author: FEINBERG, Circuit Judge:

text:
    UNITED STATES of America, Appellee, v. Horsun HOWARD, Appellant.
    No. 366, Docket 74-1282.
    United States Court of Appeals, Second Circuit.
    Argued Oct. 17, 1974.
    Decided Nov. 15, 1974.

      Sanford M. Katz, New York City, for appellant.
    Stephen M. Behar, Asst. U. S. Atty., (David G. Trager, U. S. Atty., for the Eastern District of New York, Paul B. Bergman and Gavin W. Scotti, Asst. U. S. Attys., on the brief), for appellee.
    Before DANAHER, FEINBERG and MULLIGAN, Circuit Judges.

       Of the United States Court of Appeals for the District of Columbia Circuit, sitting by designation.

   FEINBERG, Circuit Judge:

After a jury trial before Judge Walter Bruchhausen in the United States District Court for the Eastern District of New York, appellant Horsun Howard was found guilty on both counts of an indictment charging him with violations of 18 U.S.C. § 2113(a) (bank robbery) and 18 U.S.C. § 2113(d) (aggravated bank robbery). Judgment of conviction was entered in October 1971, and Howard was sentenced to concurrent 15-year terms on each count. Howard did not file a timely appeal, but in a petition under 28 U.S.C. § 2255 successfully sought permission to file an out of time appeal. 492 F.2d 1237 (2d Cir. 1974). Because Howard was convicted by a jury operating without adequate instruction as to the elements of the crimes charged, we find plain error and reverse and remand for a new trial.

The bank robbery for which Howard was convicted took place on Christmas Eve, 1970. In about five minutes, four armed men took almost $15,000 from a Flushing, New York, savings and loan association. Five bank employees identified appellant at trial as one of the perpetrators of the crime. Surveillance photos taken during the robbery also indicated that Howard was among the robbers. In short, there was ample evidence to sustain a conviction had the jury been properly instructed.

When the trial judge gave the jury the case, his instructions were quite brief. In what was to be the only mention of the crimes charged, the court summarized the two counts of the indictment :

In count one of the indictment, the defendants Fred Fernandez and Horsun Howard are charged with the crimes of knowingly and wilfully robbing the First Federal Savings & Loan Bank located at 4404 Kissena Boulevard, Queens, New York, on December 21st [sic], 1970, and taking therefrom approximately $15,000, and aiding and abetting in the commission of the robbery.
In count two of the indictment, the said defendants are charged with the crimes of knowingly and wilfully placing in jeopardy the lives of employees of the bank and other persons present in the commission of the robbery and aiding and abetting.

The judge then went on to discuss aiding and abetting and the meaning of knowingly and wilfully. However, there was no further definition of the crimes charged, although the judge did explain to the jury such matters, among others, as the need to establish guilt beyond a reasonable doubt, the meaning of reasonable doubt, the nature of circumstantial evidence, and the credibility of witnesses. Of the 12 pages of charge, only the one-half page quoted above specifically described the offenses with which the jury was to concern itself.

Even a cursory reading of the bank robbery statutes indicates that more than the few short sentences of the charge quoted above are required. At the very least, this jury should have been told that it had to find, beyond a reasonable doubt, the following elements of the crime for Count One, charging a violation of section 2113(a): The defendants took money from a federally insured savings and loan association; the taking was accomplished through the use of force and violence, or by intimidation, and from the person or presence of individuals other than defendants; the money taken was in the care, custody, control, management or possession of the association; and the taking was done with wrongful intent, 'that is, knowingly and wilfully. United States v. Cooper, 462 F.2d 1343, 1344 (5th Cir.), cert. denied, 409 U.S. 1009, 93 S.Ct. 452, 34 L.Ed.2d 303 (1972); Scruggs v. United States, 450 F.2d 359, 361, 364 (8th Cir. 1971), cert. denied, 405 U.S. 1071, 92 S.Ct. 1521, 31 L.Ed.2d 804 (1972); 2 E. Devitt & C. Blackmar, Federal Jury Practice and Instructions § 48.01 et seq. (1970). For Count Two, charging a violation of section 2113(d), the jury should have been instructed that, along with the elements specified above, it had to find that defendants assaulted or placed in jeopardy the lives of any person by use of a dangerous weapon or device. United States v. Marshall, 427 F.2d 434, 437-438 (2d Cir. 1970); Scruggs v. United States, supra; United States v. Cooper, supra.

It is clear that the judge’s charge did not cover all of these elements of the crime. The Government contends, however, that the error was harmless because the only truly contested issue for the jury was the identity of the bank robbers. While that may be substantially true, we do not think it harmless error for a jury to find a man guilty of a federal offense without even knowing what the elements of the offense are. As we said only last year:

If justice is to be done in accordance with the rule of law, it is of paramount importance that the court’s instructions be clear, accurate, complete and comprehensible, particularly with respect to the essential elements of the alleged crime that must be proved by the government beyond a reasonable doubt ....

United States v. Clark, 475 F.2d 240, 248 (2d Cir. 1973). See also Byrd v. United States, 119 U.S.App.D.C. 360, 342 F.2d 939 (1965). When Howard exercised his constitutional right to a jury, he put the Government to the burden of proving the elements of the crimes charged to a jury’s satisfaction, not to ours or to the district judge’s. Thus, even if we believe that there was overwhelming proof of the elements not charged, we must still reverse.

To be distinguished from this case is our recent decision in United States v. Pravato, 505 F.2d 703 (2d Cir. 1974), which also involved bank robbery. In that case, after telling the jury that it had to find, beyond a reasonable doubt, all the elements listed above, the court inadvertently said that the existence of force and violence was included in a stipulation of counsel, when no such agreement had been made. In refusing to reverse the conviction, we pointed out that defendant’s attorney did not object to the charge, apparently for strategic reasons, and in fact referred, in his closing argument, to "the possibility of misidentification due to the “terror and fright” of the witnesses. The difference between Pravato and this case is the difference between a jury knowing precisely what the elements of the crimes charged are (some of which, it is told, are conceded to have been proved) and deliberating upon that knowledge, and a jury operating almost completely in the dark. Notwithstanding defense, counsel’s failure to object during the trial here, we can only repeat what we said in United States v. Fields, 466 F.2d 119, 121 (2d Cir. 1972):

This is not, after all, a case of nitpicking over nuances in a judge’s charge; the errors go directly to a defendant’s right to have the jury told what crimes he is actually being tried for and what the essential elements of those crimes are.

Accordingly, a new trial is required. In view of this disposition, we need not reach appellant’s claims regarding the empaneling of the jury and the allegedly prejudicial effect on the jury of Howard’s arrest on another charge outside the courtroom, but possibly viewed by some of the jurors. For the guidance of the parties and the district court in this ease, we note, however, that in any retrial we would expect the court, if requested, to charge the jury on the dangers of misidentification, as suggested in United States v. Evans, 484 F.2d 1178, 1188 (2d Cir. 1973), and in Fernandez I, 456 F.2d at 643-644.

Judgment reversed and case remanded for further proceedings consistent with this opinion.

      . These sections provide in relevant part:
      § 2113. Bank robbery and incidental crimes
      (a) Whoever, by force and violence, or by intimidation, takes, or attempts to take, from the person or presence of another any property or money or any other thing of value belonging to, or in the care, custody, control, management, or possession of, any bank, credit union, or any savings and loan association ....
      Shall be fined not more than $5,000 or imprisoned not more than twenty years, or both.
      * * a, » *
      (d) Whoever, in committing, or in attempting to commit, any offense defined in subsections (a) and (b) of this section, assaults any person, or puts in jeopardy the life of any person by the use of a dangerous weapon or device, shall be fined not more than $10,000 or imprisoned not more than twenty-five years, or both.

      . The jury was unable to decide on the guilt or innocence of Fred Fernandez, Howard’s co-defendant. Fernandez was convicted in two later trials, but both were reversed on appeal. United States v. Fernandez, 456 F.2d 638 (2d Cir. 1972) (Fernandez I), and United States v. Fernandez, 480 F.2d 726 (2d Cir. 1973) (Fernandez II). In December 1973, Judge Weinstein of the Eastern District of New York dismissed the indictment against Fernandez because the Government failed to reveal certain information to Fernandez. This court has recently reversed that dismissal to give the Government another opportunity to disclose the information sought. United States v. Fernandez, 506 F.2d 1200 (2d Cir., 1974).

      . We do not suggest that, in addition, adequate elaboration of the above elements would also not be required, e. g., the meaning of “in jeopardy” as explained in United States v. Marshall, supra.

      . To similar effect, see United States v. Boone, 401 F.2d 659, 662-663 (3d Cir. 1968), cert. denied, 394 U.S. 933, 89 S.Ct. 1205, 22 L.Ed.2d 463 (1969).

      . Howard also argues that in-court eyewitness identification was tainted by improperly suggestive photographs. Although the photographic display might possibly have been more wisely selected, the witnesses who identified Howard from the pictures and at trial had ample time to study him during the commission of the crime. See Fernandez I, 456 F.2d at 642; Fernandez II, 480 F.2d at 736. We would, therefore, refuse to characterize the trial judge’s admission of the in-court identifications as an abuse of discretion.


source: Caselaw Access Project

author: TALBOT SMITH, Senior .District Judge.

license: Public Domain

text:
    Wade TENNYSON et al., Plaintiffs-Appellants, v. GAS SERVICE COMPANY, and Kansas Gas and Electric Company, Defendants-Appellees.
    No. 73-1930.
    United States Court of Appeals, Tenth Circuit.
    Argued Aug. 19, 1974.
    Decided Nov. 26, 1974.

      Michael D. Gragert, Wichita, Kan. (Thomas A. Wood, Wichita, Kan., on the brief), for plaintiffs-appellants.
    Donal D. Guffey, Kansas City, Mo. (Richard C. Byrd, Ottawa, Kan., on the brief), for defendant-appellee Gas Service Co.
    Robert A. Vohs, Wichita, Kan. (Ralph B. Foster, Wichita, Kan., on the brief), for defendant-appellee Kansas Gas and Elec. Co.
    Before HILL and DOYLE, Circuit Judges, and TALBOT SMITH, Senior District Judge.

       TALBOT SMITH, United States Senior District Judge, Eastern District of Michigan, sitting by designation.

   TALBOT SMITH, Senior .District Judge.

The action before us was brought February 21, 1973 under the Civil Rights Act of 1871, 42 U.S.C. § 1983. It was brought as a class action and relates to the so-called “late charge assessments” made by defendants Gas Service Company and Kansas Gas and Electric Company (hereinafter K.G. & E.). These late charge assessments impose an additional charge upon certain customers for failure to pay the amount due on the regular billing within a specified number of days. Plaintiffs alleged that such practice violates due process of law, that it is violative of their equal protection and that the late charges imposed are “usurious interest.” they sought declaratory and injunctive relief, as well as an accounting and money damages.

The defendants moved the court to dismiss the action on the ground that 28 U.S.C. § 1342 (the Johnson Act) removed the court’s jurisdiction in the premises. In addition, defendant Gas Service' cited as grounds for its motion that the complaint did not state a claim under the Civil Rights Act and, moreover, that plaintiffs had failed to join an indispensable party, the Kansas Corporation Commission. The plaintiffs, in turn, moved the court “to dismiss the Defendants’ Motions to Dismiss.” Both sides supported their motions with voluminous materials thought to be supportive of their respective positions. The trial court, following (with some reluctance) our holding in General Investment and Service Corp. v. Wichita Water Co., 236 F.2d 464 (10th Cir. 1956) granted the defendants’ motions to dismiss upon the ground that its jurisdiction was precluded by the terms of the Johnson Act. We agree.

The Johnson Act provides:

The district courts shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a State administrative agency or a rate-making body of a State political subdivision, where:
(1) Jurisdiction is based solely on diversity of citizenship or repugnance of the order to the Federal Constitution ; and,
(2) The order does not interfere with interstate commerce; and
(3) The order has been made after reasonable notice and hearing; and,
(4) A plain, speedy and efficient remedy may be had in the courts of such State.

The plaintiffs, denominating it the “focal point” of their appeal, argue principally that the legislative history of the Johnson Act makes clear that the Act “was never intended to apply to cases of the present character,” i. e. consumer class actions, and urge that we overrule our prior decision in the General Investment case.

We thus consider again the problem of federal intervention in state rate matters. The problem has had a long and troublesome history. The evil sought to be remedied by the Johnson Act was the federal courts’ interference with the states’ own control of their public utility rates. Mr. Justice Frankfurter traced the background of the legislation in the following terms:

In Congress, a prolonged debate has ensued over the wisdom of the broad grants of power made to the Federal courts of original jurisdiction — power which may be invoked against State regulation of economic enterprise. Bill after bill has been proposed to prevent the lower federal courts from interfering with such State action. Finally, in 1910, by a provision in the Mann-Elkins Act, Congress provided that an action for an interlocutory injunction to restrain the action of a State officer acting under a statute alleged to violate the Federal Constitution be heard by a court of three judges, with a right of direct appeal to the Supreme Court. Act of June 18, 1910, § 17, 36 Stat. 539, 557. In 1913, this procedure was extended to applications for an interlocutory injunction to restrain enforcement of the order of a State board or commission. Act of March 4, 1913, 37 Stat. 1013. By the same statute, a State was empowered to keep litigation concerning the validity of State agency regulation in its own courts if it was willing to stay the administrative order. In 1925, the provision for a three-judge court and direct appeal was extended to a permanent injunction. Act of Feb. 13, 1925, c. 229, § 1, 43 Stat. 936, 938.
Congress, fully aware of the problem, was still not satisfied with the jurisdiction it had left to the federal district courts. Accordingly, in 193A, it passed the Johnson Act which withdrew their jurisdiction over suits to enjoin the enforcement of State rate orders, providing that a remedy was available in the State courts. [Emphasis added; footnote omitted.]

Plaintiffs argue to us that the “sole” purpose of the Act was to prevent forum-shopping by utilities between State and Federal courts, a practice that had bedeviled the administration of the rate structures of the various states. Doubtless this was one purpose. But we find no substantial support that the Act is to be so restricted. Rather, by its broad wording it is clear that it was intended to keep constitutional challenges to orders affecting rates out of the federal courts “lock, stock and barrel,” or, as Professor Moore succinctly puts it, to effect a “general hands-off policy relative to state rate making.” The Act is not framed in terms of categories of plaintiffs, whether municipalities, state commissions, utilities or consumers, but in terms of enumerated conditions. Behind the Act were years of hostilities generated from jurisdiction in both the state and federal systems, removal of which was deemed desirable to the national policy. Thus the restriction imposed was far-reaching, going to jurisdiction itself. Should it be thought desirable to resurrect the federal jurisdiction in favor of any particular class or group, such is a matter for the Congress, not for this court. We do not find the General Investment decision or the ruling below to be oblivious to the intended purposes of the Act. Indeed, these purposes are peculiarly served here, for the late charge issue has recently (April 16, 1974) been ruled on by the Kansas State Corporation Commission in a proceeding involving both defendants.

Plaintiffs next seek to avoid the proscription of the Johnson Act by basing their claimed jurisdiction and framing their prayer for relief in terms not only of injunctive relief, which is specifically prohibited by the Act, but for declaratory and monetary relief as well. Congress has prohibited federal injunctive interference not only with state rate-making but with state tax matters. 28 U.S.C. § 1341 provides:

The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.

The language and history of this provision parallel the Johnson Act. With respect to its interpretation it was held in Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 298-299, 63 S.Ct. 1070, 1073-1074, 87 L.Ed. 1407 (1943) that:

The earlier refusal of federal courts of equity to interfere with the collection of state taxes unless the threatened injury to the taxpayer is one for which the state courts afford no adequate remedy, and the confirmation of that practice by Congress, have an important bearing upon the appropriate use of the declaratory judgment procedure by the federal courts as a means of adjudicating the validity of state taxes.
It is true that the Act of Congress speaks only of suits “to enjoin, suspend, or restrain the assessment, levy, or collection of any tax” imposed by state law, and that the declaratory judgment procedure may be, and in this case was, used only to procure a determination of the rights of the parties, without an injunction or other coercive relief. It is also true that that procedure may in every practical sense operate to suspend collection of the state taxes until the litigation is ended. But we find it unnecessary to inquire whether the words of the statute may be so construed as to prohibit a declaration by federal courts concerning the invalidity of a state tax. For we are of the opinion that those considerations which have led federal courts of equity to refuse to enjoin the collection of state taxes, save in exceptional cases, require a like restraint in the use of the declaratory judgment procedure.

It is equally true in the area before us that the considerations which we have briefly considered as influencing the Congressional hands-off policy relating to rate making are not to be defeated by the use of either the declaratory judgment procedure alone or combined with a claim for money damages. A decision going.to the merits of the additional relief claimed would of necessity involve our decision as to the same issues proscribed by the Johnson Act. If favorable to the plaintiffs it would impinge upon duly filed rate schedules and thus would effect indirectly that which the Johnson Act precludes.

The plaintiffs urge also that the charge made by the utilities for failure to pay the amount due within 15 days of the billing is not a “rate” at all but is “interest,” and, being interest, is not covered by the Johnson Act which, concerns “order[s] affecting rates.” The issue presented requires an examination of the theory of, and the procedures followed under, the applicable statutes governing the formulation of “rate” structures. In the State of Kansas the State Corporation Commission, an administrative agency of the State, has been vested with the power and authority to supervise and control public utilities doing business within the state. In such capacity it may investigate, fix, establish and consent to rates charged by public utilities under its jurisdiction.

Within this framework defendant K. G. & E. filed an application with the Kansas State Corporation Commission for authority to increase its rates on June 25, 1971 (Docket 92,581-U). A part of this application concerning a territory “Within the City Limits of Wichita and Eastborough,” being rate schedule RSW-771, contained the provisions here under litigation, the so-called “late charges

GROSS MONTHLY BILL
The net monthly bill, computed in accordance with the Net Monthly Rate, plus 5% on the first $200 and 2% on the balance thereof.
PAYMENT
The net monthly bill is due and payable when rendered; when not not paid within 15 days from date, the Gross Monthly Bill applies.

The Commission’s order thereon of June 28, 1972 stated:

3. That with the filing of the above-stated provision, the existing schedules of rates of Applicant will not be unjust, unreasonable, unjustly discriminatory or unduly preferential to the customers affected thereby. [Footnote added.]

The Defendant Gas Service Company relies upon similar authorization by the State Corporation Commission. In its order of February 21, 1968, Docket No. 82,760-U, relative to “[T]he matter of the application of the Gas Service Company for an adjustment of certain of its rates in the State of Kansas,” the Commission approved the following provision:

Bills for service shall become delinquent fifteen (15) days after date of the bill or meter reading in case of self billing. If bill becomes delinquent, a 5% penalty charge will be added on the first $200 and 2% on the balance thereafter.

As to whether late charges are “rates” there is a division of authority. Plaintiffs cite to us as supportive of their position that such charges are “interest” a decision of a court of appeals in Louisiana, as well as a law review commentary. Defendants cite to us cases per contra. It would serve no useful purpose to analyze these authorities in detail, each decision resting upon its own statutory structure. More useful to us, from a standpoint of the Kansas rate structure, is the State Corporation Commission’s recent finding that the “late payment charges in question do not constitute interest * *

However such authorities may differ from an actuarial or accounting standpoint, it is pertinent to note that such differentiation does not go to the core of our problem of statutory construction. For the fact of the matter is that the Johnson Act proscribes federal interference not with a “rate” simpliciter but with “any order affecting rates.” Since the late charges made were presented to the Commission as an integral part of the rate structures and so ruled upon by the Commission, it is clear that its rulings were orders “affecting” rates within the terms of the Act.

With respect to the notice and hearing requirements of the Johnson Act it was the finding of the trial court that “No assertion is made that the orders establishing the late charges were not made after reasonable notice and hearing at state administrative levels.” Before us the plaintiffs made general charges of lack of such notice and hearing, but we find the charges made without support and without merit. The notice and hearing requirement with respect to the making of rates must of necessity be viewed in light of the fact that in Kansas, “In the constitutional division of powers, the regulation of public utilities is legislative in nature.” Cities Service Gas Co. v. State Corporation Commission, 201 Kan. 223, 232-233, 440 P.2d 660, 670 (1968). The Johnson Act does not engraft its own undefined standards of notice and hearing upon the rate making bodies of the several states but requires no more than that which is appropriate to an “order affecting rates.”

The Johnson Act thus seeming by its terms to be clearly applicable, the remaining question we confront is whether a “plain, speedy and efficient remedy” may be had in the state courts. The court in Mountain States Telephone & Telegraph Co. v. Public Utilities Commission, 345 F.Supp. 80, 82 (D.Colo. 1972) (Doyle, Chilson, & Finesilver, JJ.) held that “[W]e have jurisdiction to proceed only if part 4 of § 1342 requires it, that is, if nonexistence of a plain, speedy and efficient remedy in the courts of the state is shown. As we read the statute, its plain object is to prevent federal courts from intervening in the state rate-making process even though the matter might be repugnant to the Federal Constitution, unless the remedy in state courts is inadequate.”

We turn to the remedies in the state courts, set forth in Kan. S.A. 66-101 to 66-195 (1972). In brief summary, such sections provide that a taxpayer may file a complaint with the State Corporation Commission against a utility for a wide range of charges concerning not only the utility’s rates, but its charges, rules and regulations. Upon receiving such complaint it is further provided that the Commissioners shall proceed “to make such investigation as they may deem necessary” (Kan. S.A. 66-111 (1972)). Thereafter “The public utility * * * or the complainant or complainants, if any, shall be entitled to be heard” and shall have compulsory process. (Kan. S.A. 66-112 (1972)). It is further provided (Kan. S.A. 66-113 (1972)) that if upon such hearing and investigation the rates, charges, rules or regulations of the utility are found to be unjust, unreasonable, unfair, unjustly discriminatory or unduly preferential, or in any wise in violation of any of the laws of the state of Kansas, the State Corporation Commission shall have the power to fix and establish, and to order substituted therefor, such rates, charges, rules or regulations as it shall find to be just, reasonable and necessary.

The procedures for a subsequent judicial review are found in Kan. S.A. 66-118c to 66-1180 (1972). It is therein provided that within 30 days following the Commission’s final decision, application may be made to the appropriate district court for a review of the decision. Provision is also made for the production of the transcript to the district court judge, who is required to give the case precedence over all other cases. The cause is heard upon the record made before the commission, unless additional materials, properly receivable, are presented, in which event the district court proceedings are stayed pending the commission’s consideration and ruling upon such materials, which is, again, reviewable in the district court. (Kan. S. A. 66-118f (1972)). During the pendency of the review hearings the district court may stay, in whole or in part, the commission’s order. Finally, provision is made for further judicial review in the Kansas Supreme Court. (Kan. S.A. 66-118d (1972)).

From the foregoing it is clear that the plaintiffs have a plain, speedy, and efficient remedy in the state courts. In this regard we take note that plaintiffs hypothesize that even if they are successful in their claims as to the late charges, they might not later be successful in the state courts (either for procedural or substantive reasons) should they choose to pursue certain causes of action, e. g., “reparations" for usurious exactions. Plaintiffs misapprehend the thrust of the Act. Its requirements concern “any order affecting rates chargeable by a public utility.” As to such order a prescribed state remedy is required. But the Act does not purport to require for its invocation a predictable successful outcome to whatever cause of action litigants may later see fit to assert in the state courts, should they have theretofore maintained a successful assault upon the rate structure.

The allegations in the complaint raise issues properly triable before the state courts. We conclude that the four conditions specified in the Act are met in this case and that we are thus precluded by the terms of the Johnson Act from exercising jurisdiction interfering with the subject orders of the Commission.

It is well to point out, finally, that what is here being attempted is precisely what the Johnson Act in part sought to avoid, namely, the pitting of federal court against state court in the rate making process, to the exacerbation of federal-state relationships. Whether the simultaneous pursuit of the same questions in both state and federal jurisdictions is by the utilities or their customers is not critical. The evil to be avoided arises equally in both situations.

Here, as we have noted supra note 7, the same questions of whether the late charges were rates or interest, and whether usurious, were brought against these same defendants before the Kansas State Corporation Commission “In the Matter of the Complaint against Kansas Gas and Electric Company and the Gas Service Company, Defendant * * * while such matter was pending before the Commission, the instant suit was filed in the federal court. The Commission entered its ruling adverse to the complainants on April 16, 1974, with judicial review of the ruling available in the Kansas courts. Yet, argument is now made to us praying a ruling contrary to that of the Commission.

The situation is thus ripe for federal-state conflict. The Johnson Act forbids our participation. But we are constrained to observe that even if jurisdiction in a technical sense were present, we should, in conformity with the doctrine of comity between state and federal courts, decline to exercise it in this situation. It is as true today as it was at the time of General Investment, supra 236 F.2d at 468, that:

[W]here parties have come into federal court for a determination of rights, the federal court should not only stay its hand but should dismiss the action, where there is available in the state courts a complete and adequate remedy for the determination of the same questions presented in the federal action. * * * We think the facts of this case bring it within the admonition of the Supreme Court in the Alabama case [Alabama Public Service Commission v. Southern Ry., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002 (1951)] that the federal court should not interfere when any federal question can be preserved in a state court action and therefore, as stated by the Supreme Court in that case, “Whatever rights appellee may have are to be pursued through the state courts.” [Footnote omitted.]

Under the view we have taken of this case we need not examine the additional issues presented by the parties.

Affirmed.

APPENDIX

Portions of the Kansas State Corporation Commission’s findings in the matter referred to in note 7, supra, are set out below:

“7. -X- -x- -x- rpjjg Commission is persuaded and so finds that the late payment charges do not constitute payment for the extension of credit or forbearance by the defendants, but are, as defendants contend, a charge for utility service designed to allocate certain costs of such service to those who cause the incurrence of those costs. It follows, and the Commission so finds, that the late payment charges in question do not constitute interest nor are the charges usurious within the meaning of K.S.A. 16-201 et seq. as alleged.
“There is a definite distinction between utility service and business enterprises in which extension of credit and charges for the use of money is inherent. In the latter .case, the extension of credit is for a profitable interest, or as an inducement to purchase competitive products or services. On the other hand, a public utility functions as nearly as possible on cash flow, and a large accumulation of accounts receivable is at best a hindrance to good, efficient utility economics, and rates and services are not structured to extend credit — nor should it be necessary to do so.
“8. Each of the defendants bills its customers after delivery of electrical service or natural gas service, as the case may be, and as such are to be distinguished from those utilities which bill in advance for service not yet rendered. * * *
“9. Bearing in mind the costs of working capital required for operations pending delayed collection of delinquent accounts, unless there is a corresponding reduction in costs of collecting such accounts, elimination or reduction of late payment charges or extension of time of their imposition would have an adverse effect upon the return of defendants and ultimately would require higher rates to all of defendants’ customers than might otherwise have been required to provide the defendants a fair return. The Commission is of the opinion and finds that utility costs attributable to those of the utilities’ customers who do not pay their bills when due should not be so shifted to those .who do promptly pay for the utility services they have received. The Commission further finds that the assessment of collection costs against the class of customers who cause them is consistent with the mandate of K.S.A. 66-107 et seq. requiring that utility rates shall not be unreasonably discriminatory nor unduly preferential. It likewise follows that the statute does not contemplate subsidization of one class of customer by another, nor within the classes.
“10. * * *
“The evidence of defendant KG&E indicates that during the twelve month period upon which its study was based, collection expenses totaled $463,529 and receipts from late payment charges were $355,670. * * * [TJhere is nothing in the record before this Commission which impels the Commission to the belief that the late charge made by each of the defendant utilities is, in its amount, unreasonable, unjustly discriminatory or unduly preferential when measured against the undisputed portion of their subsequently accruing costs of collecting delinquent accounts.”

      . Specifically, the complaint alleged violations of the Fourth, Fifth and Fourteenth Amendments of the United States Constitution, Sections 1, 15 and 18 of the Bill of Rights of the Kansas Constitution, and the laws of Kansas set forth in Kan. S.A. 66-107 et seq. & 16-201 et seq. (1972).
      Jurisdiction was claimed to be based upon 42 U.S.C. § 1983; 28 U.S.C. § 1343(3), (4); 28 U.S.C. § 2201 et seq.; Fed.R.Civ.P. 23; §§ 1, 15 and 18 of the Bill of Rights of the Kansas Constitution; and Kan. S.A. 66-107 et seq., & 16-201 et seq. (1972).

      . In General Investment, the plaintiff, for itself and all other customers similarly situated, sought declaratory and injunctive relief, asserting that the collection of an allegedly discriminatory surcharge on defendant’s water rate violated plaintiff’s due process rights. Summary judgment was entered in favor of the defendant. On appeal this court held, after examining the provisions of the Johnson Act and discussing principles of comity “under our dual system of Government in cases involving state laws, rules or regulations,” 236 F.2d at 468, that “the federal court lacked jurisdiction to entertain the action for an injunction and for a declaratory judgment,” 236 F.2d at 466, and that the lower court should have “dismissed the action without considering the merits and relegated the parties to the state court,” 236 F.2d at 468.

      . Concurring in result in Alabama Pub. Serv. Comm’n v. Southern Ry., 341 U.S. 341, 357-358, 71 S.Ct. 762, 772-773, 95 L.Ed. 1016 (1951). See also (Professor) Frankfurter, Distribution of Judicial Power Between United States and State Courts, 13 Cornell L.Q. 499 (1928).

      . The history of the Johnson Act is exhaustively discussed in 44 Yale L.J. 119 (1934) and 20 Iowa L.Rev. 128 (1934); see also 1A J. Moore, Federal Practice ¶ 0.206 (1974).

      . 1A J. Moore, Federal Practice ¶ 0.206, at 2282 (1974).

      . We are referred to no authority specifically dispositive of the issue presented. Defendants’ cited case of David v. N. Y. Tel. Co., 341 F.Supp. 944, 947 (S.D.N.Y.), aff’d on other grounds, 470 F.2d 191 (2nd Cir. 1972), a consumer’s class action, most nearly parallels the case before us. As an alternate ground for the dismissal of (the action, the court found itself without jurisdiction under the Johnson Act.

      . Defendant K.G. & E., submits as Attachment A to its brief on appeal the Order of the State Corporation Commission “In the matter of the Complaint against Kansas Gas and Electric Company and the Gas Service Company, Defendants, by Lola B. Jones and Marie R. Wilson, Complainants,” Docket No. 96,137-U. (The complaint in this proceeding, dated August 4, 1972, was submitted with defendant K.G. & E.’s Motion to Dismiss in the trial court.) The commission held that defendants’ late charges were neither usurious under Kan.S.A. 16-201 nor unreasonable under Kan.S.A. 66-107. We reproduce substantial and relevant portions of the commission’s ruling as an Appendix hereto.

      . As noted by Mr. Justice Frankfurter, rate orders and taxation were “two fields where the greatest dissatisfaction with federal jurisdiction existed.” Alabama Pub. Serv. Comm’n v. Southern Ry., 341 U.S. 341, 358-359, 71 S.Ct. 762, 773, 95 L.Ed. 1016 (1951) (concurring in result).

      . The declaratory judgment act does not, of itself, contain a grant of jurisdiction. It is remedial in scope. C. Wright, Federal Courts § 100, at 449 (2nd ed. 1970); W. Barron & A. Holtzoff, Federal Practice & Procedure § 1268 (1958).

      . We note that a claim for declaratory relief was rejected in Gen. Inv. & Serv. Corp. v. Wichita Water Co., 236 F.2d 464 (10th Cir. 1956).

      . Kan. S.A. 66-101 (1972).

      . Kan. S.A. 66-107, 66-110, 66-113 & 66-117 (1972).

      . The provision referred to had to do with the billing of a franchise tax.

      . State ex rel. Guste v. Council of City of New Orleans, 297 So.2d 518 (La.Ct.App. 1974).

      . Samuels, Commentary: Utility Late Payment Charges, 19 Wayne L.Rev. 1151 (1973).

      . City of Dearborn v. Consol. Gas. Co., 297 Mich. 388, 297 N.W. 534 (1941); Appalachian Elec. Power Co. v. Koontz, 138 W.Va. 84, 76 S.E.2d 863 (1953).

      . See note 7, supra.

      . 28 U.S.C. § 1342(3).

      . 28 U.S.C. § 1342(4).

      . See also Mountain States Tel. & Tel. Co. v. Pub. Util. Comm’n, 324 F.Supp. 857, 859 (D.Colo.1971) (Lewis, C. J., Chilson, & Bratton, J.T.) : “[W]e find the plaintiff has a plain, speedy, and efficient remedy in the courts of the State of Colorado, and that any injunctive interference by this Court with the Commission’s order is barred by 28 U.S.C. Section 1342 [the Johnson Act].”

      . Kan. S.A. 66-111 (1972) enumerates the grounds for complaint:
      * * * that any of the rates or joint z-ates, fares, tolls, charges, rules, regulations, classifications or schedules of such public utility * * * are in any respect unreasonable, unfair, unjust, unjustly discriminatory or unduly preferential, or both, or that any regulation, practice or act whatsoever affecting or relating to any service, performed or to be performed by such public utility * * * for the public, is in any respect unreasonable, unfair, unjust, unreasonably inefficient, insufficient, unjustly discriminatory or unduly preferential, or that any service performed or to be performed by such public utility * * * for the public is unreasonably inadequate, inefficient, unduly insufficient or cannot be obtained * # sK

      . Kan. S.A. 66-118c (1972) provides :
      Within thirty (30) days after the application for a rehearing is denied, or if the application is granted, then within thirty (30) days after the rendition of the decision on rehearing, the applicant may apply to the district court of the county in which the order of the commission is to become effective for a review of such order or decision; if the order of the commission is to become effective in more than one county the application must be to the district court of one of such counties. The application for review shall be filed in the office of the clerk of the district court of the proper county and shall specifically state the grounds for review upon which the applicant relies and shall designate the order or decision sought to be reviewed. The clerk of the district court shall immediately serve a certified copy of said application upon the state corporation commission by transmitting a certified copy thereof by registered mail to the secretary of the state corporation commission at his office at the state Capitol. The secretary shall immediately notify all parties who appeared in the proceedings before the commission by registered mail, that such application for review has been filed.

      . Kan. S.A. 66-118d (1972) provides in part:
      The secretary [upon receipt of fhe application for review] shall forthwith transmit to the clerk of the district court in which the application for review has been filed, a certified transcript of all pleadings, applications, proceedings, orders or decisions of
      the commission and of the evidence heard by the commission on the hearings of the matter or cause * * *.
      íjí V
      All proceedings under this section shall have precedence in any court in which they may be pending, and the hearing of the cause shall be by the court without the intervention of a jury. The procedure upon the trial of such proceedings in the district court and upon appeal to the supreme court of this state shall be the same as in other civil actions, except as herein provided. No court of this state shall have power to set aside, modify or vacate any order or decision of the commission, except as herein provided.

      . Kan. S.A. 66-118g (1972) provides in part:
      [D]uring the pendency of such proceeding the court, in its discretion, may stay or suspend, in whole or in part, the operation of the order or decision of the commission. No order so staying or suspending an order or decision of the commission shall be made by any court of this state otherwise than on five days’ notice and after a hearing, and if a stay or suspension is allowed the order granting the same shall contain a specific finding, based upon evidence submitted to the court and identified by reference thereto, that great or irreparable damage would otherwise result to the petitioner and specifying the nature of the damage.


author: WILLIAM E. DOYLE, Circuit Judge. MOORE, Circuit Judge

text:
    ESTATE of Milton S. WYCOFF, Deceased, Zions First National Bank, Executor, Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee.
    No. 73-1901.
    United States Court of Appeals, Tenth Circuit.
    Nov. 19, 1974.

      J. Jay Bullock, Salt Lake City, Utah, for appellant.
    Louis A. Bradbury, Atty., Tax Div., Dept, of Justice (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks and Loring W. Post, Attys., Tax Div., Dept, of Justice, on the brief), for appellee.
    Before LEWIS, Chief Judge, and MOORE  and DOYLE, Circuit Judges.

       Honorable Leonard P. Moore, Senior Judge, United States Court of Appeals, Second Circuit, New York, New York, sitting by designation.

   WILLIAM E. DOYLE, Circuit Judge.

This is a federal estate tax case, and the issue is whether the United States Tax Court ruled correctly in determining that the value of the marital deduction available to the estate must be reduced to the extent of inheritance, estate and transfer taxes that the executor was authorized by the will to pay out of the marital trust even though he was not required in the will to pay it from the marital share.

The will of decedent, Milton S. Wycoff, created two trusts. One was in favor of his wife amounting to 50% of his adjusted gross estate; the other trust dealt with the residue of the estate for the benefit of his son. While he directed that inheritance, estate and transfer taxes were to be paid out of the portion of his estate which was not in the marital trust, he, at the same time, granted the executor a discretion to pay these taxes out of this trust estate if the executor considered it prudent from a business standpoint to do so. Based on this authorization, both the Commissioner and the Tax Court ruled that the amount of the marital deduction had to be reduced by the amount of the death taxes. The executor now seeks reversal of the Tax Court ruling.

Decedent died on March 3, 1966 and his will was admitted to probate on March 30, 1966, Zions First National Bank of Salt Lake City being named as the executor. A large part of the estate was composed of shares in the family corporations. The trust in favor of the wife gave her income for life and the power to appoint the corpus together with accrued and undistributed income. The language of the will was such as to seek to maximize the estate tax deduction available under § 2056 of the Internal Revenue Code. A further provision in the will directed that the liquid assets were so far as possible to be given to the wife’s trust; this was so as to avoid her having to participate in the family-businesses. The residuary trust in favor of the son was created in ARTICLE VII of the will.

Death taxes were directed to be paid out of the nonmarital trust portion of the estate but, as explained above, the executor was empowered to pay these taxes out of the widow’s trust should he consider it prudent to do so. ARTICLE XII provided:

I direct prompt payment of the expenses incident to my funeral, burial and last illness, and all my just debts. I further direct that all inheritance, estate and transfer taxes due by reason of my death shall be paid out of that portion of my estate which is not included in the Marital Trust to be administered by my Trustee, unless, in the best business judgment and sole discretion of my executor, such taxes could be more prudently paid from any assets in my estate without respect to what is or is not included in the Marital Trust created by this my Last Will.

Though he was given discretion to pay the death taxes out of the wife’s trust, the executor has not elected to do so. The Probate Court decreed the distribution of the corpus of the estate to the Zions First National Bank as trustee of the two trusts on December 31, 1968.

Some time later, May 25, 1970, the District Director of Internal Revenue gave the bank notice that there was a deficiency in the amount of $57,458.30. Shortly thereafter, the appellant sought a redetermination of the deficiency by the Tax Court. However, that tribunal ruled that in computing the marital deduction, the value of the interest of the surviving spouse had to be reduced by the amount of the death taxes which could have been paid from the widow’s share. The deficiency was ruled to be in the amount of $54,888.31.

The cause was then appealed to this court pursuant to 26 U.S.C. § 7482.

The appellant raises two points on appeal:

The first is that § 2056(b)(4) of the Internal Revenue Code of 1954 does not require that the marital deduction be reduced where, as here, the death taxes have not in fact been paid by the estate or are not chargeable to it.

The second contention is that the interest transferred to the surviving spouse qualifies for the marital deduction on the basis of being a § 2056(b)(5) exception to the terminable interest prohibition of § 2056(b).

I.

THE ISSUE AS TO WHETHER THE MARITAL SHARE REMAINS INTACT AS A DEDUCTION UNLESS IT IS ACTUALLY INVADED FOR THE PURPOSE OF PAYMENT OF DEATH TAXES

The provision which gives rise to the marital deduction is § 2056 of the Internal Revenue Code of 1954 which provides as follows:

§ 2056. Bequests, etc., to surviving spouse
(a) Allowance of marital deduction. —For purposes of the tax imposed by section 2001, the value of the taxable estate shall, except as limited by-subsections (b), (c), and (d), be determined by deducting from the value of the gross estate an amount equal to the value of any interest in property which passes or has passed from the decedent to his surviving spouse, but only to the extent that such interest is included in determining the value of the gross estate.
(c) Limitation on aggregate of deductions.—
(1) General rule. — The aggregate amount of the deductions allowed under this section (computed without regard to this subsection) shall not exceed 50 percent of the value of the adjusted gross estate, as defined in paragraph (2).

The purpose of Congress in creating this deduction was to stem the tide of state law changes in the community property system. The effect of the change was to give non-community property state citizens the tax advantages which were then enjoyed only by the community property state citizens. The deduction allows married couples’ property to be taxed in two stages — upon the death of the decedent and upon the death of the surviving spouse. Thus, the marital deduction is restricted to the property interest includable in the surviving spouse’s gross estate. United States v. Stapf, 375 U.S. 118, 84 S.Ct. 248, 11 L.Ed.2d 195 (1963).

Accordingly, if the property transferred to the surviving spouse is terminable and thereby is not includable in the gross estate of the surviving spouse, there is no marital deduction. Also, if any part of the property transferred to the surviving spouse is used to pay inheritance taxes, the value of the marital deduction is reduced by the amount of the taxes so paid.

Section 2056(b) provides in part:

(4) Valuation of interest passing to surviving spouse. — In determining for purposes of subsection (a) the value of any interest in property passing to the surviving spouse for which a deduction is allowed by this section — •
(A) there shall be taken into account the effect which the tax imposed by section 2001, or any estate, succession, legacy, or inheritance tax, has on the net value to the surviving spouse of such interest;

We are required to determine the value of the deductible non-terminable interest in the property which passed to the surviving spouse. In turn, we must decide whether the executor’s authority to use marital trust assets for the payment of the state and federal death taxes served to reduce the marital deduction in this amount. The bank contends that § 2056(b)(4) is subject to the interpretation that the marital deduction is to be reduced only to the extent that the federal estate or state inheritance tax was actually paid from or charged to the marital share. Its further claim is that the language of § 2056(b)(4) supports this.

It is pointed out that the provision is entitled “valuation of interest passing to surviving spouse.” It refers to the “effect” of death taxes upon the “net value to the surviving spouse.” It is argued that the purpose was to restrict the effect on the surviving spouse’s marital deduction to the amount of taxes actually paid. The only relevant consideration in applying § 2056(b)(4), so it is argued, is whether the property interest passed to the surviving spouse was in fact utilized to pay the taxes.

The regulations relied on by the bank and quoted below are not germane ber cause the thrust of them is to explain the computation of the marital deduction rather than the effect of the taxes payable out of it.

Also, the cases hold that the marital deduction is to be strictly construed. Commissioner of Internal Revenue v. Bosch, 387 U.S. 456, 464, 87 S.Ct. 1776, 1782, 18 L.Ed.2d 886 (1967). Another relevant rule of construction is that the taxpayer has the burden of proof to establish compliance with the specific statutory requisites and the taxpayer must prove the applicability of the deduction or exception claimed. New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440, 54 S.Ct. 788, 790, 78 L.Ed. 1348 (1934).

Furthermore, in determining whether an interest of the surviving spouse is entitled to the marital deduction, the time of death of the decedent governs the tax consequences. Jackson v. United States, 376 U.S. 503, 84 S.Ct. 869, 11 L.Ed.2d 871 (1964); Boston Safe Deposit and Trust Co. v. Commissioner of Internal Revenue, 345 F.2d 625 (1st Cir. 1965). See also 26 C.F.R. 20.-2056(b)-4(a) (1972) and In Estate of Albert L. Rice, 41 T.C. 344 (1963), wherein this principle was applied in valuing a property interest.

The value of the marital deduction and the effect of death taxes upon the extent of the marital deduction are to be determined as a matter of federal law. Thus, the orders of state probate courts are not applicable. In this instance the Utah Probate Court ordered the executor to distribute to the widow’s trust 50% of the adjusted gross estate unreduced by any federal estate or Utah inheritance taxes. The court also decreed that such taxes were to be charged to the property not included in the marital trust.

It is conceded by the bank that ARTICLE XII is ambiguous. In one sentence it directs that the inheritance and estate taxes are to be paid out of that portion of the estate not part of the wife’s trust but subsequently states that the executor can, in the exercise of business judgment, pay such taxes out of the marital share. The bank is not deterred. It argues that the death taxes should not reduce the marital share since there is not a clear direction to the executor to pay taxes from the marital assets. It must be concluded, however, that since the will speaks as of the date of death, and since it does authorize the payment of taxes from the marital trust within the executor’s discretion, it serves the interest of precision and definiteness as well as avoidance of uncertainty to rule that the authorization to pay death taxes from the marital share by its very existence reduces the marital share. In the absence of a clear and unambiguous direction in the will, property transferred to the surviving spouse must bear part of the estate tax burden. See Thompson v. Wiseman, 233 F.2d 734 (10th Cir. 1956).

In Thompson v. Wiseman, supra, the will directed that decedent’s debts and expenses “be paid out of my estate as soon after my demise as conveniently may be done.” We ruled in that case that the language of the will, although ambiguous, gave the executor discretion to pay taxes from the marital assets if this procedure would further the efficient and convenient administration of the estate. See also Greene v. United States, 476 F.2d 116 (7th Cir. 1973).

The directive in the will at bar authorizing payment of death taxes dispels the executor’s claim that decedent failed to vest authority in the executor to apply marital trust assets to the payments of death taxes. The existence of the authority is out of harmony with the notion that the decedent firmly directed the executor to pay taxes out of funds other than marital ones so as in all circumstances to secure the greatest possible marital deduction. Cf. Bauknecht v. Kellogg-Citizens National Bank, 49 Wis.2d 392, 182 N.W.2d 238 (1971).

Although ARTICLE XII of the will expresses a preference for payment of the taxes from that part of the estate not included in the marital trust, this is much less than a positive direction that death taxes be paid from that part of the estate not included in the marital share, and as we view it such an express provision would be necessary to justify a ruling for the executor. For an example of the kind of an express provision that is needed see In Estate of Leeds, 54 T.C. 781 (1970).

Since we do not have a positive expression in the will we must rule that § 2056(b)(4) renders the marital share available to the surviving spouse subject to the payment of death taxes. As a result of this, the value of the marital deduction is reduced by the amount of these death taxes.

II.

THE PETITIONER’S CONTENTION THAT THE EXCEPTION TO THE TERMINABLE INTEREST PROVISION, § 2056(b)(5), APPLIES AND RESULTS IN A DEDUCTION OF THE ENTIRE MARITAL SHARE UNREDUCED BY DEATH TAXES

The mentioned section provides that terminable interests passing to a surviving spouse do not qualify for the marital deduction under 26 U.S.C. § 2056(a). At the same time, an exception exists where the surviving spouse receives a life estate coupled with the power to appoint by will (or during life). To qualify, this power of appointment must be exercisable by the spouse alone with no power in any other person to appoint any part of the interest to any person other than the surviving spouse. The surviving spouse here fulfills these requirements in that she receives a life estate in the marital trust plus the power to appoint the remainder. It is argued that since the surviving spouse fulfills these requirements, that the entire marital share bequeathed to the wife is embraced by the terminable interest exception. An obvious answer is that due to the authority granted the executor to pay the death taxes from the marital share, the amount of the death taxes must be excluded from the marital deduction. The fact that the executor did not choose to exercise the discretion granted to use the marital funds to pay the taxes is inconsequential since the determination as to whether an interest qualified for the deduction is to be made at the time of the decedent’s death. Jackson v. United States, supra; Allen v. United States, 359 F.2d 151 at 154 (2d Cir. 1966), cert. denied, 385 U.S. 832, 87 S.Ct. 71, 17 L.Ed.2d 67; United States v. Mappes, 318 F.2d 508 at 511 (10th Cir. 1963).

Appellant has a further argument which is ingenious but not meritorious. This contention is that assuming the executor had the power to invade the marital trust assets to pay death taxes, this would not prevent the entire marital property from passing and being non-terminable because the payment of death taxes would not be to a “person,” but only to the United States or to the state of Utah. In this connection the bank cites 26 U.S.C. § 7701(a)(1), which narrowly defines the term “person” to mean individual, a trust, estate, partnership, association, company or corporation. However, 26 U.S.C. § 7701(b) states that the definition given does not exclude other things which otherwise are within the meaning of the term. Thus, the definition does not exclude the United States or Utah. Cf. Sims v. United States, 359 U.S. 108 at 112, 79 S.Ct. 641 at 644-645, 3 L.Ed.2d 667 (1959).

Whether “person” includes a state or the United States depends on the legislative context in which the word is found. Ohio v. Helvering, 292 U.S. 360 at 370, 54 S.Ct. 725 at 727, 78 L.Ed. 1307 (1934); Sims v. United States, supra, 359 U.S. at 112, 79 S.Ct. at 645. The legislative purpose behind the estate tax marital deduction is to equalize estate tax treatment in community property and non-community property states. This allows up to one-half of decedent’s adjusted gross estate to be passed to his surviving spouse free of tax liability. It contemplates, moreover, that the interest will be available for state taxation when the surviving spouse dies. Northeastern Pennsylvania Nat. Bank and Trust Co. v. United States, 387 U.S. 213 at 221, 87 S.Ct. 1573 at 1578, 18 L.Ed.2d 726 (1967).

Thus, when considered in this context the United States and the state of Utah should not be, on the basis of technical reasoning, excluded from the term “persons,” for to do this would be out of harmony with the marital deduction provision. As a practical matter, to accept the appellant’s argument would carve out a judicial loophole which Congress did not intend to create.

It is then consistent with the purposes of the Act to regard the United States and the state of Utah as “persons” within the language of § 2056(b)(5). So considered, the terminable interest in question is exercisable in favor of persons other than the surviving spouse, and, at least to the extent of the death taxes, the marital trust does not qualify for the marital deduction.

We must conclude then, contrary to the executor’s contention, that § 2056(b)(5) does not display a congressional intent that the marital share be deductible as an unreduced unit.

The judgment of the Tax Court is affirmed.

MOORE, Circuit Judge

(dissenting):

When the testator asked an attorney (and presumably he did) to draw his will, he must have told him, judging by the will, that he wished to provide for his wife and set up a marital trust which would “maximize the estate tax deduction available under § 2056 of the Internal Revenue Code.” (Majority Opinion) He also “indicated a preference as to which assets were to go to the marital trust so that his surviving spouse would not have to be involved in decisions relating to the family business.” (Tax Court Opinion) The usual clause for payment of funeral expenses, just debts, etc. was inserted but as a special directive, the testator directed that “all inheritance, estate and transfer taxes due by reason of my death shall be paid out of that portion of my estate which is not included in the Marital Trust to be administered by my Trustee . ”. The testator’s instructions to his executor, whether attorney-drawn or layman-drawn, could not have been clearer.

However, mindful of the unexpected, which it is always wise to provide for in any document, testamentary or corporate, the testator added an “unless” proviso so that if in the executor’s sole discretion and “in his best business judgment” the executor might think it advisable that “such taxes could be more prudently paid from any assets in my estate without respect to what is or is not included in the Marital Trust”, then the executor would not be accused of a breach of trust if it did so. But before doing so, it was called upon to exercise its best business judgment, which judgment was to be'exercised in its sole discretion. It was not the discretion of the Tax Commissioner, nor the Tax Court, nor the Court of Appeals.

Little comment is necessary as to the applicable principles of law. The courts are to discover and enforce the will and intent of the testator. We can speak only through the document declaring his intent. Were he here today he would undoubtedly reaffirm what he thought he had clearly expressed.

Error becomes first noticeable in the Tax Court’s opinion in its assumption that “decedent’s will directed the executor in his sole discretion to pay death taxes without respect to what was or was not included in the marital trust.” Quite to the contrary, he specifically directed that estate taxes “be paid out of that portion of my (his) estate which is not included in the Marital Trust . .” (emphasis added).

An all-important prerequisite had to occur before the executor could invade the marital trust for this purpose. It had to exercise its “best business judgment.” Had the executor been called to account for departing from the testator’s wishes, it would undoubtedly have had to show cause as to the wisdom of this exercise and by adequate proof to justify the soundness of its judgment.

I cannot understand, nor agree with, the majority’s statement that Article XII “expresses a preference for payment of the taxes from that part of the estate not included in the marital trust.” Nowhere in the Article is there any suggestion of “preference.” Quite the opposite — the testator used words of command. Thus, he wrote, “I further direct . ” and that the taxes “shall be paid out of that portion of my estate which is not included in the Marital Trust . . . ” (emphasis added). These words I cannot reconcile with the majority’s statement that “we do not have a positive expression in the will” or “a positive direction that death taxes be paid from that part of the estate not included in the marital share . . . ”.

The courts should strive to carry out the wishes and intent of testators and not decree, in effect, that only if the testator writes, in substance, that “I direct that under no circumstances whatsoever shall any estate taxes be paid out of. or which in any way might diminish, the marital trust.” True, the testator gave to his executor a contingent power to apply funds of the trust if it could justify its use as its “best business judgment” but this is a far cry from saying, as do the majority, that “the existence of the authority is out of harmony with the notion that the decedent firmly directed the executor to pay taxes out of funds other than marital ones so as in all circumstances to secure the greatest possible marital deduction.”

The Tax Court judge conceded that “under Utah State law the decedent’s will must be interpreted to give effect to the decedent’s expressed intention” but at the same time said that “the decedent clearly intended that his executor possess absolute power to commit the assets of the marital trust to the payment of death taxes if he saw fit to do so.” Were the will to be properly interpreted, he should have said that the executor possessed a conditional power not to be exercised without a showing that the conditions had been met.

Furthermore, although the Commissioner is not foreclosed from making a federal assessment, the Tax Court judge acknowledged that “[wjhether any estate taxes are payable from the surviving spouse’s interest is a matter governed by state law. (citing cases)” All parties in interest were before the District Court (Utah), Probate Division, and by order of that Court the property was distributed in a manner which did not reduce the marital trust by any Federal estate or Utah inheritance tax. The federal government has received its full measure of tax from this estate. In my opinion it should honor the testator’s wishes — not seek to override and frustrate them.

The legislative purpose of the marital deduction is the equalization of treatment of surviving spouses in common-law states with those in community property jurisdictions. Furthermore, there is a presumption that the marital estate will not be burdened with Federal Tax. See Estate of Amory Haskell v. Commissioner of Internal Revenue, 58 T.C. 197 (1972). It is generally accepted that state law may determine who will pay the federal estate tax. Riggs v. Del Drago, 317 U.S. 95, 63 S.Ct. 109, 87 L.Ed. 106. Absent statutory authority from Utah placing the federal tax burden or any part of it on the surviving spouse and absent clear language in the will indicating that the testator wishes the tax to be paid from property which would otherwise be included in the marital deduction, I would hold that the presumption of no tax burden and the clear intent of the testator to bequeath the maximum marital estate be given effect.

Since I believe that the decision today departs widely from the testator’s expressed intent, I must dissent.

      . ARTICLE VI of the will reads as follows: If my said wife survives me, I devise, bequeath and appoint to my Trustee, in trust, an amount equal to fifty percent (50%) of the value of my adjusted gross estate as finally determined for Federal estate tax purposes * * * [I]n selecting and assigning to this Marital Trust the property and assets of which the same shall consist, my Trustee, insofar as is possible and practicable, shall resort first to cash, secondly to debentures or other securities, and thirdly to nonvoting shares of stock in any corporations in which I shall have such shares at the time of my death, and lastly to voting shares of stock in any corporations in which I may have such shares at the time of my death, it being my intention anti desire that unless absolutely required to provide a portion of the share of my property required for this Marital Trust, that all of my shares of voting stock in any corporation in which I may hold such shares at the tizne of my death shall be apportioned to and become a part of my Residuary Trust Estate as created and referred to in this Will. This Trust created for the use and benefit of my wife shall be known as the “Marital Trust” and shall be held and administered and disposed of as follows :

        First: I direct that income from the Marital Trust * * * shall be paid to my wife in convenient installments but not less frequently than quarter-annually during her lifetime.

        Third: Upon the death of my said wife, all accrued and undistributed income of the Marital Trust shall be paid and distributed by said Trustee unto the person or persons who my said wife by her Last Will and Testament may designate, nominate, and appoint to receive the same * * * [A]nd further upon the death of my said wife the entire remaining corpus of the Marital Trust shall be paid and distributed by said Trustee to the person or persons who my said wife, by her Last Will and Testament, shall designate, nominate and appoint to receive the same

      . ARTICLE VII. If my son, Bruce Wycoff, survives me, I devise, bequeath and appoint all of the rest, residue and remainder of my property * * * to my Trustee, in trust, for the use and benefit of my said son, Bruce, as beneficiary as herein provided, said Trust to be known as the “Residuary trust”. * * *

      . Taxpayer cites the following regulations to support its argument that a reduction is not required for taxes which merely could have been (but were not) paid from a portion of the marital share:
      § 20.2056(b)-4 (A) The marital deduction may be taken only with respect to the net value of any deductible interest which passed from the decedent to his surviving spouse, the same principles being applicable as if the amount of a gift to the spouse were being determined.
      § 20.2056(b)-4(C) (2) For example, assume that the only bequest to the surviving spouse is $100,000 and the spouse is required to pay a state inheritance tax in the amount of $1500. If no other death taxes affect the net value of the bequest, the value for the purpose of the marital deduction is $98,500.
      § 20.2056(b)-4(C) (4) If the decedent bequeaths his residuary estate, or a portion of it, to his surviving spouse, and his will contains a direction that all death taxes shall be payable out of the residuary estate, the value of the bequest, for the purpose of the marital deduction, is based upon the amount of the residue as reduced pursuant to such direction, if the residuary estate, or a portion of it, is bequeathed to the surviving spouse, and by the local law the federal estate tax is payable out of the residuary estate, the value of the bequest, for the purpose of the marital deduction, may not exceed its value as reduced by the federal estate tax.

      . Although federal law governs payability of estate tax, the impact of the federal tax is governed by state law. Riggs v. Del Drago, 317 U.S. 95, 63 S.Ct. 109, 87 L.Ed. 106 (1942); Thompson v. Wiseman, 233 F.2d 734 (10th Cir. 1956). Thus, the apportionment of payment of death taxes is governed by state law.

      . The Will there said :
      My said Executor shall also pay from my estate all federal estate tax from whomsoever due and however assessed, and all estate, succession, legacy, and inheritance tax, but in so doing said taxes shall be paid from other property than that given and devised to my wife or from life insurance received by her, so that any property received by her as the result of my death will not be reduced by the payment of said taxes, and for the further reason that my estate may get the full benefit of the marital deduction as defined in the Federal Estate Tax Reduction Act of 1948.

      . Section 2056(b) (5) reads as follows:
      (5) Life estate with power of appointment in surviving spouse.—
      In the case of an interest in property passing from the decedent, if his surviving spouse is entitled for life to all the income from the entire interest, or all the income from a specific portion thereof, payable annually or at more frequent intervals, with power in the surviving spouse to appoint the entire interest, or such specific portion (exercisable in favor of such surviving spouse, or of the estate of such surviving spouse, or in favor of either, whether or not in each case the power is exercisable in favor of others), and with no power in any other person to appoint any part of the interest, or such specific portion, to any person other than the surviving spouse—
      (A) the interest or such portion thereof so passing shall, for purposes of subsection (a), be considered as passing to the surviving spouse, and
      (B) no part of the interest so passing shall, for pur-poses of paragraph (1) (A), be considered as passing to any person other than the surviving spouse.
      This paragraph shall apply only if such power in the surviving spouse to appoint the entire interest, or such specific portion thereof, whether exercisable by will or during life, is exercisable by such spouse alone and in all events.


author: MeCREE, J., MeCREE, Circuit Judge. EDWARDS, Circuit Judge

text:
    Butrice A. HINES et al., Plaintiffs-Appellants, v. LOCAL UNION NO. 377, CHAUFFEURS, TEAMSTERS, WAREHOUSEMEN & HELPERS, et al., Defendants-Appellees.
    No. 73-2105.
    United States Court of Appeals, Sixth Circuit.
    Nov. 22, 1974.

      Niki Z. Schwartz, Gold, Rotatori, Messerman & Hanna, Cleveland, Ohio, for plaintiff s-appellants.
    Eugene Green, Youngstown, Ohio, Robert C. Knee, Jr., Dayton, Ohio, Bernard S. Goldfarb, Alan M. Rauss, Cleveland, Ohio, David Leo Uelmen, Milwaukee, Wis., for defendants-appellees.
    Before PHILLIPS, Chief Judge, and EDWARDS and MeCREE, Circuit Judges.
   MeCREE, J.,

delivered the opinion of the Court, in which PHILLIPS, C. J., joined. EDWARDS, J., (p. 1158) filed a separate opinion concurring in part and dissenting in part.

MeCREE, Circuit Judge.

This is an appeal from the grant of a motion for summary judgment in- favor of defendants in an action by eight truck drivers for damages caused by their wrongful discharge by their employer and by the breach of the duty of fair representation on the part of their union. The primary question we consider is whether summary judgment in favor of defendant local union was proper in light of plaintiffs’ allegation, assumed to be true, that because of political animosity, local union officials processed their grievance in a perfunctory manner. We decide that summary judgment should not have been entered for the local union and that plaintiffs should have been permitted to submit proofs in support of the allegations of bad faith and perfunctory treatment.

The case was filed by discharged employees on June 30, 1969, approximately two years after their discharge had been upheld by the arbitration committee designated in the contract to hear employees’ grievances. On October 31, 1972, the district judge denied defendant Anchor Motor Freight’s motion for summary judgment, finding “substantial issues as to material facts.” On May 31, 1973, Anchor filed another motion for summary judgment in which the unions joined. After reviewing the depositions and briefs submitted by the parties, the district court entered summary judgment in favor of all defendants. This appeal followed.

The facts considered relevant by the district court are as follows:

Plaintiffs were discharged from their employment with Anchor Motor Freight on the 27th day of July, 1967, for alleged dishonesty; said dishonesty consisting of the falsifying of motel receipts. The discharges of all of the plaintiffs were processed through the grievance procedure as provided for by a contract between the local union and the company, known as the National Master Automobile Transporters Agreement and Central Conference Area Supplemental Agreement covering truckaway, driveaway and local agreements. Plaintiffs asserted their innocence to the charges. The tangible evidence that was used against plaintiffs in the grievance procedure consisted of receipts showing that amounts paid were in excess of amounts shown paid on the comparable motel registration cards; company logs and expense summaries; a notarized statement of motel clerk, Anthony Pagano, swearing to the accuracy of the amounts shown on the registration cards; and the notarized statements of motel owner, Joseph Repicci, swearing to the accuracy of the accounts shown on the registration cards and to the fact that inflated receipts were given to plaintiffs.
Plaintiffs carried their grievance to the Union, and the Union representative, one Mr. John Angelo. They assert that they told Mr. Angelo that the motel operator was at fault and that Mr. Angelo’s response was that “there was nothing to worry about.” In July of 1967, there was a meeting of the Central Conference Joint Arbitration Committee, at which time all plaintiffs were given an opportunity to present their evidence and make their arguments as to their side of the case. At that meeting local union representatives spoke on behalf of the drivers. However, the final decision of the Committee was that the discharge of the drivers was upheld.
Plaintiffs then retained an attorney who went to the motel in New York, obtained a statement from the owner of the motel, Mr. Repicci, indicating ’that he had no personal knowledge of the transactions in question, that the clerk had handled such transactions, and that the discrepancies between the receipts and registration cards could possibly be attributable to the clerk recording less than was actually paid. With this new information plaintiffs returned to Detroit in October of 1967, seeking a rehearing based on new evidence. However, said requests were unanimously denied on the ground that there was no new evidence justifying the reopening, and that the motel owner’s statement was never considered on the merits of the discharge.

Under Rule 56(c) of the Federal Rules of Civil Procedure, the burden is on the party seeking summary judgment to establish that there is no genuine issue as to any material fact. In addition, the inferences to be drawn from the affidavits, exhibits and depositions filed in connection with the motion must be viewed in the light most favoi^ble to the party opposing the motion. United States v. Diebold, 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962).

Accordingly, we consider, as did the district court, the matters before it from which bad faith or arbitrary conduct of the local union could be inferred. They consist of the motel clerk’s admission, made a year after the discharge was upheld in arbitration, that he, not plaintiffs, pocketed the money; the claim of the union’s failure to investigate the motel clerk’s original story implicating plaintiffs despite their requests; the account of the union officials' assurances to plaintiffs that “they had nothing to worry about" and “that there was no need for them to investigate;” the contention that no exculpatory evidence was presented at the hearing; and the assertion that there existed political antagonism between local union officials and plaintiffs because of a wildcat strike led by some of the plaintiffs and a dispute over the appointment of a steward, resulting in denunciation of plaintiffs as “hillbillies” by Angelo, the union president.

After considering all material submitted with the motion for summary judgment, the district court held that under Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), no breach of the duty of fair representation was shown.

A union breaches its duty of fair representation when it acts arbitrarily, discriminatorily or in bad faith. Vaca v. Sipes, 386 U.S. at 190, 87 S.Ct. 903; Humphrey v. Moore, 375 U.S. 335, 350, 84 S.Ct. 363, 11 L.Ed.2d 370 (1964); Ford Motor Co. v. Huffman, 345 U.S. 330, 338, 73 S.Ct. 681, 97 L.Ed. 1048 (1953); Johnson v. General Drivers, Warehousemen & Helpers, Local 89, 488 F.2d 250, 251 (6th Cir. 1973); Dill v. Greyhound Corp., 435 F.2d 231, 238 (6th Cir.), cert denied, 402 U.S. 952, 91 S.Ct. 1622, 29 L.Ed.2d 122 (1970). For example, it “may not arbitrarily ignore a meritorious grievance or process it in a perfunctory fashion.” 386 U.S. at 191, 87 S.Ct. at 917. In Vaca, the plaintiff was dismissed from his job because of poor health. He contested the dismissal and the union initiated a grievance. However, upon receipt of an unfavorable medical report it dropped the grievance at the fourth step just prior to arbitration and urged the employee to accept a company offer to refer him to a rehabilitation center. The employee refused the offer and filed suit against the union. The Supreme Court determined that the union did not breach its duty of fair representation because it attempted to obtain medical evidence in support of the employee’s case and tried to secure less vigorous work or rehabilitative treatment for him. There was no evidence of personal hostility by any union official toward the grievant.

Although this appeal does not concern a union decision to short circuit the processing of a grievance, the facts assumed as true by the district court were that the union made no attempt to obtain evidence favorable to the employes and that some of its officials were hostile towards them.

Appellants contend that had the local union investigated the motel clerk, Pagano, as requested, it would have discovered that he had pocketed the money and that appellants were innocent of any wrongdoing. The failure to investigate, by itself, is insufficient to fix liability on the union since “proof that the union may have acted negligently or exercised poor judgment is not enough to support a claim of unfair representation.” Dill v. Greyhound Corp., 435 F.2d at 238, quoting Bazarte v. United Transp. Union, 429 F.2d 868, 872 (3d Cir. 1970). In Dill, we reversed the trial court’s finding of a breach of the duty of fair representation because, although the union failed to proceed to arbitration, there was no proof that its decision was the result of hostility or malice, nor was there any evidence that it acted in bad faith in settling the grievance.

In this appeal, there are allegations of bad faith and the- assertion of a reason for it, and the district court’s ruling that “plaintiffs have failed to reveal even a threshold issue of bad faith” should not have been made without affording them the opportunity to prove this contention.

Appellants have met the requirement that supporting affidavits

alleging the breach of a Union’s duty of fair representation must contain more than “conclusory statements alleging discrimination. In particular plaintiffs must make a showing that the action or inaction of the statutory representative complained of was motivated by bad faith, for the gravamen of the rule is ‘hostile discrimination’.” Gainey v. Brotherhood of Railway Employees, 313 F.2d 318, 323 (C.A. 3). “[C]onelusory words * * * without a concomitant showing of lack of good faith [does] not set forth a claim.”

Balowski v. International Union, United A., A. & A. Imp. Workers, 372 F.2d 829, 835 (6th Cir. 1967), quoting Hardcastle v. Western Greyhound Lines, 303 F.2d 182, 186 (C.A. 9) cert. denied, 371 U.S. 920, 83 S.Ct. 288, 9 L.Ed.2d 229 (1962).

A case where questions of good faith or fraud are at issue should not be summarily decided without the taking of testimony unless it is clear that recovery cannot be had on any state of the evidence. Williamson v. Wilbur-Rogers, Inc., 381 F.2d 719, 721 (6th Cir. 1967); S. J. Groves & Sons Co. v. Ohio Turnpike, 315 F.2d 235, 238-239 (6th Cir. 1963).

In St. Clair v. Local Union No. 515, 422 F.2d 128 (6th Cir. 1969), we upheld a jury verdict for an employee against his union in a fair representation case where the local contended that a directed verdict should have been granted. Although “the evidence of bad faith [was] minimal, there [was] enough to present a jury question” (422 F.2d at 131) that the union should have protested more vigorously, that it should have urged its members to walk off the job in protest, or that a union official declined to act because of hostility towards the employees. Accordingly, we determine that the district court erred in granting summary judgment in favor of the local union.

Although we hold that defendant local union’s motion for summary judgment was improperly granted, we determine that the district court did not err in granting the motions made by the International Union and by the employer.

There was no claim that the local union was acting for or at the direction of the International, and appellant Hines, when asked on deposition what steps the International failed to take in investigating the company’s charge replied: “I don’t know of any steps that they should or should not have taken.” Since there was no genuine issue as to a material fact about the conduct of the International Union, the grant of summary judgment was proper.

Appellant contends that the employer did not have “just cause” to discharge them because of the recantation of the motel clerk. As we said in Balowski v. International Union, supra, 372 F.2d at 833,

[i]t is apparent that what plaintiff is attempting to do is to relitigate his grievance in this proceeding. This he cannot do when the collective bargaining agreement provides for final and binding arbitration of all disputes, absent a showing of fraud, misrepresentation, bad faith, dishonesty of purpose, or such gross mistake or inaction as to imply bad faith on the part of the Union or the employer. Cf. Smith v. Evening News Association, 371 U.S. 195, 83 S.Ct. 267, 9 L.Ed.2d 246.

No evidence of any misconduct on the part of the employer to avoid the arbitration award is suggested. Although appellants argue that there was a conspiracy between the union and the company, none of the evidence offered to substantiate this claim is sufficient under the requirement of Balowski, supra, that something more than suspicion be shown. Accordingly, we hold that the district court correctly granted summary judgment in favor of Anchor Motor Freight. See United Steelworkers of America v. American Manufacturing Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1959); United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1959); United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1959).

Summary judgment in favor of Anchor Motor Freight and the International Union is affirmed.

Reversed and remanded to vacate the judgment in favor of the local union and for further proceedings consistent with this opinion.

EDWARDS, Circuit Judge

(concurring in part and dissenting in part.)

I agree with the majority opinion in affirming the judgment of the District Court in dismissal of the case as to the International Union. I also agree with the majority opinion in reversing for hearing as to plaintiffs’ allegations concerning the Local Union.

I think, however, that similar issues of fact were presented by the pleadings concerning plaintiffs’ charges against the employer which should not have been dealt with on summary judgment, and as a consequence, as to the employer the ease should likewise be reversed and remanded for hearing.

      . The “facts” plaintiffs rely upon to show that both the union and company were working together to discharge the drivers are as follows:
      (1) That a company manager loaned a company car to Angelo, the local President, and arranged a personal automobile purchase for him in Michigan.
      (2) That the company gave jobs to two relatives of Schwartz, another union official.
      (3) That the company had tried to fire one of the appellants before.
      (4) That 25 of the 57 Norwood drivers hired by Lordstown had either been terminated or quit by the end of 1967.