author: O’SULLIVAN, Senior Circuit Judge.

text:
    John W. MARR and Lucille Marr, Appellants, v. Douglas RIFE et al., Appellees.
    No. 73-1285.
    United States Court of Appeals, Sixth Circuit.
    Argued Oct. 16, 1973.
    Decided Sept. 26, 1974.

      Denis J. Murphy, Patchen, Murphy & Allison, Columbus, Ohio, for appellants; Nathaniel R. Jones, James I. Meyer-son, N.A.A.C.P., New York City, Denis J. Murphy, Columbus, Ohio, on brief; James J. Kozelek, Columbus, Ohio of counsel.
    John E. Holzapfel, Smith, Clark & Holzapfel, Columbus, Ohio, for appel-lees; Charles T. Kaps, Columbus, Ohio, on brief.
    J. Stanley Pottinger, Asst. Atty. Gen., Frank E. Schwelb, Elyse S. Goldweber, Attys., U. S. Dept, of Justice, Washington, D. C., William W. Milligan, U. S. Atty., Columbus, Ohio, on brief for U. S. amicus curiae.
    Before PHILLIPS, Chief Judge, WEICK, Circuit Judge, and O’SULLIVAN, Senior Circuit Judge.
   O’SULLIVAN, Senior Circuit Judge.

Plaintiffs appeal from a decision of the District Court wherein three of four named defendants were found not to have violated the Civil Rights Act of 1866, 42 U.S.C. § 1982, and the Fair Housing Act of 1968, 42 U.S.C. §§ 3601-3612. Trial was had to a United States District Judge for the Southern District of Ohio. Judgment was entered only against defendant-appellee Joseph Arntz.

Plaintiffs-Appellants, John and Lucille Marr, are black residents of Columbus, Ohio. During the period from approximately January 12, 1970, until February 12, 1970, they were negotiating for the purchase of a home which was being offered for sale by the Doug Rife Realtor Agency of Columbus. The dwelling involved was identified as 124 South Southampton, Columbus, located in what had been a predominantly white neighborhood. Between the above dates, the Marrs dealt with various sales agents employed by the Rife Realtors, including Joseph Arntz, Lloyd Simmons, and Ruth Barclay. Appellants assert that during negotiations these agents violated the above statutes, and that Douglas Rife, proprietor of the agency, should be made liable for the conduct of his employees.

In addition to the instant suit, appellants also initiated action through the Ohio Civil Rights Commission and the Housing Opportunity Center in Columbus. The latter organization arranged for various Caucasians, posing as prospective purchasers, to test whether the Rife employees were in fact engaging in illegal discriminatory practices, frustrating appellants’ desire to acquire the above-mentioned property.

Plaintiffs’ Appendix and other papers available to us disclose that from about January 12, 1970, to February 7, 1970, the Marrs, aided by representatives of the Columbus Housing Opportunity Center, exhibited interest in the purchase of a house at 124 South Southampton in Columbus. It was not, however, until February 10, 1970, that the Marrs made an offer to buy the premises at the owner’s asking price of $21,500. Prior to that’ date they had made an offer of $20,900 which was submitted by an agent of Rife Realtors, but was not accepted by the owner. On February 10, 1970, the Marrs signed an offer to buy the property at the asking price of $21,-500. The Doug Rife Agency promptly submitted this to the owner who accepted it on February 12, 1970. The processing of this offer and completion of the transaction were carried on by agents of Rife Realtors, and delivery of the closing deed was made on April 30, 1970. We are not told just when the Marrs moved into the house. Mrs. Marr said they began their residence in the property about two and one-half years prior to trial of this lawsuit, which commenced on September 14, 1972. This would indicate that they moved in about the date when the deed was delivered in April of 1970.

Of the four defendants — Douglas Rife, Lloyd Simmons, Joseph Arntz and Ruth Barclay — the District Judge gave judgment only against Joseph Arntz, dismissing the action against the others. As to Arntz, the judgment awarded plaintiffs,

“the sum of One Dollar ($1.00) compensatory damages, Two Hundred Fifty Dollars ($250.00) punitive damages and costs in the amount of $109.78.”

The owner of the premises prior to the sale to appellants was William R. Gibbon. On or about January 19, 1970, the Rife Agency received an offer of one Robert J. Kramer to purchase the premises. Gibbon accepted the offer, but the sale was not carried out because of Kramer’s inability to obtain the needed financing. While there is some uncertainty as to when this sale fell through, from his consideration of the evidence, the District Judge concluded that between January 19 and February 5, 1970, the property in question was not available for purchase. He went on to say that representations made by employees of the Rife Agency to checkers for the Housing Opportunity Center, who were assisting the Marrs, were consistent, to wit: “the property was under contract.” He further found that “defendants did not know at that time that plaintiffs were black or that Learner and Jones [the checkers] were white.” There was evidence, however, from which such knowledge could be inferred, depending upon resolution of credibility issues.

There was conflicting evidence, however, as to whether one or more of defendants falsely represented to the appellants that the property was under contract when they knew that it was available. There was also some evidence from which the District Judge could have found that one or more of the defendants, Arntz, Simmons or Barclay had expressed a view that they were opposed to selling the involved house to blacks, and that these defendants had attempted to frustrate the efforts of the Marrs and the checkers assisting them to purchase the house because of their knowledge that the Marrs were black.

In their address to us appellants set out the following questions for review:

“1. Whether the Court below committed reversible error in finding that, as a matter of fact, appellees Simmons and Arntz did not know during the middle of January, 1970, that the appellants were black.
“2. Whether the Court below committed reversible error in concluding that a call to appellee Arntz was not initiated by a Columbus newspaper ad on the 5th of February.
“3. Whether the Court below committed reversible error in holding that the appellants failed to establish by a clear preponderance of the evidence that appellee Simmons committed actions proscribed by the Fair Housing Act of 1968.
“4. Whether the Court below committed reversible error in holding that the appellants failed to establish by a clear preponderance of the evidence that appellee Barclay committed actions proscribed by the Fair Housing Act of 1968.
“5. Whether the Court below committed reversible error in holding that the appellants failed to establish by a clear preponderance of the evidence that appellee Rife committed actions proscribed by the Fair Housing Act of 1968; and in refusing to apply the doctrine of respondent (sic) superior as to appellee Rife.
“6. Whether the Court below committed reversible error in awarding only one dollar ($1.00) compensatory damages.
“7. Whether the Court below committed reversible error in failing to award to the appellants reasonable attorney fees and in only awarding to them one hundred and nine dollars ($109) in costs.”

We also have before us a brief for the United States as Amicus Curiae, partially supporting the appellants, and presenting the following questions:

“1. Whether the Court below erred in refusing to award plaintiffs compensatory damages.
“2. Whether the Court below erred in refusing to award plaintiffs reasonable attorneys fees.
“3. Whether the Court below erred in failing to impute to Rife the discriminatory conduct of Arntz.”

We have reviewed the attack on the District Judge’s Findings of Fact, examining for that purpo'se the contents of the Appendix to Brief of Appellants. This appendix is but a photo-offset reproduction of the entire transcript. Much of it is of little relevancy to the issues raised on appeal. From our examination of it, we are satisfied that the District Court did not err in finding that Lloyd Simmons, Ruth Barclay and Douglas Rife personally engaged in no discriminatory conduct violative of the statutes set out above. We affirm the District Judge’s exoneration of defendants Simmons and Barclay. We conclude, however, that it is necessary to rule on the following contentions of the appellants: that the District Judge erred in holding that plaintiffs had the burden of proving their case by a preponderance of the evidence; that the award of compensatory damages and costs was inadequate; that plaintiffs should have been awarded reasonable attorney fees; and that defendant Rife should have been made liable for the conduct of his agent, Arntz, upon the doctrine of respondeat superior.

I. Burden of Proof.

Appellants argue that the District Judge, in considering factual issues, was

required to hold that appellants’ proofs had made out a prima facie case and that the defendants thereafter had the burden to overcome such prima facie case with clear and convincing evidence. As support for this, appellants cite various cases dealing with employment discrimination, e. g., Baker v. Columbus Municipal Separate School District, 329 F.Supp. 706, 720 (N.D.Miss.1971), aff’d, 462 F.2d 1112 (5th Cir. 1972); Arm-stead v. Starkville Municipal Separate School District, 325 F.Supp. 560 (N.D. Miss.1971) ; rev’d on other grounds, 461 F.2d 276 (5th Cir. 1972); Chambers v. Hendersonville City Board of Education, 364 F.2d 189 (4th Cir. 1966), where the courts required defendants to show the absence of racial motivation by clear and convincing evidence.

In opposing appellants’ argument, ap-pellees rely in part on the case of Hamilton v. Miller, 477 F.2d 908 (10th Cir. 1973), involving the Fair Housing Act. The Court there said:

“We are urged to hold that the defendant should have the burden of establishing his defense through clear and convincing evidence. We are not so persuaded. It is true, of course, that prejudice is difficult to prove except circumstantially. But it is equally difficult to disprove and we see no compelling reason to vary from traditional rules applicable generally to civil cases.” 477 F.2d at 910 n. 2.

We are of the view that none of the above cases cited by appellants are of controlling importance in deciding the burden of proof issue. We do believe, however, that a plaintiff in a Section 3612 suit must show a violation by a preponderance of the evidence.

The Fair Housing Act provides two means of enforcing its provisions. Under Section 3610(a), a person “aggrieved” may file a complaint with the Secretary of Housing and Urban Development, and investigation and resolution of the complaint’s charges is accomplished by the Secretary. If the Secretary is unable to obtain voluntary compliance within a certain period, a civil suit may be commenced by the person aggrieved. (Section 3610(d)). However, it is provided under Section 3610(e) that “[i]n any proceeding brought pursuant to this section, the burden of proof shall be on the complainant.”

The alternate route for obtaining redress for a violation of the Act is pursuant to Section 3612, which provides the right to file suit in a federal or state court without awaiting action by the Secretary. Although Section 3612 fails to indicate the burden of proof to be applied, it would be anomalous for a different burden of proof to apply under that section than is applied under the Section 3610 procedure. By adopting appellants’ suggested burden of proof, we would virtually eliminate any reason for seeking voluntary enforcement under Section 3610. This we decline to do.

We hold that the District Court was correct in holding that the appellants were required to carry the burden of proof by a preponderance of the evidence. It should be noted that the ami-cus brief of the United States does not join in appellants’ contention as to the burden of proof.

In this connection, we recite that on August 27, 1970, the Ohio Civil Rights Commission wrote to Doug Rife Realtors as follows:

“The Ohio Civil Rights Commission has carefully reviewed and discussed our investigator’s documented COMPLIANCE REVIEW REPORT. In regular session on August 19, 1970, the Commission adopted the recommendation to close the subject matters. Therefore, the matters have been closed.
“In behalf of the Commission, I again thank you for your cooperation.”

II. District Court Findings.

Except as we have set out above, we will not attempt to review all of the evidence upon which the District Court made its factual findings. The Court determined that defendant Arntz was guilty of discriminatory practice, which finding is not being appealed by Arntz. We also find that there was conflicting evidence offered as to the charges against Simmons and Barclay. Resolution of this conflict was for the District Judge, whose findings may not be set aside unless we are of the view that they are “clearly erroneous.” Fed.R.Civ.P. Rule 52. We are not persuaded that his findings exonerating Simmons and Barclay are clearly erroneous.

As to Barclay, a motion for dismissal at the conclusion of the plaintiffs’ evidence was sustained. Rule 41(b), Federal Rules of Civil Procedure, provides for such practice, and review is again limited to a determination of whether the District Court’s finding supportive of such ruling was clearly erroneous. Woods v. North American Rockwell Corp., 480 F.2d 644, 646 (10th Cir. 1973); Simpson v. United States, 454 F.2d 691, 692 (6th Cir. 1972). We do not consider that the relevant findings of the District Judge were clearly erroneous. It was for him to resolve the conflicts in the evidence as to whether Simmons and Barclay had been guilty of actionable discriminatory conduct.

III. Vicarious Liability of Doug Rife.

There was no evidence that Doug Rife, the owner of the Doug Rife Realtor Agency, had personally joined in any discriminatory acts against appellants. Appellee Joseph Arntz, against whom judgment was entered, was an employee and agent of the Rife Agency, and the evidence indicated that Doug Rife, as proprietor of the agency, received some portion of the commissions earned by his agents. The District Judge, however, denied appellants’ contention that Doug Rife, as proprietor of the agency, should be charged with Arntz’ misconduct under the rule of respondeat superior. In making this ruling, the District Judge relied on the law of Ohio. We hold that this was error.

Although this Court has not decided the extent to which state law is to guide a principal’s liability under the Fair Housing Act, we believe prior decisions in other areas of civil rights direct us to use federal — not state — law.

In Nelson v. Knox, 256 F.2d 312 (6th Cir. 1958), appellant brought suit under 42 U.S.C. § 1983, alleging that various city officials of Huntington Woods, Michigan, had passed and enforced discriminatory ordinances thereby destroying his garage business. As one ground for dismissing the complaint, the District Judge determined that the defendant officials were immune from suit under Michigan law. Justice Stewart, then a member of this Court, stated:

“We.hold at the outset that the extent of the defendants’ insulation from liability under the Civil Rights Act cannot properly be determined by reference to the local rule in Michigan. Surely each state cannot be left to decide for itself which of its officials are completely immune from liability for depriving a citizen of rights granted by the Federal Constitution. The question must be decided as a matter of general law.” 256 F.2d at 314.

See also Lynch v. Johnson, 420 F.2d 818, 820-821 (6th Cir. 1970); 1A J.Moore, Federal Practice, j[0.323[3], at 3732 (1965). In addition, this Court has said that “[wjhere a decision is likely to have a substantial effect on the implementation of a federal program, then a federal court should declare a rule consistent with the program’s demands.” United States v. Carson, 372 F.2d 429, 432 (6th Cir. 1967).

An examination of the Act, 42 U.S.C. §§ 3601-3612, reveals a broad legislative plan to eliminate all traces of discrimination within the housing field. To allow such a purpose to be controlled by state law might well defeat this objective. We believe that in such a situation this Court is not restricted by the law of the various states, and that it should apply federal law.

The law which is to control enforcement of the Congressional Acts in the area of housing discrimination is still in the developmental state. We consider, however, that some decided cases are sufficiently analogous to the present case to warrant our discussion of them.

In United States v. Northside Realty Associates, Inc., 474 F.2d 1164 (5th Cir. 1973), the Fifth Circuit made findings of fact relevant to the rule we consider. Appellant Northside was located in Atlanta and had various branch agencies, one of which was managed by its Vice President, Isakson. All salesmen worked on a commission basis, and it was found that of the 3000 homes sold since passage of the Act in 1968, none had been sold to blacks. The District Court determined that Isakson had violated the Act by “denying to a prospective black buyer that he, Isakson, sold real estate —without explaining that Northside Realty, of which he was Executive Vice-President, did, and then referring him to a black real estate agency; by showing an intention not to cooperate with a black realtor; and by various other acts.” In affirming the District Court’s finding of liability on the part of the corporate defendant, the Court of Appeals said:

“In light of the fact that Ed Isakson (1) is the Executive Vice President of Northside Realty, (2) is the broker whose license inures to the benefit of the corporation and enables it to engage in the business of selling real estate, and (3) directly supervises one sales office of Northside Realty and is in charge of hiring or selecting the sales managers for the other North-side offices, we do not think it clearly erroneous for the District Court to conclude that appellant Isakson acted within the scope of his duties when he spoke to customers at the office that he supervised and when he discussed sales policy with other people in the real estate business. Nor do we think the District Court was clearly erroneous in finding- that these activities were conducted with the intention of benefiting the corporation for which Isakson served as executive vice president. See Standard Oil Co. of Texas v. United States, supra, 307 F.2d 120, 5 Cir.” 474 F.2d at 1168.

United States v. Youritan Construction Co., 370 F.Supp. 643 (N.D.Cal. 1973) involved discrimination in the renting of apartments, with the government seeking to enjoin the company owner, T. S. Tan, from further discrimination. In holding that the owner was vicariously liable, the District Judge said:

“The discriminatory conduct of an apartment manager or rental agent, is as a general rule, attributable to the owner and property manager of the apartment complex, both under the doctrine of respondeat superior and because the duty to obey the law is non-delegable. United States v. Real Estate Development Corp., supra [D.C., 347 F.Supp. 776]; United States v. Reddoch, supra; Williamson v. Hampton Mgt. Co., 339 F.Supp. 1146 (N.D.Ill.1972); and United States v. Mitchell, 335 F.Supp. 1004, 1006 (N.D.Ga.1971). As the court stated in United States v. Real Estate Development Corp., supra, 347 F.Supp. at 785 (apartment case):
The resident managers and managers of the defendants, as agents of the defendants, are authorized to represent the defendants and can rent in no other capacity. Their acts and statements, made within the scope of their agency, are attributable to the defendants, whose duty to comply with the law is non-delegable. United States v. Reddoch, supra, slip opinion at 28; Williamson v. Hampton Mgt. Co., 339 F.Supp. 1146 (N.D.Ill.1972).”

370 F.Supp. at 649. See also United States v. Real Estate Development Corp., 347 F.Supp. 776 (N.D.Miss.1972).

At trial, appellee Arntz testified that the salesmen at the Rife Agency worked on a commission basis, and that except for floor time — time spent at the agency — they selected their own working hours. He also testified that Rife did have certain controls over salesmen, though most rules established by Rife were due to the broker-salesman relationship. “These are the things that when you take the real estate license commission examination pretty much establish the results.” No contracts were signed by salesmen, for example, because their license was “through the broker.” Appellee Simmons’ testimony was similar to Arntz’ in that the only control which Rife exercised over the salesmen, other than that provided by law, was the requirement of spending time on the floor. We also note the following from appellee Rife’s testimony:

“[Question] In what capacity are they [the salesmen] engaged in the sale of real estate of Douglas Rife? “[Answer] They list homes, make appointments, sell homes. They are real estate sales people.
“Question: Are they under your general supervision?
“Answer: Yes.
“Question: Do you give your final approval on contracts or are you consulted in regard to various purchase contracts or offers that are made through Doug Rife Realty through one of your agents; Mr. Arntz, Mr. Simmons, or Mrs. Barkley? (sic).
“Answer: If there is an unusual circumstance, I would be consulted.
“Is that basically correct, the latter part, that if there is an unusual circumstance in a transaction, you would be contacted?
“A. I believe so. If something was different I think they would consult me.”

While this evidence does not indicate that Arntz acted with the approval or at the direction of appellee Rife, we do not believe that such a finding is necessary in order to hold Rife liable. As owner of the agency, Rife had at least the power to control the acts of his salesmen. Rife would, therefore, be liable for compensatory damages resulting to the Marrs.

IV. Compensatory Damages.

The District Judge awarded One Dollar ($1.00) as compensatory damages. The evidence offered to support appellants’ claim for such allowance included Mrs. Marr’s own testimony as to an illness for which she was hospitalized at Mt. Carmel Hospital, the testimony of a doctor who attended her at the hospital and a psychiatrist who first saw Mrs. Marr about two and one-half years after her hospitalization for the purpose of testifying in support of her claim of damages. There was testimony that charges of the doctors totalled $65.00, and hospital records introduced in evidence disclose that its charges for attending Mrs. Marr were $660.10.

The first of these records, made at the time of her admission, set out that she was “complaining of epigastric pain..” A later record showed that Mrs. Marr advised that she had “eaten pickles and sauerkraut” several hours prior to the onset of pain. The record made at the time of her admission as an out-patient contained no claim by her that her indisposition was related to discriminatory treatment she had received when she was seeking to buy the house at 124 South Southampton. The admission record also recited that Mrs. Marr’s personal physician was a Doctor Rusoff. This doctor did not appear as a witness at the trial. Her discharge summary, after setting out that “[s]he had a history of ulcer disease one year PTA [pri- or to admission] and treated with some medications,” contained the following:

“All laboratory tests including admission CBC ELECTROLYTES, URINALYSIS and multiple SERIAL ENZYMES including CPK, HBD, LDH, CREATININE, BUN, BLOOD SUGAR were all normal. There was no growth on the URINE CULTURE. 24 hour URINARY AMYLASE was normal, as was the serum AMYLASE. BILIRUBIN was negative and trace. PROTEIN ELECTROPHORESIS was normal. X-rays of the upper GI, gall-bladder and chest were negative. Serial EKGs were normal.
“HOSPITAL COURSE & TREATMENT: Patient was admitted to the SMU and treated initially as a possible MI [myocardial infarction]. The enzymes and EKGs were normal. She was discharged to the medical floor after infarction was ruled out and then the other investigations were carried out. When these were nega- Uve, patient was approched about possibility of tension causing her difficulties. She agreed and her problems were briefly discussed. She was discharged improved on no medications, to be followed by her doctor.” (Emphasis supplied.)

Thus, the admission and discharge records contain nothing from Mrs. Marr attributing her indisposition to the alleged discrimination. When it was suggested to her that tension might have caused her illness, she did not attribute these tensions to the charged discrimination. Defendants put in no medical testimony to rebut the doctors’ testimony that Mrs. Marr’s illness could have been the product of discriminatory treatment by Arntz and others. We are not advised by the District Judge whether the foregoing led him, as it could have, to conclude that Mrs. Marr’s illness and hospitalization were not the product of discriminatory conduct by defendant Arntz.

The District Judge’s opinion and his findings of fact do not disclose the reason for an award of only $1.00 as compensatory damages. Upon the remand which we order, the District Judge should make clear the reason for his finding on compensatory damages. (Rule 52, Fed.R.Civ.P.)

V. Allowance of Costs.

Appellants’ brief asserts that they had submitted to the District Court a bill of costs in the amount of $869.78. Costs were allowed in the amount of $109.78. Without now ruling that this allowance was error, we again hold that upon remand some explanation should be given as to the basis of the District Judge’s consideration and award of costs. We also hold that Douglas Rife, as owner of the agency, should be made liable for such costs.

VI. Attorney Fees.

No attorney fees were allowed to appellants and no reason was given by the District Judge for this action. 42 U.S.C. § 8612(c) provides, in part, that the trial court.

may award to the plaintiff * * * court costs and reasonable attorney fees in the case of a prevailing plaintiff ; Provided, That the said plaintiff in the opinion of the court is not financially able to assume said attorney’s fees.” u

In 42 U.S.C. § 1982 there is no express authorization for awarding attorney fees. Nevertheless, such expenses have been awarded in Section 1982 cases. Knight v. Auciello, 453 F.2d 852 (1st Cir. 1972); Lee v. Southern Home Sites Corp., 444 F.2d 143 (5th Cir. 1971).

The evidence showed that appellants had a joint income of $9,739 and $12,847 in 1969 and 1970, respectively. The District Judge had the right to weigh such fact in considering the matter of an award for appellants’ attorney fee. We do not consider, however, that the shown amount of appellants’ earnings would necessarily be dispositive of the question. The brief for appellants sets out a claim that their attorneys devoted 127 hours to their handling of this lawsuit and had paid out $131.70 in expenses.

The Supreme Court in Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968), indicated a policy favoring the award of attorney fees. The Court there said:

“If successful plaintiffs were routinely forced to bear their own attorneys’ fees, few aggrieved parties would be in a position to advance the public interest by invoking the injunctive powers of the federal courts.” 390 U.S. at 402, 88 S.Ct. at 966.

See also Hall v. Cole, 412 U.S. 1, 5-6, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973); Mills v. Electric Auto-Lite Co., 396 U.S. 375, 391-392, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970). This policy favoring the award of attorney fees has been recognized and applied by courts in actions under the Fair Housing Act. See Steele v. Title Realty Co., 478 F.2d 380, 385 (10th Cir. 1973); Sanborn v. Wagner, 354 F.Supp. 291, 297 (D.Md.1973).

While keeping in mind the above policy, it must be remembered that the award of attorney fees is controlled by specific statutory language. Section 3612(c) first states that the court may award attorney fees. Such language is permissive, not mandatory, in nature and it therefore is in keeping with the general rule that the Court may exercise discretion. Whitehead v. Richardson, 446 F.2d 126, 128 (6th Cir. 1971), The above Section then adds the caveat: “Provided, That the said plaintiff in the opinion of the court is not financially able to assume said attorney’s fees.” Although we do not regard this caveat as limiting the award of attorney fees only to those of indigent status, accord, Sanborn v. Wagner, supra, 354 F. Supp. at 297, it does indicate an intention to allow a District Court considerable discretion. Our inquiry is limited to whether this discretion was abused.

To deny appellants any recovery for attorney fees when they were at least partially successful in their suit would, we believe, be inconsistent with the policy favoring the award of attorney fees. At the same time, it might indeed be unfair to impose all the attorney fees upon a single defendant when the suit involved numerous alleged violations by various defendants and only one was found to be meritorious. In such a case it might be the better rule to allow a plaintiff a proportionate amount of attorney fees to the extent that he prevailed in the suit.

This rule allowing a proportionate share of attorney fees has been used in other areas of civil rights litigation. In Schaeffer v. San Diego Yellow Cabs, Inc., 462 F.2d 1002 (9th Cir. 1972), the court was faced with a Title VII sex discrimination case. Section 706(k), 42 U. S.C. § 2000e-5(k), allowed.the award of attorney fees, in the court’s discretion, to the prevailing party. The District Court awarded $600 out of a claim of $2,220 in such fees. On appeal, the Ninth Circuit said:

“The allowance of reasonable fees in civil rights cases is an important feature of the enforcement provisions of that Act * *' * . The amount of the award should not be such that it would discourage others from seeking to attack discriminatory practices. However, the amount of the award should also be proportionate to the extent to which the plaintiff prevails in the suit.” 462 F.2d at 1008 (citations omitted).

Upon remand of this cause, the District Judge should articulate what prompts his discretionary action as to attorney fees. See Milburn v. Hueeker, 500 F.2d 1279 (6th Cir. 1974). We make no command as to his action in this regard.

VII. Punitive Damages.

The District Judge assessed punitive damages against defendant Arntz in the sum of $250. The appellants’ brief does not assert that this amount was inadequate; neither does appellants’ address to us consider whether Douglas Rife should be made liable for punitive damages. The brief of the United States, as amicus curiae, does ask, however, that defendant Rife be made to respond for the punitive damages assessed against Arntz.

Such damages as a rule are disfavored in the law and are awarded where willful or wanton conduct can be shown, see, e. g., Newman v. Nelson, 350 F.2d 602, 604 (10th Cir. 1965); Wright v. Kaine Realty, 352 F.Supp. 222 (N.D.Ill.1972), or as a deterrent measure, Lee v. Southern Home Sites Corp., 429 F.2d 290, 294 (5th Cir. 1970); Green v. Wolf Corp., 406 F.2d 291, 303 (2d Cir. 1968), cert. denied, 395 U.S. 977, 89 S.Ct. 2131, 23 L.Ed.2d 766 (1969).

The discriminatory act of Arntz was in itself insufficient to show that Rife had failed to prevent discrimination by his salespeople. Neither appellants’ brief nor that of the United States, amicus, sets out what facts support a claim that there was a pattern or practice of discrimination in the agency, or that Rife was aware of Arntz’ misconduct. If the District Judge, upon his. review of the entire record, is persuaded that Rife was, by action or knowledgeable inaction, involved in the wrongdoing, he may tie him into the award for punitive damages. Again, we issue no relevant command.

VIII. Conclusion.

This cause is remanded to the District Court for reconsideration of the award of compensatory damages, costs and attorney fees. Rife should be liable for such items. While we direct! no change in the amount of punitive damages, we do ask the District Judge' to consider whether both Rife and Arntz should be held liable for punitive damages already assessed.

This cause is remanded to the District Court for further findings consistent with this opinion. Each party shall) bear his or her costs of appeal.

      . The proviso found in Section 3612(e) is not found in other civil rights laws allowing attorney fees. See, e. g., 42 U.S.C. § 2000a-3(b) (Title II) ; 42 U.S.C. § 2000b-l (Title III) ; 42 U.S.C. § 2000e-5(k) (Title YII).


source: Caselaw Access Project

author: TONE, Circuit Judge.

license: Public Domain

text:
    SKIL CORPORATION, Plaintiff-Appellee, v. LUCERNE PRODUCTS, INC., Defendant-Appellant.
    No. 73-1716.
    United States Court of Appeals, Seventh Circuit.
    Heard May 23, 1974.
    Decided Oct. 4, 1974.
    Rehearings Denied Oct. 23, 1974 and Nov. 12, 1974.
    James Van Santen and Lewis T. Steadman, Chicago, 111., for defendant-appellant.
    Clarence J. Fleming, Thomas A. Reynolds, Jr., Chicago, 111., for plaintiff-ap-pellee.
    Before CUMMINGS and TONE, Circuit Judges, and MATTHES, Senior Circuit Judge.

       Senior Circuit Judge M. C. Matthes of the Eighth Circuit is sitting by designation.

   TONE, Circuit Judge.

This is an appeal by defendant Lu-cerne Products, Inc. from a judgment holding Claim 5 of plaintiff Skil Corporation’s Reissue Patent No. 26,781 valid and infringed, declaring defendant Lu-cerne Products, Inc.’s Patent No. 3,389,365 invalid under 35 U.S.C. § 102(b) because of sales more than one year before the application was filed, and awarding attorneys’ fees to plaintiff by reason of defendant’s conduct in seeking to defend the latter patent. Both patents cover speed control devices for switches in variable speed portable electric drills.

Skil manufactures and sells power tools, including variable speed portable electric drills. Lucerne manufactures and sells electric switches that are used in power tools.

The switches involved in this case are mounted in the trigger assembly of the drill. To vary the speed of the drill’s electric motor, a rheostat is mounted in the spring-loaded movable trigger of the drill, and as the trigger is depressed or released the rheostat moves, thereby changing the resistance in the circuit of the motor and thus the speed of the motor.

Early in 1964, Skil negotiated a contract with Benjamin H. Matthews, Lu-cerne’s president and principal stockholder, calling for the development by Lucerne of a trigger speed control switch for Skil electric drills. Skil placed a purchase order for 100,000 speed control switches to be delivered over an 18-month period, subject, however, to approval of the switch by Underwriters' Laboratories.

Matthews first developed a switch containing a “horizontal” rheostat, which was a flat strip of carbon-coated material mounted in the trigger mechanism on a horizontal plane. This mechanism proved defective in certain respects, and Matthews redesigned the switch, rotating the strip 90°, putting it on a vertical plane, and formed the movable contact as a sliding clamp with spring fingers on either side of the strip. Triggers incorporating the “vertical” rheostat were shipped to Skil in August 1964. Before August 23, 1964, over 1400 switches with either the horizontal or the vertical rheostat were shipped to Skil and credited against the purchase order for 100,000. Skil drills manufactured beginning in early August contained the vertical rheostat switches. By the end of August 1964, Skil sold 449 drills containing the Matthews switch to the public. On September 3, 1964, Underwriters’ Laboratories approved the switch. On August 23, 1965, Matthews filed a patent application on the switch, which resulted in the issuance of U.S. Patent 3,389,365.

Sometime after it commenced manufacturing and selling drills containing the vertical rheostat Lucerne switch, Skil decided that a fine speed adjustability feature should be added to the switch. The project of developing this feature was assigned to Carl Frenzel, a Skil engineer. Frenzel successfully completed his assignment in the manner described below and on December 27, 1965, an application for patent was filed on his behalf. The application was “made special,” i. e., given accelerated treatment at the request of the applicant upon his presentation to the Patent Office of the results of a prior art search which, he represented, contained the most recent prior art. U.S. Patent Letter 3,309,484, containing ten claims, was issued on Frenzel’s application on March 14, 1967. Over a year later Frenzel filed an application for reissue of the patent based on a second version of the adjustability feature. U.S. Reissue Patent 26,781 containing the original ten claims and additional claims 11 to 14, was granted on February 3, 1970.

Lucerne developed, for sales to other customers after the eighteen month exclusive contract with Skil expired, a speed control adjustability mechanism different from the one manufactured and sold to Skil, which contained the Frenzel development. This new Lucerne mechanism was developed by Lucerne’s Vice President for Sales, Edward Sahr-backer, who received a separate patent, U.S. Patent Letter 3,603,757, on the ad-justability switch he developed. The validity of this patent is not before us.

Skil brought this patent infringement action against one of Lucerne’s customers, Rockwell Manufacturing Company, alleging that Rockwell, through the use of Lucerne trigger mechanisms in a drill, infringed Frenzel’s Reissue Patent 26,781. Lucerne, as Rockwell’s indemnitor, was substituted as the defendant. Lucerne filed a counterclaim asserting that Skil had infringed its Matthews Patent. Skil then counterclaimed against Lucerne under the Declaratory Judgment Act for a determination that the Matthews Patent was not infringed and was invalid.

Skil originally claimed that Lucerne had infringed eight claims of its Frenzel Patent but withdrew prior to trial all claims except 2, 3, and 5. Lucerne withdrew its counterclaim, since it would be able to litigate the validity of the Matthews Patent under the Skil counterclaim. Claim 1 was also considered by the District Court, because Claim 5 is dependent on Claim 1.

The District Court held Claims 1, 2, and 3 of the Frenzel patent invalid but held Claim 5 valid and infringed. The court also held the Matthews patent invalid and assessed attorneys’ fees against Lucerne on that aspect of the case. Lucerne has appealed the findings of validity of Claim 5 of the Frenzel patent and invalidity of the Matthews patent and the awarding of attorneys’ fees. Since Skil did not cross appeal, the validity of Claims 1, 2, and 3 of the Frenzel patent is not before us.

Invalidity of Claim 5 of Frenzel Patent

Frenzel’s improvement, in substance, consisted of changing the Lucerne switch, which can form no part of his invention, in the following manner: inserting a stop member between the trigger and the trigger casing positioned to engage the front edge of the casing; mounting a horizontal adjusting screw with its head on the face of the trigger, it shaft passing through the trigger and its threads engaging threads in a hole in the front of the stop member, so that turning the screw variably positions the stop member; and causing the locking pin (which was already in the Lucerne switch) to engage with the stop member instead of directly with the trigger. Turning the screw causes the stop member, or “lug means,” to mové along the shaft of the screw, which varies the position of the stop member and thereby controls how far the trigger can be depressed. When the locking pin is engaged in the stop member, turning the screw moves the trigger. Moving the trigger moves the rheostat and thus changes the speed of the electric motor.

The description of this application of simple mechanical principles in the Frenzel patent proliferated into 14 claims, only one of which, Claim 5, is before us for adjudication. Claims 1, 2 and 3 as we have stated, were held invalid by the District Court, and Skil has not appealed from that determination. The prior art Sparklin Patent No. 2,525,839, which the District Court held “preclude[d] Claims 1 and 2 of Frenzel’s patent on the ground of obviousness, if not complete anticipation,” teaches controlling the speed of an electric motor by varying the amount of trigger depression and a means of locking the trigger in the depressed position. The prior art Ingersoll-Rand pneumatic impact tool, which the District Court held precluded Claim 3, and which was not before the Patent Office in the prosecution of plaintiff’s original or reissue patent, utilized an adjusting screw to vary the amount of trigger depression.

Frenzel’s stop member and adjusting screw are described (“lug means carried by said trigger [and] ... a manually operable adjustment means including a member rotatably carried by the trigger and engaged with said lug means for moving the same in either direction along said path of movement thereof”) in invalid Claim 1, on which Claim 5 is dependent. Claim 5, which merely adds the locking feature, reads as follows:

“The switch device according to claim 1 further defined by, trigger locking means including a locking pin, which locking means is mounted on said casing for extending through a bore in the tool housing thereby to expose said pin for manual depression, catch means carried by said lug means and adapted to be releasably locked by said pin when the catch means is aligned with the pin.”

Invalid Claim 2 describes the entire switch, including the locking means. The portion of invalid Claim 2 which is comparable to Claim 5 is as follows:

“. . . said device including locking means engagable with said element [the stop member] for locking said trigger in any one of its positions determined by engagement of said element with said abatement means.”

The District Court found in Claim 5 a “vernier adjustment” which he did not find in Claim 2. The court said, referring to the patent drawings, that it was the “unique combination of elements 24, 27 and 42 in connection with the trigger which results in the fine adjustment or vernier capability that we find totally lacking in” the cited prior art. Element 24 is the lug portion of the stop member that is threaded to receive the adjusting screw and abuts against the trigger housing; 27 is the hole in the side plate of the stop member that receives the locking pin; and 42 is the locking pin.

The stop member and the adjusting screw are in Claim 1, which the District Court held invalid, and are concededly not invention. The invention, if Claim 5 is valid and Claim 1 is not, must consist of adding the locking pin and the hole in the stop member. The locking pin and a rectangular depression in the trigger to engage the pin were already in the Lu-cerne switch before Frenzel made his improvement. He simply made the locking pin engage with the stop member, which is connected to the trigger by the adjusting screw, instead of directly with the trigger.

We do not have the benefit of specific findings by the District Court as to the level of ordinary skill in the art (cf. Graham v. John Deere Co., 383 U.S. 1, 17, 86 S.Ct. 684, 693, 15 L.Ed.2d 545 1966)), but it is apparent from the record that the designing of portable electric tools is a crowded art in which there is a high level of ordinary skill. We think Frenzel’s improvement would have been obvious to any person with ordinary skill in that art. We therefore hold Claim 5 invalid for obviousness.

In reaching this conclusion we apply the standard that a claimed invention consisting of old elements must pass a “rather severe test,” Toro Mfg. Corp. v. Jacobson Mfg. Co., 357 F.2d 901, 904 (7th Cir. 1966), and are obedient to the mandate laid down in A & P Tea Co. v. Supermarket Corp., 340 U.S. 147, 152-153, 71 S.Ct. 127, 130, 95 L.Ed. 162 (1950):

“Courts should scrutinize combination patent claims with a care proportioned to the difficulty and improbability of finding invention in an assembly of old elements. The function of a patent is to add to the sum of useful knowledge. Patents cannot be sustained when, on the contrary, their effect is to subtract from former resources freely available to skilled artisans. A patent for a combination which only unites old elements with no change in their respective functions, such as is presented here, obviously withdraws what already is known into the field of its monopoly and diminishes the resources available to skillful men.”

At trial, Lucerne introduced evidence concerning a trigger device developed by Singer Manufacturing Company, a Skil competitor, the subject of Winchester Patent 3,439,248, contending that the Singer device was reduced to practice prior to the Frenzel device and therefore was a part of the prior art. The District Court noted that there was an interference pending before the U.S. Patent Office but refused to await the outcome of that proceeding and held that the depositions and evidence presented by Lucerne failed to prove the priority of the Singer device. While this appeal was pending, the Patent Office Board of Interference Examiners concluded that Singer had demonstrated an actual reduction to practice of its device prior to the date conceded by Frenzel to be the date of conception of his device. Patent Interference No. 97,893, Winchester, et al. v. Frenzel, February 25, 1974.- The Winchester patent shows a device that is similar in important respects to Fren-zel’s and is capable of being locked into any one of four positions. Its teaching, whether treated as prior art or as evidence of the state of skill in the art and the ease with which an adjustability feature could be designed by one seeking to do so, reinforces our conclusion that Claim 5 is invalid for obviousness.

Invalidity of the Matthews Patent under Section 102(h)

The District Court held the Matthews patent invalid under 35 U.S.C. § 102(b), which denies patentability if

“the invention was ... in public use or on sale in this country more than one year prior to the date of the application for patent in the United States, . . .

The Matthews application was filed August 23, 1965. Lucerne contends that the sale of the switches developed under the Matthews patent before September 3, 1964, the date on which Underwriters’ approval was received, were experimental and therefore not sales under the statute. The District Court’s holding that there was an actual sale before August 23, 1964, the date one year before the patent application was filed, is adequately supported by the evidence summarized above that in July and August 1964 Lucerne shipped to Skil over 1400 trigger mechanisms which were credited against the Skil purchase order of 100,000, and a substantial number of these switches were incorporated by Skil into drills sold to the public. Moreover, in a deposition in another case, Skil Corporation v. Sears Roebuck & Co. and Culter-Hammer, Inc., Matthews himself testified that the first sale of the speed control device to Skil was on April 22, 1964 and did not state that this sale was on an experimental basis. The District Court properly concluded that “the switch had been commercially sold to Skil and thereby dedicated to the public more than a year before the filing date.”

Attorneys’ Fees

The last issue to be decided is whether the District Court erred in awarding attorneys’ fees to Skil as the prevailing party on the Matthews patent claim under the authority of 35 U.S.C. § 285, which provides:

“The court in exceptional cases may award reasonable attorney fees to the prevailing party.”

The district judge appears to have based his determination that the case was “exceptional” principally on his finding that the testimony of Matthews that sales before August 23, 1964 were for experimental purposes, was disingenuous. The court said that the testimony was

“. . . contrary to his company’s prior position and contrary to all documentary evidence. The disingen-uousness of his testimony on this subject impressed this court at the time as a gross disregard of the facts, if not bad faith, and as an ill-advised attempt to salvage an invalid patent.”

The court concluded that in view of our decision in L. F. Strassheim Co. v. Gold Medal Folding Furniture Co., 477 F.2d 818, 824 (7th Cir. 1973), it was unnecessary to determine that there was fraud in order to award attorneys’ fees under 35 U.S.C. § 285, and that it was enough to find, as the court did, that the defendant’s conduct was “unreasonable, without legal justification and caused gross injustice to the plaintiff.” Lucerne contends that an unconscionable act in the nature of fraud or bad faith is necessary to make the case exceptional under the statute, and that since the District Court found neither of.these elements present its decision must be reversed. This argument ignores the Strassheim case, in which the court held that fraud was not necessary to support an award of attorneys’ fees. Even in the absence of Strassheim, accepting, as we do, the District Court’s findings with respect to Matthews’ testimony, that testimony amounted to an unconscionable act done with deceptive intent and was a sufficient basis for an award of attorneys’ fees. Kearney & Trecker Corp. v. Giddings & Lewis, Inc., 452 F.2d 579, 597 (7th Cir. 1972), cert. denied, 405 U. S. 1066, 92 S.Ct. 1500, 31 L.Ed.2d 796 (1972).

In reaching that conclusion we need not and do not consider the other matters referred to by the District Court as additional reasons for assessing attorneys’ fees.

The judgment of the District Court is reversed insofar as it holds Claim 5 of the Frenzel patent valid and is in other respects affirmed.

Affirmed in part and reversed in part.

      . The Lucerne switch, before Frenzel’s improvement, liad the following basic elements:

      . The stop member (with its round hole to engage the locking pin) and adjusting screw added by Frenzel are shown in the patent (Figure 5) as follows:

      . The entire Frenzel switch device is shown in the patent (Figure 4) as follows:

      . See the drawings in footnotes 2 and 3, supra.


author: GIBSON, Chief Judge.

text:
    FRED MILLER CO., Appellant, v. EMPIRE FIRE & MARINE INSURANCE CO., Appellee.
    No. 74-1187.
    United States Court of Appeals, Eighth Circuit.
    Submitted June 14, 1974.
    Decided Sept. 16, 1974.

      L. R. Magee, Kansas City, Mo., for appellant.
    William H. Sanders, Kansas City, Mo., for appellee.
    Before GIBSON, Chief Judge, and BRIGHT, and WEBSTER, Circuit Judges.
   GIBSON, Chief Judge.

This appeal presents an important question regarding the rights and liabilities of an insurance company and a general agent upon termination of a general agency agreement. This diversity suit was brought by Fred Miller Co. (Miller), a general agent, against Empire Fire & Marine Insurance Co. (Empire) to recover for an alleged interference with Miller’s use and control of expirations guaranteed him by the terms of the general agency agreement.

The District Court, without objection of the parties and in order to spare them the unnecessary expense of a trial, ruled after a pretrial hearing that Miller could not make a submissible case under principles enunciated in Otto v. Imperial Casualty & Indemnity Co., 277 F.2d 889 (8th Cir. 1960) and entered final judgment for defendant. Miller brings this appeal.

Miller and Empire executed a general agents agreement October 6, 1960, which, except for amendments dealing with commission rates, remained in effect until Empire gave notice of termination July 26, 1972, effective 45 days after receipt. This termination was pursuant to a provision of the agreement which allowed either party to cancel without cause upon 45 days notice.

All of the insurance that Miller placed with Empire was referred to his agency by independent insurance agents. These local agents would forward a particular insurance risk to Miller, who in turn would place it with Empire or another of the insurance companies with which Miller had agency agreements.

Thus there was in operation a four-tiered system. An insured would go to a local agent to obtain insurance for a particular risk. This local agent might in some instances place the insurance directly with an insurance company or broker the policy through a general agency like Miller. Miller, upon receiving an application from a local agent, would then place the insurance with one of the companies he represented. This four-tiered relationship becomes important to a later analysis of what rights, if any, were secured to Miller upon termination of the agency agreement.

The interference complained of occurred after termination of Miller’s agency agreement. Empire in the fall of 1972 undertook a series of mailings to licensed insurance agents as listed in the Missouri Underwriters Handbook in Missouri soliciting them to become agents for Empire. Higher commissions than could be obtained by brokering their policies through a general agent and lines of insurance not previously available were offered. Miller claims the effect of this blanket mailed solicitation was to prevent the local agent from placing renewals of their policies with Miller.

Miller claims that this solicitation by Empire interfered with the undisputed possession of the use and control of ex-pirations guaranteed him by paragraph 16 of the agency agreement upon termination. Empire contends that the person who owns and controls the expira-tions in question is not Miller but the local agent who brokered the business with plaintiff and thus there could be no interference by a direct solicitation of these agents. The District Court, in granting judgment for defendant on the basis of Otto, apparently agreed with Empire that Miller had no property right in the expirations or renewals of the insurance policies, and, therefore, even if there could be said to be an interference, it would not be actionable.

The question for our decision is whether Otto requires a conclusion that Miller has no property rights which were legally protected by the contract from company interference. This interpretation of Qtto is based upon our discussion in Otto of Woodruff v. Auto Owners Ins. Co., 300 Mich. 54, 1 N.W.2d 450 (1942). Therein we stated:

There, as here, it was the sub-agent who owned the expirations, not the general agent who was apparently trying to collect for them. * * * We thus conclude that plaintiff had no ownership of or control of the Gordon business such as would entitle him to recover in the circumstances here shown by the evidence.

Otto v. Imperial Casualty & Indemnity Co., supra, 277 F.2d at 894-895 (empha-is supplied).

It is important then in interpreting Otto to determine the circumstances shown by the evidence in that case. Otto was appointed an agent of Imperial Casualty in July, 1957. During the continuance of the agreement and with the knowledge of Imperial the majority of the insurance written through Otto came from a G.E.M. store insurance counter operated by a subagent, Milton Gordon. Otto had no contract with Gordon requiring him to place this insurance through Otto. Imperial terminated Otto’s agency agreement March 1, 1958. Sometime in March, 1958, Gordon approached Imperial and requested and received appointment as an agent. Otto then brought suit against Imperial alleging that Imperial “entered into a plan to purloin the 'block of business’ generated by Plaintiff.” The trial court granted a directed verdict and this was affirmed on appeal.

The facts in Otto were stated to be identical with Woodruff v. Auto Owners Ins. Co., supra,. In Woodruff, an agent sued for an alleged interference with his rights in expirations after termination of his agency by the defendant company. Plaintiff received a $5,000 jury verdict but this was reversed and judgment entered for defendant on appeal. In Woodruff, a Mr. Keyser solicited business in defendant company for Wood-ruff’s agency. After termination of the agency, Keyser requested and received appointment as one of defendant’s agents. This was determined not to be a malicious interference by the company with any of plaintiff’s rights. The court noted that to make a ease for the jury “there must be competent testimony tending to prove that defendant maliciously interfered with plaintiff’s property rights in his expirations or expiration data.” Woodruff, supra at 457. In discussing the extent of plaintiff’s rights the court noted:

We think it is clear that the full purpose of and the need for the application of the custom established by the American Agency System is that the so-called clientele or established business of an insurance agent may be preserved to him as far as possible upon the termination of his agency. To this extent, and no further, the custom should be respected and enforced. * * * [T]he insurer is only denied what would otherwise be legitimate in the way of attempting to appropriate to itself or some other of its agents the business which under the established custom belongs to the agent with whom the principal has severed its relations.

Woodruff v. Auto Owners Ins. Co., supra, 1 N.W.2d at 453.

The court in Woodruff, as was this court in Otto, was impressed by the fact that the expirations there in question were actually a property right of the subagent and not the agent recently terminated. This same situation is admittedly true in the present case. However, to recognize this does not require a conclusion that the terminated agent has no right in the expirations, nor does Otto or Woodruff appear to go this far. It is important to place the rights involved in the insurance field within perspective. Paramount of course are the rights of the insured. No matter who, as a matter of custom or contract, may be considered to own the expirations to a given policy, it is always open to the insured to place his business with whomever he pleases. But cf. Kerr & Elliott v. Green Mountain Mut. Fire Ins. Co., 111 Vt. 502, 18 A.2d 164 (1941). Thus, even though a subagent or local agent may be considered owner of the expiration, the insured may bypass the subagent or local agent and go directly to the general agent or the company and assert his unwillingness to purchase through the subagent. A renewal of the policy in these circumstances will not be considered an interference with expirations. Northwest Underwriters, Inc. v. Hamilton, 151 F.2d 389, 392 (8th Cir. 1945). But this is no support for the converse of that proposition, that a general agent or the company may bypass the subagent or local agent and go directly to the insured on their own initiative.

Next within the structure of the insurance field is the agent who deals directly with the insured. This agent may be a general agent in some instances, or like the present case a local agent who brokers the insured’s business through a general agent with a particular insurance company. Unless otherwise modified by contract, this agent is considered to own the expiration in a particular insured’s business. Otto v. Imperial Casualty & Indemnity Co., supra; Woodruff v. Auto Owners Ins. Co., supra. This ownership and control of expirations is a protection of the work product of the individual agent and in this ownership and control he is protected from any interference with his relationship to the insured by the insurance company, or in a situation like the present case, a general agent through which he brokered the policy. Woodruff v. Auto Owners Ins. Co., supra; Kerr & Elliott v. Green Mountain Mut. Fire Ins. Co., supra; 16A J. Appleman, Insurance Law and Practice, § 9025 at 179-80 (1968). However, as we noted previously, he is not protected against acts of the insured which may defeat his ownership and control of the expirations.

Apart from this pattern of the industry which can be considered a three-tier system where there is the insured and his agent who deals directly with the insurance company, there exists a pattern personified in the present case where a fourth party is inserted between the company and the insured’s agent. A general agent such as Miller who places policies with a company on behalf of a local agent has no contact with the insured and therefore is not customarily considered to own or control the expirations in a particular policy. This, however, is only valid when determining his relationship with the local agent, and even then can be modified by contract. 16A J. Appleman, Insurance Law & Practice, § 9025 at 182 (1968). There appears no reason why, as between the general agent and the company, the general agent could not be considered to own and control the expira-tions, as the purpose of an agent being considered owner of the expirations is to protect his business relationship with his clientele from appropriation by someone higher up in the tiers. This is especially true when, as here, the contract between the parties provides for just that conclusion.

Miller and amicus curiae argue that the customs embodied in the American Agency System establish these expirations as the exclusive property of the general agent, in relationship to the company, and afford him protection against interference by the insurance company. However, as we noted in Otto, whatever protection Miller has against interference is governed by the terms of the contract between the two parties, and the contract provides for exactly what the American Agency System provides, “that the agent shall have full and exclusive ownership of business which he generates.” Otto v. Imperial Casualty & Indemnity Co., supra, 277 F.2d at 891.

We have previously noted that the ownership and control of expirations serves to protect the business relationship between a subagent or local agent and his clientele, the insureds, from interference by the insurance company or the general agent. The clientele of a general agent who writes insurance brokered to him from subagents is not the insureds but rather the subagents. Should this leave the general agent without any protection against acts of the insurance company which could destroy this existing business relationship? We think not.

The provisions of paragraph 16 are clear and unambiguous' and do not support defendant’s argument that the expirations in question are the property of the subagents and not Miller. While the subagent’s rights to the expirations are superior to the rights of the general agent, it does not follow that as between the company and the general agent the latter has no enforceable rights in the expirations. As a matter of contract between the parties, Empire has agreed to treat the expirations as Miller’s property upon termination of his agency. We find no authority for treating this contractual language to apply only to business which Miller should happen to write directly for an insured. We think that just as the insurance company is barred from appropriating the benefits of an insured-agent relationship in the absence of agreement to the contrary, it may also be barred from appropriating the work product of its general agents upon termination. In a three-tier system the company only comes into possession of the records of an individual policy through the efforts of its agent. By custom or contract these records are reserved to the agent upon termination. In a four-tier system the company comes into possession of the records through the efforts of its general agent. We think the clear meaning of paragraph 16 of the Agency Agreement is to guarantee the general agent the use and control of those records free from interference by the company. This provision does not and cannot determine the ownership or control of expirations between Miller and the subagents, but “the question here is not what the sub-agent may do, but what the company may do.” V. L. Phillips & Co. v. Pennsylvania Threshermen & Farmers’ Mutual Cas. Ins. Co., 199 F.2d 244, 249 (4th Cir. 1952), cert. denied, 345 U.S. 906, 73 S.Ct. 645, 97 L.Ed. 1342 (1953).

The extent of the protection afforded Miller must next be determined. Just as a subagent is not protected against acts of the insured which may defeat his ownership and control of expirations, Northwest Underwriters, Inc. v. Hamilton, supra, we view Otto and Woodruff as holding that a general agent, such as Miller, is not protected against the acts of an independent subagent which may defeat the expiration rights the general agent has in relationship to the insurance company. For in such a situation, the act the general agent is complaining about is that of the subagent who has a superior right to the control of expira-tions. Thus a subagent may bypass the general agent, if not contractually bound, and go directly to the insurance company and request appointment as an agent without creating liability on the part of the insurance company or himself for an interference with protected rights of the general agent. As we stated in Northwest Underwriters, Inc. v. Hamilton, supra, 151 F.2d at 392:

Manifestly, if plaintiff was unable to control the re-writing of the insurance policies at their expiration, he lost nothing because of the act of defendant in writing the insurance direct.

This rationale we think equally applicable to the relationship between a general agent and subagent unless otherwise modified by contract.

However, we think the rule is different where the acts complained of as an interference are not that of a subagent bypassing the general agent in his dealing with the company, but rather are deliberate acts of the insurance company which defeat the general agent’s use and control of expirations which the company has agreed to leave in the undisputed possession of the general agent. The insurance company’s undertaking to leave these records in the undisputed possession of the general agent must be considered as an agreement to make no interference with the former general agent’s attempt to obtain a transfer of the policies previously written through the former company.

This contract provision provides an agent with the knowledge that even if his agency with a particular company is terminated, he will have the opportunity to attempt to place renewals of those policies with another insurance company, assuring him of some business continuity. Such protection also serves a business purpose for the insurance company, for without this assurance it is unlikely an agent would devote time and expense to developing business in that particular company with the knowledge that once developed the renewals might be appropriated with impunity by the company.

We think the agency agreement in this case must be considered to guarantee Miller the opportunity to place renewals on the policies previously written with Empire with some other company without interference from Empire. The ability to do this would, of course, be contingent on the desires of the independent subagents who may or may not wish to renew the business through Miller and, of course, the insured, but we think Miller would be protected in his efforts from any interference by Empire which deprives him of this opportunity.

It is alleged the Empire directly solicited the brokers previously writing policies through Miller. There is a factual dispute as to the solicitation and its effect. But we think that if Miller does prove a solicitation of subagents previously dealing with him and that the actual effect was to deprive him of the opportunity to attempt to place these renewals with another company a submissive case on liability would be made for the jury to consider. Testimony of inconvenience, annoyance and loss of business is not enough.

Instead there must be competent testimony tending to prove that defendant maliciously interfered with plaintiff’s property rights in his expirations or expiration data. * * * In reaching this conclusion we are also mindful that direct evidence of malice is not essential; but “a malicious motive or intent will be presumed or implied in law from the intentional commission of a wrongful act which causes injury to another.” (citation omitted).

Woodruff v. Auto Owners Ins. Co., supra, 1 N.W.2d at 457-458.

Authority for the conclusion that an interference as alleged in the present case may be actionable is found in V. L. Phillips & Co. v. Pennsylvania Threshermen & Farmers’ Mutual Cas. Ins. Co., supra. In Phillips a contract provision on termination provided that “the Agent’s record, use and control of the expirations shall be deemed the property of the Agent and left in his undisputed possession * * *.” In interpreting this language the court said:

[W]e hold . . . that the plaintiffs [general agent] were the owners of all the expirations and that defendant [insurance company] had no right to them.

V. L. Phillips & Co. v. Pennsylvania Threshermen & Farmers’ Mutual Cas. Ins. Co., supra, 199 F.2d at 247.

Phillips had been appointed agent for the company for the state of Virginia, except two designated counties. During the time of his agency he procured 173 subagents to sell insurance in the defendant company. After termination the company appointed at least 90 of these former subagents less than 30 days after termination of the agency. These subagents had a written contract with the plaintiff, signed also by defendant company, which provided that all evidence of insurance was to be forwarded to plaintiff; but contrary to the suggestion of Empire, this contract apparently did not provide that as between the sub-agents and plaintiff the expirations would become property of the plaintiff. The American Agency System apparently governed the ownership of the expiration rights between plaintiff and his subagents. Further, that this would have been immaterial to the court’s analysis appears from the following:

It is said that the sub-agent who wrote the policy has the records of the business in his office and upon the expiration of the policy has the right to solicit the business for any company that he may happen to represent at the time. The answer is that the question here is not what the sub-agent may do, but what the company may do. The sub-agent would have no power to approach the policy holder in behalf of the company unless the company vests him with the power to do so; and the company should not thus cooperate with the sub-agent in doing what it has no right itself to do. When it does so, it violates its contract.

V. L. Phillips & Co. v. Pennsylvania Threshermen & Farmers’ Mutual Cas. Ins. Co., supra at 248.

In further answer to Empire’s contention that Miller has no rights since the expirations belonged to the subagent, the court in Phillips stated in regard to this same argument advanced by the defendant company therein:

The ingenious argument of the defendant is to the effect that the sub-agent owned the expirations in business written by him and the Company could appoint him and use his knowledge without liability to the plaintiffs. We have already explained that by the Contract itself, as between plaintiffs and defendant, the plaintiff acquired property rights in all expirations. It follows that the defendant could not use its own records to solicit those ex-pirations nor can it secure the information from the former sub-agents and use it without answering in damages to the plaintiff. (Emphasis added.)

V. L. Phillips & Co. v. Pennsylvania Threshermen & Farmers’ Mutual Cas. Ins. Co., supra at 248.

We, therefore, hold that in the circumstances here disclosed, that is, when an insurance company performs acts which are alleged to interfere with rights to expirations guaranteed the agent by terms of the agency agreement, Otto v. Imperial Casualty & Indemnity Co., supra, does not require a determination that no submissible case regarding liability can be made. We think that the applicable language of the agency agreement represents the undertaking of Empire that upon termination it will not take any actions that interfere with Miller’s right to attempt to effect renewals of the affected policies with another company, and upon a breach of that agreement Empire would be liable for the injury sustained.

As the record developed below was concerned only with the question of whether our prior decision in Otto required the conclusion that plaintiff could not make a submissible ease, we can only determine that plaintiff does have rights in expirations protected against interference by the insurance company. Whether in this case there was actually an unlawful interference with those rights by Empire is a matter appropriately left for resolution in the trial court.

We reverse the judgment of the District Court and remand the cause for further proceedings consistent with this opinion.

      . “Expirations” is a term with definite and well-recognized meaning in the insurance field.
      [I]t embodies the records of an insurance agency by which the agent has available a copy of the policy issued to the insured or records containing the date of the insurance policy, the name of the insured, the date of its expiration, the amount of insurance, premiums, property covered and terms of insurance. * '* * It has been determined that this information is of vital assistance to the agency in carrying on the insurance business and it has become, in the insurance field, recognized as a valuable asset in the nature of good will.
      V. L. Phillips & Co. v. Pennsylvania Threshermen & Farmers’ Mutual Cas. Ins. Co., 199 F.2d 244, 246 (4th Cir. 1952), cert. denied, 345 U.S. 906, 73 S.Ct. 645, 97 L.Ed. 1342 (1953); accord, Northwest Underwriters, Inc. v. Hamilton, 151 F.2d 389 (8th Cir. 1945); Kerr & Elliott v. Green Mountain Mut. Fire Ins. Co., 111 Vt 502, 18 A.2d 164 (1941).

      . Paragraph 16 of the General Agents Agreement between Miller and Empire provided :
      In the event of termination of the Agreement, the Agent having promptly accounted for any paid over premiums for which he may be held liable, the Agent’s records, use and control of expirations shall remain tlie property of the Agent and be left in his undisputed possession; otherwise the records, use and control of expi-rations shall be vested in the Company.

      . We will refer to these independent insurance agents as local agents or subagents in this opinion. These local agents had no contractual duty to Miller and were free to place their business elsewhere. However, the evidence indicates that local agents wishing to place their business with Empire in Missouri or Kansas would have to broker it through Miller as Miller was Empire’s only general agent in those two states. The relationship of these local agents to the general agent Miller is similar to that of a “suba-gent” as referred to in the cases discussed later in this opinion.

      . Miller had agency agreements with or represented ten other insurance companies at the time Empire cancelled the general agency agreement.

      . The question of whether there has been an interference is not before us on this record. This would be a matter of proof at trial. We will assume, arguendo, that there has been an interference for purposes of deciding the legal issue of whether Otto required entry of judgment for defendant.

      . The court in Otto as an additional ground for its holding also pointed out that after the termination of the contract that the gen eral agent through its representative indicated disinterest in renewals and “cooperated with defendant with reference to them and accordingly waived any complaint which jdaintiff might have had for the claimed interferences therewith.”
      While plaintiff seeks to distinguish Otto on the ground of waiver, we feel this cannot be satisfactorily done in view of what might he termed the primary holding, that the general agent “had no ownership of or control of the Gordon business such as would entitle him to recover in the circumstances here shown by the evidence.”

      . The American Agency System can be seen as giving an agent in the tier below the insurance company or a general agent a limited right of protection or freedom from interference with his course of business dealings or the expirations of particular policies by other parties in privity to the insurance policy.

      . The American Association of Managing General Agents filed a brief amicus curiae supporting Miller’s position in this appeal.

      . While the provisions of the contract are unambiguous and clear and evidence of custom is not required for their construction, evidence of the custom known as the American Agency System is valuable in showing how the contractual right to expirations applies to parties not signatory to the agreement. The contract merely places in written form the American Agency System as between the parties to the contract and does not answer the question of how the contracting parties are bound to other parties who are not parties to the contract.


author: WILLIAM E. DOYLE, Circuit Judge.

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. The DAYTON TIRE & RUBBER COMPANY, a division of the Firestone Tire & Rubber Company, Respondent.
    Nos. 74-1019, 74-1020.
    United States Court of Appeals, Tenth Circuit.
    Argued Aug. 20, 1974.
    Decided Sept. 23, 1974.
    William H. DuRoss, III, Atty., N. L. R. B., (Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, and William R. Stewart, Atty., N. L. R. B., on the brief), for petitioner.
    Edward E. Soule, Oklahoma City, Okl. (Walter B. Connolly, Jr., Akron, Ohio, The Firestone Tire & Rubber Company, and Of Counsel: Lytle, Soule & Emery, Oklahoma City, Okl., on the brief), for respondent.
    Before HILL and DOYLE, Circuit Judges, and TALBOT SMITH,  District Judge.

       Honorable Talbot Smith, United States District Judge, Ann Arbor, Michigan, sitting by designation.

   WILLIAM E. DOYLE, Circuit Judge.

The above two cases are before us on applications of the National Labor Relations Board (N.L.R.B.) seeking enforcement of orders issued by it to the respondent pursuant to § 10(e) of the National Labor Relations Act, 29 U.S.C. § 151 et seq. In each instance the Dayton Tire & Rubber Company, a division of Firestone Tire & Rubber Company, is the respondent. The alleged unfair labor practices occurred at the plant of respondent located in Oklahoma City, Oklahoma.

Case No. 74-1019

Starting in March 1971, the Union began a campaign to organize respondent’s employees. One Paul Grammont was one of the early Union advocates. Evidence showed that he wore a Union T-shirt at work, signed a Union authorization card and solicited other employees to sign Union authorization cards. He testified that at the end of July 1971, his supervisor, Bratcher, approached him and asked him how his business was. When Grammont asked whether he was referring to the Union, Bratcher said that he was and added that “You can’t organize the plant with one or two guys coming to a union meeting”, and when Grammont asked how he knew this he replied that he had ways of knowing. Another time Bratcher stated to him that he did not have to worry about the Union guys. “All I have to do is go down to the belt and start picking on your tires.”

On January 22, 1972, the warehouse supervisor, one Williams, called his employees together and told them how proud he was of their work performance the preceding night and although it was none of his business he was going to take a poll to find out if the men wanted the Union. He requested each employee to place an unsigned note on his desk stating “Yes” or “No”. The employees, however, ignored this, and when Williams approached the men individually and asked them how they were going to vote in the Board election scheduled for April 16, 1972, they refused to reveal this information.

In March 1972, one Hembree, a supervisor, approached an employee, Randy Ferguson, and asked him what he thought about the Union and whether he thought it would help the company if the Union was successful in organizing the plant. Again, on April 1, Hembree asked him what he thought of the Union, and Ferguson replied that he had had two prior experiences with unions and they provided a pretty good deal.

A hearing was held on June 5-8, 1972, but before the decision was entered, the Administrative Law Judge reopened the case and held the second hearing involving additional violations. Employees Allred, Bert Verel and Paul Greenwood testified on behalf of the General Counsel during the June 6, 1973 hearing.

The employee Allred, when he returned to work on June 8, was given a memorandum to report to personnel on absenteeism. The memorandum regarding Allred’s absence stated that it was personal and concluded that Allred had been in the past counseled about absenteeism.

Verel worked on June 8 without any incident. Both Allred and Verel were given to understand that even though the absence to testify at the Board meeting was valid, nevertheless the company disapproved of it. Verel was told that if he did not straighten out he would be either discharged or suspended. This, notwithstanding that Verel had explained that he had a great deal of family illness. The same attitude was taken toward employee Paul Greenwood. As a result of his testifying, he was subjected to criticism or reprimand. Subsequently, Greenwood called in to state that he was not going to be there on June 29 due to the fact that his wife had left him. He was told by his supervisor that he could not be excused because of his poor record. The supervisor said he would allow Kim two hours.

Employee Harrington was discharged for allegedly stealing. What he had done was to turn in time cards which were erroneous in that they purported to reflect work performed on whitewall tires instead of blackwall tires.

Chambers was shown to have been very active in union organization, notwithstanding that his work was uniformly rated good and he received commendations. He was suspended for one day and given six months probation because of absenteeism. He was told that any unexcused absence would subject him to possible discharge. But on July 7 and 8 Chambers arrived for work four or five minutes late. On his time card he indicated that he had worked eight hours. The upshot of this was that he was fired.

The Board, on the basis of the facts recited above, found that the company had violated § 8(a)(1) of the Act by eo-cereively interrogating certain employees about their voting intentions in a Board election and by creating the impression among the employees that it had their pro-union activities under surveillance. The Board also found that the company violated § 8(a)(3) and (1) by preparing absentee reports on two employees, showing them the reports and making them a part of the employees’ personnel files.

The Board also found that there was a violation of § 8(a) (4) (3) and (1) as a result of the discharge of Chris Chambers because of his pro-union activities. The Board also found violations growing out of the discharge of Paul Greenwood and growing out of the assignment of Paul Grammont to an undesirable work station. The Board found that the sane-tions imposed were the result of the testifying by these employees on behalf of the General Counsel at a Board hearing. It was also found that the company had violated § 8(a)(4) and (1) by their discussions with employees Allred and Ver-el about absences relating to testimony before the Board. The Board also found, Chairman Miller dissenting, that the company violated § 8(a)(3) and (1) by discharging employee Harrington because of his pro-union activities.

The Board ordered the company to cease and desist from the practices that it found and also enjoined the respondent from restraining or coercing the employees in the performance of their § 7 rights. The Board’s order also required the respondent to offer jobs to employees Chris Chambers, Paul Greenwood and Patrick Harrington, giving full and immediate reinstatement without prejudice to their seniority or their rights and to make them whole for any loss of earnings suffered as a result of the discrimination. The Board also required the company to offer employee Paul Grammont assignment to a tire-building machine No. A-7 or to an equivalent one and to make him whole for his loss of earnings. The Board also ordered the respondent to expunge the absentee reports of employees Allred and Ver el.

The respondent company seeks to justify all of the actions taken by it on the basis that the several employees were not discharged because of union activity or testifying at the Board meeting or that in the case of Grammont, Allred and Verel the respondent discriminated against them because of their union activities. However, the Board found in each instance that the union activities were at least part of the reason for the discharge.

It is impossible for us to say that these findings and orders were not supported by substantial evidence on the record as a whole. In most instances the company would have us draw different inferences than were drawn by the Board. This is not to say, however, that the inferences which were adopted were not fully supported by the record. In the case of Harrington and Chambers, for example, the Board found that the company’s asserted explanation was pre-textual and that the real reason for the discharge of these employees, who were shown to have been experienced, was their pro-union activity. But the Board also found that the union activities were the real reason and that the company’s conduct was unlawful. The evidence on behalf of the Board, generally speaking, tended to establish that the work records of the employees in question were good; that the reasons for discharge were generally frivolous; that this weighed in relationship to their substantial activities on behalf of the union added up to discharges or other sanctions being attributable to union activities and thus being in violation of the statutory provisions heretofore cited.

In some instances the evidence and findings seek to establish that the company went to extraordinary lengths to accomplish the firings or other sanctions.

It was for the Board to interpret the basic facts and to draw the inferences which it regarded to be logical from these facts. Inasmuch as these findings are supported by substantial evidence on the record as a whole, we are constrained to uphold the Board’s findings.

Case No. 7A-1020

This ease is also before the court on the application of the N.L.R.B. for enforcement of the Act pursuant to § 10(e), 29 U.S.C. § 151 et seq. The order which it requests us to enforce was issued on November 28, 1973. The respondent is the same as in 74-1019. The persons who are the object of the alleged unlawful discrimination of the company were Thomas Rose and Paul Grammont. The former was discharged on March 22, a few days following his being observed distributing union authorization cards to his co-workers. The Board asserted that the discharge was for violating the company rules against solicitation, but the Board found that the no solicitation rule was discriminato-rily applied; that the actual basis for the discharge was Rose’s active union support which was determined to be a violation of § 8(a)(3) and (1) of the Act.

As to the employee Grammont, the company officials seized Union authorization cards from him and made a statement which the Board considered established that the company was engaged in surveillance of union activity or conduct tending to interfere with employee organizing rights contrary to § 8(a)(1) of the Act.

The Board’s position is that, first, the existence of a valid reason for discharging an employee is not controlling where the action is also motivated by the employee’s union activity. They cite S. A. Healy Co. v. N.L.R.B., 435 F.2d 314 (10th Cir. 1970) and Betts Baking Co., Inc. v. N.L.R.B., 380 F.2d 199 (10th Cir. 1967).

Second, the Board says that it is unlawful to prohibit union activities where it is shown to have liberally allowed or permitted other solicitations in the plant. Such a discharge resulting from a discriminatory application of a no solicitation rule, it is argued, is a violation of § 8(a)(3) and (1) of the Act.

The evidence in the case of Paul Grammont is here summarized to the extent necessary to show the nature of the issues. During the time in question he was the Union organizing committee chairman for the plant’s day shift. As such, signed authorization cards were handled through him. He received 52 or 53 signed cards which either he or others had initially distributed. In addition to attending the Union meetings, he distributed Union handbills at the plant’s front gate.

The present problem had its inception in Grammont’s removing from his pockets all of his personal property including watch, lighter, keys, cigarettes, billfold and a quantity of Union cards (when he reported for work). These were placed on top of his machine. The foreman made an issue out of the fact that he had the Union authorization cards among his property and told him he was not to leave the cards on his machine or they would be confiscated. Grammont took issue with the foreman, stating that if he was going to confiscate his cards he ought to confiscate the rest of his property as well.

Two days later, the foreman noticed that the cards were still in evidence and when Grammont again argued with him he reported Grammont to the Personnel Manager, who interviewed him in his office, calling his attention to the fact that thievery was a basis for firing an employee, and he added that if employees were to take these cards from Grammont’s work space these employees would subject themselves to being fired.

The incident pertaining to employee Rose occurred on March 22, 1973. Rose operated a forklift, which supplied the tire machine operators with the plies, whitewalls, shapers, beads and treads. Rose attended the Union’s initial campaign meeting in February and obtained an authorization card. As a member of the organizing committee he passed out Union authorization cards during lunch and other break periods. On about March 20 during a break, Rose was asked by employees for cards. While Rose was moving back to the break area in order to let the employees sign the cards, the foreman and supervisor were observing what was happening.

The other Rose incident which was the subject of company complaint involved the handing of 20 Union cards by Rose to an employee named Hoover. This incident was observed by the supervisor who asked Rose to deliver the cards. This he did. Rose was discharged as a result of this. Hoover, the man who received the cards, was not fired. The basis for the firing of Rose was the no solicitation rule which renders an employee subject to discharge for handing out literature and other materials unrelated to work. The evidence showed that no other employee had ever previously been discharged for this.

Based upon the foregoing, the Board found, as did the Administrative Law Judge, that Rose was discharged so as to discourage union activities and not for the purpose of promoting production and plant discipline. It further found that the action against Grammont was coercive in that it gave the impression that union activities were under surveillance.

The relevant statutory provision is § 8(a)(1) of the National Labor Relations Act which declares that it is an unfair labor practice for an employer to interfere with, restrain or coerce employees in the exercise of their rights guaranteed by § 7 of the Act. It is not easy to determine the bona fides of an employer in its application of a rule which is ostensibly designed to prevent solicitation during working hours in the interest of promoting work production. The question is whether he is actually using the rule in order to suppress union activity. One criterion which exposes the presence of the union suppression motive is the application of the rule in an exaggerated, overly strict manner. That element might well support a conclusion of fact such as the Board found in this case. In other words, the presumption which attaches to the validity of these solicitation restrictions loses much of its meaning where the incident is a trifling or technical one and is nevertheless applied in a vigorous manner. The testimony and the record as a whole support the Board’s finding that the no solicitation rule was applied discriminatorily, particularly in view of the fact that solicitations had been tolerated in various other instances. These efforts used much more time than was shown to have been used in handing cards to Hoover. Also, football betting pools were conducted on the premises during working hours. Accordingly, the Board was within its rights in holding that the rule was applied in a discriminatory fashion.

There was ample evidence to support the Board’s finding that employee Grammont was coerced. Based on what appears, the Board was justified in treating this as a frivolous incident.

-X* -X- * -X- *

Respondent and the Board as well would have us retry all of these controversies and reevaluate as well as weigh the conflicting evidence. Such a detailed dissective process is impossible. We are ill equipped to reconsider all of the testimony in detail and assign correct significance to the various activities of the respondent and the employees. Thus, we must rely on the deductive expertise of the Law Judge and the Board members.

Finally, to repeatedly maintain that particular inferences drawn from basic facts are out of harmony with other de-cidions of the Board and of reviewing courts in other circuits is also untenable because each of these cases has its own peculiar facts.

The findings of the Board in both 74-1019 and 74-1020 are supported by substantial evidence on the record as a whole. Accordingly, it is directed that these orders of the Board be enforced.