author: CUMMINGS, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Juan DeLEON et al., Defendants-Appellants.
    Nos. 73-1609, 73-1610 and 73-2049.
    United States Court of Appeals, Seventh Circuit.
    Heard March 1, 1974.
    Decided June 25, 1974.
    Rehearing En Banc in No. 73-1609 Denied July 31, 1974.
    Rehearing En Banc No. 73-1610 Denied July 18, 1974.

      Francis E. Andrew, Jackson H. Welch, Cornelius E. Toole, Allan A. Ackerman, Chicago, 111., for defendants-appellants.
    James R. Thompson, U. S. Atty., Walter Jones, Jr., Asst. U. S. Atty., Chicago, 111., for plaintiff-appellee.
    Before FAIRCHILD, CUMMINGS, and PELL, Circuit Judges.
   CUMMINGS, Circuit Judge.

The three defendants, Wilton Torres, Juan DeLeon, and Gloria Diaz, were indicted with two others, for possessing with intent to distribute and distributing cocaine and for a conspiracy to do so, in violation of 21 U.S.C. §§ 841(a)(1) and 846. After a jury trial, these defendants were convicted on both counts. Torres and DeLeon received five-year sentences and Diaz was sentenced to five years under the provisions of 18 U.S.C. § 4208(b).

Viewed most favorably to the Government, the evidence at trial showed that Steve Campbell, a special employee of the Bureau of Narcotics and Dangerous Drugs (“Bureau”) told Francis Tucci, an agent of the Bureau, that if he met Holzinger, Tucci would be able to purchase a pound of cocaine. Accordingly, Tucci visited Holzinger on August 23. Holzinger thought that Tucci was a partner in a cocaine operation. Tucci was told by Holzinger that he was making arrangements to meet Torres the next day to procure a pound of cocaine.

On August 24, Tucci accompanied Holzinger to the residence of Wilton Torres, described by Holzinger as his supplier. Upon inquiry, Torres told Tucci that after Torres received a phone call he would sell Tucci a pound of cocaine for $10,000. Torres then told Tucci that he was going to meet “with his people” and it would be best for Tucci to return at 6:00 p. m. to complete the deal. Tucci agreed to return to the Torres apartment later.

At the 6:00 p. m. rendezvous, Torres told Holzinger that they would have to see a couple of people about procuring the pound of cocaine. They went to see Juan DeLeon and found him outside his home in his car. Holzinger was told by Torres that he was going to talk to his connection, and Torres and DeLeon then disappeared into the latter’s home.

Soon afterwards, Torres and DeLeon returned outside and walked toward Torres’ auto. Torres told Holzinger they would not be able to obtain a pound of cocaine but possibly could obtain two ounces. Holzinger then called Tucci at Torres’ apartment to see if Tucci was willing to purchase two ounces. Diaz answered Torres’ phone and Holzinger asked to speak to Tucci. Diaz gave Tucci the phone and Holzinger told him he could not obtain the pound of cocaine but had a couple of ounces to sell. Tucci told both Holzinger and Torres that he would wait until a pound became available.

On September 8, Tucci telephoned Holzinger. Holzinger said that Wilton Torres was ready to sell Tucci a pound of cocaine. Tucci and Holzinger met that afternoon and drove to Torres’ apartment, where Diaz and Torres were present. Torres asked Tucci if he was ready to buy the cocaine and received an affirmative reply, and Tucci was again told by Torres that the price would be $10,000 a pound. Torres gave Tucci a small sample of the cocaine and told him to return at six o’clock to consummate the deal. As Tucci was leaving Torres’ apartment, Diaz said she was certain the deal would go through and that Tucci was not a policeman. When Tucci returned to Torres’ apartment at 6:00 p. m., Diaz told him that Holzinger and Torres had left. Torres later called Tucci at Torres’ apartment. Torres told Tucci that he could not settle the deal until 9:00 p. m., and Tucci then backed out, apparently because of the delay.

On September 14, Tucci called Holzinger about the purchase of the pound of cocaine from Wilton Torres. Holzinger replied that final arrangements had been made for the sale. Therefore, on the following day, Tucci met in his car with Holzinger and went to a Chicago intersection around noon. Holzinger left the car and walked out of view for five minutes. When Holzinger returned, both stood by the car for a few minutes until Diaz came and escorted them into a basement apartment at 1434 North Ashland Avenue in Chicago.

In the apartment, Wilton Torres asked Tucci if he had the money and told Tucci the cocaine was due shortly. Soon thereafter, DeLeon and Manuel Torres entered the apartment. The Torreses and DeLeon left the living-room and DeLeon handed a package to Wilton Torres in the kitchen. Wilton Torres then walked into the living-room and handed Tucci a small package containing some white powder, stating that it was a sample of the pound he was prepared to sell Tucci. Wilton Torres then asked Tucci to go outside and obtain the money and bring it inside. Tucci said that he would not bring the money inside the apartment because the large number of people inside the apartment might rob him. Diaz assured Tucci that they were not going to rip him off, that they only intended to sell him cocaine. DeLeon insisted that the sale be conducted inside the apartment to reduce the chance of arrest. Tucci threatened to leave if the deal were not conducted outside. Wilton Torres then stated that if the deal were conducted outside, Holzinger would have to remain inside as a hostage with Manuel Torres. DeLeon agreed to this proposal. Tucci, DeLeon and Wilton Torres then left the apartment while Diaz remained inside with Holzinger and Manuel Torres.

Tucci accompanied Wilton Torres to his car where they stood until they were approached by DeLeon and one Thomas Nieves, a non-defendant. Nieves handed a blue bag to Torres, who extracted a clear plastic bag therefrom and stated to Tucci “Here is the cocaine, where is my money?” Tucci then took the cocaine and signaled other agents of the Bureau and announced that defendants were under arrest. DeLeon and Nieves started to run away but were caught and arrested. Wilton Torres and the three who remained in the apartment were also arrested.

Defendant Diaz first contends that a mistrial was necessary because of the district judge’s remarks when she failed to appear at the afternoon session on the second day of the trial. Her counsel explained to the court that he did not know Diaz’ whereabouts and speculated that her absence might be because of her roommate’s pregnancy. The court then announced in the jury’s absence: “We will go forward with the trial. I will tell the jury that Miss Diaz has been unavoidably detained and has waived her privilege to be here and the trial will continue.” Counsel for Diaz then stated, “All right, your Honor.” Then he made an oral motion for a mistrial and severance. The motion was promptly denied and the court stated it hoped that Diaz would be present on the following day.

After government counsel pointed out that Diaz had been an hour late on the initial trial date and was presently four hours late on the second day of the trial, he requested that a bench warrant issue and that her bond be forfeited. The court agreed that a bench warrant should issue and said that it would deal with the bond forfeiture at a later time. The jury was then brought in and the court stated:

“Miss Gloria Diaz, one of the defendants, is unable to be present and has waived her right to be present for this session and we will go ahead and proceed in her absence.”

Her counsel now states that the district judge erroneously declared that Diaz had waived her right to be present. However, he failed to object when the judge first stated that he would make such a statement and again failed to object when the statement was made to the jurors. We cannot agree with defense counsel that the judge’s statements had the effect of “planting the seed of prejudice in the minds of the jurors,” on the theory that the statement that she waived her rights was inconsistent with the statement that she was unable to be present. The two statements were not necessarily inconsistent, and even if they were in some technical sense, we doubt that the jury understood them in that sense. As noted even by Diaz’ counsel, Rule 43 of the Federal Rules of Criminal Procedure provides that in prosecutions for non-capital offenses a “defendant’s voluntary absence after the trial has been commenced in his presence shall not prevent continuing the trial to and including the return of the verdict.” As her counsel’s brief states, “the defendant’s voluntary absence constitutes an effective waiver of his right to be present * * *.” Diaz’ pregnancy certainly does not show that her sudden absence from trial was involuntary; her roommate’s pregnancy shows even less. No other reason for her absence has been advanced. She remained a fugitive until being arrested on a bench warrant on September 20, 1973, some 4i/£ months later, thus buttressing the trial judge’s conclusion that she willingly remained away from the trial. At least in the absence of any request by her counsel for a hearing as to the reason for her absence, we agree that the trial judge’s statement to the jury was’ appropriate and nonprejudicial. In fact, his statement gave her the benefit of every possible doubt to avoid prejudice.

Diaz’ counsel contends that since there was no evidence of her flight and since her absence was not voluntary, the trial court improperly instructed the jury that flight is a circumstance which may tend to prove consciousness of guilt and should be considered and weighed in connection with all the other evidence. If the jury viewed her absence as her counsel does — and the only explanation of her absence to the jury was the judge’s statement that she was “unable” to be present — then it understood the instruction as applying only to DeLeon, who fled at the initial arrest. This was apparently the trial judge’s intention; he refused to instruct that Diaz had been absent without his permission. Even if the jury understood the flight instruction as applying to Diaz’ absence from trial, there was no prejudice since her own counsel did not know her whereabouts, and no plausible excuse for her absence has been offered.

DeLeon and Torres also attack the flight instruction. As noted, the flight instruction was singularly appropriate as to DeLeon. Since the jury had been advised by Agent Tucci that Wilton Torres did not attempt to escape arrest, the instruction did not apply to him. At least in the absence of a request, it was unnecessary for the district judge to specify that the flight instruction applied only to DeLeon.

DeLeon and Torres also argue that Diaz’ flight from trial was imputed to them by the standard instruction that the acts of one conspirator “in furtherance of the conspiracy and during its existence” may be considered against co-conspirators. It appears that defendants did not request a clarifying instruction that the conspiracy had terminated before trial, so that they cannot complain now. We doubt that the jury misunderstood, particularly since in the instruction on statements of coconspirators, the judge specifically mentioned that statements after the termination of the conspiracy were evidence only against the person making them.

Diaz’ final argument is that there was insufficient evidence to support her conviction. Again we disagree. She appears to concede that a conspiracy was established, and the evidence summarized above was ample to connect her with the conspiracy to sell a pound of cocaine to Tucci. Her service as a functionary of the scheme was also sufficient to support her conviction on the substantive count, for she led Tucci to the place of sale, previously unknown to him; she assured both sides that they would not be betrayed by the other, stating that defendants only wanted to sell cocaine. She was present at the prior negotiations and unsuccessful attempts to complete the sale, where her cautious co-defendants were unlikely to have admitted non-conspirators. Her participation was adequately established. Cf. United States v. Pentado, 463 F.2d 355, 362-363 (5th Cir. 1972), certiorari denied sub nom. Noa v. United States, 410 U.S. 909, 93 S.Ct. 963, 35 L.Ed.2d 271.

All defendants complain that their cross-examinations of Tucci and Holzinger were unduly restricted. They argue that they should have been permitted to explore further Holzinger’s involvement as a broker in the sale of one hundred pounds of marijuana on August 23. Holzinger had not been prosecuted for this sale. Defendants concede that the sale was not admissible to show Holzinger’s general lack of credibility (the character theory). See Michelson v. United States, 335 U.S. 469, 482, 69 S.Ct. 213, 93 L.Ed. 168; United States v. Banks, 475 F.2d 1367 (5th Cir. 1973). However, they argue that the sale was admissible to show that Holzinger might falsely testify favorably to the Government from fear of prosecution (the bias theory).

Previous attempts to deal with the tension between the admissibility of evidence supporting the bias theory and the inadmissibility of the same evidence to support the character theory relied heavily on the fact that the witness was substantially impeached by other means. See United States v. Amabile, 395 F.2d 47, 50-51 (7th Cir. 1968), reversed on other grounds, 394 U.S. 310, 89 S.Ct. 1163, 22 L.Ed.2d 297, reimposed convictions affirmed, 432 F.2d 1115 (7th Cir. 1970), certiorari denied, 401 U.S. 924, 91 S.Ct. 869, 27 L.Ed.2d 828; United States v. Conrad, 448 F.2d 271, 274 (9th Cir. 1971). Similai'ly, here, the jury was informed of many other factors bearing adversely on Holzinger’s credibility. However, we need not rely on other impeachment. We think the district judge found a general solution to the conflict between the two principles involved here.

The matter first arose on DeLeon’s cross-examination of Tucci. He was permitted to testify that through Holzinger he had obtained some of the hundred pounds of marijuana. Such a showing that at the time of the direct testimony the Government knew of the alleged criminal act is essential to admissibility under the bias theory; if a witness’ general fear that he might be caught and prosecuted were sufficient to show bias, then the rule that past criminal conduct not resulting in conviction is inadmissible would never apply to government witnesses. Judge McLaren then refused to permit further inquiry into the circumstances surrounding the sale. The matter next arose at a conference the following morning, and Judge McLaren ruled as follows:

“THE COURT: It’s already established there is something to do with a hundred pounds of marijuana. I will allow you to go into that in a very limited way. That is to say, there has been no prosecution, no case brought on that, and I will let you inquire as to whether any promises have been made; beyond that, I am not going to go on a whole other trial.”

This was correct, for the crime, the government’s knowledge, the lack of prosecution, and any promises are relevant to the bias theory. Whether Holzinger feared prosecution would also be relevant. Other surrounding circumstances would go only to the inadmissible character theory. However, defendants apparently failed to grasp the implications of the distinction they urged. When counsel for Torres raised the marijuana sale on cross-examination of Holzinger, he immediately began inquiry into surrounding circumstances. When objections were sustained, he went on to another subject, never asking about promises or lack of prosecution. DeLeon’s counsel did not raise the matter until re-cross-examination and then conceded it was outside the scope of recross. Diaz has adopted this argument by incorporating the briefs of DeLeon and Torres; she does not indicate that her counsel ever asked about the marijuana sale. Judge McLaren’s rulings were correct and explicit; defendants simply failed to ask the right questions.

Torres complains that he was denied due process by the absence of an interpreter during the beginning of his cross-examination. However, his trial counsel had considered Torres to be sufficiently adept in English to proceed without an interpreter through direct examination and most of cross-examination. Then an interpreter was provided immediately when requested by counsel. Holzinger testified that Torres spoke English fluently, and all Tucci’s negotiations with Torres were conducted in English. In these circumstances, the argument is purely frivolous.

Torres also asserts that the trial court erroneously permitted evidence of his prior criminal acts. Here Torres had raised the defense of entrapment so that evidence of prior acts was admissible to show his disposition to commit the offense. United States v. Simons, 374 F.2d 993, 995 (7th Cir. 1966); United States v. Brown, 453 F.2d 101, 108 (8th Cir. 1971). Since this defendant specifically denied selling cocaine or heroin prior to August 23, 1972, it was permissible for the Government to rebut his testimony by Special Agent Patterson’s testimony that Torres had sold him cocaine on April 4, 1972. Although Torres now urges that the court should have given an instruction as to how the jury should treat his April 4, 1972, sale, his own counsel objected to such an instruction that had been proffered by the Government and was agreeable to the court. Torres argues here that the Government instruction was incorrect, but the trial judge was never advised that the instruction would be acceptable if modified, and no substitute was tendered. Because all defendants’ counsel had objected, the instruction was not given. This invited error cannot be raised now.

Finally, we conclude that no reversible error occurred with respect to the destruction of Agent Tucci’s original handwritten notes. At the September 26, 1972, preliminary hearing before the magistrate, at the request of the defense counsel, the magistrate ordered Tucci to produce his handwritten notes which were in the process of transcription. After the recess, the Government moved to dismiss the complaint and defendants were not indicted until December 19, 1972.

At the trial, defense counsel were permitted to cross-examine Tucci about his investigative notes. He had incorporated these notes into a handwritten memorandum submitted for typing. He testified that at the preliminary hearing before the magistrate the references were to that handwritten memorandum rather than the original handwritten notes. Both the original handwritten notes and the handwritten memorandum were destroyed prior to trial. He testified that the handwritten memorandum was destroyed after the preliminary hearing, and that he was not sure about the timing of the destruction of the original notes. The final report generated from the notes was made available to the defense counsel under the Jencks Act.

It was indefensible for Agent Tucci to destroy his handwritten memorandum after the magistrate’s order to produce it. The Government has a remedy in mandamus for premature orders to disclose Jencks Act material. United States v. McMillen, 489 F.2d 229 (7th Cir. 1972). Instead, to end the magistrate’s power to act by destroying the subject matter of the litigation is contemptuous. Griffin v. County School Board, 363 F.2d 206 (4th Cir. en banc 1966). It is of course well settled that contempt of an erroneous order is still contempt. United States v. Seale, 461 F.2d 345, 361 (7th Cir. 1972), collecting cases.

The Government’s response that Agent Tucci routinely destroyed his notes in accordance with long-established practice strains credulity here. It is scarcely “routine” to destroy notes after an order to produce them. The Government knew that defendants wanted these notes and that a judicial officer had found their production necessary. Although the Government contended that the magistrate lacked power to order their production at that time, it knew that under 18 U.S.C. § 3500 that objection would vanish once Agent Tucci had testified at trial. See United States v. Bell, 457 F.2d 1231, 1235 (5th Cir. 1972). Under these circumstances the Government had an obligation to preserve the notes, and their destruction must be deemed in bad faith. See Campbell v. United States, 303 F.2d 747, 751 (1st Cir. 1962), vacated on other grounds, 373 U.S. 487, 83 S.Ct. 1356, 10 L.Ed.2d 501, Comment, “Judicial Response to Governmental Loss or Destruction of Evidence,” 39 U.Chi.L.Rev. 542, 548-552 (1972).

The remaining issue is whether defendants should benefit from the Government’s misconduct. United States v. Quinn, 357 F.Supp. 1348 (N.D.Ga.1973), although involving similar facts, is not in point because defendant there sought to quash the indictment. Here defendants sought to impeach Agent Tucci by showing the circumstances under which he destroyed the notes. By his relevancy ruling, the trial judge must have concluded that the Government destroyed the notes because of its refusal to deviate from custom, rather than to avoid producing evidence damaging to its case. Therefore, Killian v. United States, 368 U.S. 231, 242, 82 S.Ct. 302, 7 L.Ed.2d 256, does not require a remand. United States v. Lonardo, 350 F.2d 523 (6th Cir. 1965) limited its holding to stenographic transcripts of a witness’ statement ; to the extent that the language of that case is contrary to our holding here, we disagree.

Judgments affirmed.

      . Defendant Allen Holzinger pled guilty before trial, testified as a government witness and received three years’ probation. Defendant Manuel Torres was a fugitive when these defendants were tried. He was recaptured, and his trial was scheduled for March 19, 1974.

      . Agent Tucci testified that Nieves was not indicted because he played only a minor part in the conspiracy.


source: Caselaw Access Project

author: WEICK, Circuit Judge.

license: Public Domain

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. EAST SIDE SHOPPER, INC., et al., Respondents.
    No. 73-1925.
    United States Court of Appeals, Sixth Circuit.
    Argued April 11, 1974.
    Decided June 25, 1974.

      Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, John D. Burgoyne, Sandra R. Mc-Candless, Attys., National Labor Relations Board, Washington, D. C., on brief for petitioner.
    Key well & Rosenfeld by Robert S. Rosenfeld, Herman D. Healy, Birmingham, Mich., on brief, for respondents.
    Before WEICK, PECK and ENGEL, Circuit Judges.
   WEICK, Circuit Judge.

In this case we consider the Board’s application for enforcement of its order against East Side Shopper, Inc., TriCounty Printers, Inc., Publishers Circulation Service, Inc., d. b. a. DAWN (Detroit Area Weekly Newspapers, Inc.) hereinafter referred to as Company. The order was issued on July 9, 1973 and is reported at 204 NLRB 125 (1973).

The Board found that the company had violated Section 8(a)(1) of the Act by engaging in coercive interrogation of one employee, by granting vacation benefits to part-time employees, and by instituting new rules on grievance and layoff procedures. The Board also found violations of Sections 8(a)(3) and (1) resulting from the discharge of three employees who had participated in the union organization effort. Finally, the Board found that the company had violated Sections 8(a)(5) and (1) of the Act by refusing to recognize and bargain with the union on the basis of a majority of authorization cards. The Board set aside an election conducted on June 12, 1972, in which 21 votes were east for the union and 37 votes were cast against the union.

The company contends that there is not substantial evidence to support the finding of §§ 8(a)(1) and 8(a)(3) violations. It further contends that a § 8(a)(5) bargaining order was not appropriate because the Board’s finding of an impossibility of a fair election being held was only conclusory, and that such finding was not supported by substantial evidence.

We conclude from our examination of the record that there was substantial evidence to support the Board’s order with respect to §§ 8(a)(1) and 8(a)(3) violations. However, we are not satisfied that the facts in this case warrant the bargaining order.

While NLRB v. Gissel Packing Co., 395 U.S. 575, 89 S.Ct. 1918, 23 L.Ed.2d 547 (1969), sanctions such an order in certain circumstances, our decision in NLRB v. Essex Wire Corp., 496 F.2d 862 (6th Cir., 1972), which followed the decision of the Fifth Circuit in NLRB v. American Cable Systems, Inc., 427 F.2d 446 (5th Cir. 1970), is more appropriate to the fact situation here. The Fifth Circuit in American Cable Systems described the reasoning of the Board in ordering the company to bargain, as “a litany, reciting conclusions by rote without factual explication.” 427 F.2d at 449. We think the same is true in the present case.

The interrogation violation in this case was only marginal. The answers of the one employee involved were honest and direct, and they indicate little real coercion. Moreover, this one incident took place back in April, 1972, and simply does not have a continuing impact. Likewise, the vacation policies with respect to part-time employees and grievance procedures have also been in effect for that long, and while they may have had some impact in the first election we cannot conclude that those actions still would prevent a fair election at this time.

With respect to the Section 8(a)(3) violations, it appears that in September, 1972 all of the three discharged employees were offered reemployment. This was five months after their initial discharges, and long before the company was under any order to offer reinstatement in July, 1973. One of the three discharged employees (Mass) accepted the offer; one (Musial) rejected the offer; and one (Baer) did not respond.

We are of the opinion, considering the record as a whole, that there is not substantial evidence to support the Board’s bargaining order.

The hearing before the Administrative Judge on the unfair labor practices charges filed against the company was closed on November 26, 1972.

The company moved in this Court to supplement the record on appeal with affidavits showing that on February 1, 1973, prior to the decision of the Administrative Judge and the decision of the Board, the company sold all of its assets to Panax, Inc.; that the business is being operated by new management; and that there has since been a turnover in employees of more than fifty percent. The motion was denied by a Judge of this Court, and the papers have been appended to Respondent’s brief filed in this Court.

It is clear that there can be no adjudication of liability against a successor without affording it full opportunity to present any defenses which it may have. Golden State Bottling Co. v. NLRB, 414 U.S. 168, 94 S.Ct. 414, 38 L.Ed.2d 388 (1973). A bona fide successor with knowledge of an unfair labor practice may be ordered to reinstate a discharged employee, with back pay. The old company and the successor are jointly and severally liable for the back pay award. Golden State, supra.

Enforcement is ordered against the company only of the Board’s order finding a violation of Sections 8(a)(1) and 8(a)(3) of the Act; and enforcement is denied as to the Section 8(a)(5) alleged violation.

      . A cease and desist order may not be entered against the successor because it did not commit any uniair labor practice. Thomas Eng’r Corp., 179 NLRB 1029, enforced sub. nom., United Automobile Workers v. NLRB, 442 F.2d 1180 (9th Cir. 1971).

        A successor is not liable to carry out the provisions of a collective bargaining agreement. NLRB v. Burns Int’l Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972).


author: EDWARDS, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Buford PEAK, Defendant-Appellant.
    No. 73-2035.
    United States Court of Appeals, Sixth Circuit.
    Argued Feb. 5, 1974.
    Decided July 5, 1974.
    Don H. Major, Mulhall, Major & Turner, Louisville, Ky., on brief, for defendant-appellant.
    Eugene E. Siler, Jr., U. S. Atty., William D. Kirkland, Asst. U. S. Atty., Lexington, Ky., on brief, for plaintiff-appellee.
    Before WEICK, EDWARDS and CELEBREZZE, Circuit Judges.
   EDWARDS, Circuit Judge.

Appellant was indicted on three counts. Two counts alleged that he caused the knowing interstate transportation of a stolen truck, in violation of 18 U.S.C. § 2312 (1970). One count charged that appellant aided and abetted in knowing possession of a stolen truck, in violation of 18 U.S.C. § 2 (1970). The jury found him guilty on Counts 1 and 3. The District Judge sentenced him to two years, with each count to run concurrently.

Two material issues are presented. First, on motion of the defendant, the District Judge granted a discovery order requiring the government to produce for inspection by defendant’s counsel all physical evidence which it intended to introduce. It is clear that this instruction was not complied with completely. What appellant claims were very incriminating documents pertaining to the theft of the truck and corroborating evidence of certain phone calls, consisting of toll records of the telephone company, were introduced by the government without any prior notice to the defendant. On subsequent objection Judge Swinford ruled that because of violation of his order, the physical evidence would be stricken. He held, however, that the failure to turn over these documents was inadvertent. As a consequence, he allowed oral testimony about the same data which was contained on these records to be introduced.

The District Judge in this instance followed the sanction of exclusion of evidence found in Rule 16(g) of the Federal Rules of Criminal Procedure. On this issue we believe the District Judge’s rulings were appropriate and that they clearly were not an abuse of the discretion which a trial judge must have in ruling on evidence. See Hansen v. United States, 393 F.2d 763, 769-70 (8th Cir.), cert. denied, 393 U.S. 833, 89 S.Ct. 103, 21 L.Ed.2d 103 (1968).

Secondly, appellant argues that the Assistant United States Attorney who tried this case continually went outside the record in his argument to the jury with prejudicial information and comments, and that the District Judge erred in not granting a mistrial on this basis.

Appellant sought our review of this issue against the standard of Berger v. United States:

“The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done. * * *
“It is fair to say that the average jury, in a greater or less degree, has confidence that these obligations, which so plainly rest upon the prosecuting attorney, will be faithfully observed. Consequently, improper suggestions, insinuations and, especially, assertions of personal knowledge are apt to carry much weight against the accused when they should properly carry none.” Berger v. United States, 295 U.S. 78, 88, 55 S.Ct. 629, 633, 79 L.Ed. 1314 (1935).

Since appellant’s objections to the United States Attorney’s argument pertained to evidence which was scattered through the whole transcript, our review of this issue has occasioned our reading of the entire record. That experience has led this court to the conclusion that this record contains prejudicial error which requires reversal for new trial.

Several of appellant’s objections to the United States Attorney’s argument related to his recital of evidence from law enforcement personnel and telephone company employees pertaining to a certain house and to certain phone calls which the government contends were used by appellant’s accomplices in stealing the truck. The excluded physical exhibits discussed above were related to these phone calls and this house. But government witnesses testified orally about these same matters and the District Judge ruled the oral testimony to be admissible. As to these objections, we find no error.

A matter of much greater concern was the United States Attorney’s expression of his personal conviction that appellant was a person of bad character. Such an expression is directly violative of the Berger standard quoted above. See also Donnelly v. De-Christoforo, 416 U.S. 637, 94 S.Ct. 1868, 40 L.Ed.2d 431 (1974) (Decided May 13, 1974). Absent the prompt and stern admonition of the trial judge, we would consider such a prejudicial comment grounds for reversal for mistrial in any close case.

The comment and the District Judge’s handling of the matter is set forth below:

[MR. KIRKLAND:] “Now, their defense is, number one, T didn’t do it.’; number two, T am a man of good character.’ What kind of character does this man have? Anyway, I don’t think I would have made that defense. I think I would have kept my character out of it. This man has the worst character and reputation of anybody in Madison, Indiana.
“MR. MAJOR: Judge, I object.
“THE COURT: Objection sustained. That is not justified by the evidence. There has been no evidence as to what his character was except the witnesses who testified that it was good. Under the law the United States cannot put his character in issue unless he himself testifies and puts it in issue. Then the United States has a right to attack it and counter attack it. There have been no witnesses appear here for the United States and the cross-examination of the witnesses who testified as to the character of the defendant was based on questions which were asked them from the district attorney, but there is no proof that those matters which they were questioned about have to do with his reputation or that they are necessarily true. They were just questions which he asked the witness, testing their knowledge of the character and reputation of the defendant. The United States could have produced witnesses if they had had them to rebut the testimony of these character witnesses for the defendant, but they did not produce them.”

Finally, however, in two instances the United States Attorney made references to threats of physical harm. The United States Attorney said:

“That is not a bunch of boys out joyriding. It was somebody who was experienced in stealing things, who was experienced in big money operations and getting things done. People on the phone — ‘break your fingers’— ‘shoot somebody.’ I think probably some of us are in more danger than we know by vigorously prosecuting this case. We have to take that risk. All these police officers have to take that risk. It is a threat and this man wants to carry it out.”

Although the District Judge on defendant’s objection struck this comment and admonished the jury that the record did not support it, it seems unlikely that the jury could forget or put aside such a prosecutorial comment.

And in spite of prior admonitions, the United States Attorney returned to this sort of theme. Referring to defendant’s brother, whom one police officer testified that he thought he saw taking pictures of police activity, the United States Attorney extrapolated:

“First of all, if you don’t have anything to hide, why are you hanging around with a tape recorder or a camera? Why are you trying to find out who is investigating the case? Do you want to do something to them? Is that why you wanted to know? Why would I want to know who was investigating the case against you? Are you going to try to buy him off or blow up his house?”

While there was admissible testimony by witness Hoffman that defendant Buford Peak had made threats about witness Spann if Spann did not go through with the truck deal, the references to threats to police and prosecutors and to bribery of police are totally unsupported in the record. They cannot be justified as fair inferences. They may, of course, represent some extrajudicial knowledge of the prosecutor. But even so, he is not privileged to testify in the guise of a closing argument.

We have considered the recent pronouncements on due process standards outlined in Donnelly v. DeChristoforo, supra. Our instant case, however, is a federal prosecution and here the standards of Berger v. United States, supra, apply in full force.

The judgment of conviction is vacated and the case is remanded for new trial.


author: PER CURIAM:

text:
    GABLES BY THE SEA, INC., Plaintiff-Appellant, v. Emmett C. LEE, Jr., Colonel, et al., Defendants-Appellees.
    No. 74-1028
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    July 9, 1974.
    Rehearing Denied Aug. 2, 1974.
    Allan M. Glaser, Marion E. Sibley, Miami Beach, Fla., for plaintiff-appellant.
    Robert W. Rust, U. S. Atty., Robert Reynolds, Asst. U. S. Atty., Miami, Fla., for defendants-appellees.
    Parker D. Thomson, Sanford L. Bohr-er, Miami, Fla., for Audubon Societies.
    Wallace H. Johnson, Carl Strass, Edward J. Shawaker, Attys., James R. Walpole, U. S. Dept, of Justice, Washington, D. C., for intervenor.
    Before GEWIN, GODBOLD and CLARK, Circuit Judges.

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

   PER CURIAM:

In this case, Gables by the Sea, Inc., seeks reversal of the district court’s order granting summary judgment to the appellees. After giving full consideration to the briefs, trial record, and the district court opinion, 365 F.Supp. 826, we discern no valid basis for reversal under the facts disclosed by the record in this case. Moreover, our recent opinion in Di Vosta Rentals, Inc. v. Lee, 488 F.2d 674 (5th Cir. 1973), demonstrates to us that appellant’s contentions are without merit. Accordingly, the judgment of the district court is affirmed.


text:
    Nathan Elmont ELI, Petitioner-Appellant, v. Louis S. NELSON, Warden, California State Prison at San Quentin, Respondent-Appellee.
    No. 73-2346.
    United States Court of Appeals, Ninth Circuit.
    July 9, 1974.
    Paul N. Halvonik (argued), San Francisco, Cal., for petitioner-appellant.
    Karl S. Mayer, Deputy Atty. Gen., San Francisco, Cal., for respondent-appellee.
    Before CHAMBERS and WRIGHT, Circuit Judges, and McGOVERN, District Judge.

       The Honorable Walter T. McGovern, United States District Judge for the Western District of Washington, sitting by designation.

   ORDER AFFIRMING

The district court order denying habeas corpus relief on a state judgment is affirmed. See Eli v. Nelson, 360 F.Supp. 225 (N.D.Cal.1973).

The district court examined the state court record and was satisfied that questions concerning Eli’s confession were adequately explored by the state court.

We conclude that the federal district court ruling that no evidentiary hearing was necessary was within its discretion.

The case is pre Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), but post Escobedo v. Illinois, 378 U.S. 478, 84 S.Ct. 1758, 12 L.Ed.2d 977 (1964). The district court found on the record that there was no violation of Escobedo. The finding was justified.


author: PER CURIAM: WINTER, Circuit Judge

text:
    Carl D. BISHOP, Plaintiff-Appellant, v. W. H. WOOD, etc., et al., Defendants-Appellees.
    No. 73-2240.
    United States Court of Appeals, Fourth Circuit.
    Argued Feb. 8, 1974.
    Decided June 21, 1974.
    J. David James, Greensboro, N. C. (Norman B. Smith, Smith, Carrington, Patterson, Follín & Curtis, Greensboro, N. C., on brief), for plaintiff-appellant.
    Charles E. Burgin, Marion, N. C. (Dameron & Burgin, Marion N. C., on brief), for defendants-appellees.
    Before BRYAN, Senior Circuit Judge, and WINTER and WIDENER, Circuit Judges.
   PER CURIAM:

Upon consideration of the record, the briefs, and oral argument, we are of opinion the judgment below was correct, and affirm on the opinion of the district court, 377 F.Supp. 501 (W.D.N.C.1973).

Affirmed.

WINTER, Circuit Judge

(dissenting):

Unlike my co-panelists, I think that Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972), and Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1952), not only foreclosed the entry of summary judgment for defendants, but require that, if summary disposition is to be made, plaintiff should be adjudged entitled to recover damages from defendants in an amount subsequently to be assessed. I therefore respectfully dissent.

Plaintiff was employed as a policeman for more than thirty-three months by the City of Marion, North Carolina. He was dismissed by the City Manager upon the complaint of the Chief of Police for unsatisfactory work, failure to attend training schools, “insubordination,” and the commission of “acts unsuited to a police officer.” Admittedly, the plaintiff was not given notice that there were grounds allegedly sufficient to discharge him, nor was he given a hearing to determine if those grounds were well grounded. He was given written notice of his discharge, but all of the reasons therefor were not set forth. In short, if plaintiff was entitled to be afforded procedural due process, it was clearly denied him; he was given neither notice nor a hearing.

As I read Roth and Sindermann, plaintiff was entitled to recovery under either or both of two theories. In my view, he had been deprived of an interest in “property” and he had been deprived of his “liberty.”

Roth and Sindermann make clear that the right to tenure is a “property” interest entitled to the protection of procedural due process. Plaintiff possessed such a right. Under the ordinances of the City of Marion which governed his employment, newly hired policemen are probationary employees for six months. After then they become permanent employees, and a permanent employee may be discharged only if he “fails to perform work up to the standard of the classification held, or continues to be negligent, inefficient, or unfit to perform his duties [after he has been first ‘notified in what way his work is deficient and what he must do if his work is to be satisfactory’].” Article II, § 6, Personnel Ordinance of the City of Marion. I can only read this ordinance as giving plaintiff a right to continuing employment unless there be good cause for his dismissal. This continuing right is tantamount to tenure; hence, my conclusion that plaintiff had a “property” right to his employment entitling him to procedural due process protection.

Even if plaintiff lacked a property right in his job, there can be no question that the circumstances of his dismissal from public employment injured certain interests embraced within the concept of “liberty” found in the fourteenth amendment. In Roth, the Court quoted from Wisconsin v. Constantineau, 400 U.S. 433, 437, 91 S.Ct. 507, 510, 27 L.Ed.2d 515 (1971), that “[w]here a person’s good name, reputation, honor or integrity is at stake because of what the government is doing to him, notice and an opportunity to be heard are essential.” 408 U.S. at 573, 92 S.Ct. at 2707. Defendants’ affidavits admit that plaintiff was dismissed, inter alia, because of “insubordination” and “conduct unsuited to a police officer.” Accusations of this nature made against one engaged in the occupation of a law enforcement officer manifestly have a severe adverse impact upon future employment opportunities, and it can be reasonably expected that defendants would disclose these reasons upon the request of a person considering plaintiff’s employment who inquired of the respects in which plaintiff’s work had been found unsatisfactory. To my mind, it therefore follows that procedural due process should apply, and as a minimum plaintiff should have been given notice of and afforded an opportunity to refute the charges before he was dismissed.

I add a word about the jurisdiction of the district court. Plaintiff joined the City of Marion, North Carolina, as a party-defendant, together with the Chief of Police and the City Manager. Jurisdiction was alleged to exist under 42 U. S.C. § 1983; 28 U.S.C. §§ 1331(a) and 1343(3). Of course, Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961), and City of Kenosha v. Bruno, 412 U.S. 507, 93 S.Ct. 2222, 37 L.Ed.2d 109 (1973), hold that the City of Marion is not a “person” within the meaning of 42 U.S.C. § 1983, and therefore the district court lacked jurisdiction over the claim against the City under 28 U.S.C. § 1343(3). Jurisdiction as to the individual defendants unquestionably existed. But, as to the City, plaintiff alleged a deprivation of his right to procedural due process under the fourteenth amendment, and the district court had jurisdiction under 28 U.S.C. § 1331(a), provided there was the requisite amount in controversy. Whether $10,000 is at issue is sharply contested on the theory that plaintiff’s back pay claim after mitigation of damages will not reasonably amount to $10,000. The short answer is that the district court had pendent jurisdiction over the claim against the City arising directly under the fourteenth amendment by reason of the intimate connection of that claim with the § 1983 claim against the other defendants. The Second Circuit has held that the doctrine of pendent jurisdiction applies even where the defendant to the pendent claim is not a defendant to the claim conferring jurisdiction, and I would follow its lead. Leather’s Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800, 809-811 (2 Cir. 1971).


text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. LORD INDUSTRIES, INC., Respondent.
    No. 74-1128.
    United States Court of Appeals, Sixth Circuit.
    Argued June 20, 1974.
    Decided June 28, 1974.
    Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, Paul J. Spielberg, Thomas A. Woodley, Attys., National Labor Relations Board, Washington, D. C., on brief, for petitioner.

      Cross, Wrock, Miller & Vieson, William A. Coughlin, Jr., Detroit, Mich., on brief, for respondent.
    Before WEICK, PECK and McCREE, Circuit Judges.
   ORDER

On consideration of the application for enforcement, the record, and arguments and briefs of counsel, we are of the opinion that there is substantial evidence to support the order of the Board, reported at 207 NLRB No. 69, which found that Respondent had violated Sections 8(a) (1) and (3) of the Act.

It is therefore ordered that enforcement be granted and that the mandate of the Court issue forthwith.

In view of this disposition of the case we find it unnecessary for us to pass upon the motion for a protective order.


author: NICHOLS, Judge:

text:
    William J. DIETZSCH and Anita Dietzsch v. The UNITED STATES.
    No. 745-71.
    United States Court of Claims.
    June 19, 1974.
    As Amended on Denial of Rehearing Oct. 4, 1974.
    Martin D. Cohen, attorney of record for plaintiff. Samuel B. Nimberger, New York City, N. Y., of counsel.
    Theodore D. Peyser, Jr., Washington, D. C., with whom was Asst. Atty. Gen., Scott P. Crampton, for defendant. Gilbert E. Andrews, and Samuel H. Bay-less, Washington, D. C., of counsel.
    Before SKELTON, NICHOLS, and BENNETT, Judges.
   OPINION

NICHOLS, Judge:

This case involves a claim for refund of Federal income taxes for the plaintiffs’ taxable years 1965 and 1966 in the respective amounts of $3,540.57 and $4,804.45. The parties have stipulated the material facts. This court has jurisdiction pursuant to 28 U.S.C. §§ 1346(a) and 1491. The facts found pursuant to the stipulation are stated in the opinion to the extent they are relevant. We hold that the plaintiffs cannot prevail.

William J. Dietzsch and Anita Dietzsch, the plaintiffs, are husband and wife who have resided at all material times in Endwell, New York. Anita Dietzsch is a party plaintiff solely because she filed joint returns with her husband William for the years at issue. The term taxpayer or plaintiff as used hereinafter refers only to William J. Dietzsch.

In 1964 William J. Dietzsch, entered into an agreement with General Motors (hereinafter GM) to establish an automobile dealership, to be known as Dietzsch Pontiae-Cadillac, Inc. Although plaintiff could have obtained loans elsewhere GM required him to finance his operations through the “Dealer Investment Plan”, of GM’s Motors Holding Division (hereinafter Holding).

The plan is apparently a standard one used with new dealerships. Plaintiff says the terms are not open to negotiation. The respective investments to be made by an “Operator”, such as Dietzsch, and by Holding are described in a GM brochure as follows:

* * * * * *
The Operator’s initial investment is a minimum of 25% of the total required capital of the dealership, it may be more — in fact, the Operator is expected to use all his available commercial investment funds in the enterprise. Motors Holding provides the balance of the capital established for the company.
******
The Operator makes his investment in the dealership by the purchase of $100 par Class B (non-voting) Stock. Motors Holding Division makes one-half of its investment in 6% long term notes and one-half through the purchase of $100 par Class A (voting) Stock. Shares of each class participate equally in profits on a per-share basis.

In accordance with such plan, Holding organized Dietzsch Pontiac-Cadillac, Inc. Dietzsch made an initial investment of $50,000 by purchasing $100 par Class “B” (non-voting) Stock. Holding provided the remaining $150,000 of capitalization — -$75,000 in 6 percent long term notes and $75,000 through the purchase of Class “A” (voting) Stock. There were no other stockholders. Voting and non-voting stock was to share equally in all dividends.

Other features of the “Dealer Investment Plan” are a “Bonus Agreement” and an “Option Agreement”. Under the “Bonus Agreement” the “Operator” receives a yearly bonus, in addition to his salary, in the amount of 33 percent of the dealership’s net income in excess of an annual rate of return of 15 percent on all funds invested in the dealership.

Article I of the “Option Agreement” gives the “Operator” the right to purchase all of the shares held by Holding, but “only from funds received * * * as dividends or bonus from Dealer Company.” However, the Article I option is temporarily suspended, when the number of shares held by Holding is reduced to 20 percent of the number it initially purchased. At that juncture, the 6 percent long term note payable to Holding must be retired by the dealer company and/or purchased by the Operator before the balance of Holding’s Class “A” Stock may be retired.

Article II of the “Option Agreement”, the tax effect of which is the crux of the present controversy provides:

Operator agrees that during the period of the option granted him in Article I:
A. He will use all dividends received on his Stock and at least one-half of any bonus received by him from Dealer Company to purchase Investor’s Stock;
B. He will immediately convert any Class “A” Stock which he purchases from Investor into Class “B” Stock.
******

The dealer corporation was not a party to this agreement.

The taxpayer argues that the respective amounts of $10,914.97 and $10,199.-65, paid to him as “cash dividends” in 1965 and 1966, and used by him to buy Class “A” Stock from Holding, were non-taxable stock dividends under Internal Revenue Code of 1954, § 305(a) and therefore not includable in his gross income. He also received bonuses but concedes they were taxable. If the dividend distributions received by the taxpayer in 1965 and 1966 were stock dividends, their taxability is governed by § 305, as it read prior to its amendment by the Tax Reform Act of 1969, Pub.L. No. 91-172, § 421(a). That section read as follows:

305. Distributions of Stock and Stock Rights.
(a) General rule. — Except as provided in subsection (b), gross income does not include the amount of any distribution made by a corporation to its shareholders, with respect to the stock of such Corporation, in its stock or in rights to acquire its stock.
(b) Distributions in lieu of money. —Subsection (a) shall not apply to a distribution by a corporation of its stock (of rights to acquire its stock), and the distribution shall be treated as a distribution of property to which section 301 applies—
(1) to the extent that the distribution is made in discharge of preference dividends for the taxable year of the corporation in which the distribution is made or for the preceding taxable year; or
(2) if the distribution is, at the election of any of the shareholders (whether exercised before or after the declaration thereof), payable either—
(A) in its stock (or in rights to acquire its stock), or
(B) in property.
******

We therefore must first decide: 1) whether the distributions made by the •dealer company to Dietzsch were stock dividends, and if so 2) whether they were non-taxable stock dividends under § 305(a) or taxable stock dividends under § 305(b). Our analysis does not reach the latter question since, in our judgment, the distributions in question were not stock dividends.

The taxpayer’s contention that the cash distributions made to him constituted stock dividends is premised on the step transaction doctrine. The objective of that doctrine is to give tax effect to the substance, as opposed to the form of a transaction, by ignoring for tax purposes, steps of an integrated transaction that separately are without substance. See, King Enterprises, Inc. v. United States, 418 F.2d 511, 189 Ct.Cl. 466 (1969).

In the case at bar, the taxpayer was required by the “Option Agreement” to use all of his dividends to purchase Class “A” Stock from Holding, and then immediately to convert the purchased Class “A” Stock into Class “B” Stock, which of course left Holding in entire control. Dietzsch complied with the contractual obligation, so that each time he received a dividend cheek the following series of events was triggered:

(1) Upon receipt of his dividend check, Dietzsch endorsed it to the order of Holding and immediately mailed it to Holding.
(2) Upon receipt of the check from Dietzsch, Holding mailed a Class “A” Stock certificate to Dietzsch endorsed in such a way as to show a sale of certain Class “A” shares to Dietzsch and retention of the balance by Holding.
(3) Dietzsch immediately turned the Class “A” certificate (as endorsed by Holding) in to Dietzsch Pontiac-Cadillac, Inc., with a request that the Class “A” shares he purchased be converted to shares of Class “B” Stock.
(4) Dietzsch Pontiac-Cadillac, Inc. then issued new certificates, one representing the reduced number of Class “A” shares retained by Holding, and the other representing Class “B” shares issued to Dietzsch reflecting his purchase of Class “A” shares and their conversion into Class “B” shares.

The taxpayer argues that if we apply the step transaction doctrine, so as to ignore the first event in the above listed sequence, i. e., his receipt of the dividend check, he has received a stock dividend. It is, however, difficult to characterize the taxpayer’s reinvestment of the cash distribution he received as a stock dividend, where the ultimate destination of the cash is another shareholder as opposed to the distributing corporation. One usually thinks of a stock dividend as reflecting the retention of assets by the declaring corporation rather than their distribution to shareholders. Furthermore, it is absurd that a single cash dividend declared and paid by the dealer company at one time, should be treated for tax purposes by one shareholder (Holding) as a cash dividend and as a stock dividend by another (Dietzsch).

Should one apply the step transaction doctrine, in substance what we have more nearly resembles a redemption of Holding’s shares by Dietzsch Pontiac-Cadillac, Inc., as opposed to a stock dividend to Dietzsch. A redemption is defined by § 317(b) as follows:

******
(b) Redemption of stock. — For purposes of this part [§§ 301-318 of this title], stock shall be treated as redeemed by a corporation if the corporation acquires its stock from a shareholder in exchange for property whether or not the stock so acquired is cancelled, retired, or held as treasury stock. * * *

It might plausibly be argued that Dietzsch was merely a conduit for Holding to exchange its Class “A” Shares for the dealer company’s cash. Such a view of the facts would bring the transaction within the § 317(b) definition.

The circuitous route utilized by the parties here for the dividends on “B” Stock to take is by no means fortuitous. The terms of the form contracts provided by GM, were undoubtedly carefully drafted for GM’s advantage. If the dealer company redeemed Holding’s stock without Dietzsch as an intermediary, the amounts received by Holding would presumably have been taxable as ordinary dividend income under § 302(a). We say “presumably”, as Holding’s taxes are not before us for adjudication, and of course are not adjudicated by us. The thing seems clear enough for purposes of the Dietzsch’s tax problem.

In Richard B. Bennett, 58 T.C. 381 (1972), acq. 1972-2 Cum.Bull. 1, the Tax Court held that the purchase of the majority shareholder’s stock by the taxpayer, a minority shareholder, constituted a redemption of the majority shareholder’s stock, when the purchase was made with funds distributed to the taxpayer by the corporation. Such funds were borrowed, not earned surplus. The taxpayer was held not taxable on the amounts received by him since he was merely a conduit or an agent of the corporation. To the same effect Fox v. Harrison, 145 F.2d 521 (7th Cir. 1944); Frank Ciaio, 47 T.C. 447 (1967).

The present case is distinguishable since Mr. Dietzsch was more than just a conduit or an agent of Dietzsch Pontiac-Cadillac, Inc. In Bennett, the role played by the purchasing shareholder totally lacked economic substance. The form of the transaction in that case was designed to protect the selling shareholder from liability to creditors, in his capacity as a director, for the impairment of capital caused by the corporation’s borrowing the consideration to be paid him for his shares. Corporate records reflected in that case that a meeting was held for the purpose of shareholder consideration of the purchase and retirement of the selling shareholders stock and the borrowing of funds to finance such purchase. Furthermore the taxpayer never owned or became personally obligated to pay for the stock, lacked the funds and borrowing capacity to pay for the stock and did not increase his own net worth via the transaction. The corporation merely switched from equity to debt capitalization.

In contrast, in the case at bar, the corporate records reflect the declaration of a cash dividend. The purpose of such dividend was a distribution of earnings as opposed to financing the purchase of a shareholder’s stock. Dietzsch was personally obligated to purchase Holding’s shares, while the corporation had no such obligation. If the dealer company had made payment directly to Holding in discharge of Dietzsch’s obligation to Holding, this still would have resulted in a constructive dividend to him. See, Wall v. United States, 164 F.2d 462 (4th Cir. 1947); Thomas C. Stephens, 60 T.C. 1004 (1973), and cases cited therein. Perhaps most important, the end result of the transaction was that Dietzseh realized an economic gain that Congress surely did not mean to exempt from taxation.

In sum, the transaction in question is not regarded for tax purposes as a stock dividend to Dietzseh or as a redemption of Holding’s stock since it lacks the substance of either transaction.

Plaintiff lays great stress on the fact that the form of the transaction was in no way his choice. This is, apparently, to refute any possible argument that the step transaction doctrine is unavailable because of plaintiff’s tax avoidance motivation. The approach we take makes it irrelevant that plaintiff obviously had no such motive. However, the draftsmen could have had in mind that other terms were more favorable to plaintiff because of the tax burden plaintiff absorbed. The record reflects that the continued operation of the plan led to plaintiff’s being sole owner and in full control soon after the tax years involved, the equity and debt in Holding being all liquidated, and this all accomplished out of the earnings of the business. Though the contract was in a sense one of adhesion, clearly it was written to attract a businessman who would scrutinize the deal he was making with care and was intellectually capable of bargaining at arm’s length. It would be unfair to shift the tax burden off to Dietzseh, while plaintiff retains the other benefits he bargained for. In other situations, courts have considered such reasons as adequate by themselves to preclude any judicial reshuffling of the bargained distribution of tax burdens. Davee v. United States, 444 F.2d 557, 195 Ct.Cl. 184 (1971). Commissioner v. Danielson, 378 F.2d 771 (3d Cir. 1967), cert. denied, 389 U.S. 858, 88 S.Ct. 94, 19 L.Ed.2d 123.

CONCLUSION OF LAW

Upon the stipulated facts, which are made a part of the judgment, the court concludes as a matter of law that the plaintiff is not entitled to recover, and the petition is therefore dismissed.

       Hereinafter all section references are to the Internal Revenue Code of 1954.


text:
    Stewart E. LUCE, d/b/a Imperial Security v. The UNITED STATES.
    No. 409-72.
    United States Court of Claims.
    June 19, 1974.

      Stewart E. Luce, pro se.
    David R. Schlee, Washington, D. C., with whom was Asst. Atty. Gen., Carla A. Hills, for defendant.
    Before SKELTON, NICHOLS and KASHIWA, Judges.
   PER CURIAM:

This case is before the court on defendant’s motion for summary judgment and plaintiff’s cross motion for summary judgment. The case has been submitted on briefs without oral argument. The court concludes on the pleadings and briefs that plaintiff is not entitled to recover.

The plaintiff is a disappointed bidder on a Government contract to supply security guard services for the Lo's Angeles Air Force Station, Los Angeles, California, for a 3-year period, July 1, 1972, through June 30, 1975, and sues here to recover the cost of preparing his bid. This project was initially proposed as a 100 percent small business set aside which was limited to firms with total annual sales in the previous fiscal year of less than $5 million. Later the size standard was reduced to $1 million, but because of the reduction in competition this would cause, the small business set aside was deleted from the Request for Bids. This was approved by the authorized representative of the Small Business Administration. Thereafter, bids were received from the plaintiff and nine other bidders. The bids were considered and evaluated by the Cost Panel and the Source Selection Authority without their knowing the names of the companies whose proposals were presented. The plaintiff’s bid ranked number five on its technical score out of eight who were determined to be within competitive range under ASPR 3-805.1 (a), and number five in cost out of the eight in the competitive range. The contract was awarded to the H. L. Yoh Company whose bid was second highest in technical score and the lowest in cost in the competitive range.

The plaintiff has alleged that the removal of the small business set aside was improper, and that there was a conspiracy between those in charge of the bidding and awarding of the contract and H. L. Yoh Company to award the contract to H. L. Yoh Company, and that by reason thereof, plaintiff should recover the costs of preparing his bid. The court has concluded that these charges do not present a triable issue of fact in view of their lack of substantiation and defendant’s detailed showing of how the award was made. See Rule 64(d).

The court concludes further that in order for the plaintiff to have standing to sue to recover his bid costs, he must show that his bid was not honestly considered by the Government and that in awarding the contract the Government acted fraudulently or arbitrarily and capriciously or contrary to governmental procurement regulations or that there was no rational basis for the award to the H. L. Yoh Company. The plaintiff has made no such showing in this case. See Heyer Products Co., Inc. v. United States, 177 F.Supp. 251, 147 Ct.Cl. 256 (1959); Heyer Products Co., Inc. v. United States, 140 F.Supp. 409, 135 Ct.Cl. 63 (1956); Scanwell Laboratories, Inc. v. Shaffer, 137 U.S.App.D.C. 371, 424 F.2d 859 (1970); Keco Industries, Inc. v. United States, 428 F.2d 1233, 192 Ct.Cl. 773 (1970); and after trial of the same case 203 Ct.Cl. -, 492 F.2d 1200 (1974), and Continental Business Enterprises, Inc. v. United States, 196 Ct.Cl. 627, 452 F.2d 1016 (1971). There is a fuller statement of the applicable law in the second Keco decision, supra.

Accordingly, on the basis of the foregoing authorities, the cross motion for summary judgment of the plaintiff is denied, the motion for summary judgment of defendant is granted, and plaintiff’s petition is dismissed.


author: KUNZIG, Judge:

text:
    Jules DRUCKER and Leland Pearson v. The UNITED STATES.
    No. 327-69.
    United States Court of Claims.
    June 19, 1974.
    John I. Heise, Silver Spring, Md., attorney of record for plaintiff; Lebovici & Safir, New York City, of counsel.
    Bernard M. Brodsky, Buffalo, N. Y., with whom was Asst. Atty. Gen., Carla A. Hills, for defendant.
    Before COWEN, Chief Judge, and SKELTON and KUNZIG, Judges.
   KUNZIG, Judge:

In this joint civilian pay case, plaintiffs claim entitlement to be “slotted” in the upper category of professorial rank at the Merchant Marine Academy (Academy), and charge the Assistant Secretary of Commerce for Maritime Affairs with abuse of discretion in not so slotting them. We hold that there was no abuse of discretion, and that the administrative decision that plaintiffs should not be so slotted is supported by substantial evidence.

The facts in the instant controversy were adequately set forth in our first decision of this case, Drucker and Pearson v. United States, 451 F.2d 619, 195 Ct.Cl. 335 (1971), and may be sparingly summarized here. Plaintiffs, both associate professors at the Academy, were recommended for promotion to full professorships by their department heads in March 1968. Pursuant to an agreement reached by the Maritime Administrator with the United Federation of College Teachers (UFCT) in May 1968, faulty salaries at the Academy were to be revised so as to correspond more closely to those of the Naval Academy. Def. Exhibit B. The central passage of this 1968 agreement read:

Those faculty members fully meeting the Maritime Administration qualification requirements of March 1966 * * * for their rank may be converted to a higher rate in the upper pay category for their rank * * * when the topper pay category is determined to be merited based on such factors as demonstrated professional competence and achievement, teaching ability, scholarly activity, and potential for future development [emphasis added].

Because plaintiffs’ promotions as full professors were not effectuated until August 1968, the Categorization Committee responsible for slotting Academy personnel for their new salaries, which met during the summer of 1968, considered plaintiffs as associate professors. Plaintiff Drucker was eventually slotted at step 31, upper category, associate professor, and plaintiff Pearson at step 29, upper category, associate professor.

On September 4, 1968, plaintiffs filed a joint grievance under Department of Commerce Administrative Order 202-770. Their grievance was denied. Thereafter, they filed suit in this court, seeking reclassification in upper category professor slots and appropriate back pay.

The court held on July 14, 1971, that the procedures of the Categorization Committee were substantially defective in not treating plaintiffs as full professors. Drucker and Pearson v. United States, supra, 451 F.2d at 623, 195 Ct.Cl. at 342. Speaking for the court, Judge Laramore said at p. 623 of 451 F.2d, at p. 342 of 195 Ct.Cl.:

[A] procedural error has been committed and for that reason we deny defendant’s motion for summary judgment and grant plaintiffs’ motion to the extent indicated herein. Consequently, we are suspending further action in this case so that the proper officials of the Maritime Administration may reconsider the category in which the plaintiffs, as professors, are slotted. We do not decide in which slot each plaintiff should be placed because to do so would be to substitute our judgment for that of the agency. The final decision as to the proper category, based on the criteria set forth in the agreement, together with a procedure that accords each faculty member equal treatment, is within the discretion of the agency involved herein. Once the procedural defect noted above has been cured, we are confident that plaintiffs will have been afforded every consideration to which they are entitled.

Action in the case was thereupon suspended, and the matter remanded to the Department of Commerce. On May 21, 1973, a Final Opinion and Order was issued by the Assistant Secretary of Commerce for Maritime Affairs denying plaintiff Drucker’s claim for step 41 categorization and plaintiff Pearson’s for step 40, but raising Drucker to step 35, lower category, full professor, and Pearson to step 34, lower category, full professor.

Appreciating the agency’s discretion, the court directed the proper officials to reconsider plaintiffs’ slottings, guided by the criteria promulgated by the 1968 agreement and utilizing a procedure that accords each faculty member equal treatment. Plaintiffs’ allegation that, if they qualified for professorial status then they clearly qualified as a matter of law for upper category slotting, is supported by neither the 1968 agreement nor the law of the case.

Accordingly, the case now becomes purely an exercise in the law of administrative discretion. The sole question remaining for us is whether there has been an abuse of that discretion by the Assistant Secretary of Commerce.

Plaintiffs argue that the Assistant Secretary acted grossly erroneously and was arbitrary and capricious by not slotting them in the upper category of professorial rank. Defendant urges the procedural defect earlier identified has been cured, and the court’s mandate in Drucker and Pearson I obeyed in all respects. We hold for defendant.

The proper standard for our review of the Assistant Secretary of Commerce’s decision regarding the slotting of plaintiffs is whether there is a rational basis in the record for that determination. Where an exercise of administrative discretion is involved, the action will be disturbed only if plaintiffs succeed in establishing that it is “so clearly wrong” as to be arbitrary. Albert v. United States, 437 F.2d 976, 979, 194 Ct.Cl. 95, 101-102 (1971). See also United States v. Shimer, 367 U.S. 374, 381-382, 81 S.Ct. 1554, 6 L.Ed.2d 908 (1961).

Webster’s Third New International Dictionary (1961) defines discretion as “[the] power of decision: individual judgment * * * [the] power of free decision or choice within certain legal bounds.” Black’s Law Dictionary (rev. 4th ed. 1968) adds that,

[w]hen applied to public functionaries, discretion means a power or right conferred upon them by law of acting officially in certain circumstances, according to the dictates of their own judgment and conscience, uncontrolled by the judgment or conscience of others.

In other words, the Assistant Secretary of Commerce had a choice within certain bounds; he could properly use his own judgment, uncontrolled by the judgment or conscience of others. This he did in granting a partial raise in slotting to plaintiffs while not fully satisfying their demands. That he was the correct official so to do, under a proper delegation of authority, cannot be questioned. Dept, of Commerce Administrative Order 202-250 (Aug. 31, 1966). Indeed, plaintiffs received the benefit of review of their grievance at the highest levels of the Commerce Department.

Plaintiffs, themselves betraying some lack of discretion of a different sort, employ strong innuendos to suggest a degree of personal bias- or animosity on the part of the Assistant Secretary in his handling of their grievance. Allegations of administrative impropriety are serious accusations to be levelled at any public official, particularly when, as here, completely unsupported. We cannot ignore the presumption that every public official discharges his functions fairly and according to law. Urbina v. United States, 428 F.2d 1280, 1284, 192 Ct.Cl. 875, 881 (1970); Knotts v. United States, 121 F.Supp. 630, 631, 128 Ct.Cl. 489, 492 (1954). No evidence is advanced to rebut this presumption in the matter here before us.

Plaintiffs also urge upon the court certain after-the-fact affidavits by a former dean of the Academy and several members of the 1968 Categorization Committee to show what step they would have allocated plaintiffs at the original slotting. We find after-the-fact affidavits unpersuasive as evidence of what one might have done had a situation of an earlier day been different from what actually transpired. Times change; situations evolve; memories falter. We cannot indulge in an exercise of fantasy distilled ex post facto from a perception of what might have been.

The essence of this case lies in what the Assistant Secretary did do. His decision reveals he made use of the materials before the Categorization Committee in 1968 and applied these to an evaluation at the rank of full professor. He made a conscious examination of plaintiffs’ professional profile in light of the guidelines set forth in the May 1968 agreement: demonstrated professional competence and achievement, teaching ability, scholarly activity, potential for future development.

He did scrutinize the Categorization Committee’s 1968 report, and observed that the Committee had not (1) placed plaintiffs at the highest rating possible in upper category, associate professor; (2) exercised its ability to issue a recommendation to grant plaintiffs higher rating privileges despite their apparent associate professor ceiling. Using a procedure that accorded each faculty member equal treatment, the Assistant Secretary rendered a carefully analyzed decision which took account of suggested findings of fact from both sides and carefully set forth his rationale in exercising his discretion.

If the Assistant Secretary took into consideration that neither plaintiff had ever actually performed in the rank of full professor and were the only two Academy professors in that situation at the time of slotting; if he observed that the only evaluations of plaintiffs were as associate professors; if he concluded there exist different standards of competence and responsibility for assessing associate professors and full professors; if he considered experience in grade an important criterion under the guidelines of the May 1968 agreement; if he noted plaintiff Drueker was pressing for a 17-step advancement, while no other faculty member had been advanced more than nine steps and the typical gain was three to six steps; we cannot discern these factors represented an abuse of discretion.

Plaintiffs conceded at oral argument “there was room for the Assistant Secretary to use discretion,” but emphasized it must be “appropriate” discretion. We find this formula for judicial review unworkable. For our purposes, the discretion here exercised was completely “appropriate” at all times. In particular, we point out that the slotting steps of both plaintiffs were raised by the Assistant Secretary following our initial decision in this case.

Without a certain freedom of decision, without the power of choice, there can be no true discretion. Plaintiffs’ view of the Assistant Secretary’s role would leave him no real choice, but reduce him to some sort of automaton, routinely programming identical slotting for all Academy faculty members.

In conclusion, plaintiffs fail to recognize that the essence of any discretionary decision is a choice which might rationally go either way. The burden is on Messrs. Drucker and Pearson to demonstrate an abuse of administrative discretion. Bookman v. United States, 453 F.2d 1263, 1268, 197 Ct.Cl. 108, 116 (1972). They have failed to carry this burden. That the decision of the Assistant Secretary may be disappointing to plaintiffs does not detract from its validity.

In our previous decision, we remanded the case to the Maritime Administration so that the proper officials could exercise their discretion and reconsider the slotting of plaintiffs herein. The Assistant Secretary of Commerce for Maritime Affairs exercised that discretion without bias or favor. There was no error, no abuse of discretion.

Accordingly, plaintiffs’ motion for summary judgment is denied, defendant’s cross-motion for summary judgment is granted, and the petition is dismissed.

      . Simply stated, “slotting” is the process by which an individual is placed in a newly revised salary scheme. For further discussion of the slotting process, see Jarett v. United States, 451 F.2d 623, 195 Ct.Cl. 320 (1971).

      . Indeed, in Jarett v. United States, supra,, tile companion ease to Drucker and Pearson I, we noted, 451 F.2d at 626-627, 195 Ct.Cl. 326-327, that out effort to affect the Commeree Department’s exercise of discretion in this matter could pose jurisdictional problems. See Administrative Procedure Act, 5 U.S.O. §§ 701, 702 (1970).

      . It must be borne in mind that “equal treatment” is not to be equated with “equal slotting” or “equal salary.” The guidelines established in Drueker and Pearson I reveal that the court spoke of “equal treatment” in procedures alone, while leaving the ultimate determination of slotting to administrative discretion. 451 F.2d at 623, 195 Ct.Cl. at 342.

      . No such qualification of administrative discretion is suggested in the case law on the fixing of wage scales. Bee Adams v. United States, 141 Ct.Cl. 133, 134-135 (1958); Mitchell v. McNamara, 122 U.S.App.D.C. 224, 352 F.2d 700, 701 (1965); Reinheimer v. Panama Canal Co., 344 F.Supp. 510, 515 (D.Canal Zone 1972).


author: KUNZIG, Judge.

text:
    Richard J. SELMAN v. The UNITED STATES. George S. H. SHARRATT, Jr. v. The UNITED STATES.
    Nos. 421-72, 422-72.
    United States Court of Claims.
    June 19, 1974.
    Penrose Lucas Albright, Arlington, Va., for plaintiff; J. Nelson Happy, Kansas City, Mo., attorney of record for plaintiff; James M. Haviland, Dietrich, Davis, Burrell, Dicus & Rowlands, Kansas City, Mo., of counsel.
    Rose E. Adewale-Mendes, Washington, D.C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, Washington, D.C., for defendant.
    Before SKELTON, KASHIWA and KUNZIG, Judges.
   KUNZIG, Judge.

This is a consolidated military pay suit in which plaintiffs claim they are entitled to rear admiral (lower half) pay for their periods of service as Assistant Judge Advocates General (AJAGs) of the Navy, while occupying only the rank of captain. We hold they are so entitled.

Because of its de minimis factual background, involving no significant dispute, the case reduces to one of virtually abstract statutory construction. By Navy Bureau of Personnel orders, plaintiffs Sharratt and Selman were ordered in 1968 to report for duty as Navy AJAGs. They served in this capacity for roughly 26 and 44 months, respectively. Despite exemplary service by both, neither plaintiff was advanced to the rank of rear admiral, which the role of A JAG normally calls for. This was apparently due to a nonstatutory limit on the number of Naval flag officers, imposed by the Senate Armed Forces Committee (the Stennis Ceiling).

During the relevant periods of service, plaintiffs drew the basic pay and allowances of Navy captains. On June 29, 1972, they filed administrative claims for the relevant periods of service, requesting the difference between such pay and allowances and those to which a rear admiral (lower half) is entitled. Plaintiffs’ requests were based on 37 U. S.C. § 202 (i) [hereinafter section 202] which reads:

Unless appointed to a higher grade under another provision of law, an officer of the Navy or Marine Corps serving as Assistant Judge Advocate General of the Navy is entitled to the basic pay of a rear admiral (lower half) or brigadier general, as appropriate.

On July 25, 1972, the Navy denied the requests in accordance with opinion B-168691 of the Comptroller General of the United States, dated July 13, 1970. 50 Comp. Gen. 22. The Comptroller had ruled that section 202 had to be read in conjunction with 10 U.S.C. § 5149(b) [hereinafter section 5149], which provides in pertinent part:

An officer of the Judge Advocate General’s Corps who has the qualifications prescribed for the Judge Advocate General in section 5148(b) of this title may be detailed as Assistant Judge Advocate General of the Navy. While so serving he is entitled to the rank and grade of rear admiral (lower half), unless entitled to a higher rank or grade under another provision of law [emphasis added].

According to this view, only officers detailed as AJAGs and bearing the qualifications of a rear admiral were eligible for the higher pay. Plaintiffs, defendant argues, were not formally detailed but only “administratively assigned” as AJAGs and, hence, do not qualify for section 202 pay above rank.

Plaintiffs’ challenge of this view is before the court on cross-motions for summary judgment. We hold for plaintiffs.

Defendant offers a basically three-pronged defense to plaintiffs’ statutory assertion: (1) that section 202 must be read in conjunction with section 5149, since both provisions were contained in the same public law; (2) that proper discernment of the meaning of section 202 requires consideration of the legislative history; and (3) that acceptance of plaintiffs’ construction of section 202 would effectively constitute “judicial promotion” of plaintiffs. We find none of these arguments of merit.

At the outset, we conclude this case can be decided on a simple, fundamental principle of statutory construction: a clear and unambiguous statute speaks for itself. This court has long recognized that, while judicial tribunals may go beyond the language contained in a statute to ascertain its meaning, they must be careful in departing from statutory terms in order to avoid doing violence to them. Crawford v. United States, 376 F.2d 266, 272, 179 Ct.Cl. 128, 138 (1967), cert. denied, 389 U.S. 1041, 88 S.Ct. 781, 19 L.Ed.2d 831 (1968). Thus, the unambiguous wording of a statute shall be given its plain and commonly understood meaning. Benton v. United States, 488 F.2d 1017, 1020, 203 Ct.Cl. -, - (1973); Ricker v. United States, 396 F.2d 454, 456, 184 Ct.Cl. 402, 406 (1968); Prudential Insurance Co. v. United States, 319 F.2d. 161, 166, 162 Ct.Cl. 55, 65 (1963).

Section 202 obviously directs • that an officer of the Navy, while serving as AJAG, is entitled to the pay of a rear admiral (lower half). Contrary to defendant’s contention, nothing could be more clearly stated. Because plaintiffs during the relevant periods were Navy officers who undisputedly “served” as AJAGs, regardless of the means by which they were named to such positions, they are entitled to judgment on their claims for back pay as a matter of law.

In an effort to inject ambiguity into the otherwise clear language of section 202, defendant points to the fact that the section was adopted by Congress as part of a larger legislative package which included the provision establishing the office of AJAG, now codified as section 5149. Act of Dec. 8, 1967, Pub. L. 90-179, 81 Stat. 545, 546. We reject the suggestion that a tedious search for inconsistency or ambiguity is warranted where the plain meaning of a statute is evident on its face. In any case, the legislative package passed by Congress as Public Law 90-179 reveals no suggestion that the two provisions here under examination are to be read together. The plain fact is that section 5149 of the bill “to establish a Judge Advocate General’s Corps in the Navy and for other purposes” relates to organization and grade, while section 202 thereof relates to pay. While the former establishes the position of AJAG and the rank to which a person holding the position is entitled, the latter permits any officer “serving” in the position to receive flag-level pay.

By making the requirement for a formal “detail” as Navy AJAG (contained in section 5149) a condition precedent to eligibility for the pay benefit of section 202, defendant would have us limit the latter section by terms extraneous to it. Indeed, such a construction would work to “delete or ignore the clear language” of section 202 as a separate provision with life of its own, an undertaking which this court traditionally avoids for fear of encroaching on the province of the legislature. Ricker v. United States, supra; Childs v. United States, 118 F.Supp. 364, 365, 127 Ct.Cl. 425, 428 (1954).

Nor is defendant’s argument strengthened in this regard by citation of a Naval regulation making formal “detail” to the officer of AJAG a condition precedent to eligibility for section 202 pay above rank. Defense Department Military Pay Manual, § 10214(b)(2). To entertain such an argument would be to allow defendant to hoist itself by its own bootstraps.

It is settled administrative law that,

[w]hen faced with a problem of statutory construction, [the courts show] great deference to the interpretation given the statute by the officers or agency charged with its adminstration.

Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965). See Cornman v. United States, 409 F.2d 230, 233, 187 Ct.Cl. 486, 492, cert. denied, 396 U.S. 960, 90 S.Ct. 435, 24 L.Ed.2d 424 (1969). The regulation here under examination, however, attempts to qualify the plain meaning of its own source, an unambiguous statute, which it may not subvert. Volkswagenwerk Aktiengesellschaft v. Federal Maritime Commission, 390 U.S. 261, 272, 88 S.Ct. 929, 19 L.Ed.2d 1090 (1968); Fix v. United States, 368 F.2d 609, 614, 177 Ct.Cl. 369, 377 (1966). Nor does defendant cite the court to any express Congressional delegation of authority to the Navy to interpret section 202 by regulation. Thus, an important element of the Udall test is here lacking. Defendant’s reliance on the mysterious appearance of the magical term, “detailed,” in its own regulation, consequently, appears too strong.

Doubt also exists as to another important element: consistency of the statute’s administrative interpretation. See Udall v. Tallman, supra, 380 U.S. at 17, 85 S.Ct. 792, 13 L.Ed.2d 616; Ganse v. United States, 376 F.2d 900, 904, 180 Ct.Cl. 183, 189 (1967). In the face of the Defense Department Military Pay Manual section on which defendant relies, the Judge Advocate General of the Navy himself recommended to the Comptroller General adoption of plaintiffs’ construction of section 202. The Judge Advocate General took the position that the bill establishing a Navy JAG Corps provided for permissive assignment of flag rank personnel as AJAGs in section 5149, but made mandatory pay to such personnel at the flag rank level.

Thus,

[a]ny officer appointed or detailed to duty as an AJAG under 10 U.S.C. 5149 subsequent. to the 8 December 1967 effective date of Public Law 90-179 must receive at least the pay of a rear admiral (lower half) or brigadier general, as appropriate. 37 U.S.C. 202 (l).

Letter from Navy Judge Advocate General Joseph B. McDevitt to the Director, Military Pay System, Nov. 5, 1969. See also Memorandum from Acting Navy Judge Advocate General D. D. Chapman to John T. Burns, Associate General Counsel, General Accounting Office, May 27, 1970.

The court has in the past chosen not to follow an administrative interpretation when it conflicts with a more sensible reading of the statute’s plain meaning. Tasker v. United States, 178 Ct.Cl. 56, 59 (1967). We must here conclude that defendant’s offer of administrative interpretation of section 202 is entitled to little weight.

In a further effort to entice the court to look beyond the clear wording of section 202, defendant invokes the doctrine of United States v. American Trucking Association, 310 U.S. 534, 60 S.Ct. 1059, 84 L.Ed. 1345 (1940), for the proposition that “no rule of law forbids the use of legislative history as an aid to statutory construction, even if the words of the statute appear clear on a superficial examination.” See, Lionberger v. United States, 371 F.2d 831, 178 Ct.Cl. 151, cert. denied, 389 U.S. 844, 88 S.Ct. 91, 19 L.Ed.2d 110 (1967); Fox v. United States, 283 F.2d 951, 151 Ct.Cl. 611, (1960). Defendant, however, para1 phrases too liberally the statutory construction lesson in American Trucking Association. Speaking for the Court, Mr. Justice Reed there said:

There is, of course, no more persuasive evidence of the purpose of a statute than the words by which the legislature undertook to give expression to its wishes. * * * When that meaning has led to absurd or futile results, however, this Court has looked beyond the words to the purpose of the act. Frequently, however, even when the plain meaning did not produce absurd results but merely an unreasonable one “plainly at variance with the policy of the legislation as a whole” this Court has followed that purpose, rather than the literal words. When aid to construction of the meaning of the words, as used in the statute, is available, there certainly can be no “rule of law” which forbids its use, however clear the words may appear on “superficial examination” [emphasis added].

310 U.S. at 543, 60 S.Ct. at 1063. In compliance with this directive, this court has utilized legislative history as an aid in construing an otherwise unambiguous statute only when such history offers “clear and compelling support” for an interpretation different from that of the ordinary meaning of the law’s words. Benton v. United States, supra at 488 F.2d at 1020, 203 Ct.Cl. at -. Thus, Fox v. United States, supra, on which defendant relies, involved a statute in which an unreasonable result would have been reached had its literal terms been applied.

Under this formula, we find no reason to look beyond the plain words of section 202. The result they dictate, pay above rank for plaintiffs, is neither absurd nor unreasonable. It is true that a Government employee is normally entitled only to the salary of the grade to which he is appointed and serves. Urbina v. United States, 428 F.2d 1280, 1285, 192 Ct.Cl. 875, 882 (1970); Price v. United States, 80 F.Supp. 542, 543, 112 Ct.Cl. 198, 200 (1948); Brech v. Immigration & Naturalization Service, 362 F.Supp. 914, 917 (S.D.N.Y.1973). Congress retains the prerogative, however, to accord, through specific statutory authorization for specialized service, entitlement to pay above that otherwise called for by rank. Such entitlement has been enforced by this court more than once before. Belsky v. United States, 290 F.2d 593, 154 Ct.Cl. 206 (1961) (minimum pay for drafted doctor) ; Stillman v. United States, 116 F.Supp. 622, 126 Ct.Cl. 750 (1953) (minimum pay for officer in combat command). Other examples of such statutory grace may also be cited. See e. g., 37 U.S.C. § 207(a), (c) (1970) (entitling leaders of Navy and Army bands to at least basic pay of lieutenant or captain, as appropriate, without regard to actual rank).

Moreover, even were we to accede to defendant’s urgings to consider the relevant statutory history, we would find that it hurts rather than helps defendant’s cause. The underlying purpose of Public Law 90-179 was to establish incentives deemed necessary by Congress for the creation of a corps of qualified uniformed lawyers to satisfy the rapidly expanding needs of the Navy for quality legal services. 2 U.S.Code Cong. & Admin.News 1967, pp. 2113, 2115 (1967). The ability of professional staff officers to (1) move into the higher ranks of the Navy and (2) achieve higher pay were two of the prime incentives which could be legislatively provided toward this goal.

Because of the Stennis Ceiling, however, movement into higher Navy ranks was restricted. The incentive of higher salary still remained, of course, and it is for this purpose that section 202 was adopted as a separate pay provision containing no reference to rank. In offering the amendment, ultimately adopted, to section 5149 making formal detailing as A JAG permissive rather than mandatory, Senator Ervin, who guided Public Law 90-179 through the Senate, commented:

After the committee’s action the line officers of the Navy and the Marine Corps protested their inability to accommodate an additional uniformed lawyer as a rear admiral or a brigadier general and I have agreed to sponsor an amendment that establishes the two new statutory positions of Assistant Judge Advocate General of the Navy on a permissive basis instead of requiring that they be filled by a flag officer of the Navy or a general officer of the Marine Corps. If those in power in the Navy and the Marine Corps are later persuaded that additional flag or general officer positions should be filled by uniformed lawyers, the authority for flag and general officer grade for the occupants of these offices will exist.
My personal view is that the powers that be in the Navy and the Marine Corps are being somewhat shortsighted in their unwillingness to share the flag and general officer positions with uniformed lawyers. This unwillingness will undoubtedly make it more difficult for the Navy to attract and retain an adequate number of uniformed lawyers with the desired competence and qualifications. Hence, I hope the Navy may alter its present position and share its prescribed flag and general officer positions with uniformed lawyers.

113 Cong.Rec. 32764 (1967). See also 113 Cong.Rec. 33209 (1967) (Remarks of Congressman Philbin, chief sponsor of the bill in the House).

Defendant has carefully sidestepped the ceiling issue in its analysis of congressional intent underlying the statutes here in question. Yet, understanding of the ceiling problem explains the existence of section 202 in the Navy JAG bill of 1970. What other purpose could it serve than as an economic incentive to those legal officers assigned to duty as AJAGs without benefit of the flag-level rank which normally comes with that position? If an officer were, in fact, a rear admiral, he would be entitled as a matter of course to receive flag pay. 37 U.S.C. §§ 201(a), 203(a) (1970). We therefore conclude that the relevant legislative history supports the unambiguous meaning of section 202 on its face and bolsters the cause of plaintiffs, not defendant.

Finally, defendant contends the granting of rear admiral’s pay to plaintiffs would be tantamount to “judicial promotion” of military officers, an undertaking the court has repeatedly rejected. See, e. g., Brenner v. United States, 202 Ct.Cl. 678, 685-686 (1973). Yet, there can patently be no “judicial promotion” when (1) the officers in question have not been advanced to a higher grade, and (2) a specific act of Congress entitles them to higher pay. In construing the clear language of such a statute, no arrogation of executive or legislative power by the court can be discerned.

In summary, having determined that the language of section 202 speaks for itself and that the appropriate legislative history only fortifies this result, we hold plaintiffs entitled to rear admiral (lower half) pay for their periods of service as Navy AJAGs.

Accordingly, plaintiffs’ motion for summary judgment is granted and defendant’s cross-motion for summary judgment is denied. Plaintiffs are entitled to recover back pay and allowances on their consolidated claim and judgment is entered to that effect with the amount of recovery to be determined pursuant to Rule 131(c).

      . Plaintiffs’ respective tenures as AJAGs will be referred to hereinafter simply as “the relevant periods of service.”

      . 37 U.S.O. § 401 et seq. (1970) sets forth the various allowances to which persons serving in the uniformed services are entitled. Such allowances vary with the rank of the individual concerned. For expediency sake, the term “pay” as hereinafter used will refer to the appropriate pay and allowances.

      . Because of the result reached on the merits, we find it unnecessary to consider plaintiffs’ motion to strike certain affidavits contained in defendant’s briefs.

      . 37 U.S.C. § 202 (Z) (1970) was originally designated in Pub.L. 90-179 as section 202 (k). Pub.L. 90-623, 82 Stat. 1314, effective Oct. 22, 1968 (during the relevant periods of service) redesignated section 202 (k) as section 202 (Z) without altering the content of that provision.

      . Defendant advances the argument that Congress, through use of the term “entitled” in section 202, intended the pay above rank of that provision to he permissive rather than mandatory. Merrill v. United States, 338 F.2d 372, 374, 168 Ct.Cl. 1, 5 (1964). As stated in Merrill, however, the precise meaning of the term “entitled” must be drawn from the context, structure, and purpose of the particular statute under scrutiny. Here, we agree with the Navy Judge Advocate General that the contrast in purpose between section 202 and section 5149 points to a mandatory connotation for the term.

      . We concur with defendant’s view that the affidavit of Senator Ervin of April 14, 1970, submitted to the court by plaintiffs, may not properly be considered as part of the legislative history relevant to this case. Since no member of a legislature, outside of the legislature, is empowered to speak with authority for that body, Senator Ervin’s affidavit is without evidentiary value. National School of Aeronautics, Inc. v. United States, 142 F.Supp. 933, 938, 135 Ct.Cl. 343, 351 (1956); Gardner & North Roofing and Siding Corp. v. Board of Governors of Federal Reserve System, 150 U.S.App.D.C. 329, 464 F.2d 838, 842 (1972). We have disregarded the affidavit in reaching our conclusion.