author: JAMES M. CARTER, Circuit Judge:

text:
    The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Plaintiff-Appellee, v. FIFTY ASSOCIATES, Defendant-Appellant.
    No. 73-1419.
    United States Court of Appeals, Ninth Circuit.
    Oct. 1, 1974.

      James Powers (argued), of Powers, Boutell, Fannin & Kurn, Phoenix, Ariz., for defendant-appellant.
    Phillip E. von Ammon (argued), of Fennemore, Craig, von Ammon & Udall, Phoenix, Ariz., for plaintiff-appellee.
   OPINION

Before BARNES and CARTER, Cir- - cuit Judges, and LINDBERG, District Judge.

JAMES M. CARTER, Circuit Judge:

This case presents the question of whether the mortgagee (appellee) or the land owner-mortgagor (appellant) is entitled to the rents from the encumbered land, collected by a receiver, between the date of the filing of a foreclosure by the mortgagee and the date of foreclosure sale. We decide in favor of the mortgagee (appellee) and affirm.

This is the third go-around in the case of Fifty Associates v. The Prudential Insurance Company of America, 446 F.2d 1187 (9 Cir. 1970); and 450 F.2d (9 Cir. 1971). Neither prior case has any real bearing on the present question.

FACTS

Fifty Associates (hereafter “Fifty”) in 1959 owned the fee interest in real property in Phoenix, Arizona, and leased the same to Mayer Central Building Corp. (hereafter “Mayer”) for 99 years. The lease required Fifty to subject its fee interest to a loan from The Prudential Insurance Company of America (hereafter “Prudential”) for $2,500,000 for the construction of an eight-story building to be built on the leased premises. In 1960, Fifty executed the mortgage to Prudential for the $2,500,000 and thereby subjected its fee interest to the mortgage. Mayer also executed the mortgage and signed the mortgage note. Prudential lent the money to Mayer and Mayer built the building.

The mortgagor conveyed the fee to Prudential as security for the loan. It contained a clause that Mayer and Fifty mortgaged the property to Prudential “together with all appurtenances thereto and improvements thereon, and all the rents, issues and profits thereof tt

The lease had a further proviso requiring Fifty to subject its fee interest to a subsequent mortgage if Mayer desired to refinance or construct additions on the premises.

In 1962, Mayer undertook a refinancing prusuant to the proviso. In the refinancing, Mayer applied for a new loan and mortgage from Prudential. $3,400,000 of this loan was to be secured by the fee interest owned by Fifty and leased to Mayer. Four loan documents were prepared for execution by Mayer and Fifty, but Fifty refused to execute any of the four except the new mortgage. On November 20, 1962, Fifth and Mayer executed the new mortgage.

The new mortgage had a clause similar to that in the first mortgage providing that Mayer and Fifty mortgaged the real property to Prudential “together with all appurtenances thereto and improvements thereon, and all the rents, issues and profits thereof

Another clause in the new mortgage provided that in any action to foreclose the mortgage “a receiver shall, upon application of the plaintiff in such action (Prudential) ... be appointed by the court . . . ” to collect the rents, issues and profits and apply them to the payment of the mortgage “and interests, taxes and other charges” becoming due during the pendency of the action and “until sale be finally made and a deed made and delivered thereunder.”

The three other documents which Fifty refused to sign were (1) the promissory note; (Fifty did not sign the note for the original mortgage and had no personal liability for the loan); (2) a document entitled “Conditional Assignment of Rentals”; and (3) a document entitled “Assignment of Lease and Agreement.” The latter two, states appellant, “dealt with the rents payable by tenants in the building.”

At the instance of Fifty, a clause was inserted in the new mortgage, reading:

“■Notwithstanding anything to the contrary contained herein, Fifty Associates has executed these presents for the sole purpose of creating the lien and right of lien set forth herein against its fee interest and this instrument creates no additional or personal liability in Fifty Associates and no personal judgment for any money deficiencies shall be sought or obtained against Fifty Associates.” (Emphasis added)

Thereafter, Mayer defaulted on the installment payment due Prudential in February 1965 and continued in default thereafter. In July 1965, Prudential notified Fifty that Mayer was in default and that it had elected to accelerate the debt and intended to foreclose the mortgage after the expiration of a ten-day period, during which Fifty could reinstate the loan. Fifty did not reinstate the loan.

On July 15, 1965, Mayer filed a petition for reorganization under Chapter X of the Bankruptcy Act and the district court issued a stay order. The bankruptcy court controlled the property until May 29, 1967. By an order on that date the property was turned over to Fifty, subject only to the rights of Prudential.

The ground rent due to Fifty from Mayer was paid through July 1965. From July 1965 to November 18, 1966, Fifty continued to receive its ground rent from a creditor of Mayer who held a second mortgage on Mayer’s leasehold estate and desired to keep it intact.

At the conclusion of the bankruptcy proceedings, Fifty applied for and received as an expense of administration the remaining unpaid ground rent. Fifty thus received all the rents it was entitled to through the end of May 1967.

On May 29, 1967, Prudential filed an action to foreclose and applied for the appointment of a receiver to take over, operate the property, and collect the rents. By stipulation of the parties a receiver was appointed by order of June 22, 1967, effective June 13, 1967.

The district court entered a summary judgment of foreclosure. The two prior appeals mentioned above intervened. The second appeal, 450 F.2d 1007, affirmed the summary judgment.

Finally, Fifty and Prudential agreed that Fifty would give Prudential a deed in lieu of foreclosure sale and the remaining issues could be decided as though a Marshal’s sale took place on March 31, 1971, on Prudential’s bid of $3,277,610.24. After applying this agreed bid price to the foreclosure judgment, there remained a deficiency to Prudential of $1,600,000.

The court order appointing the receiver expressly provided it would not be deemed an adjudication as to which party, Prudential or Fifty, would be entitled to the funds collected by the receiver, and such issue was postponed until further order of the court. The judgment of foreclosure had a similar reservation.

The receiver accumulated from rents the net sum of $322,779. By agreement of the parties concerning credits, the net balance is $290,849. The district court awarded the sum to Prudential. This is the judgment now on appeal.

DISCUSSION

Jurisdiction of this action is based on diversity of citizenship of the parties. Both parties agree that Arizona law controls.

A.R.S. § 33-703A provides: “A mortgage is a lien upon everything that would pass by a grant of the property, but does not entitle the mortgagee to possession of the property unless authorized by the express terms of the mortgage.”

The mortgage executed by Fifty created a lien on the fee to the mortgaged property including, by definition, a lien on the rents and issues which were part of the fee interest. In re Forsstrom, 44 Ariz. 472, 38 P.2d 878 (1934), overruled on other grounds, County of Mohave v. Chamberlin, 78 Ariz. 422, 281 P.2d 128 (1955) and State v. Thelberg, 87 Ariz. 318, 350 P.2d 988 (1960).

Valley National Bank v. Avco Development Co., 14 Ariz.App. 56, 480 P.2d 671 (1971) holds that the right to unaccrued rents from a lease of real property is a hereditament within the meaning of the statutory definition of real property as “coextensive with lands, tenements and hereditaments.” [A.R.S. § 1-215(25)]

Fifty had acknowledged that the rents from the property are part of the fee interest. In its brief it states that Fifty “[a]s owner . . . was entitled to the benefits of ownership, including the rights to rent.”

Wingfoot California Homes Co. v. Valley National Bank, 74 Ariz. 287, 248 P.2d 738 (1952) relied on a part of an earlier statute, Section 62-503, A.C.A. (1939) reading identically with A.R.S. § 33-703A, quoted supra. Wingfoot held at p. 289, 248 P.2d at p. 739:

By this section, then, it can readily be seen that if in its opinion a receiver is necessary for the protection and preservation of the property, the court has jurisdiction to appoint a receiver in the instant case to take possession of the mortgaged property for the benefit of the mortgagee. The above statute confers upon the court the jurisdiction to appoint a receiver if conditions warrant it. The mortgages sought to be foreclosed included the “rents, issues, and profits”, and also provided “that in any action to foreclose this mortgage a receiver shall, upon the application of the plaintiff in such action and without notice to the defendants, be appointed by the court to take charge of said property. •>:- * * »

In cases in other jurisdictions involving clauses in mortgages assigning rents and providing for the appointment of a receiver in the event of default by the mortgagor, courts have held that the mortgage creates a lien on the rents in favor of the lender as additional primary security for the loan. Mortgage Guarantee Co. v. Sampsell, 51 Cal.App. 2d 180, 124 P.2d 353 (1942); Randall v. Jersey Mortgage Investment Co., 306 Pa. 1, 158 A. 865 (1932) (mortgage language conveying “rents, issues and profits” was alone sufficient to create a pledge of rents to the mortgagee).

Other courts have held that a receivership clause alone creates an assignment of rents to the mortgagee enforceable on appointment of a receiver. Wilson v. Tolles, 210 Iowa 1218, 229 N.W. 724 (1930): 2 Glenn, Mortgages § 175 (1943).

In re Ventura-Louise Properties, 490 F.2d 1141 (9 Cir. 1974) applied California law and distinguished between an outright assignment of rents and an assignment of rents for security purposes only. The case held that the provision in the assignment authorizing the beneficiary of the trust deed to “enter” on the premises and “operate and manage” the same made the assignment outright rather than an assignment for security only. (p. 1144) The court further noted that a demand for possession would have perfected the assignment, had it been for security only. (p. 1145)

Generally, the mortgagee is not entitled to receive the rents from mortgaged property prior to a default or commencement of foreclosure proceedings. However, the mortgage lien on such rents ripens upon the appointment of a receiver. 2 Glenn, Mortgages § 175 (1943); Osborn, Mortgages § 150 (2d Ed.) (1970). In Kinniston v. Guaranty Liquidating Corp., 18 Cal.2d 256, 261, 115 P.2d 450, (1941), a pledge of rents, as distinguished from an outright assignment, was held to give the mortgagee the right to the rents when he secures possession of the property or secures an appointment of a receiver to collect the rents.

Here the mortgage contained both an assignment of rents and a provision for the appointment of a receiver. A receiver was appointed. Regardless of the character of the assignment (outright assignment, or pledge or assignment for security) the appointment of the receiver would perfect the right of the mortgagee to the rents. We think Wingfoot, supra, so holds.

Fifty’s reliance on Dart v. Western Savings & Loan Association, 103 Ariz. 170, 438 P.2d 407 (1968), as limiting Wingfoot, is misplaced. The court in Dart simply concluded that the facts did not warrant the appointment of a receiver.

Prudential’s judgment awarding it the rents is not a personal deficiency judgment contrary to the inserted clause insulating Fifty from liability. Mortgage Guarantee Co. v. Sampsell, 51 Cal. App.2d 180, 124 P.2d 353 (1942). In that California case, where the deed of trust contained rents and receivership clauses, the court awarded the rents to the beneficiary of the deed of trust. The court held the clauses created a lien on rents as primary security for the loan and that therefore the award of rents was not a personal deficiency judgment in violation of California’s anti-deficiency statute.

We think the highest Arizona court would not hold that the award of rents to Prudential constituted a personal deficiency judgment against Fifty, in violation of the inserted clause, insulating Fifty from personal liability.

Fifty contends that notwithstanding the plain language of the statute assigning rents, Prudential had no lien on rentals from the property after the termination of the Mayer lease, i. e., that the only rents subject to Prudential’s lien were those directly payable to Mayer.

Such a contention would do violence to Fifty’s general assignment of rents from the property. Fifty, as fee owner before the new mortgage was executed, had a right to all the rents from the property.

By the new mortgage it assigned the rents to Prudential. Fifty therefore would have the court read into the assignment language to the effect that (1) the rents assigned were only the rents from leases made by Mayer, and (2) the assignment was valid only as long as Fifty did not terminate Mayer’s lease. To state the contention is to demonstrate its absurdity. In fact, Valley National Bank v. Avco, supra, held that rents from land were a species of property, a hereditament within the definition of real property in A.R.S. § 1-215(25).

Finally, the receiver was properly appointed. Arizona law holds that “[the] parties may not by contract or stipulation confer jurisdiction on a court” to appoint a receiver, and that the right to appoint a receiver must exist under law independent of a contract. Wingfoot, supra, 74 Ariz. at 289, 248 P.2d at 738.

Here, when Prudential applied for a receiver, the unpaid indebtedness was $3,277,610, with accrued interest of $655,500. Fifty conceded that the security was inadequate. Mayer was insolvent, and under the mortgage Fifty had no obligation for any deficiency. A receiver was necessary and proper. Wing-foot, supra, approved the appointment of a receiver to collect rent. “Where there is danger of a loss to the mortgagee the court acts within its discretion to appoint a receiver.” Wingfoot, id., 74 Ariz. at p. 290, 248 P.2d at 739.

Judgment affirmed.

      Honorable William J. Lindberg, Senior United States District Judge, Western District of Washington, sitting by designation.


source: Caselaw Access Project

author: Mr. Justice CLARK: TONE, Circuit Judge Mr. Justice CLARK.

license: Public Domain

text:
    Dorothy GAUTREAUX et al., Plaintiffs-Appellants, v. CHICAGO HOUSING AUTHORITY and James T. Lynn, Successor to George W. Romney, Secretary of the Department of Housing and Urban Development, et al., Defendants-Appellees.
    Nos. 74-1048, 74-1049.
    United States Court of Appeals, Seventh Circuit.
    Argued June 4, 1974.
    Decided Aug. 26, 1974.
    Rehearing Denied Sept. 30, 1974.

      Tone, Circuit Judge, dissented with opinion.
    Alexander Polikoff, Milton I. Shadur, Patrick W. O’Brien and Watson B. Tucker, Chicago, 111., for Chicago Housing.
    Carla A. Hills, Asst. Atty. Gen., Anthony J. Steinmeyer, Atty. Dept, of Justice, Washington D.C., James R. Thompson, U.S. Atty., Gary L. Starkman, Asst. U.S. Atty., Chicago, 111., for Dorothy Gautreaux.
    Before CLARK, Associate Justice, and CUMMINGS and TONE, Circuit Judges.

      . Associate Justice Tom O. Clark of the Supreme Court of the United States (Ret.) is sitting by designation.

   Mr. Justice CLARK:

Appellants, black tenants in and applicants for public housing, brought these consolidated cases separately in 1966 against the Chicago Housing Authority (CHA) and the Secretary of Housing and Urban Development (HUD) respectively, charging that CHA had intentionally violated 42 U.S.C. § 1981 and § 1982 in maintaining existing patterns of residential separation of races by its tenant assignment and site selection procedures, contrary to the Equal Protection Clause of the Fourteenth Amendment; and that HUD had “assisted in the carrying on . . . of a racially discriminatory public housing system within the City of Chicago” in violation of the Fifth Amendment. Appellants sought an injunction against CHA restraining such practices and requiring CHA to remedy the past effects of its unconstitutional site-selection and tenant-assignment procedures by building any future public housing units in predominantly white areas. This appeal grows out of the decision of the district court on remand for a determination of appropriate relief pursuant to separate findings that both CHA and HUD were responsible for de jure segregation in the public housing program in Chicago. In 1969 the District Court found with the appellants on the merits and since that time has devoted its efforts to effectuating this ruling. After some four years of hearings, several judgment orders and four appeals, the District Court on the last remand called on the parties to propose a “comprehensive plan” to remedy past effects of the public housing segregation indulged in by CHA and HUD, including “alternatives which are not confined in their scope to the geographic boundary of the City of Chicago.” HUD proposed, and the District Court, after an evidentiary hearing, ordered a plan under which HUD would “cooperate” with CHA in the latter’s efforts to increase the supply of public housing units but eliminated any relief not confined to the geographic boundary of the City of Chicago and refused to impose any specific affirmative obligations upon HUD beyond its “best efforts”. 363 F.Supp. 690 (1973). The appellants contend that a metropolitan area remedial plan including housing in suburban areas, as well as those within the limits of Chicago, is necessary to remedy the past effects of said unconstitutional public housing segregation policy and attain that racial balance required by the Fourteenth Amendment. Given the eight year tortuous course of these cases, together with the findings and judgment orders of the District Court and the opinions of this Court (now numbering five), we believe the relief granted is not only much too little but also much too late in the proceedings. In effect, appellants, having won the battle back in 1969, have now lost the war. We are fully aware of the many difficult and sensitive problems that the cases have presented to the able District Judge and we applaud the care, meticulous attention and the judicious manner in which he has approached them. With his orders being ignored and frustrated as they were, he kept his cool and courageously called the hand of the recalcitrant. Perhaps in the opinion on remand on the third appeal, 457 F.2d 124 (7th Cir. 1972), the repetition of a statement in the opinion on remand in the second appeal, 448 F.2d 731 that: “It may well be that the District Judge, in his wise discretion, will conclude that little equitable relief above the entry of a declaratory judgment and a simple ‘best efforts’ clause, will be necessary . ” led the beleaguered District Judge to limit any plan to the boundaries of the City of Chicago and the “best efforts” of CHA and HUD. This is to be regretted and we trust that upon remand the matter will be expedited to the end that the segregated public housing system which has resulted from the action of CHA and HUD will be disestablished, and the deficiency in the supply of dwelling units will be corrected as rapidly as possible and in the manner indicated in this opinion.

We shall not burden this opinion with the details of the eight-year delay that has thus far deprived the appellants of the fruits of the District Court’s judgment entered on July 1, 1969. In addition the unconstitutional action of CHA has stripped thousands of residents of the City of Chicago of their Fifth and Fourteenth Amendment rights for a score of years. Indeed, anyone reading the various opinions of the District Court and of this Court quickly discovers a callousness on the part of the appellees towards the rights of the black, underprivileged citizens of Chicago that is beyond comprehension. As far back as 1954, the District Court found that CHA had continuously refused to permit black families to reside in four public housing projects built before 1944; and that as far back as 1954 CHA has imposed a black quota on the four projects to the end that at the beginning of 1968 black tenants only occupied between 1 percent to 7 percent of the 1,654 units in the projects. The non-white population of Chicago at that time was 34.4 percent. In 64 public housing sites, having 30,848 units (other than the four above mentioned), the tenants were 99 percent black. All during this period Illinois law required that CHA secure prior approval of new sites for public housing from the City Council of the City of Chicago, but the District Court found that CHA set up a pre-clearance arrangement under which the alderman in whose ward a site was proposed would receive an informal request from CHA for clearance. The alderman, the Court found, to whom sites in the white neighborhoods were submitted, vetoed the sites and the City Council rejected 99V2 percent of the units proposed for white sites while only 10 percent were refused in black areas. Moreover, the Court found that during this period about 90 percent of the waiting list of some 13,000 applicants to CHA for occupancy in its projects were black. These findings were neither challenged nor appealed. Furthermore, as early as July 1, 1969, a judgment order was entered herein, requiring CHA to build 700 new housing units in predominantly white areas and requiring 75 percent of all future units built by CHA to be constructed in such areas. This judgment also ran against the City Council of the City of Chicago (not then a party) on the basis of notice. Finally, CHA was directed by the District Court to “affirmatively administer its public housing system ... to the end of disestablishing the segregated public housing system which has resulted from CHA’s unconstitutional site selection and tenant assignment procedures [and] use its best efforts to increase the supply of Dwelling Units as rapidly as possible . . . ”. 304 F. Supp. 736 (1969). No appeal was taken from this judgment.

Appellants and the District Court waited patiently for a year and a half but CHA submitted no sites for family dwellings to the City Council. The appellants contacted CHA and were advised that CHA had no intention to submit sites prior to the Chicago mayoralty election of April, 1971. The parties then asked for and were given informal hearings, so as to prevent publicity, and finally the District Court modified its “best efforts” provision in the July 1, 1969 judgment order so as to affirmatively require CHA to submit sites for no fewer than 1500 units to the City Council for approval on or before September 20, 1970. This order was appealed by CHA and affirmed, 436 F.2d 306, cert. den. 402 U.S. 922, 91 S.Ct. 1378, 28 L.Ed.2d 661 (1971).

Meanwhile, in the separate suit against HUD filed simultaneously with the one against CHA (and now consolidated), the District Court had dismissed all four counts. On appeal this Court held that HUD had violated the due process clause of the Fifth Amendment and reversed with directions to enter a summary judgment for the appellants. This Court found that HUD had approved and funded family housing sites chosen by CHA in black areas of Chicago. HUD’s explanation was “it was better to fund a segregated housing system” than deny housing altogether. This Court found that in the sixteen years (1950-1966) HUD spent nearly $350 million on such projects “in a manner which perpetuated a racially discriminatory housing system in Chicago”; that its excuse of community and local government resistance has not been accepted as viable and that this Court was “unable to avoid the conclusion that the Secretary’s past actions constituted racial discriminatory conduct in their own right.” Gautreaux v. Romney, 448 F.2d 731 (7th Cir. 1971).

During the progress of this litigation, HUD was conferring with the City of Chicago concerning grants under the Model Cities Program (established by the Demonstration Cities and Metropolitan Development Act of 1966, 42 U.S.C. § 3301 et seq.)., A $38 million grant was made for the calendar year 1970. However, for the 1971 calendar year HUD required a “letter of intention” signed by the Mayor of Chicago, the Chairman of CHA and the Regional Administrator of HUD, indicating how Chicago’s large housing deficiency would be met. Under this letter CHA was to acquire sites for 1700 units within a specified timetable. HUD approved $26 million and had released $12 million when the opinion in Romney, supra came down. Appellants then sought an injunction from the District Court restraining further payments by HUD under the Model Cities Program unless and until sites in predominantly white areas for 700 dwelling units had been certified to the City Council for approval (at the time only 288 had been approved). The District Court granted this relief but on appeal the order was reversed. 457 F.2d 124 (7th Cir. 1972). On remand the District Court entered a summary judgment against HUD, consolidated the cases and entered an order calling for each of the parties to file suggestions for a “comprehensive plan” to remedy the past effects of the public housing segregation, including “alternatives which are not confined in their scope to the geographic boundary of the City of Chicago.”

HUD proposed a “best efforts” judgment order under which it would “cooperate” with CHA in the latter’s efforts to increase the supply of housing units in accordance with the earlier judgment order against CHA and reported in 304 F.Supp. 736. Its proposed relief was confined to the geographic boundaries of the City of Chicago. Its “best thinking” was that the letter of intention previously mentioned and signed by the Mayor, the Regional Administrator of HUD and CHA should be carried oiit. This letter only covered the matter of the relocation housing deficiency of 4300 units and did not spell out any “comprehensive plan to remedy the past effects”. Appellants’ proposed plan provided a mechanism by which CHA could supply remedial housing in suburban areas ,as well as within Chicago and required HUD to administer its programs affirmatively to ensure that the order was carried out. At the hearing the appellants introduced evidence of the need for a metropolitan plan and the unreliability of HUD’s “best efforts”. HUD offered evidence of the lack of funds then available and CHA offered no evidence. On December 8, 1972, Bradley v. Milliken, 484 F.2d 215 (6th Cir. 1972) came down, holding that a remedial plan involving suburban school districts in the metropolitan area of Detroit was necessary to disestablish existing segregation. Appellants then requested a “Bradley plan” order. On September 11, 1973, the District Court sustained the HUD proposal and this appeal resulted.

1. Scope of Review

We agree with the appellees that the District Court did not hold that it lacked power to adopt a metropolitan plan but rather that on the facts shown such relief was unwarranted. While neither CHA nor HUD concedes that the District Court has power to require compliance with a plan that includes areas outside the official boundaries of the City of Chicago, they both conclude that the District Judge’s holding was not predicated on a lack of such power. At least until Milliken v. Bradley, 418 U.S. 717, 94 S.Ct. 3112, 41 L.Ed.2d 1069, the law was clear that political subdivisions of the States may be readily bridged when necessary to vindicate federal constitutional rights. Ex parte Virginia, 100 U.S. 339, 25 L.Ed. 676 (1880); Brown v. Board of Education, 349 U.S. 294, 300-301, 75 S.Ct. 753, 99 L.Ed. 1083 (1954); Swann v. Board of Education, 402 U.S. 1, 27, 91 S.Ct. 1267, 28 L.Ed.2d 554 (1971); Griffin v. County Board, 377 U.S. 218, 84 S.Ct. 1226, 12 L.Ed.2d 256 (1964); Bradley v. Milliken, 484 F.2d 215, 250 (6th Cir. 1973); Haney v. County Board, 410 F.2d 920 (8th Cir. 1969). The equal protection clause speaks to the state, and the state cannot escape its obligations under that clause by delegating some of its governmental functions to local units. Hall v. St. Helena Parish School Board, 197 F.Supp. 649 (E.D.La.1961), affirmed, 368 U.S. 515, 82 S.Ct. 529, 7 L.Ed.2d 521; Reynolds v. Sims, 377 U.S. 533, 575, 84 S.Ct. 1362, 12 L.Ed.2d 506; Hart v. Community School Board, 383 F.Supp. 699 (E.D.N.Y.1974). Cf. Hunter v. City of Pittsburgh, 207 U.S. 161, 178, 28 S.Ct. 40, 52 L.Ed. 151.

We turn then to the Supreme Court’s opinions in Milliken v. Bradley. That case clarifies an important equitable limitation on the substantial body of law just cited but does not overrule it. The Chief Justice’s opinion for the Court assumes arguendo that the actions of local government are attributable to the state, 418 U.S. 748, 94 S.Ct. 3112, and it notes that school district lines are not sacrosanct if they conflict with the Fourteenth Amendment, 418 U.S. 744, 94 S.Ct. 3112. However, “ [proceeding from basic principles [of remedies],” 418 U.S. 737-738, 94 S.Ct. 3124, the Court holds that metropolitan relief does not follow automatically from these premises, 418 U.S. 748, 94 S.Ct. 3112. Boundary lines may be “bridged,” but not “casually ignored.” Consolidation of 54 independent school districts would present overwhelming problems of logistics, finance, administration and political legitimacy. The Court gives great deference to the “deeply rooted” and “essential” tradition of local control of the public schools. Unless the Michigan legislature completely restructured relevant statutes, the District Judge would become both de facto legislature and metropolitan school superintendent, 418 U.S. 743-744, 94 S.Ct. 3112. The conclusion that inter-district school desegregation is “in order” and “appropriate” only where there has been what the Court terms “an inter-district violation” (418 U.S. 745, 94 S.Ct. 3112) must be read in this light. Only an inter-district violation justifies incurring all the difficulties attendant on inter-district school desegregation.

This reading of the opinion is conclusively reinforced by Justice Stewart’s concurrence, which expressly states the holding:

“the Court does not deal with questions of substantive constitutional law. The basic issue now before the Court concerns, rather, the appropriate exercise of federal equity jurisdiction.
“The opinion of the Court convincingly demonstrates . . . that traditions of local control of schools, together with the difficulty of a judicially supervised restructuring of local administration of schools, render improper and inequitable such an inter-district response to a constitutional violation found to have occurred only within a single school district.” 418 U.S. 753, 94 S.Ct. 3131 (citation omitted).

Justice Stewart’s view is pivotal because his vote makes a majority when added to any of the other opinions. It is also significant that the Chief Justice’s opinion does not indicate any disagreement with Justice Stewart’s understanding.

Milliken v. Bradley therefore fits into an established line of precedent. Beginning in Brown I, the Court recognized that remedial complexities may limit or delay implementation of the constitutional right to school desegregation. 347 U.S. 483, 495, 74 S.Ct. 686, 98 L.Ed. 873. In Brown II, the Court emphasized local school problems, and in a passage quoted by both the Chief Justice and Justice Stewart in Milliken, reminded that “Traditionally, equity has been characterized by a practical flexibility in shaping its remedies and by a facility for adjusting and reconciling public and private needs.” 349 U.S. 294, 300, 75 S.Ct. 753, 756, 99 L.Ed. 1083. Long experience in reconciling practical problems with demands for total desegregation eventually resulted in the following rule:

“Having once found a violation, the district judge or school authorities should make every effort to achieve the greatest possible degree of actual desegregation, taking into account the practicalities of the situation.” Davis v. Board of School Comm’rs, 402 U.S. 33, 37, 91 S.Ct. 1289, 1292, 28 L.Ed.2d 577.

An alternative phrasing is the requirement “that all reasonable methods be available to formulate an effective remedy.” North Carolina State Board of Education v. Swann, 402 U.S. 43, 46, 91 S.Ct. 1284, 1286, 28 L.Ed.2d 586. We understand Milliken v. Bradley to hold that the relief sought there would be an impractical and unreasonable over-response to a violation limited to one school district.

' In view of the dominant theme of the majority opinion as a whole, the fact that any application of the opinion to factual situations other than the one before the Court would be dictum, and particularly in view of Justice Stewart’s opinion for the fifth vote, we conclude that the majority opinion in Milliken v. Bradley deals with equitable limitations on remedies.

Our task therefore, and that of the District Judge, is to determine how great a degree of public housing desegregation is practical. Milliken v. Bradley dealt only with schools. Public housing may be quite different; indeed, both the Chief Justice’s and Justice Stewart’s opinions implied that the result as to schools might be different if housing discrimination were shown 418 U.S. 728, n. 7, 94 S.Ct. 3112; 418 U.S. 754-755, 94 S.Ct. 3112. Compare Watson v. City of Memphis, 373 U.S. 526, 532-534, 83 S. Ct. 1314, 1319, 10 L.Ed.2d 529 holding that because

“[ desegregation of parks and other recreational facilities does not present the same kinds of cognizable difficulties inhering in elimination of racial classification in schools, ... it is patent . . . that the principles enunciated in the second Brown decision have absolutely no application [to parks].”

2. A Metropolitan Plan is Necessary and Equitable

After careful consideration and reflection we are obliged to conclude that on the record here it is necessary and equitable that any remedial plan to be effective must be on a suburban or metropolitan area basis. This could entail additional time but not under proper management since the intra-city portion of the plan may proceed without any further delay. In the meanwhile the suburban or metropolitan phases of the plan can be perfected (new parties, if necessary, etc.) and effectuated without delaying or interfering with the intra-city phase of the comprehensive plan. There are only five housing authorities (in addition to CHA) involved, and while voluntary cooperation is not indicated, a Court order directing that those not volunteering were to be made parties might help. On the record here we are not able to discuss — much less pass upon —the validity of any specific metropolitan plan. We leave that for the district court on remand.

Our decision in regard to the necessity and equity of suburban or metropolitan area action is predicated on the following :

The equitable factors which prevented metropolitan relief in Milliken v. Bradley are simply not present here. There is no deeply rooted tradition of local control of public housing; rather, public housing is a federally supervised program with early roots in federal statutes. See 42 U.S.C. § 1401 et seq.; Gautreaux v. Romney, 448 F.2d 731, 737-740 (7th Cir. 1971). There has been a federal statutory commitment to non-discrimination in housing for more than a century, 42 U.S.C. § 1982, and the Secretary of HUD is directed to administer housing programs “in a manner affirmatively to further the policies” of non-discrimination, 42 U.S.C. § 3608(d)(5). In short, federal involvement is pervasive.

Similarly, the administrative problems of building public housing outside Chicago are not remotely comparable to the problems of daily bussing thousands of children to schools in other districts run by other local governments. CHA and HUD can build, housing much like any other landowner; and whatever problems arise would be insignificant compared to restructuring school systems as proposed in Milliken v. Bradley.

In Milliken v. Bradley, the Chief Justice emphasized that there was no evidence of discrimination by the suburban school districts affected. Here, although the record was not made with the Supreme Court’s Milliken opinions in mind, there is evidence of suburban discrimination. Plaintiff’s Exhibit 11 indicates that of twelve suburban public housing projects, ten were located in or adjacent to overwhelmingly black census tracts. And although the case was not limited to public housing, it is not irrelevant that we recently took judicial notice of widespread residential segregation “in Chicago and its environs.” Clark v. Universal Builders, Inc., 501 F.2d 324, p. 335 (7th Cir. 1974). We went on to hold that a prima facie showing had been made that this segregation had discriminatory effects throughout the metropolitan area.

Finally, tha possibility of metropolitan relief has been under consideration for a long time in this case. While they disagree as to what relief the District Court should order, the parties are in agreement that the metropolitan area is a single relevant locality for low rent housing purposes and that a city-only remedy will not work.

The HUD General Counsel is quoted as saying:

“The provisions in State housing authorities laws which authorize a city housing authority to operate in a county or other city with the consent of the governing body concerned, were included in these laws because it was realized that many cities would have to utilize the areas outside their borders in meeting their low-rent housing needs. It was recognized that the elimination of slums and the provision of decent housing for families of low income in the locality are matters of metropolitan area scope but of primary concern to the central city because the problem and impact are intensified there. In effect, therefore, the State legislatures have determined that the city and its surrounding area comprise a single ‘locality’ for low-rent housing purposes.” (Pis.’ Exh. 13, pp. 3-4).

Likewise, an applicable HUD regulation states in part: “[Hjousing market areas often are independent of arbitrary political boundaries . . . ”. (Pis.’ Exh. 16, p. 1).

And CHA itself in a memorandum of December 21, 1971, (Record Doe. 167 at p. 27) said:

“CHA fully agrees that public housing must be metropolitan in nature, and not confined to the City of Chicago. It has so stated on numerous occasions before this court. It has offered testimony that a dispersal program for public housing will not work unless it is operated on a metropolitan basis.”

HUD has taken a similar position:

“[T]he impact of the concentration of the poor and minorities in the central city extends beyond the city boundaries to include the surrounding community. The City and the suburbs together make up what I call the ‘real city.’ To solve problems of the ‘real city’, only metropolitan^wide solutions will do.” (Statement by Secretary Romney, Appendix Z, pp. 15-16, to HUD’s Memorandum, December 17, 1971, Record Doe. 283, Attachment 6, Memorandum 2, p. 2, emphasis added.)

And Samuel J. Simmons, former Assistant Secretary for Equal Opportunity of HUD, said:

“Central cities are losing Whites and gaining Blacks. In spite of a gradual increase in the number of Blacks and other minorities living in the suburbs, the fact of the White noose around the country’s largest cities is a largely unchanged reality. The White trek to the suburbs has continued unabated in the last ten years and in the majority of the large metropolitan areas White and Blacks still live largely separate lives . . . It is impossible to solve central city problems in the central city alone.” (Pis.’ Exh. 7, pp. 3-4, emphasis added.)

In fact, HUD joined the appellants in a joint representation to the District Judge that “the parties are of the view that a metropolitan remedy is desirable.” Tr. pp. 4, 6, Feb. 22, 1972. While it later said: “it is by no means clear” that a metropolitan remedy is necessary, it reaffirmed subsequently “the desirability of a metropolitan wide plan” and explained that its previous statement was only raising “various legal objections to the particular plan plaintiffs have proposed . . . ” Tr. Rec.Doc. 310 p. 7-10 HUD Memorandum.

In addition to CHA’s and HUD’s strong, positive statements as to the necessity for a metropolitan plan here, the appellants also offered the testimony of a recognized demographer who estimated that a continuance of present trends in black and white census tracts would lead to at least a 30 percent black occupancy in every census tract in Chicago by the year 2000. The District Judge himself added support to this thesis; however his prediction was 1984:

“[Ejxisting patterns of racial separation must be reversed if there is to be a chance of averting the desperately intensifying division of Whites and Negroes in Chicago. On the basis of present trends of Negro residential concentration and of Negro migration into and White migration out of the central city, the President’s Commission on Civil Disorders estimates that Chicago will become 50% Negro by 1984. By 1984 it may be too late to heal racial divisions.” (296 F.Supp. 907, 915).

If this prediction comes true it will mean that there will be no “general Public Housing Area” left in Chicago on which CHA could build desegregated public housing. In the ten-year period 1960-1970 the population of the City of Chicago declined by 183,000 people, a decrease of 505,000 whites and an increase of 322,000 blacks. The expert demographer further testified that by providing desegregated housing opportunities in the suburban areas, the rate of white exodus from the city would diminish. There was no testimony to the contrary. In fact “White flight” has brought on the same condition in most of our metropolitan cities, such as Indianapolis, Indiana. See United States v. Board of School Commissioners, 332 F.Supp. 655, 676 (S.D.Ind.1971); also as to Atlanta, Georgia; Calhoun v. Cook, 332 F.Supp. 804, 805 (N.D.Ga.1971). Like conditions — but aggravated — exist in Washington, D. C. and Cleveland, Ohio.

The realities of “White flight” to the suburbs and the inevitability of “reseg-regation” by rebuilding the ghettos as CHA and HUD were doing in Chicago must therefore be considered in drawing a comprehensive plan. . The trial judge back in 1969 ordered scattered-site, low-rise housing — despite much criticism— but the experts now agree that such requirements are mandatory. His warning that “By 1984 it may be too late to heal racial divisions”, rather than a cliche, is a solemn warning as to the interaction of “White flight” and “black concentration”. It is the most serious domestic problem facing America today. As Assistant Secretary Simmons further advises:

“As Whites have left the cities, jobs have left with them. After 1960, three-fifths of all new industrial plants constructed in this country were outisde of' central cities. In some cases as much as 85% of all new industrial plants located outside central cities were inaccessible to Blacks and other minorities who swelled ghetto populations.” (Pis.’ Exh. 9, p. 3).

These words also convey a solemn warning, i. e., we must not sentence our poor, our underprivileged, our minorities to the jobless slums of the ghettos and thereby forever trap them in the vicious cycle of poverty which can only lead them to lives of crime and violence.

By way of concluding, we have carefully read the records in these cases and find no evidence that the suburban or metropolitan area should not be included in a comprehensive plan. All of the parties, the Government officials, the documentary evidence, the sole expert and the decided eases agree that a suburban or metropolitan area plan is the sine qua non of an effective remedy. In fact the Judge himself recognized its importance in his original judgment order by authorizing housing units to be provided in suburban Cook County on a voluntary basis. See 304 F.Supp. at 739. Furthermore, in his order of December 23, 1971, calling for the preparation by the parties of a “comprehensive plan”, he wisely included the following paragraph:

“3. In the preparation of such plan or plans, the parties are requested to provide the Court with as broad a range of alternatives as seem to the parties feasible as a partial or complete remedy for such past effects, including, if the parties deem it necessary or appropriate to provide full relief, alternatives which are not confined in their scope to the geographic boundary of the City of Chicago.”

In light of all of these considerations we can but conclude that the District Court’s finding as to not including in a comprehensive plan of relief areas outside the City of Chicago, i. e., the suburban or metropolitan area, was clearly erroneous.

3. Action on Remand

The judgment order of September 11, 1973, is reversed and the causes are remanded for further consideration in the light of this opinion, to wit: the adoption of a comprehensive metropolitan area plan that will not only disestablish the segregated public housing system in the City of Chicago which has resulted from CHA’s and HUD’s unconstitutional site selection and tenant assignment procedures but will increase the supply of dwelling units as rapidly as possible.

It is so ordered.

TONE, Circuit Judge

(dissenting).

I respectfully dissent based on my reading of the majority decision in Mil-liken v. Bradley, 418 U.S. 717, 94 S.Ct. 3112, 41 L.Ed.2d 1069 (1974). I recognize that that ease involved facts significantly different from those in the case at bar, but the “controlling principle” stated and applied there seems to me to be applicable here. That principle is that the remedy must be commensurate with the constitutional violation found, and, therefore, an inter-district remedy is not justified unless the evidence shows an inter-district violation. (418 U.S. 744 and 756, 94 S.Ct. 3112.) This seems to me to preclude metropolitan .relief here. No violation outside the city has even been alleged, let alone proved, as the District Court pointed out. Compare, United States v. Board of School Comm. of City of Indianapolis, 503 F.2d 68, at 78-80, 86 (7th Cir. 1974).

I do not disagree with this court’s persuasive argument that a metropolitan plan is needed to reduce segregation in the metropolitan area. The record does not support that relief in this case, however, in view of the stricture of Milliken v. Bradley.

ORDER

On Rehearing

Mr. Justice CLARK.

On rehearing, we reaffirm our view that the trial judge should not have refused to “consider the propriety of metropolitan area relief.” His conclusion that the only factual basis for plaintiffs’ request was the opinion of an urbanologist ignores much of the record and, in particular, the statements of the parties themselves to the effect that “only metropolitan-wide solutions will do.”

The requested relief does not go “far beyond the issues of this case,” as the trial judge suggests. Rather, it is reasonable to conclude from the record that defendants’ discriminatory site selection within the City of Chicago may well have fostered racial paranoia and encouraged the “white flight” phenomenon which has exacerbated the, problems of achieving integration to such an extent that intra-city relief alone will not suffice to remedy the constitutional injuries. The extra-city impact of defendants’ intra-city discrimination appears to be profound and far-reaching and has affected the housing patterns of hundreds of thousands of people throughout the Chicago metropolitan region.

It is in this sense, we believe, that the Supreme Court requires a showing that “there has been a constitutional violation within one district that produces a significant segregative effect in another district.” Milliken v. Bradley, 418 U.S. at 745, 94 S.Ct. at 3127. We therefore reaffirm our remanding of this case for additional evidence and for further consideration of the issue of metropolitan area relief in light of this opinion and that of the Supreme Court in Milliken v. Bradley. In the meantime, intra-city relief should proceed apace without further delay.

A majority of the judges in regular active service not having requested that a vote be taken on the suggestion for an en banc rehearing, and a majority of the panel having voted to deny a rehearing,

It is ordered that the petition of the appellees for a rehearing in the above-entitled appeal be, and the same is hereby denied.

TONE, Circuit Judge, adheres to his prior dissent.

      . For a detailed statement of the facts see the dissenting opinion of Judge Sprecher, 457 F.2d at 129.

      . The trial judge himself made the following statement in his 1969 oi>inion in this matter: “Two further results of CHA’s participation in a policy of maintaining existing patterns of residential separation of the races must be mentioned. First, as Dr. Baron’s Affidavit discloses, the 188,000 White families eligible for public housing have understandably chosen in the main to forego their opportunity to obtain low cost housing rath-ther than to move into all Negro projects in all Negro neighborhoods. This is an ironic but predictable result of a segregationist policy of protecting Whites from less than half as many (76,000) eligible Negro families. Second, existing patterns of racial separation must be reversed if there is to be a chance of averting the desperately intensifying division of Whites and Negroes in Chicago. On the basis of present trends of Negro residential concentration and of Negro migration into and AVhite migration out of the central city, the President’s Commission on Civil Disorders estimates that Chicago will become 50% Negro by 1984. By 1984 it may be too late to heal racial divisions.” Gautreaux v. Chicago Housing Authority, 296 F.Supp. 907, 915 (N.D.Ill. 1969).


author: WISDOM, Circuit Judge: LYNNE, District Judge

text:
    UNITED STATES of America, Plaintiff-Appellee, v. James David ROSS, Defendant-Appellant.
    No. 73-2256.
    United States Court of Appeals, Fifth Circuit.
    Nov. 13, 1974.
    Lynne, District Judge, filed concurring opinion.

      Charles L. Caperton, Dallas, Tex., for defendant-appellant.
    Anthony J. P. Farris, U. S. Atty., Mary L. Sinderson, Asst. U. S. Atty., Houston, Tex., for plaintiff-appellee.
    Before WISDOM and GOLDBERG, Circuit Judges, and LYNNE, District Judge.
   WISDOM, Circuit Judge:

This appeal requires us to examine, if briefly, the scope of the power of the district judge to revoke probation, and the proper standard for waiver of the right to counsel at a hearing on revocation of probation.

James David Ross, appellant, attacks on two grounds the revocation of his probation, ordered by the district judge after a hearing at which Ross allegedly waived the right to counsel. First, the appellant contends, he was not “within the probation period” as required by Title 18 U.S.C. § 3653, at the time he committed the state offense which led to revocation. The court, therefore, was without power to revoke his probation for violation of its conditions. Second, the appellant contends that he was entitled to the assistance of his retained counsel at the revocation hearing and that his waiver of this right was not understandingly and intelligently made.

We hold that the appellant’s first contention is groundless. We conclude, however, that Ross was entitled to the assistance of counsel at the revocation hearing and that his waiver was not made with an adequate understanding of the import of the proceeding in which he was involved. Accordingly, we vacate the revocation of his probation and remand the case to the district court.

I.

On January 8, 1973, after a jury trial, Ross and his co-defendants, were convicted for conspiracy to possess with intent to distribute twenty-six pounds of marihuana. The court imposed a sentence of three years imprisonment, and a special parole term of three years, with the proviso that the defendant be confined to prison for four months, that the remainder of the sentence be suspended, and that Ross be placed on probation for a five year period following his release. The court stayed execution of the sentence for one week, until January 15, 1973, to allow Ross to put his business in order. Ross returned to his home in Dallas.

His stay at home was short. A few hours after he returned, Ross was arrested by Dallas police and charged with possession of amphetamines and narcotics (barbiturates), violations of state law. On January 9, 1973, the day after his arrest by Dallas police, the stay of the appellant’s federal sentence was revoked, and he was taken into federal custody. When arraigned on the state charges, Ross pleaded guilty and was sentenced to thirty days imprisonment (which was probated for 12 months) and was fined $400. Because of this conviction the district court conducted a hearing on May 7, 1973, to determine whether Ross’s probation should be revoked. Through an oversight, Ross’s retained counsel was not notified of the hearing. When the hearing was convened, however, Ross expressed a belief that the hearing was “sort of informal’’ and was willing to continue without the presence of counsel. Ross then signed a waiver of counsel form and the hearing proceeded on that basis. After a short dialogue with the defendant, the court revoked the probation and ordered execution of the full sentence as originally assessed.

II.

Ross contends that Title 18, U. S.C. §§ 3651 and 3653, establishing the guidelines for federal probation and its revocation do not permit a district court to revoke probation when an offense is committed after sentencing but before service of the sentence or probation has begun. The argument has a certain superficial, if semantic, appeal. As Ross observes, Section 3653 sanctions termination, alteration, or suspension of probation for a violation occurring “at anytime within the probation period”. The appellant would have us read this provision as exclusive; only if an individual is “on probation” may probation be revoked. Otherwise, he asserts, there are no conditions of probation which a potential probationer could violate and hence he would have no notice as to a course of conduct by which he could avoid revocation.

Aside from the fact that Section 3653 is not by its terms exclusive, case law and sound policy reject Ross’s contentions. The standard of appellate review in probation cases is a strict one; only if the district court has abused its discretion will its determination to revoke probation be upset. United States v. Clanton, 5 Cir. 1969, 419 F.2d 1304, 1305-1306. There was clearly no abuse of discretion here. As long ago as 1940, this Court observed, in dictum, that a district court had acted properly in revoking the probation of a prisoner who was discovered to be in possession of narcotics while awaiting transportation to prison. Cline v. United States, 5 Cir. 1940, 116 F.2d 275, 276 (per curiam) (dictum).

At least two other Courts of Appeals have also recorded their rejections of the appellant’s position: United States ex rel. Sole v. Rundle, 3 Cir. 1971, 435 F.2d 721; Longknife v. United States, 9 Cir. 1967, 381 F.2d 17. Although Run-dle involved a state prosecution and Longknife was a federal matter, both appear to sanction revocation of probation before the time the probation actually begins. In both cases probation was granted as the result of a misrepresentation by the defendant to the sentencing court. Revocation was held to be proper, since probation would not have been granted if the court had had accurate information at the time of sentencing. See Rundle, 435 F.2d at 724-725; Longknife, 381 F.2d at 20. Since the defendant here was arrested on state charges the day of sentencing, the court can hardly be thought to have abused its discretion in revoking probation once Ross had pleaded guilty to those charges. Only a narrow and proscriptive reading of Sections 3651 and 3653 could yield the contrary result urged by the appellant. We do not so read these provisions.

Sound policy requires that courts should be able to revoke probation for a defendant’s offense committed before the sentence commences; an immediate return to criminal activity is more reprehensible than one which occurs at a later date.

III.

To conclude that it was not improper per se for the district court to revoke the appellant’s probation is not to hold that the hearing at which revocation was ordered was properly conducted. The appellant asserts, first, that Mempa v. Rhay, 1967, 389 U.S. 128, 88 S.Ct. 254, 19 L.Ed.2d 336, establishes a right to the assistance of counsel at every critical stage of a criminal proceeding, including a hearing on revocation of probation and, second, that his waiver of that right was ineffective because it was not intelligently and knowingly made. we agree with both of these contentions.

Although the district judge recognized that Ross was entitled to counsel at the hearing, a brief explanation of our conclusion that counsel was required may be appropriate.

As Ross notes, Mempa v. Rhay instructs that “appointment of counsel for an indigent is required at every stage of a criminal proceeding where substantial rights of a criminal accused may be affected.” 389 U.S. at 134, 88 S.Ct. at 257, 19 L.Ed.2d at 340. Although Ross was not an indigent, he was entitled to the presence and assistance of his retained counsel at the revocation hearing if it was a proceeding to which Mempa applies. In this Circuit, however, Mempa has been read as requiring counsel only at those relocation hearings at which resentencing takes place. Shaw v. Henderson, 5 Cir. 1970, 430 F.2d 1116, 1118-1119. Since we are convinced that his revocation was essentially resentencing, we have no more difficulty than did the district court in concluding that counsel was required.

We view the revocation as a re-sentencing for several reasons. First, Ross was arrested on the state charges the same day that a relatively lenient federal sentence was imposed. The one week stay of execution of his sentence was immediately vacated and he was placed in federal custody. Thus Ross was not on probation when the offense occurred and it was not, strictly speaking, a violation of probationary terms that resulted in the revocation. Second, the revocation hearing was held within a few days of the time at which Ross was scheduled to be released, that is, within a few days of the completion of the confinement period of his original sentence. By revoking probation the district court in effect vacated its earlier suspension of sentence and increased the term of Ross’s incarceration from the original four months to a full three year term. Finally, the court in its colloquy with Ross at the revocation hearing indicated that it viewed the revocation hearing as an opportunity to correct an error in sentencing at trial:

THE COURT: Well, I will say this to you, Mr. Ross: You sold me a bill of goods when we tried the matter.
I personally had some uncertainty in my mind as to whether you were telling the truth. The circumstances were very strong against you. I thought you made a right good impression and there was a little uncertainty in my own mind.
After the lie detector test, I thought that you were probably guilty and, of course, the jury had passed on it. It wasn’t up to me to pass on your guilt or innocence, but I did think you were a young man of some promise and gave you what I considered a relatively light sentence.
So I was not greatly impressed with your honesty or credibility the day after you got home and you were found in possession of not only marihuana, but a quantity of hard narcotics, too.
I revoke the probation and order the sentence into execution.
That’s all for now.

It is clear, of course, that a defendant, once properly advised of his right to counsel may waive it, Miranda v. Arizona, 1966, 384 U.S. 436, 445, 86 S.Ct. 1602, 16 L.Ed.2d 694, 707, but it is equally clear that the waiver must be made with a full understanding of the nature of the right to be forgone as well as the possible consequences of the charges against the defendant and of the proceeding in which he is involved. Von Moltke v. Gillies, 1948, 332 U.S. 708, 723-724, 68 S.Ct. 316, 92 L.Ed. 309, 320-321. Particularly crucial is the role of the trial judge, whose penetrating interrogation and careful explanation can assure that the waiver of the right to counsel by the defendant is made with a full understanding of its ramifications. Von Moltke v. Gillies, 332 U.S. at 723-724, 68 S.Ct. 316.

Applying such a standard here, the record fails to show that Ross’s waiver of counsel was a knowing and intelligent one. He was told that he had a right to counsel, but at no point was he advised of the dire consequences that could flow from the proceeding; that is, that he might immediately be returned to prison to serve the previously suspended two years and eight months of his term. Although the district judge certainly determined that Ross’s waiver was voluntary, his inquiries never touched upon Ross’s understanding of the significance of the waiver — or of the hearing itself. Indeed, from Ross’s statements, the court reasonably could have inferred that Ross did not actually grasp the import of the proceeding:

THE COURT: Come around here, please.
I understand through an oversight Mr. Capteton was not advised to be here today.
Is that your understanding ?
DEFENDANT ROSS: Yes, sir.
THE COURT: He still represents you?
DEFENDANT ROSS: Yes, sir.
THE COURT: We will have to have him come down, I am told he is in trial today and it will take a few days to get him here.
DEFENDANT ROSS: Your Honor, I understood that this hearing was sort of informal and that he wouldn’t have to be here.
I would waive that right and not have him here is okay with me.
THE COURT: You want to waive your right to have Mr. Caperton or some other lawyer here on your behalf?
You are entitled to do that if you wish.
DEFENDANT ROSS: Yes, sir.
THE COURT: You are entitled to have your lawyer present here just as you were at the trial and so forth and I want to be sure you understand that.
DEFENDANT ROSS: Well, yes, sir. I would just like to talk to you about it if I could.

The district judge did nothing to counteract impression that the hearing was “sort of informal”, merely reiterating to Ross that he could waive counsel if he so desired.

Finally, we cannot overlook the fact that the absence of the defendant’s counsel was due to an oversight on the part of the Governmént itself. The fault was not the defendant’s. In these circumstances, with the absence of counsel an accomplished fact, the standard for concluding that the waiver was knowing and intelligent must be high indeed. Here, the standard was not met.

Accordingly, we vacate the judgment revoking Ross’s probation and remand the case to the district court for a new hearing on revocation of the defendant-appellant’s probation.

LYNNE, District Judge

(concurring).

I concur in the result. However, I would not pretermit reconsideration by the district court of its power to revoke Ross’s probation for an offense committed by him prior to the commencement of his probationary sentence.

Counsel for Ross should be unfettered by Part II of the court’s opinion to contend that a close reading of 18 U.S.C. §§ 3651, 3653 (1970), a statute which I would construe strictly, seems to require that probation under the split sentencing provisions commence after the period of incarceration. Moreover, the cases cited in Part II rely on the “right-privilege” distinction which has been firmly discredited, particularly in Footnote 4 of Gagnon v. Searpelli, 411 U.S. 778, 782, 93 S.Ct. 1756, 36 L.Ed.2d 656 (1973). The district court should be left free to determine whether the reasoning in Longknife and Rundle will withstand current due process scrutiny.

      . Section 3651, in part, provides :
      § 3651. Suspension of sentence and probation
      Upon entering a judgment of conviction of any offense not punishable by death or life imprisonment, any court having jurisdiction to try offenses against the United States when satisfied that the ends of justice and the best interest of the public as well as the defendant will be served thereby, may suspend the imposition or execution of sentence and place the defendant on probation for such period and upon such terms and conditions as the court deems best.
      Upon entering a judgment of conviction of any offense not punishable by death or life imprisonment, if the maximum punishment provided for such offense is more than six months, any court having jurisdiction to try offenses against the United States, when satisfied that the ends of justice and the best interest of the public as well as the defendant will be served thereby, may impose a sentence in excess of six months and provide that the defendant be confined in a jail-type institution or a treatment institution for a period not exceeding six months and that the execution of the remainder of the sentence be suspended and the defendant placed on probation for such period and upon such terms and conditions as the court deems best.
      The court may revoke or modify any condition of probation, or may change the period of probation.
      The period of probation, together with any extension thereof, shall not exceed five years.
      Section 3653, in part, provides :
      § 3653. Report of probation officer and arrest of probationer.
      At any time within the probation period, the jirobation officer may for cause arrest the probationer wherever found, without a warrant. At any time within the probation period, or within the maximum probation period permitted by section 3651 of this title, the court for the district in which the probationer is being supervised or if he is no longer under supervision, the court for the district in which he was last under supervision, may issue a warrant for his arrest for violation of probation occurring during the probation period.
      As speedily as possible after arrest the probationer shall be taken before the court for the district having jurisdiction over him. Thereupon the court may revoke the probation and require him to serve the sentence imposed, or any lesser sentence, and, if imposition of sentence was suspended, may impose any sentence which might originally have been imposed. June 25, 1948, c. 645, 62 Stat. 842; May 24,1949, c. 139, § 56, 63 Stat. 96.

      . In this section of his brief, the appellant also cites Gagnon v. Scarpelli, 1973, 411 U.S. 778, 93 S.Ct. 1756, 36 L.Ed.2d 656 which applied the extensive due process requirements laid down for parole revocation hearings by Morrissey v. Brewer, 1972, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484, to hearings on the revocation of probation. It is apparent that if Gagnon’s standards were applicable to this controversy, a new revocation hearing would be required. Gagnon was decided by the Supreme Court on May 14, 1973, however, seven days after Ross’s probation revocation hearing. Unlike Morrissey, which was by its terms limited to “future parole hearings,” Gagnon was silent as to its retrospective application. It might be argued that the Supreme Court did not intend Gag-

        non to have a retroactive effect, a position seemingly confirmed, in passing, by the Court. See Wolff v. McDonnell, 418 U.S. 539, 94 S.Ct. 2963, 41 L.Ed.2d 935 (1974). In any event, we need not wrestle with the problem, since we must vacate and remand this case even under pre-Gagnon standards. Gagnon’s standards will apply, of course, to further proceedings on remand.

      . The court continued, as follows :
      THE COURT: Okay. For the record, then, I advise you that you are entitled to counsel at this hearing.
      DEFENDANT ROSS : Tes, sir.
      THE COURT: If you have retained Mr. Oaperton, you are entitled to have him here.
      If you have no money with which to employ a lawyer, you are entitled to appointment of counsel as an indigent person.
      I am sure you understand that, but I want to be sure you do.

      . This reading of Mempa is hardly universal. See Gunsolus v. Gagnon (Scarpelli v. Gagnon), 7 Cir. 1971, 454 F.2d 416; Hewett v. North Carolina, 4 Cir. 1969, 415 F.2d 1316; Ashworth v. United States, 6 Cir. 1968, 391 F.2d 245, and may not be viable in the post-Gagnon world.


author: PER CURIAM:

text:
    James M. BACON et al., Plaintiffs-Appellants, v. TEXACO, INC., Defendant-Appellee.
    No. 74-2045
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Nov. 13, 1974.

      Donald Scott Thomas, Jr., Austin, Tex., Allen Wood, Corpus Christi, Tex., for plaintiffs-appellants.
    William C. Weitzel, Jr., Charles F. Kazlauskas, Jr., New York City, James W. Wilson, Austin, Tex., Ben A. Donnell, Corpus Christi, Tex., for defendant-ap-pellee.
    Before THORNBERRY, AINS-WORTH and CLARK, Circuit Judges.

       Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of N. Y. et al. (5th Cir. 1970), 431 E.2d 409, Part I.

   PER CURIAM:

Appellants sought treble damages and injunctive relief against Texaco, Inc. for alleged violations of the price discrimination provisions of Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C.A. § 13(a). The sole issue on appeal is whether the underlying transaction giving rise to their claim crossed the interstate threshold of Robinson-Patman so as to avoid the summary judgment granted by the district court below. We hold that it does not and affirm.

Appellants are thirty-one gasoline retailers in the Corpus Christi, Texas area who lease their stations and purchase their gasoline from Texaco and do business under the “Texaco” sign. They claim injury from the sale of gasoline by Texaco to Texas Star Distributing Company (Texas Star), the operator of a chain of Texaco retail service stations, at a price approximately four cents per gallon cheaper than that paid by appellants. Appellants assert that Texas Star was in direct competition with them and that the “favored customer discount” that it received bore little relation to any distribution or wholesale functions that Texas Star performed for Texaco.

The material facts of the sale are stipulated and Texaco readily agreed that Texas Star received a jobber discount. But in defense Texaco challenges appellants’ right to bring this price discrimination claim within the “in commerce” language of Section 2(a) of the Robinson-Patman Act. After extensive discovery on that issue by both parties, the district judge granted Texaco’s motion for summary judgment.

Appellants mount two principal assaults. First, but quixotically, they directly challenge the long-accepted interpretation of the “sale in commerce” language of Section 2(a) of the Robinson-Patman Act which restricts price discrimination cases to sales occurring, at least in part, in interstate commerce. E. g., Littlejohn v. Shell Oil Co., 483 F.2d 1140 (5th Cir.), cert. denied, 414 U.S. 1116, 94 S.Ct. 849, 38 L.Ed.2d 743 (1973); Lehrman v. Gulf Oil Corp., 464 F. 2d 26, 37 (5th Cir.), cert. denied, 409 U.S. 1077, 93 S.Ct. 687, 34 L.Ed.2d 665 (1972); Cliff Food Stores, Inc. v. Kroger, Inc., 417 F.2d 203, 208-210 (5th Cir. 1969; Walker Oil Co. v. Hudson Oil Co., 414 F.2d 588, 589-590 (5th Cir. 1969); Hiram Walker, Inc. v. A & S Tropical, Inc., 407 F.2d 4, 9 (5th Cir. 1969), cert. denied, 396 U.S. 1042, 90 S.Ct. 684, 24 L.Ed.2d 686 (1970). They argue that the statutory language should be read broadly, in accord with the original congressional intent, to encompass the full scope of the Commerce Clause as does the Sherman Anti-trust Act, thereby including within the coverage of the Robinson-Patman Act any sale which has an “effect on commerce” regardless of whether the sale itself is interstate in nature. Despite their vigorous and cogent advocacy, the weight of existing precedent mandates that the federal act not be extended to afford intrastate relief.

Whatever may be its ambiguous history, the phrasing of the RobinsonPatman Act clearly dictates that a particular sale is subject to its sanction only if: (1) the seller is engaged in commerce; (2) in the course of such commerce, the seller has discriminated in price between different purchasers of commodities of like grade and quality; (3) “either or any of the purchases involved in such discrimination are in commerce’’-, and (4) there is likely to be a severe, adverse effect on competition. To permit suits to be brought under this provision for price discrimination in intrastate sales of the type at issue in this litigation would be to ignore the explicit words of the statute and make it a panacea for every sort of pricing disparity.

Anticipating the probability that this court would continue to follow the considerable precedent requiring an interstate sale for Robinson-Patman jurisdiction, appellants’ second and alternative contention is that the network of sales involved in this case meets the “in commerce” requirement as construed by existing case law. We reject this position also. Appellants first argue that the sales at issue here were conducted in the “flow of commerce” since the crude oil from which the gasoline was refined was shipped from another state. While it is true that the Supreme Court and this court have held that when a sale occurs in the “flow of commerce,” the sale is deemed to be “in commerce” under the Robinson-Patman definition, [e. g., Standard Oil Co. v. FTC, 340 U.S. 231, 71 S.Ct. 240, 95 L.Ed. 239 (1951) (the gasoline itself was shipped across a state line so the “flow of commerce” was not interrupted); and Foremost Dairies, Inc. v. FTC, 348 F.2d 674 (5th Cir.), cert. denied, 382 U.S. 959, 86 S.Ct. 435, 15 L.Ed.2d 362 (1965) (the milk underwent “rather negligible processing,” so the “flow of commerce” was not interrupted)], those decisions are inapplicable here since the sales at issue in this case, unlike the sales in Standard Oil Co. and Foremost Dairies, Inc., involve products which have undergone substantial change through processing after entering the State of sale. The extensive process involved in refining crude oil into gasoline results in the alteration of the nature of the product. No “flow of commerce” ever took place as to the gasoline which is the subject of this claimed wrong. Therefore the prior travels of the atoms and molecules of crude oil from which it came are not determinative of the inter- versus intra-state nature of the end product refined therefrom. Belliston v. Texaco, Inc., 455 F. 2d 175 (10th Cir.), cert. denied, 408 U.S. 928, 92 S.Ct. 2494, 33 L.Ed.2d 341 (1972)

Similarly, we reject appellants' additional arguments that the transactions were in commerce because the gasoline was transported in a navigable waterway of the United States, the Gulf Intracoastal Waterway, or because Coastal States (the independent refinery that processed part of the gasoline at issue here) gave Texaco, as part of the consideration for the refining contract, petroleum products located in another state. The fact that some of the gasoline was transported within Texas on navigable waterways is of no jurisdictional significance, and, as Littlejohn, supra, clearly mandates, Texaco’s interstate and foreign operations and the existence of interstate dealings with Coastal States do not alter the nature of the sales at issue in this case.

Because we also find appellants’ remaining arguments unpersuasive, we affirm the summary judgment below.

Affirmed.

      . As support for their argument that Congress intended the Robinson-Patman language to be read broadly, appellants cite H. R.Conf.Rep. No. 2951, 74th Cong., 2d Sess., 6 (1936) in which it was explained that the more expansive House version of the Act that specifically prohibited intrastate price discrimination sales was deleted by the Joint Conference solely because the “in commerce” language was understood to reach the same result.

      . See 86 Harv.L.Rev. 765 (1973), asserting that the legislative history of Robinson-Pat-man reveals an ambivalent congressional intent. Contra, Note, The Commerce Requirement of the Robinson-Patman Act, 22 Hastings L.J. 1245 (1971).

      . 15 U.S.C.A. § 13(a) (Emphasis added.).

      . See also Scranton Constr. Co. v. Litton Indus. Leasing Corp., 494 F.2d 778, 781 (5th Cir. 1974) (“the interstate movement of mere ingredients [does not] suffice.”).


text:
    William PACKNETT, Jr., Petitioner-Appellant, v. UNITED STATES GOVERNMENT, Respondent-Appellee.
    No. 74-1889
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Nov. 13, 1974.

      William Packnett, Jr., pro se.
    Dennis C. Weber, Mary Williams Cá-zalas, Asst. U. S. Attys., New Orleans, La., for respondent-appellee.
    Before GEWIN, GODBOLD and CLARK, Circuit Judges.

      Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of N. Y. et al. (5th Cir. 1970), 431 F.2d 409, Part I.

   PER CURIAM:

After a jury found appellant guilty of possessing articles from baggage that had been stolen from a common carrier in interstate commerce, a violation of 18 U.S.C. § 659, the trial court imposed sentence under the Youth Corrections Act, 18 U.S.C. §§ 5010(b), 5017(e). Although appellant did not appeal his conviction directly, the instant case marks his second application for relief under 28 U.S.C. § 2255. We affirmed the denial of his first motion to vacate judgment. 435 F.2d 693 (5th Cir. 1970). We find this second application equally unavailing.

Four contentions are raised in appellant’s pro se petition. The first is that the failure of the indictment to ascribe a value to the stolen articles in appellant’s possession precludes his conviction under section 659. The statutory definition of the offense makes all possession unlawful, but provides for a maximum sentence of one year and a 1000 dollar fine in the event the articles do not exceed 100 dollars in value. The articles involved here, a credit card and a Social Security card, have negligible intrinsic worth but substantial derivative value if used fraudulently. The prosecution apparently made no effort to prove a value for the cards, and the jury received no instruction on the need to find a value. The verdict returned read only “guilty on the second count.”

“[Wjhere the grade of larceny, and consequently, the punishment, depend on the value of the property, it is essential that the value of the property defendant is charged with having taken be alleged and proved.” Cartwright v. United States, 146 F.2d 133, 135 (5th Cir. 1944). Thus, had appellant been sentenced under the felony penalty provision of the statute, which does make value an element of the offense, the failure to allege and prove a value in excess of 100 dollars would require resentencing pursuant to the misdemeanor penalty. See Theriault v. United States, 434 F.2d 212 (5th Cir. 1970); Robinson v. United States, 333 F.2d 323 (8th Cir. 1964).

However, where the only element of the crime is the theft or possession of stolen property, the fact that the value of that taken is neither alleged nor proved is immaterial. The verdict of guilty under the indictment as written and the proof as made, while insufficient to support conviction for a felony, indicates that the jury determined appellant to be guilty of the lesser crime provided for by section 659, i. e., the possession of stolen articles not exceeding 100 dollars in value. See Larson v. United States, 296 F.2d 80 (10th Cir. 1961), quoted in Theriault v. United States, 434 F.2d 212 (5th Cir. 1970). The verity of appellant’s conviction of such possession would not be disturbed by the failure of proof of value.

Appellant was sentenced under the Youth Corrections Act. Neither the applicability of that Act nor the exercise of the court’s discretion in sentencing under its provisions is affected by whether the conviction was for the felony of taking articles of a value in excess of 100 dollars or the misdemeanor of taking property of any worth. Therefore, the sentence imposed was not inconsistent with the verdict of guilt of the lesser crime and the lack of an ascription of value in the indictment and proof of value at trial has no relevance.

Appellant next contends that his appointed attorney rendered him ineffective assistance. Specifically, he asserts the failure to advise, appellant of his right to appeal, counsel’s “admission of incompetence” during his closing argument, and the fact that the appointment of counsel was made only two days before trial to support this claim. Whatever merit there may have been to the claim of failure to advise of the right to appeal was waived by appellant’s refusal of the district court’s offer of an out-of-time appeal, see n. 1, supra. Appellant has done no more than assert that his counsel said during argument that his client’s incriminating statement limited his ability to defend him. Accepting petitioner’s recollections as completely accurate, the comment does not admit or demonstrate incompetence or ineffectiveness. The record shows that the appointed attorney spent twelve hours in preparation of appellant's defense. This more than adequately supports the district court’s conclusion that appellant received effective assistance.

Appellant further alleges that a prior Louisiana prosecution “for the same offense” rendered the federal conviction violative of both the statutory prohibition against federal duplication of state charges in section 659 and the Double Jeopardy Clause of the Fifth Amendment. However, examination of the state information reveals that it charged appellant with the fraudulent use of a stolen credit card and not possession of stolen property as alleged in the federal indictment. The court below properly ruled that this presented no double jeopardy problem.

Finally, appellant urges that the federal government failed to prosecute in good faith. He supports this with allegations that the United States Marshal improperly refused to execute a recognizance bond order and that false statements were made in a complaint used to obtain a warrant for his arrest. The docket entry noting the return of the bond indicates that appellant refused to sign the bond form because of detainers then pending against him on state charges, and an examination of the complaint fails to disclose the misstatements appellant claims are there.

Affirmed.

      . Appellant prefaced his pleadings below with an allegation that he liad never been advised by his appointed counsel or the trial court of the right to appeal his conviction. The district court discerned a violation of Fed. R.Crim.P. 32(a) (2) and granted an out-of-time appeal without reaching the other allegations. Appellant, proceeding pro se, was unsatisfied with this disposition and moved the court to set aside the order and rule on the merits of his section 2255 motion. The court, after a hearing, complied, and denied post-conviction relief. The Rule 32 claim is not reasserted here and we consider it to have been abandoned.

      . Count 2 was otherwise an accurate and complete statement of the elements of the offense.

      . Appellant also claims that the United States Attorney has “affixed” his records to show that appellant was convicted of a felony. Although the original judgment and commitment order erroneously indicated that he had been convicted of possession of tag-gage stolen from a common carrier, the trial judge upon realization of the error corrected the misstatement. As corrected, the commitment order accurately states the offense for which appellant was convicted and the nature of the penalty imposed.


text:
    LA FORTUNE Substituted for Jones & McKnight, Inc., Plaintiff-Appellant, v. S.S. IRISH LARCH, her engines, etc., et al., Defendants. IRISH SHIPPING, LTD., Defendant and Third-Party Plaintiff-Appellee, v. CHR. SALVESEN & CO., LTD., et al., Third-Party Defendants.
    No. 42, Docket 74-1345.
    United States Court of Appeals, Second Circuit.
    Submitted Sept. 24, 1974.
    Decided Oct. 9, 1974.
    Donovan, Donovan, Maloof & Walsh, New York City, Charles C. Goodenough, New York City, of counsel, for plaintiff-appellant.
    Healy & Baillie, New York City, Jack A. Greenbaum, New York City, of counsel, for defendant-appellee Irish Shipping, Ltd.
    Before LUMBARD, FEINBERG and OAKES, Circuit Judges.
   PER CURIAM:

Appellant La Fortune, subrogated underwriter of a shipper, appeals from a judgment of the United States District Court for the Southern District of New York, Charles M. Metzner, J., dismissing after an admiralty trial La Fortune’s claim against defendant shipowner, Irish Shipping, Ltd., for cargo damage to coils of bright basic wire. In an unreported memorandum opinion, the judge based his decision upon two clauses in the Carriage of Goods by Sea Act. The first provides that the carrier shall not be responsible for damage to goods “if the nature or value thereof has been knowingly and fraudulently misstated by the shipper in the bill of lading.” 46 U.S.C. § 1304(5). The second clause similarly relieves the carrier of liability if the damage results from “Insufficiency of packing.” 46 U.S.C. § 1304(2) (n).

Appellant attacks the district court’s findings applying these exceptions. As to the former, the goods were inaccurately described in the bill of lading, thus reducing the freight, rate from $35-$40 a .ton to approximately $15 a ton. That document by its terms contained the “Shipper’s Description of the Goods,” and there was testimony from which the judge could conclude that it is customary for the shipper or his agent to prepare the bill of lading. In addition, while the judge did not use the word “fraudulent,” it is clear in context that his finding that “the shipper knowingly misstated the nature and value of the shipment,” amounted to a finding of “knowingly and fraudulently misstated.” As to the second exception, at least one witness examined pictures of the original binding and testified that it was inadequate while the opposing evidence offered by plaintiff was inconclusive at best. In sum, none of the judge’s key findings was clearly erroneous.

Judgment affirmed.


author: SETH, Circuit Judge.

text:
    FEAR RANCHES, INC., Appellant, v. H. C. BERRY, d/b/a Berry Ranch Co., et al., Appellees.
    No. 73-1297.
    United States Court of Appeals, Tenth Circuit.
    Sept. 25, 1974.
    Milton A. Oman, Salt Lake City, Utah, for appellant.
    Frank H. Allen, Jr., Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, N. M., for appellees, H. C. Berry, d/b/a Berry Ranch Co., and Berry Land and Cattle Co., Inc.
    Charles C. Spann, Grantham, Spann & Sanchez, Albuquerque, N. M., and Kreh-biel & Alsup,- Clayton, N. M., for appel-lee, Kelly Perschbacker.
    Before JONES, SETH and DOYLE, Circuit Judges.

      Of the Fifth Circuit, sitting by designation.

   SETH, Circuit Judge.

An opinion on the first appeal of this case was filed as Fear Ranches, Inc. v. H. C. Berry, et al., 10 Cir., 470 F.2d 905. On the first appeal, all issues were disposed of except as to a point concerning the custom and usage prevailing in New Mexico. On this point the trial judge received evidence but made no finding. The case was remanded for additional findings. These have now been made and the case is before us as No. 73-1297.

The trial court on remand, in Supplemental Findings of Fact, found that:

“There is a usage of trade in the cattle industry in New Mexico that a knowledgeable buyer, relying entirely on his own judgment, in buying cattle from a knowledgeable seller, who makes no representations as to the condition of the cattle, takes the animals as he selects them and there are no implied warranties of the fitness of the cattle.”

This Finding No. 7 excludes any implied warranty of fitness for a particular purpose. The finding of the buyer’s reliance on his own judgment is supported by the record. This self-reliance included the matter of whether or not the cattle were free from disease. This was the only issue remaining after the original opinion.

The judgment is affirmed.


text:
    Senobio TRUJILLO-HERNANDEZ, Individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. Raymond S. FARRELL, Commissioner of United States Immigration and Naturalization Service, et al., etc., Defendants-Appellees (two cases).
    Nos. 73-1845, 73-3005.
    United States Court of Appeals, Fifth Circuit.
    Nov. 13, 1974.
    George J. Korbel, Mario Obledo, Ed Idar, Jr., San Antonio, Tex., Sanford Jay Rosen, San Francisco, Cal., R. P. Sanchez, McAllen, Tex., for plaintiff-appellant.
    Anthony J. P. Farris, U. S. Atty., B. Stephen Rice, Robert Darden, Asst. U. S. Attys., Houston, Tex., Joseph Sureek, Regional Counsel, Southwest Region, I. N. S., San Pedro, Cal., John L. Murphy, Administrative Regulations Service, Crim. Div., Dept, of Justice, Washington, D. C., Mary L. Sinderson, Asst. U. S. Atty., Houston, Tex., Pete Magaro, I. N. S., San Antonio, Tex., James R. Gough, Helen Eversberg, Asst. U. S. Attys., Houston, Tex., for defendants-appellees.
    Before WISDOM and BELL, Circuit Judges, BREWSTER, District Judge.
   PER CURIAM:

In this consolidated appeal, Senobio Trujillo-Hernandez, acting both as an affected individual and as a class representative, challenges the English language requirement of the naturalization statute, 8 U.S.C. § 1423(1), and its associated regulations. The district court denied his petition for naturalization and dismissed his class action without granting the application for a three-judge court.

Although aliens are entitled to due process protection, Congress has broad authority in setting requirements for naturalization. In Terrace v. Thompson, 1923, 263 U.S. 197, 220, 44 S.Ct. 15, 19, 68 L.Ed. 255, the Court stated, “Congress is not trammeled, and it may grant or withhold the privilege of naturalization upon any grounds or without any reason, as it sees fit.” Similar language occurs in the Court’s later cases. “The opportunity to become a citizen of the United States is said to be merely a privilege, and not a right. [Tjhe Constitution does not confer upon aliens the right to naturalization. . . . There is, of course, no ‘right to naturalization unless all statutory requirements are complied with.’ ” Tutun v. United States, 1926, 270 U.S. 568, 578, 46 S.Ct. 425, 427, 70 L.Ed. 738. See also United States v. Macintosh, 1931, 283 U.S. 605, 615, 51 S.Ct. 570, 572, 75 L.Ed. 1302; Taka-hashi v. Fish and Game Commission, 1948, 334 U.S. 410, 419, 68 S.Ct. 1138, 1142, 92 L.Ed. 1478.

This case need not turn on the right-privilege distinction. See Graham v. Richardson, 1971, 403 U.S. 365, 374, 91 S.Ct. 1848, 1853, 29 L.Ed.2d 534. See also, Sugarman v. Dougall, 1973, 413 U.S. 634, 93 S.Ct. 2842, 37 L.Ed.2d 853; Van Alstyne, The Demise of the Right-Privilege Distinction in Constitutional Law, 81 Harv.L.Rev. 1439 (1968). The question for decision is non justiciable. The naturalization power is conferred on Congress in Article I, Section 8, along with the war power, the power over foreign commerce, and the power to define and punish offenses against the law of nations, all of which are indicative of the foreign relations responsibilities committed to the Congress. It has never been supposed that there are any judicially manageable standards for reviewing the conduct of our nation’s foreign relations by the other two brandies of the federal government. Harisiades v. Shaughnessy, 1952, 342 U.S. 580, 72 S.Ct. 512, 96 L.Ed. 586; United States v. Pink, 1942, 315 U.S. 203, 62 S.Ct. 552, 86 L.Ed. 796; Oetjen v. Central Leather Co., 1918, 246 U.S. 297, 38 S.Ct. 309, 62 L.Ed. 726. See also Spacil v. Crowe, 5 Cir. 1974, 489 F.2d 614.

The district court did not err in dismissing the class action and denying the petition for naturalization. See Harisiades v. Shaughnessy, 1952, 342 U.S. 580-590, 72 S.Ct. 512, 96 L.Ed. 586; Samras v. United States, 9 Cir. 1942, 125 F.2d 879, 881, cert. denied, 317 U.S. 634, 63 S.Ct. 34, 87 L.Ed. 511.

Our holding of nonjusticiability applies only to the power of Congress to establish conditions precedent to naturalization. It does not extend to other governmental powers that are constrained by the due process and equal protection clauses. For example, Trujillo-Hernandez is entitled to procedural due process in the processing of his petition for naturalization, as a guard against administrative arbitrariness. Similarly, the state law denying him qualification as a voter is open to attack, since state action is subject to fourteenth amendment restrictions. We hold only that the direct attack on congressional exercise of the naturalization power is foreclosed as nonjusticiable.

Affirmed.


text:
    Thomas S. KEATY, Plaintiff-Appellant, v. FREEPORT INDONESIA, INC., Defendant-Appellee.
    No. 74-2472
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Nov. 11, 1974.

      John G. Torian, II, Lafayette, La., for plaintiff-appellant.
    Donald W. Doyle, Howard J. Smith, Jr., Edward F. Stauss, Jr., New Orleans, La., for defendant-appellee.
    Before BELL, SIMPSON and MORGAN, 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.

   PER CURIAM:

Appellant, Thomas S. Keaty, seeks review of the district court’s refusal to exercise jurisdiction of his breach of contract action against Freeport Indonesia, Inc. (Freeport). The lower court based its dismissal on the following contract provision:

“This agreement shall be construed and enforceable according to the law of the State of New York and the parties submit to the jurisdiction of the courts of New York.”

The sole issue with which we must contend is whether this above quoted provision constitutes a mandatory forum-selection clause, requiring that any action under the contract be brought only in the courts of New York. We hold that it does not and reverse for further proceedings.

Uncontroverted facts, as shown by the complaint, control. Keaty, a resident of New Orleans, Louisiana, entered into a two year employment contract with Freeport, a Delaware corporation doing business in Louisiana, but with its principal office elsewhere, whereby he was to establish and supervise a job training program for local Indonesians at the site of Freeport’s West Irian, Indonesia facilities. While Keaty was still in Indonesia, his services were terminated by Freeport prior to the expiration date of the contract. Keaty returned to the United States and initiated suit for damages for breach of contract against Freeport in the United States District Court for the Eastern District of Louisiana. Diversity jurisdiction was asserted. Freeport moved to dismiss the action pursuant to the quoted contract provision, asserting that the language, “and the parties submit to the jurisdiction of the courts in New York,” constituted a mandatory forum-selection clause which the court should honor. The action was dismissed and the instant appeal followed.

The trial judge by his dismissal order defined what he considered the sole issue to be determined as, “whether this court in a diversity action should decline to exercise its jurisdiction in light of the mutually agreed upon provision in the parties contract limiting the forum to New York.” (emphasis supplied). It is apparent that the trial judge assumed that the contract provision in question constituted a mandatory forum-selection clause. This assumption we find to be erroneous.

We note initially that this is not a situation where the contract, on its face, clearly limits actions thereunder to the courts of a specified locale. See, M/S Bremen v. Zapata Off-Shore Co., 1972, 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (“Any dispute arising must be treated before the London Court of Justice.”); Central Contracting Co. v. Maryland Casualty Co., 3 Cir. 1966, 367 F.2d 341 (“The subcontractor agrees that it will not commence any action, arising out of this subcontract agreement, in any Courts other than those in the County of New York, State of New York. . .”). Neither is this a situation involving an adhesion contract whereby contract provisions are literally forced upon the weaker party. See, e. g., Bisso v. Inland Waterways Corp., 1955, 349 U.S. 85, 75 S.Ct. 629, 99 L.Ed. 911. Instead we are confronted here with a negotiated contract provision subject to opposing, yet reasonable, interpretations.

Through the affidavit of its Employment Coordinator in New Orleans, Free-port alleges that the questioned contract provision “was intended to evidence the agreement of both parties thereto that the law of the State of New York would govern all disputes arising under the contract and that any such disputes would be litigated only in the State or Federal Courts located within the State of New York.” On the other side, Reaty acknowledges his intent to have the law of the State of New York govern all contract disputes, but states that he merely intended to submit to the jurisdiction of the New York courts if sued there; he did not intend to waive his right to sue or be sued elsewhere. We find both interpretations of the contract provision to be reasonable.

When previously confronted with two opposing, yet reasonable, interpretations of the same contract provision, this Court adopted the traditional rule whereby, “an interpretation is preferred which operates more strongly against the party from whom [the words] proceed.” Tenneco, Inc. v. Greater La-Fourche Port Comm’n, 5 Cir. 1970, 427 F.2d 1061, 1065, quoting from Restatement of Contracts Sec. 236(d) (1932). The contract agreement, including the challenged provision, was put into written form by Freeport and must therefore be construed more strongly against it. We find that the disputed contract provision falls short of being a mandatory forum-selection clause and accordingly hold that the district court erred in its refusal to accept jurisdiction. Rather it should proceed to the merits of the contract dispute between the parties.

We reverse and remand to the district court for further proceedings.

Reversed and remanded.