73-1065.
    United States Court of Appeals, Sixth Circuit.
    Argued June 14, 1973.
    Decided July 31, 1973.

      Robert E. Lee, pro se; Charles V. Boarman, Lexington, Ky., on brief.
    John I. Mayer, William D. Goldsberry, Joseph L. Grant, Howard P. Alterman, S. E. C., Chicago, 111., Paul Gonson, Asst. Gen. Counsel, S. E. C., Washington, D. C., for appellee; Walter P. North, Acting Gen. Counsel, David Ferber, Sol., Martin S. Berglas, Atty., S. E. C., Washington, D. C., on brief.
    Before PHILLIPS, Chief Judge, and CELEBREZZE and PECK, Circuit Judges.
   PER CURIAM.

Defendant-appellant, Robert E. Lee, seeks reversal of an order for permanent injunction entered against him. The injunction forbids further violations of the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. We affirm.

This action, brought by the Securities Exchange Commission, originally sought permanent injunctions against three Kentucky corporations and eight individuals. Default judgments were entered against the corporate defendants and permanent injunctions by consent were entered against each of the individual defendants, except Lee. The findings of fact and conclusions of law of District Judge Mac Swinford are attached as an appendix to this opinion.

The trial record reveals that Lee, as corporate counsel for American Associated Systems, Inc. (AASI), prepared board of directors’ meeting agendas, led board discussions, drafted resolutions and was paid as a director. He served also as a member of AASI’s executive committee and owned the management corporation which managed AASI and its subsidiaries.

In 1970, when AASI was experiencing serious cash-flow problems and Lee was aware, of these problems, he prepared a quarterly report for AASI which failed to disclose the difficulties. Also included in this report were false statements concerning Belva Manor, an AASI subsidiary which had diverted funds intended for construction of a nursing home to other purposes.

Lee failed also to disclose the financial problems of AASI at the 1970 annual shareholders’ meeting and the directors’ meeting immediately thereafter. He led discussions at both meetings. Appellant also prepared a misleading registration statement and prospectus for American Associated Financial Corp., another AASI subsidiary.

A careful review of the record reveals substantial support for the District Court’s findings and conclusions.

Affirmed.

APPENDIX

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This cause coming on to be heard on motion of Plaintiff, Securities and Exchange Commission, for a judgment of permanent injunction in accordance with the Complaint filed herewith as to defendant Robert E. Lee and the Court having considered the Complaint and the Answer of the defendant and having heard evidence and arguments of counsel, the Court makes Findings of Fact and Conclusions of Law, as follows:

FINDINGS OF FACT

1. That American Associated Systems, Inc. is a Kentucky corporation which was organized on May 29, 1967 as Educational Funds, Inc. The name was changed to American Associated Systems, Inc. on July 24, 1969.

2. That Belva Manor, Inc. is a Kentucky corporation which was acquired by Educational Funds, Inc. on June 19, 1969.

3. That American Associated Financial Corporation is a Kentucky corporation which was organized on March 3, 1970.

4. That between August 1969 and December 1969, Belva Manor, Inc. had a public offering of 450,000 shares of its common stock at $2 per share. The use of the mails was utilized.

5. That approximately 1,000 persons paid $900,000 for the shares of stock offered by Belva Manor, Inc.

6. That the prospectus furnished to purchasers of the securities of Belva Manor stated that Belva Manor had $100,000 on deposit with the Corbin Deposit Bank of Corbin, Kentucky. This statement was, in fact, false.

7. That the Belva Manor, Inc. prospectus stated that the proceeds from the sale of the public offering were to be utilized for the construction of a nursing home.

8. That, in fact, prior to the completion of the offering by Belva Manor, Inc., in December 1969, monies from the public offering were being utilized for the operations of American Associated Systems, Inc., an affiliate corporation of Belva Manor, Inc., as well as for subsidiaries of American Associated Systems, Inc. and by corporations owned and controlled by officers and directors of Belva Manor, Inc.

9. That Associated Management Corporation was organized under the laws of Kentucky in 1970 and was owned equally by Robert E. Lee, Joel S. Jackson, William E. Bohon, and Alvin L. Norton. Associated Management Corporation was organized to provide managerial, legal, and accounting services to American Associated Systems, Inc., as well as its subsidiaries and affiliates, commencing January 1, 1970 and it was to be paid $150,000 annually for such services. These services were to be provided by Robert E. Lee, William E. Bohon, Joel S. Jackson, and Alvin L. Norton. Each individual was to be paid, and was paid, $3,000 per month.

10. That Hester Finance Co., Inc. was acquired by American Associated Systems, Inc. on January 31, 1970 for 15,000 shares of the latter corporation’s stock. Associated Investors was the principal shareholder of Hester Finance Co. prior to its acquisition by American Associated Systems, Inc. Lee owned 40,000 shares of Associated Investors stock both prior and subsequent to January 31, 1970. Two loans, totalling $25,000, were granted to Hester Finance Co. during November and December 1969. These loans were not disclosed in the “Plan of Reorganization” dated' January 31, 1970 between American Associated Systems, Inc. and Hester Finance Co.

11. That Robert E. Lee attended almost all of the directors meetings of American Associated Systems, Inc., its subsidiaries and affiliates, from 1967 through August 1970. Corporate minutes of American Associated Systems, Inc. provided that Lee was to be compensated at the same rate as the other directors for his attendance at the meetings of the board of directors. Lee prepared agendas, presented matters to the board, proposed resolutions, and kept and maintained the corporate minute books for all of the entities.

12. That as of January 1970, Lee had knowledge of the fact that the monies obtained from the offer and sale of the common stock of Belva Manor, Inc. to the public had been misappropriated and utilized for purposes other than that which was specified in the registration statement filed with the Commonwealth of Kentucky and prospectus furnished to the purchasers of said securities.

13. That a board of directors meeting for Belva Manor, Inc. was held on February 21, 1970. The agenda of said meeting was prepared by Robert E. Lee. The board of directors was requested to authorize and approve the making of a loan of $722,295.07 to American Associated Systems, Inc. in order to permit the latter corporation to reduce its outstanding bank loans. The directors, who were not also officers, were not advised or apprised of the fact that the monies had already been expended as is indicated in Finding 8. It was further represented to the board of directors at said meeting that Belva Manor, Inc. would be furnished notes representing said loans and these notes would be fully secured. No notes representing said loans were ever made or delivered, nor were said loans secured.

14. That in April and May 1970, American Associated Systems, Inc., and its subsidiaries were experiencing cash flow problems. At this time, Lee was being furnished with daily schedules of bank balances for American Associated Systems, Inc., and its subsidiaries.

15. That Lee prepared the American Associated Systems, Inc., Third Quarter Report — 1970 which was mailed to all the shareholders of American Associated Systems, Inc., in about May of 1970. Said report did not disclose any of the cash flow problems being experienced by American Associated Systems, Inc., or its subsidiaiúes. The report also stated that the funds of Belva Manor had been invested in short-term paper. This statement was false in fact. No disclosure was made by Lee that the funds had been utilized by corporations which were owned and controlled by officers and directors of Belva Manor nor was any disclosure made that any loans had been made to Associated Management Corporation which was owned and controlled by Lee, Bohon, Norton, and Jackson.

16. That a shareholders meeting was held in June 1970 of American Associated Systems, Inc. Lee presented the agenda and led the discussions. Lee stated at the shareholders meeting that the company was experiencing no financial difficulties. He failed to disclose the cash flow problems which the company was then experiencing.

17. That Lee, in May of 1970, had knowledge concerning the cash flow difficulties which American Associated Systems, Inc., and its subsidiaries were experiencing. Richard Stoy was requested to join the company as a financial administrator. Lee discussed the cash flow problems with Stoy and stated that the difficulties would be alleviated by a new public offering to be made by a subsidiary of American Associated Systems, Inc., American Associated Financial Corp.

18. That Lee prepared the registration statement and prospectus for American Associated Financial Corporation. The prospectus is dated July 15, 1970. Four hundred thousand (400,000) shares of its common stock were offered to the public at $2 per share. The prospectus failed to disclose the financial difficulties being experienced by American Associated Systems, Inc. and its subsidiaries. It also did not disclose that the funds from the Belva Manor offering had been utilized by American Associated Systems, Inc. for purposes other than those stated in the Belva Manor prospectus or by corporations owned and controlled personally by officers and directors of Belva Manor, Inc.

19. That Lee offered and sold 1,250 shares of common stock of American Associated Systems, Inc. in May, 1970 through an agent. The agent was only told that Lee needed money. Lee failed to disclose any of the financial difficulties being experienced by American Associated Systems, Inc. and its subsidiaries nor did he disclose that funds of Belva Manor, Inc. had been misappropriated. Lee received approximately $2,500 plus stock of another corporation as the proceeds from the sale of his stock.

CONCLUSIONS OF LAW

For the foregoing facts, the Court adopts the following Conclusions of Law:

1. That this Court has jurisdiction of this action under Section 22(a) of the Securities Act of 1933, as amended, (15 li*S.C. § 77v(a)) and Section 27 of the Securities Exchange Act of 1934, as amended, (15 U.S.C. § 78aa), and that it has jurisdiction of the defendant.

2. That the defendant has violated Section 17(a) of the Securities Act of 1933 (15 U.S.C. § 77q(a)) and Section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78j (b)) and Rule 10b-5 promulgated thereunder (17 C.F.R. 240.-10b-5).

3. That a final judgment of permanent injunction should be granted in accordance with the Plaintiff’s motion.


author: PER CURIAM. WILLIAM E. MILLER, Circuit Judge,

text:
    Josephine GOSS et al., Plaintiffs-Appellants, v. The BOARD OF EDUCATION OF the CITY OF KNOXVILLE, TENNESSEE, et al., Defendants-Appellees.
    Nos. 72-1766, 72-1767.
    United States Court of Appeals, Sixth Circuit.
    July 18, 1973.

      Avon N. Williams, Jr., Nashville, Tenn., Carl A. Cowan, Knoxville, Tenn., Jack Greenberg, James M. Nabrit, III, Norman J. Chachkin, Sylvia Drew, John F. Butler, New York City, for plaintiffs-appellants.
    S. Frank Fowler, Sr., Sam F. Fowler, Jr., W. P. Boone Dougherty, Knoxville, Tenn., for defendants-appellees; Fowler, Rowntree, Fowler & Robertson, and Bernstein, Dougherty & Susano, Knoxville, Tenn., of counsel.
    Before PHILLIPS, Chief Judge, and WEICK, EDWARDS, CELEBREZZE, PECK, McCREE, MILLER and LIVELY, Circuit Judges.
   PER CURIAM.

This appeal was heard by a panel of the Court on February 12, 1973 and affirmed with a per curiam opinion filed on March 29, 1973. Appellants’ petition for rehearing was granted, and a rehearing in banc was held, without further oral arguments, on June 6, 1973. Under Rule 3(b) of this Court, the previous opinion and judgment were vacated.

The history of this case, which has now been in litigation for more than thirteen years, may be found in the District Court’s opinion. See Goss v. Board of Education, 340 F.Supp. 711 (E.D. Tenn.1972). When it was last before this Court, the case was remanded “for further proceedings consistent with Swann v. Charlotte-Mecklenburg Bd. of Ed., 402 U.S. 1, 91 S.Ct. 1267, 28 L.Ed.2d 554 and other relevant Supreme Court opinions announced on April 20, 1971.” Goss v. Board of Education, 444 F.2d 632, 640 (6th Cir. 1971). In remanding we declined to set a timetable within which Knoxville must conform to what is directed by these Supreme Court opinions, and noted that—

Swann (1971) fixes no formulae for what must be done or what will be acceptable in efforts to arrive at a better racial mix in the schools. It does, however, lay on school authorities the duty to take some affirmative action toward improvement. While the existence of some all black or all white schools is not struck down as per se intolerable, school authorities will have to justify their continuance by something more than the accident or circumstance of neighborhood. Consideration of pairing of school zones, contiguous or non-contiguous, should be given; arrangement of new construction so as to further desegregation will be a legitimate objective, not to the detriment, however, of the discharge of school authorities’ total and overriding responsibilities, 444 F.2d at 638.

Following remand, an evidentiary hearing was held. In the summer of 1971, on the basis of consultation with Dr. Charles Trotter, a professional educator employed as Director of the University of Tennessee School Planning Lab, the Knoxville Board of Education made a number of changes in its desegregation plan. Among other revisions, the privilege of student transfer was severely restricted, new school pairings and zone adjustments were made and election of minority cheerleaders was assured. The amendments also provided for simultaneous closing of Cansler, a predominantly black elementary school, and Moses, a predominantly white elementary school. Dr. Trotter testified in support of this plan and introduced a pupil locator map which had been constructed by the Board of Education. The plaintiffs presented a plan prepared by Dr. Michael Stolee, Associate Dean of the University of Miami (Florida) School of Education. Dr. Stolee testified in support of this plan. The District Court held that “Knoxville is in compliance with Swann.” We affirm this holding and remand for the limited purpose hereafter noted.

The District Court has complied with the directions of this Court as contained in the opinion of Judge O’Sullivan in 444 F.2d 632 (6th Cir. 1971). The situation before Judge Taylor upon remand from this Court was quite different from that faced by Judge McMillan in Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 91 S.Ct. 1267, 28 L.Ed.2d 554 (1971). In this case the District Judge had two plans presented to him for further desegregation of the Knoxville school system. As his opinion demonstrates, there were a number of reasons for giving less weight to the plan offered by the plaintiffs than to the one offered by the Board of Education. As trier of the facts it was his responsibility to make judgments on the weight of evidence and credibility of the various witnesses.

While it is true that some schools in the Knoxville system will remain identifiably black or white on the basis of pupil enrollment, this is largely the result of several concentrations of blacks in the area of East Knoxville. In Swann the Supreme Court recognized that there are frequently concentrations of minority groups in one or more parts of a metropolitan area and the existence of a small number of racially identifiable schools in these areas is not, in and of itself, a sign that a dual system exists.

The school authorities of Knoxville have taken affirmative actions to improve the racial mix of the schools, as required by our previous decision. Furthermore, the appellee presented evidence concerning the location of highways and railroad yards in relation to prominent topographical features, matters other than “the accident or circumstance of neighborhood,” from which the Court was justified in finding that no plan involving the transportation of pupils between non-contiguous zones in order to further improve the racial mix within the system would be feasible at this time. There was evidence also of a lack of funds to purchase and operate buses. However, the financial condition of the City of Knoxville would not provide sufficient reason for failing to order the transportation of pupils if the Board of Education were found to be operating a dual public school system which required busing in order to become a unitary system.

Having found that a unitary school system exists, the District Court acted within its discretion in refusing to adopt the plaintiffs’ plan which would require the busing of a large number of pupils in order to obtain a certain percentage of black students in each school in the system. As the Supreme Court said in Swann, 402 U.S. at page 24, 91 S.Ct. at page 1280, “The constitutional command to desegregate schools does not mean that every school in every community must always reflect the racial composition of the school system as a whole.”

Appellants complain that the result in this case is inconsistent with that reached by this Court in other school desegregation cases. If the result is different, it is only because the evidence produced in the District Court required a different result. The brief answer to the principal arguments of appellants is that the proof relied upon by them in the District Court and now reviewed by this Court sitting in banc failed to establish their contentions. We do not depart from the principles enunciated by this Court in Northcross v. Board of Education of Memphis City Schools, 466 F.2d 890 (6th Cir. 1972); Kelley v. Metropolitan Board of Education of Nashville and Davidson County, Tennessee, 463 F.2d 732 (6th Cir. 1972), cert. denied, 409 U.S. 1001, 93 S.Ct. 322, 34 L.Ed.2d 262 (1972); Mapp v. Board of Education of Chattanooga, 477 F.2d 851 (6th Cir. 1973) and Davis v. School District of City of Pontiac, 443 F.2d 573 (6th Cir.), cert. denied, 404 U.S. 913, 92 S.Ct. 233, 30 L.Ed.2d 186 (1971).

This Court has consistently upheld the decrees of the District Judges of this Circuit when properly supported by the pleadings and evidence. An appellate court simply cannot violate this settled principle of our jurisprudence, no matter how desirable a particular result may appear to be. The experienced District Judge who has lived with this case from its inception analyzed the evidence in great detail. His findings are supported by substantial evidence and are not clearly erroneous. As the Supreme Court, speaking through Chief Justice Burger, has recently written:

In shaping equity decrees, the trial court is vested with broad discretionary power; appellate review is correspondingly narrow. Lemon v. Kurtzman, 411 U.S. 192, 93 S.Ct. 1463, 36 L.Ed.2d 151 (1973).

In. briefs and argument it has been brought out that the population of Knoxville is shifting and that changes have occurred since the decision was reached by the District Court and will continue to occur. We decline to consider these matters in the present appeal. Appropriate relief required by changed conditions is a matter for presentation to and consideration by the District Court. We reemphasize the holding of this Court in Kelley v. Metropolitan Board of Education of Nashville and Davidson County, supra: “Like most decrees in equity, an injunctive decree in a school desegregation case is always subject to modification on the basis of changed circumstances.” 463 F.2d at 745-746.

The demand of appellants for attorneys’ fees from the beginning of this litigation must be determined in light of the most recent Supreme Court pronouncement in Northcross v. Memphis Board of Education, 412 U.S. 427, 93 S.Ct. 2201, 37 L.Ed.2d 48 (1973). This action is remanded for consideration of this issue and in all other respects the judgment of the District Court is affirmed.

No costs are taxed. Each party will bear its own costs on the appeal.

WILLIAM E. MILLER, Circuit Judge,

in a separate opinion, concurring in the affirmance of the judgment of the district court, in which WEICK, Circuit Judge, joins.

I am in full agreement with the per curiam opinion insofar as it affirms the judgment of the district court. However, it is my view that the affirmance should be upon the basis of the well-considered opinion of Judge Robert L. Taylor. See Goss v. Board of Education, 340 F.Supp. 711 (E.D.Tenn.1972). Since the district court has continuing jurisdiction of the case, it has the authority to consider any question pertaining to attorneys’ fees as well as any other pertinent issue. For this reason I do not find it necessary that the case should be formally remanded to the district court.


author: JOHN R. BROWN, Chief Judge:

text:
    E. C. ERNST, INC., Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION and the Whiting-Turner Contracting Company, Defendants-Appellees.
    No. 72-2201.
    United States Court of Appeals, Fifth Circuit-
    July 24, 1973.

      Glower W. Jones, Aubrey L. Coleman, Jr., Atlanta, Ga., for plaintiff-appellant.
    R. Byron Attridge, Joseph B. Haynes, Atlanta, Ga., Ross L. Malone, Detroit, Mich., for Gen. Motors Corp.
    Charles T. Lester, Jr., James P. Gro-ton, Atlanta, Ga., for Whiting-Turner.
    Before JOHN R. BROWN, Chief Judge, and WISDOM and AINS-WORTH, Circuit Judges.
   JOHN R. BROWN, Chief Judge:

The question is whether summary judgment should have been granted below against an electrical subcontractor in an action seeking damages for breach of contract against the general contractor and the owner. The trial court concluded that the action was barred because Plaintiff below had failed to comply with the notice provision in the contract under which it was suing. After carefully reviewing the record, under the usual standard, we have concluded that the court below erred in finding the nonexistence of any triable issue of fact and entering judgment for Defendants below as a matter of law. Dunnington v. First Atlantic National Bank of Daytona Beach, 5 Cir., 1952, 195 F.2d 1017.

Summary judgment as envisioned by F.R.Civ.P. Rule 56, 28 U.S.C. A. is a method of testing in advance of trial, not as formerly on bare contentions found in the legal jargon of pleadings, but on the intrinsic merits, whether there is in actuality a real basis for relief or defense. Bruce Construction Corp. v. United States, 5 Cir., 1957, 242 F.2d 873, 874. When a movant makes out a convincing showing that genuine issues of fact are lacking, it becomes incumbent on the adversary to adequately establish by receivable facts that a real, not formal, controversy exists. Stopping short of expressing any opinion as to how the trier should resolve the fact issue ultimately, we think Appéllant has made the required showing and should have been allowed to go to trial.

Perspective into the posture of the parties in this dispute may be gained by briefly reciting the events preceding the filing of the suit. On April 18, 1967 Appellant entered into a contract with General Motors Corporation which required that it provide labor and materials to perform electrical work in the con-struetion of the General Motors Lakewood New Final Process Building in Atlanta. The contract required that General Motors pay Appellant $356,950.00 therefor. Though the contract was negotiated and concluded between only Appellant and General Motors Corporation, it was generally understood between the parties that ultimately the contract would be assigned by General Motors to a general contractor such that Appellant would perform its contractual obligations as a subcontractor. In the contract General Motors specifically reserved the right to make such an assignment.

Prior to the conclusion of Appellant’s contract, General Motors, on April 6, 1967, had entered into a contract in the amount of $1,279,470.00 with Whiting-Turner Contracting Company for construction of the Lakewood New Final Process Building. The contract specifically provided that Whiting-Turner, as the general contractor for the project, would assume the contract covering the electrical work.

In its contract with GM, it was expressly stated that Appellant would be able to (i) “start work immediately and proceed with the utmost dispatch and diligence” and (ii) “complete all work contemplated hereunder in accordance with the schedule set forth on page 1-E-ll of the Special Conditions.” It was further declared that “time was to be of the essence.”

Notwithstanding the urgency expressed in the contract, and through no fault of its own, Appellant was unable to begin work immediately. The project, initially scheduled to be fully completed in less than one year hence, was seriously delayed from the beginning by GM’s rough grading contractor who was approximately six weeks behind schedule in site preparations. GM’s Field Representative at the project site testified that the reasons for the delay, at least partially, were that the rough grading contractor had failed to follow instructions, failed to have sufficient men and equipment on the job, and failed to have adequate supervision on the job. Appellant was formally advised of this delay at a “contractors progress meeting” held on May 1, 1967. Immediately after this meeting Appellant protested its inability to begin work “without delay” by a letter addressed to Whiting-Turner.

By the terms of Appellant’s contract, the building was to be ready for GM’s beneficial occupancy on or before December 1, 1967, with the entire project due to be completed on or before April 11, 1968. To assist in meeting these contract completion dates, Appellant’s contract required that the Critical Path Method (CPM) be used to plan and schedule all phases of the project. The preparation and final submitted to GM of a CPM, which was the responsibility of Whiting-Turner, had not been accomplished as late as September 26, 1967. The result was that Ernst and others working on the project received written instructions in the form of progress meeting minutes and bar charts which reflected changing beneficial occupancy dates. The beneficial occupancy date finally achieved was not until late March or early April of 1968 with final completion of the project not occurring until September of 1968. On January 5, 1969, Appellant presented to GM a 180 page “claim booklet” seeking payments in the amount of $134,000.00 for purported delays and inefficiencies in completion of the project.

The suit below, initially filed in state court, alleged breach of an electrical construction contract in that Defendants delayed and disrupted Plaintiff’s performance, thereby requiring Plaintiff to perform its contract over an extended period of time and in an inefficient and more costly manner. After removal, Defendants entered general denials and pled certain defenses which were to also provide the grounds for their motion for summary judgment which was made after discovery. On Defendant’s motion for summary judgment the court held that the Plaintiff’s entire cause of action as to both Defendants was barred by the Plaintiff’s failure to strictly comply with the notice provisions contained in paragraph 52 of the contract, entitled “Procedure for Alleged Change in Cost —Contractor’s Supervision.” The court specifically found that the procedure contained in section (c — 1) of paragraph 52 was directly applicable to claims such as Plaintiff’s which sought “damage or loss because of any action or omission of the owner, or others engaged by the owner, during the performance of the work * * * ” (note 9, su/pra,).

Plaintiff’s rejoinder below, and its contention here on appeal, is two-pronged. The first prong alleges that the provision of paragraph 52 which is applicable to its claims is section (a) which deals with increases in costs resulting from verbal instructions from the Purchasing Department [of General Motors] (see note 9, supra). Appellant contends that notice was not required because the increased costs resulted from written directives from Appellees. These written directives, it is contended, were in the form of minutes of progress meetings, letters and bar charts. Part (c) of paragraph 52, appellant maintains, only applies to extra work situations.

The trial judge, while agreeing with that the increased costs claimed by Appellant were not barred by part (a) of paragraph 52 as the continuing delay was confirmed in writing, found that part (c) of the paragraph was applicable to the claims and that compliance with its provisions was, as a result of part (d), a condition precedent to any recovery. After studying the provisions of the controverted contract and in view of the settled law in Georgia that the construction and legal effect of a written contract is for determination by the court, Goodwin, Inc. v. City of Lafayette, 5 Cir., 1969, 418 F.2d 698, we cannot conclude that the court’s holding on this part of Appellant’s argument was clearly erroneous.

The second prong of Appellant’s argument upon appeal, however, alleges that it did in fact give notice to Appellees sufficient to satisfy paragraph 52(c-1) by a letter dated May 1, 1967.

The trial court rejected this latter contention holding that the letter failed in several respects to comply with the strict terms of part (c-1) of paragraph 52. Specifically, the trial court held that the letter was inadequate notice under the contract because (i) it was not sent to the Architect-Engineer (Argonaut, a division of GM) and the Purchasing Department of GM as expressly required by the contract, and (ii) the letter did not contain the amount of the claim and all details in connection therewith as required expressly by the contract. Appellant retorts here that, since its contract with General Motors (GM) envisioned from the beginning that the contract would be assigned from GM to the general contractor for the project (Whiting-Turner) and GM’s contract with the general contractor made such assignment mandatory, it was not thus unreasonable for Appellant to have understood that any letters regarding delays should be sent to Whiting-Turner. Furthermore, it is argued that, considering the ostensible, if not yet formalized, relationships between GM, Appellant and Whiting-Turner, Appellant’s letter of May 1, 1967 to Whiting-Turner should have served as notice to GM. Appellant asserts as supportive of this proposition the agenda transacted at the first project progress meeting held on May 1, 1967. It is argued that paragraph 25 of its contract made mandatory Appellant’s attendance at these progress meetings and full compliance with the instructions promulgated therein.

In response to the lower court’s holding that Appellant did not state in its letter the “amount of the claim and all details in connection therewith,” it is submitted on appeal that such a detailing and allocating of the additional costs involved here would have been virtually impossible at that time. Appellant contends that it was impracticable for it to arrive at a dollar measurement with any degree of accuracy until the project was completed. It is alleged that the original delay complained of in Appellant’s May 1 letter was of a continuing nature, with further delays and resultant inefficiencies emanating therefrom, necessitating that notice only be given once to adequately apprise Appellee that it had a grievance.

A careful review of the record has convinced us that threshold dismissal of Appellant’s claims as a matter of law on grounds that it failed to strictly comply with the notice provisions of the contract was unwarranted. Here, Appellant’s contention that the instructions given at the first progress meeting acted to modify the contractual reporting procedures and responsibilities is certain3y made more believable by the common knowledge among all involved that assignment of the “subs” contract to the general contractor was predetermined. It is settled that the question of whether such modification actually occurred may not be summarily decided but must be preserved for the trier of fact. Farnsworth & Co., Inc. v. Tri-State Construction Co., 5 Cir., 1959, 271 F.2d 728.

The lower court apparently considered it significant that Appellant’s letter of May 1 referred only to damages for delay itself and not costs due to inefficiencies. The court concluded that' the letter could not thus be considered to cover increased costs due to inefficiencies. We disagree. As already discussed, the vast majority of the inefficiencies complained of were either closely connected to or emanated from the initial delay complained of in the letter. The purpose of a notice provision in a contract is to alert the other party that the claimant has a grievance against it. We are of the opinion that notice that one cannot be responsible for extra costs inherent in a delay encompasses those inefficiencies caused by severe winter working conditions which would not have been incurred but for the delay.

The district court, while conceding that Appellant, at the time of its letter, probably could not have known the costs due to delay, held against Appellant in any event, because Appellant did not make known the amount of the claim when an official start date was given or as the increased costs were actually incurred. Our reading of the record has not convinced us that an official start date was ever in fact given to Ernst. Furthermore, since the initial delay appears to have been a continuing one, thereby causing certain stages of the work to be done under severe weather conditions with an absence of corresponding support as contractually required. notice given “as the increased costs were actually incurred” would have practically required Appellant to give daily notice. Bearing in mind the generally accepted purpose of the notice provision, which is to alert the other party of a grievance against it, we think the giving of such daily notice is more of a burden than a contract or the law should impose.

The relationship of an electrical subcontractor with a general contractor on an overall project is in the nature of symbiosis. The performance of one is dependent on prior performance by the other, and so on until completion, with their combined efforts, producing, in this case, a building. The general contractor, however, as the assignee of the “sub’s” contract, has the ultimate responsibility for completion of the project. Here, though the subcontractor’s attempt to give notice of its grievance was limited to its letter of May 1, 1967, there is ample evidence in the record that GM was notified of the hardships being experienced by its contractors due to the delays and the consequent severe winter working conditions.

Our decision here should in no way be construed as relieving the parties to a contract of strict compliance with notice provisions and the like. To the contrary, it results from our conclusion that, under the particular facts of this case, Appellant complied with the notice provision contained in paragraph 52 of its contract to the extent reasonable. When a contract calls for such a specification of damages as the one here, obviously it cannot exact of a claimant the impossible, and no Georgia court would so .require. The question we have answered here is — need Appellant, at the time of its May 1 letter, have made their notice any more specific than it did? Our answer to that is one well supported in general contract law — if it could have, it should have. We think the record supports the conclusion that here it did all it could have done.

Though never reached by the trial court, defendants below asserted four alternative grounds for summary judgment (see note 4, supra). One of them, we think, merits treatment here. On October 29, 1968, at the behest of Appellant, a meeting was held between representatives of GM, Whiting-Turner and Appellant to settle “outstanding directives which had not been covered by change orders.” At this meeting Appellant accepted payment of more than $20,000 in settlement of these “outstanding directives.” Appellees argue that all claims, including the claims which are the subject of this suit, are barred by the settlement reached at the October 29 meeting. We disagree.

Though we would agree that Appellant’s letter evidences a poor choice of language, we do not think that their intention there was to settle the claims at bar here. To so hold would not only be to read that particular phrase out of context with the rest- of the letter, but, in view of the nature of the other claims settled at the October 29 meeting, such a holding would be illogical. The record' supports the conclusion that Appellant requested this meeting to settle various directives from GM to perform extra work incurred during the course of the project, but for which no price had been agreed upon between the parties. The only thing which remained on these claims of record was for the parties to meet and negotiate the prices.

Appellant here has demonstrated to our satisfaction that genuine triable issues of fact are in existence. Where such a showing is made, summary judgment may not be substituted for trial. Bruce Construction Corp. v. United States, supra.

Vacated and remanded.

      . E. C. Ernst, Inc.

      . Whiting-Turner Contracting Company.

      . General Motors Corporation.

      . Failure to comply with the notice provision was the basis of the trial court’s grant of summary judgment. The court never reached our other separate and distinct defenses raised by Defendants below. These were:
      (i) Ernst accepted final payment for all work under the contract between it and General Motors, thereby waiving all alleged claims by it under paragraph 6, Article III of the contract and under the electrical work specifications.
      (ii) The contract limited the remedy for any purported delay to an extension of time to complete the contract and precluded any claim for damages.
      (iii) Ernst failed to prosecute a request for any extension of time under the contract.
      (iv) Ernst settled any and all claims cognizable under the contract on October 29, 1968 and received approximately $20,000 therefore.

      . Appellant’s contract with GM in paragraph 50 entitled “Assignment of Contract to General Contractor” provided:
      The Owner reserves and is hereby granted the right to assign this Contract to the General Contractor and make same a part of the General Contract. The Contractor for this trade agrees that, in the event of such assignment, he will work under the General Contractor in the same manner as he would had the Contract been originally awarded to him by the General Contractor ; and, further, that he will be bound to and assume toward the General Contractor all the obligations and responsibilities that he, by this Contract, assumes toward the Owner.

      . Article IV, paragraph I of the contract between GM and Whiting-Turner provided in part:
      * $ * * *
      It is agreed that the Owner [GM] will assign to the General Contractor [Whiting-Turner], and the General Contractor shall assume, as Subcontractors, the Purchase Order and Contracts entered into by the Owner covering Mechanical Trades, Electrical and Fire Protection Work in connection with the construction.and completion of the project contemplated hereunder;
      * * * * *

      . See note 14, infra.

      . This letter, which was addressed to the Whiting-Turner Construction Company, stated in part: “We cannot be held liable for late start dates beyond our control, without additional compensation and/or extension of time. Our proposal for com-ixensation for this late start date will be forthcoming when the work presently under construction is completed and an official start date is assigned to the Whiting-Turner Construction Company.”

      . The entire text of paragraph 52 provides : PROCEDURE FOR ALLEGED CHANGE IN COST — CONTRACTOR’S SUPERVISION
      (a) Should the Contractor perform any work or should he proceed in any manner which he may subsequently allege has caused him increased cost, damage, or loss, purporting, in each case to have acted upon verbal instructions or with tacit consent or acceptance or approval other than written from the Purchasing Department, the Contractor shall bo held to have no claim against the Owner or the Architect-Engineer on account of the alleged increased cost, damage or loss.
      (b-1) The contractor shall keep on the work, during its progress, a competent Superintendent and any necessary assistants. The Superintendent shall represent the Contractor on the site of the work and all directions given to him shall be as binding as if given to the Contractor.
      (b-2) If the Contractor shall contend that such directions will result in an increase in the cost of the work, damage or loss, and that he is entitled to payment by the Owner by reason thereof, the Contractor shall, within four (4) days .of the receipt of such directions, except in an emergency notify the Architect-Engineer and Purchasing Department, in writing, of his contentions, the amount of his claim with respect thereto, and all details in connection therewith. He shall not proceed with such directions or with the work affected thereby until he has received, in writing, acknowledgment of the claim by, and instructions from the Purchasing Department. The Contractor shall comply with such written instructions, and unless said claim is finally disposed of by said acknowledgment and instructions said compliance shall be without prejudice to the rights of the Contractor and Owner. In the event of an emergency, the Contractor shall proceed with that work necessary and shall keep accurate and complete records of the costs of such work, which records shall be presented to the Architect-Engineer and Purchasing Department as soon as the emergency ceases to exist.
      (c-1) If the Contractor shall contend that he is entitled to payment from the Owner for increase in the cost of the work, damage or loss, because of any action, or omission of the Owner, or others engaged by the Owner, during the performance of the work, the Contract-tor shall not delay his work on account thereof and shall, within seven (7) days after the first observance of such occurrence, notify the Architect-Engineer and the Purchasing Department, in writing, of his contentions, the amount of his claim with respect thereto, and all details in connection therewith.

        (c-2) Within seven (7) clays after receipt by the Architect-Engineer and Purchasing Department of the Contractor’s written notice of claim, the Owner, shall, in writing, acknowledge receipt of such notice (with copy concurrently directed to the Architect-Engineer). At the time of such acknowledgment, or within a reasonable time thereafter, the Purchasing Department shall certify or deny the validity of the Contractor’s claim. The Contractor shall furnish all information requested by the Purchasing Department to assist it in making its decisions.
      (d) It is a condition precedent to the consideration or prosecution of claims by the Contractor that the foregoing provisions be strictly observed in each instance, and if the Contractor fails to comply, the Contractor shall be deemed to have waived the claim. Neither the provisions of this Section nor the receipt of any claim by the Architect-Engineer and Purchasing Department shall constitute admission on the part of the Architect-Engineer or Owner that any such claim is valid.

      . See note 8, supra.

      . The trial judge, while conceding that Appellant probably could not at the time of the letter have known the costs due to delay, seemed to fault Appellant more for not making known to Appellees the amount of the claim until some four months after final completion of the project instead of when the grading and sub-grading work at that time in progress was completed or when an official start date was given to Appellant as its letter stated (see note 10, supra). Also weighed heavily by the court below was the failure of the letter to mention costs due to inefficiencies.

      . See note 5, supra.

      . See note 6, supra.

      . The actual assignment by GM to Whiting-Turner of the GM-Ernst contract was not made until June 5, 1967.

      . The announced purpose of this meeting as recorded in the minutes was “discussing job procedures with assigned, subcontractors and for establishing date Process Building site could be turned over to General Contractor.”
      The significance of this meeting to Appellant’s arguments on appeal is two-fold. First, the minutes of the meeting contained this entry:
      * * * * *
      Black Grading Co. Advised that the site for the Process Facility Building would not be ready before June 12, 1967. Whiting-Turner stated that work on the building would not proceed in this area until all of the site is in proper condition for engineering and layout work.
      * :¡: * * *
      Appellant points out that this disclosure was its first formal notification that it would not be able to “start work immediately and proceed with the utmost dispatch and diligence” as its contract with GM provided. It was immediately following this notification that Appellant sent its letter to Whiting-Turner putting them on notice that it could not be responsible for additional costs incurred as a result of the delay (see note 7, supra,).

      Appellant further submits that the agenda transacted at the meeting rendered inescapably reasonable its conclusion that Whiting-Turner was the proper party for such notification in accordance with its contract. In support of this assertion Appellant relies on the fact that it was instructed at the meeting to deal directly with Whiting-Turner on several matters. Entries in the minutes of the May 1 meeting reflect these instructions:
      2. Subcontractors will arrange with Whiting-Turner superintendent the location for all office and tool trailers. Subcontractor’s office trailer must also have telephone.
      3. 110 Volt temporary electrical service will be provided for subcontractors hand tools, source of supply to be located by Whiting-Turner superintendent.
      4. Subcontractors advised to go through Whiting-Turner superintendent with all questions and clarifications in lieu of going directly to Resident Engineer. Each field superintendent will also be advised of this procedure.
      5. Certificates of Insurance (3 copies) shall be mailed to Whiting-Turner’s office as soon as possible.
      C. Subcontractor shall be responsible for cleaning up daily and removing from the jobsite all trash and debris resulting from his operations. If he fails to fulfill this obligation, the General Contractor will take necessary measures to accomplish this clean up and will back-charge the Subcontractor accordingly.
      7. Subcontractors will furnish badges to their personnel working within fenced plant area and they much check in each day with proper security guards. Only authorized personnel will be allowed within plant. Cold drink machines inside .plant are off limits to construction personnel, however, cafeteria in front of plant will be available.
      8. Breakdown of subcontractor’s lump sum price for billing purposes shall be in AVhiting-Turner’s office by Thursday, May 4. Each month’s percentage of work in place must first be verified in AVhiting-Turner’s office before invoices are prepared. Invoices must be in Whiting-Turner’s office by the 27th of each month. AVaiver of lien forms must be executed and in Chevrolets accounting office before the next month’s invoice from AVhiting-Turner becomes payable.
      # :¡t sfc :H sjs
      Appellant asserts that both common knowledge and the “usage and trade” of the construction industry dictate that when a subcontractor works under a general contractor the “sub” deals solely on all matters with the general contractor instead of the owner. It is urged that the instructions recorded at the progress meeting clearly suggested, if not compelled, the existence of such a relationship here and that the announced purpose of the meeting serves to strengthen this conclusion.
      Appellant points out that the fifth entry in the minutes listed above, requiring the subcontractors to submit certificates of Insurance to Whiting-Turner, altered paragraph 13 of its contract with GM which stated “Contractor (Ernst) shall submit to the Owner (GM) certificate of insurance * * * ”. Appellant argues that the eighth entry in the minutes is likewise inconsistent with paragraph 3 of its contract which provides “After the contract is awarded and previous to the first payment under the contract, the contractor (Ernst) shall submit to the Architect-Engineer and Owner a schedule of prices or breakdown of the estimated cost * * * ” and paragraph 8 of its contract which provided “contractor’s applications to the Architect-Engineer for payment * ® * ”. Ernst maintains that it complied fully with these changes in procedure without ever hearing a protest from GM. It is strenuously argued that the instructions given Ernst at the progress meeting should not be construed to have altered the contractual relationship of the parties on some matters and not on others. Finally, Appellant submits that entry number seventeen in the progress meeting minutes which stated
      :}: * * *
      As of this date Whiting-Turner has not received any contract documents (plans, specifications, purchase orders) for the assigned subcontractors. It will be necessary for these documents to be delivered before work can progress and bulletin changes can be quoted.
      * * * * *
      reflected only a delay in paperwork between the Appellees and should not permit them to escape liability to Appellant.

      . Paragraph 25 of Appellant’s contract entitled “Contractor’s Meetings” provided :
      As directed by the Architect-Engineer, there is to be held at his field office a meeting of the representatives of the various trades engaged about the building, for furthering the progress of the work and giving of instructions by the Architect-Engineer. Where the Contractor’s Representatives fail in attendance or in executing the instructions given them, they shall on request of the Owner be dismissed from the work and other representatives must be immediately substituted.

      . Appellant contends that the extra costs incurred as a result of inefficient performance during the winter season, some six to seven months after the initial delay, are directly attributable to the late start. Had the project been able to get underway as originally planned, Appellant contends that the omissions of Appellees such as failure to timely enclose the building, failure to provide roof heaters, and failure to provide temporary protection and heat would not have been so significant.

      . Our review, not limited to the appendices prepared by the parties, has encompassed the original record including all depositions and exhibits.

      . Appellant’s letter of May 1 clearly indicated that a proposal for additional compensation would be forthcoming after the “official start date.”

      . We are convinced that Ernst’s acceptance of the contract envisioned their beginning work “without delay” as its contract provided. In his deposition Mr. Bystry, the division manager for Whiting-Turner testified that he didn’t believe a new (subsequent to the initial delay) start date, beneficial occupancy, or completion date was ever given by GM. The importance of an “official start date” where, as here, there has been an initial delay, is to inform all contractors whether the owner intends to hold them to the original contract completion date which would inherently involve extra costs due to accelerated performance (extra men and overtime).

      . The contract between GM and Ernst provided in its special conditions section under a paragraph entitled “Temporary Space Heating Requirements”:
      After the building construction has progressed far enough, the areas will be enclosed by the General Contractor, by use of temporary walls, partitions and suitable coverings to retain heat within the work areas. Within the various rooms and areas the ambient temperature shall be maintained at no less than 50°F. and higher where and as required for each particular type of trade work.

      . Of the seven items of work required to be complete for beneficial occupancy, three were of great significance to the Appellant — the floor slab and the enclosure of the building (roofing and siding). The completion of these three items of work was important to Appellant because a large part of its work was overhead electrical work. The floor slab was critical since Appellant, when bidding the job, had planned to use rolling scaffolding. The roofing and siding was necessary to prevent rain, sleet, snow, and cold weather from interfering with the work.
      The revised bar charts and job schedules distributed periodically to Appellant reflected repeated ijostponements of the completion of these three items of work.

      . It is significant here that Mr. Feren, GM’s Field Representative, testified that the delays on the project were due to no fault of Appellant.

      . AVhiting-Turner notified GM by letter dated January 17, 1968 that, due to the initial delay, they were experiencing great hardship involving additional time and money resulting from severe winter weather working conditions. There can be no doubt that GM knew that these hardships must have equally hampered the activities of the “subs” working under Whiting-Turner.
      As it turned out, Whiting-Turner never submitted a claim for additional compensation. Mr. Bystry, Division Manager for Whiting-Turner, testified that “the main purpose (of the letter) was for us to get on record * * * with the owner in accordance with the specifications for any delays or claims that we might come up with a later day.”
      That GM was acutely aware of the continuing problems caused by the initial delay is made manifestly clear evidenced by a letter from GM’s field representative, Mr. Greco, to GM’s Senior Project Engineer, Mr. Feren, written upon receipt of Whiting-Turner’s letter of January 17, 1968. In that letter Mr. Greco speculated that the efficiency of the men working on the project in the extremely cold weather dropped to 40% of that which was normal.
      The “progress meetings” and periodic “bar charts,” a substitute for the CPM requirement which had never become reality, had as their purpose the assurance of timely completion of the various phases of the project. The minutes of the meetings and the revised job schedules which were submitted continually from Whiting-Turner and General Motors to Appellant clearly confirmed their knowledge of the delays. There is ample evidence in the record which indicates that there was no “surprise” upon receipt of Appellant’s claim.

      . A letter dated September 10, 1968 from Mr. E. P. Johnson, Jr., Manager of Ernst’s Atlanta Office to General Motors Corporation stated in pertinent parts:
      * * * * *
      “We bring to your attention that there are many outstanding directives which have not been covered by Change Orders.

        :¡s * * :¡: *
      We suggest that a meeting be set up as soon as possible in order to thoroughly discuss and settle all outstanding directives, claims, etc.”

      . See note 25, supra where it specifies the purpose of a meeting to “settle all outstanding * * *, claims, etc.” (emphasis ours).

      . We find the remainder of Appellee’s alternative asserted grounds for summary judgment without merit (see note 4, supra).


author: GODBOLD, Circuit Judge:

text:
    Learness MELANCON, Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA et al., Defendants. COATING SPECIALISTS, INC., Defendant-Third Party Plaintiff-Appellant, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Third Party Defendant-Appellee.
    No. 73-2007
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 2, 1973.
    Rehearing Denied Sept. 10, 1973.

      Rudolph R. Schoemann, New Orleans, La., for plaintiff appellant.
    John M. Duhe, Jr., New Iberia, La., Thomas M. Bergstedt, Reid K. Hebert, Lake Charles, La., for Ins. Co. of North America.
    John Rixie Mouton, J. Minos Simon, Lafayette, for Melancon.
    Lawrence J. Ernst, New Orleans, La., for Highlands and others.
    John M. Shaw, Opelousas, La., for Fireman’s Fund and others.
    Donald V. Organ, New Orleans, La., for State Auto and others.
    Before BELL, GODBOLD and IN-GRAHAM, Circuit Judges.

       Rule 18, 5 Cir,; See Isbell Enterprises, Inc. v. Citizens Casualty Company of New York, et al., 5 Cir., 1970, 431 F.2d 409, Part I.

   GODBOLD, Circuit Judge:

Melancon, alleging that his work aboard the M/V SNIPE from September 7, 1968 to January 1969 aggravated or caused his silicosis or pneumonoconiosis condition, sued his employer Coating Specialists, Inc. (Coating) and its insurer Insurance Company of North America (INA), for damages under the Jones Act and maintenance under the general maritime law. The District Court entered orders granting summary judgment for INA on the ground of lack of coverage and denying Coating’s subsequent motion for leave to file a third-party complaint against INA. Coating appealed from both orders. We dismissed for lack of jurisdiction because the District Court had not accompanied its summary judgment for INA with a F.R.Civ.P. 54(b) certificate and, because, assuming that the denial of Coating’s motion to file a third-party complaint might be appealable if certified under R. 54(b), it was clearly not appealable without such certification. Melancon v. Ins. Co. of North America, 476 F.2d 594 (CA5 1973).

Subsequently the District Court expressly determined that there was no just reason to delay and directed that final judgment for INA be entered upon the two orders. Coating appeals from this judgment. We reverse.

On the appeal from the summary judgment, the record must be viewed in the light most favorable to Coating, which opposed the motion. Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458, 464 (1962); Pogue v. Great A&P Tea Co., 242 F.2d 575, 576 (CA5, 1957). INA bears the burden of showing both that there is no genuine issue as to any material fact and that it is entitled to a judgment as a matter of law. F.R.Civ.P. 56(c) and Steed v. Central of Georgia Ry. Co., 477 F.2d 1303 (CA5 1973).

The insurance agreement between INA and Coating provided:

This policy applies only to injury (1) by accident occurring during the policy period, or (2) by disease caused or aggravated by exposure of which the last day of the last exposure, in the employment of the insured, to conditions causing the disease occurs during the policy period.

INA’s theory of lack of coverage is first that there was no “accident” during the policy period, and, second, that the last day of the exposure to conditions causing or aggravating plaintiff’s disease occurred after its policy had terminated. To establish factual bases for summary judgment in its favor, INA presented and relied upon the following: (1) M el-ancon’s allegations in his complaint that he was employed as a seaman by Coating aboard the M/V SNIPE from about September 7, 1968, to January, 1969;

that his duties included filling sand pots in the vessel’s hatch with sand; that he was exposed to particles of foreign matter created or thrown in the air by sandblasting activities Coating conducted on the oil platforms to which the SNIPE was moored; and that “the performance of his duties [for Coating aboard the SNIPE] caused or aggravated the disease of silicosis or pneumonoconiosis which now totally and permanently disables complainant from pursuing any gainful employment.” (2) The policy dates which appear on the face of the insurance agreement (April 24, 1968 to April 24, 1969) and the uneontroverted affidavit of an INA underwriter stating that the policy expired on April 24, 1969, and was not renewed. (3) The uncontroverted affidavit of Coating’s general counsel admitting that Melancon worked for Coating from September 4, 1968, through July 3, 1969. (4) Melan-con’s testimony by deposition which INA claims establishes without contradiction that when he worked as a “helper” for Coating on shore after the April 24, 1969, termination date of the policy his job entailed sandblasting, filling of sand pots, cleaning and painting and that he never went as long as three weeks without performing all of these jobs, including sandblasting.

Coating presented no controverting evidentiary documents in opposition to INA’s motion. It relied instead upon Melancon’s deposition and also filed with the court memoranda concerning the proper construction to be given the policy provision quoted above and the arguable characterization of silicosis as an “accident” not a “disease”.

The District Court made no findings and gave no reasons for granting INA summary judgment. The policy would cover Melancon’s' alleged silicosis or pneumonoconiosis if that condition were determined to be either (1) an injury “by accident occurring during the policy period” or (2) an injury “by disease” caused or aggravated by exposure to conditions causing the disease, the last day of such exposure occurring during the policy period. Since the court granted summary judgment, we must assume that it considered there were no material disputed facts pertaining to either basis of coverage and that under this state of the facts the principles of law governing both bases excluded coverage.

The record before the Court establishes without contradiction that Melancon was exposed to sandblasting in his employment for Coating after the termination date of the INA policy. That record, however, does not establish without contradiction that such exposure was to conditions causing or aggravating the silicosis or pneumonoconiosis condition Melancon alleges. INA has not met the burden resting on it to show that there is no genuine issue of fact material to its alleged direct liability to Melancon as the insurer of the allegedly negligent employer. To the contrary, the Melan-con deposition creates at least one genuine issue of fact material to INA’s alleged liability. Melancon testified that when he had been exposed to sandblasting on shore, where he worked after the policy’s termination date, he wore a canvas hood over his head. But he testified that when he had been exposed to sandblasting on board the M/Y SNIPE, where he worked during the policy period, no such hood was available even though he asked for one. At least one court has recognized that the use or non-use of a mask or hood is a pertinent factor in determining the etiology of the condition known as silicosis. See Svoboda v. Mandler, 133 Neb. 433, 275 N.W. 599, 600 (1937). Whether the silicosis or pneumonoconiosis Melancon alleges was caused in fact or aggravated by his exposure to sandblasting on shore after the policy’s termination date when he wore a hood or was caused or aggravated solely by his exposure to sandblasting aboard the M./V SNIPE during the policy period when he wore no hood is an issue of fact which remains to be settled. This court makes no determination or intimation as to this question.

Since the unsettled question of fact is material to both bases of coverage provided by the policy, we need not address ourselves to the question of whether under the applicable law silicosis (or pneu-monoconiosis) is an accident or a disease. The judgment for INA is reversed and the case remanded for trial on its merits.

We assume that the court refused to permit Coating to file a third-party complaint against INA because it had concluded that there was no coverage and that this placed INA outside the language of Rule 14(a), F.R.Civ.P., one who “is or might be liable.” Our disposition of the summary judgment in favor of INA will require the District Court to reconsider its ruling on the third-party complaint and for that purpose the judgment refusing Coating the right to file such a complaint must be vacated.

Reversed in part, vacated in part, and remanded for further proceedings.

      . Melancon’s complaint named another of Coating’s insurers, State Automobile and Casualty Underwriters, as defendant. Summary judgment in this insurer’s favor is not attacked on this appeal.

      . The complaint Coating sought to file alleged that although INA had an insurance agreement with Coating which covered the injury claimed by Melancon and which obligated INA to defend and indemnify Coating, INA had refused to defend Coating and to make any payments to Melan-con which might become due. Coating prayed for recovery over from INA of any sums which it might have to pay Melan-con and of the costs of defense.

      . Documents presented on the motion for summary judgment show an earlier date for termination of employment aboard the SNIPE, but the difference is not material to this appeal.

      . While findings of fact and conclusions of law are not required on decisions on motions for summary judgment, they are desirable and minimize duplication of judicial effort. See, e. g., Steed v. Central of Georgia Ry. Co., 477 F.2d 1303 (CA5, 1973), Montgomery v. Otis Elevator, 472 F.2d 243 (CA5, 1973), and U. S. for the Use & Ben. of Industrial Instrument Corp. v. Hardeman, Inc., 320 F.2d 115 (CA5, 1963).

      . INA has not challenged Melancon’s right to sue it directly for the alleged negligence of Coating outside Louisiana’s territorial waters. See Sassoni v. Savoie, 327 F.Supp. 474 (E.D. La. 1971).

      . If tliere are other reasons the lower court can make them known upon remand.