author: MANSFIELD, Circuit Judge:

text:
    UNITED STATES of America, Appellee, v. Thomas Henry MARRA, Defendant-Appellant.
    No. 986, Docket 73-1464.
    United States Court of Appeals, Second Circuit.
    Argued June 20, 1973.
    Decided July 12, 1973.

      Herbert Ira Handman, New York City, for defendant-appellant.
    S. Andrew Schaffer, Asst. U. S. Atty., (Paul J. Curran, U. S. Atty., for S. D. N. Y., John J. Kenney, John W. Nields, Jr., Asst. U. S. Attys., of counsel), for ap-pellee.
    Before FRIENDLY, FEINBERG and MANSFIELD, Circuit Judges.
   MANSFIELD, Circuit Judge:

This appeal raises the perplexing question of what procedure must be followed by a trial judge before holding a witness in contempt for refusal to obey an order directing the witness to testify after immunity has been granted. Thomas Henry Marra appeals from an order of summary criminal contempt entered on January 16, 19,73, pursuant to Rule 42(a) of the Federal Rules of Criminal Procedure and 18 U.S.C. § 401(3) by Judge Constance Baker Motley of the United States District Court for the Southern District of New York. Marra, in the presence of the jury, had invoked the Fifth Amendment privilege against self-incrimination in response to certain questions posed by the prosecution despite a grant of immunity pursuant to 18 U.S.C. §§ 6002 and 6003. Since we conclude that summary disposition under Rule 42(a), F.R.Cr.P., was not available to the court under the circumstances of this case, the order of contempt is reversed.

Marra was subpoenaed as a government witness in the prosecution of Kenneth Krevey, who along with Frank Anthony Conte, was charged with possessing and passing counterfeit federal notes and conspiring to commit these substantive offenses in violation of 18 U.S.C. §§ 472 and 371. Because Marra, who had pleaded guilty to one count in each of two indictments arising from violations of the counterfeiting laws, planned to invoke the Fifth Amendment privilege upon being questioned, the Assistant United States Attorney had applied for an order granting immunity. The government advised the court, when Marra appeared at the time of trial on January 15, 1973, without his then counsel, Donald Gilbert, that Mr. Gilbert had been apprised of the pending application for immunity and of the intention to call Marra as a witness.

Outside of the presence of the jury, Judge Motley questioned Marra as to his willingness to testify. Marra informed the court that his lawyer had “advised me . . .to answer as many questions as I can but since I have cases pending in this Court, . . . not to say anything that would incriminate me either in this matter or the matters pending.” Notwithstanding Judge Motley’s ensuing explanation that the grant of immunity would prevent the government from using any of his testimony against him and that a refusal to testify might result in a finding of contempt, Marra persisted in stating his intention to invoke the Fifth Amendment. Still outside the presence of the jury, Marra was then sworn as a witness and questioned by the government. Following his refusal to testify the court signed the order granting immunity, and instructed him to consult with his attorney concerning the effect of the .grant of immunity and to be prepared to testify the next day.

On January 16, 1973, Marra returned and was again questioned outside of the hearing of the jury, at which time he gave testimony contrary to that expected of him by the prosecution. After reiterating the consequences of the grant of immunity but cautioning that such grant did not insulate a witness from a possible perjury charge, Judge Motley stated that it was her “feeling that the Government now has the right to assume that when Mr. Mar-ra testifies now he will testify in accordance with the way he previously answered questions put to him by Mr. Tulley.”

Upon being sworn as a witness before the jury Marra, after responding to a few preliminary questions, refused to answer the prosecutor’s inquiry as to a “transaction with Krevey concerning counterfeit currency,” stating that he would “rather not answer any more questions since I could be incriminating myself until my attorney is here. I have no legal advice here at all.” When he further invoked the Fifth Amendment in response to another question, Judge Motley excused the jury and reviewed with him again the consequences of his refusal to answer after being granted immunity and being ordered to answer, including the probability of imprisonment for contempt. When the witness nevertheless persisted in his refusal, Judge Motley decided that criminal contempt was appropriate, after concluding that “civil contempt would be ineffective to compel compliance.” Later on the same day, acting pursuant to Rule 42(a) and 18 U.S.C. § 401(3), she summarily found Marra in contempt for his “refusal to answer a material question” and sentenced him to a term of imprisonment of three months. On January 17, 1973, two days after the commencement of the trial and one day after Marra had been summarily found in contempt, the jury found Krevey guilty on all counts.

In an opinion dated February 22, 1973, which nominally dealt with a motion for bail pending appeal, Judge Motley rejected the claim that “summary criminal contempt cannot be used to punish testimonial failures” and concluded that in any event Marra’s conduct “show[ed] a calculated design to obstruct a court proceeding.” Finally Judge Motley denied Marra’s claim that he was improperly denied the right to counsel.

By repeatedly instructing the witness as to his responsibilities and giving him the opportunity to seek the advice of independent counsel before finally responding to her order to testify, the district judge appears to have conscientiously sought to strike a balance between the court’s interest in commanding respect for the judicial process and the witness' right to procedural due process protection. Indeed, if we were writing on a tabula rasa the court’s use in this case of the summary contempt procedure provided by Rule 42(a) would seem appropriate enough, especially since Marra’s defiance of the court’s order took place in the jury’s presence after immunity had been granted and it tended to obstruct an ongoing proceeding. But we are confronted with well-entrenched authority, including decisions of the Supreme Court and of our own court, squarely holding that summary procedure may not be used to punish a testimonial refusal of the type here encountered. In Harris v. United States, 382 U.S. 162, 86 S.Ct. 352, 15 L.Ed.2d 240 (1965), which overruled Brown v. United States, 359 U.S. 41, 79 S.Ct. 539, 3 L.Ed.2d 609 (1959), Harris, appearing as a witness before the grand jury, refused to answer certain questions on Fifth Amendment grounds despite the trial judge’s promise of immunity. Harris was then brought before the court where he was represented by counsel and, after being given the opportunity to purge himself by testifying, continued to invoke the privilege against self-incrimination. Thereupon he was summarily adjudged guilty of criminal contempt under Rule 42(a). The Supreme Court reversed, holding that under the circumstances the summary punishment constituted an abuse of the contempt power, and that a Rule 42(b) proceeding was required.

Although Harris might be construed as being limited to instances where a witness repeats before the court a testimonial refusal originally committed outside of its presence, we are persuaded by the language of the opinion that such an interpretation would be unduly restrictive. The Court emphasized that “Rule 42(a) was reserved ‘for exceptional circumstances,’ Brown v. United States, 359 U.S. 41, 54, 79 S.Ct. 539, 3 L.Ed.2d 609 (dissenting opinion), such as acts threatening the judge or disrupting a hearing or obstructing court proceedings . . . [where] [s]peedy punishment may be necessary in order to achieve ‘summary vindication of the court’s dignity and authority,’ Cooke v. United States, 267 U.S. 517, 534, 45 S.Ct. 390, 69 L.Ed. 767. But swiftness was not a prerequisite of justice here.” 382 U.S. at 164, 86 S.Ct. at 354. Absent such disruptive conduct, which afronts the dignity of the court, a hearing pursuant to Rule 42(b) is required to explore possible exculpatory or mitigating circumstances. “[W]hat appears to be a brazen refusal to cooperate may indeed be a case of frightened silence. Refusal to answer may be due to fear — fear of reprisals on the witness or his family. Other extenuating circumstances may be present.” 382 U.S. at 166, 86 S.Ct. at 355.

Any doubt as to the ambit of Harris was resolved by our decision in United States v. Pace, 371 F.2d 810 (2d Cir. 1967), which controls the outcome in this case. In Pace we applied the broad underpinnings of Harris to reverse the summary conviction for criminal contempt under Rule 42(a) of a witness who, in the presence of the court but with the jury absent, refused to testify on the ground that the answers might tend to incriminate him. In rejecting a narrow reading of Harris we stated in terms applicable here:

“[S]ummary disposition is thus available only when immediate punishment is necessary to put an end to acts disrupting the proceedings, such as threats to the judge, disturbances in the courtroom or insolence before the court. It is not a remedy to be used in a case like this where the contempt consists of no more than orderly refusal in the absence of the jury to answer a question on Fifth Amendment grounds. ...” 371 F.2d at 811.

Because summary contempt under Rule 42(a) deprives the contemnor of procedural safeguards, its limited use is “to prevent ‘demoralization of the court’s authority’ before the public.” In re Oliver, 333 U.S. 257, 275, 68 S.Ct. 499, 500, 92 L.Ed. 682 (1948), quoting Cooke v. United States, 267 U.S. 517, 536, 45 S.Ct. 390, 69 L.Ed. 767 (1925). Cf. 8A J. Moore, Federal Practice ¶ 42.04[2] (2d ed. 1972).

“To preserve order in the court room for the proper conduct of business, the court must act instantly to suppress disturbance or violence or physical obstruction or disrespect to the court when occurring in open court. Such summary vindication of the court’s dignity and authority is necessary.” Cooke v. United States, supra, 267 U.S. at 534, 45 S.Ct. at 394.

Thus, to invoke Rule 42(a) the contempt must not only be committed “directly under the eye or within the view of the court . . . [but must be] an open threat to the orderly procedure of the court and ... a flagrant defiance of the person and presence of the judge before the public. . . . ” Id. at 536, 537, 45 S.Ct. at 394.

Here the district judge suffered no obloquy from Marra’s respectful and orderly refusal to testify. The government’s attempt to paint his conduct as sufficiently contumacious to exclude it from the ambit of Pace is contradicted by the record and belied by the fact that Marra’s conduct was found violative of 18 U.S.C. § 401(3), which proscribes “disobedience or resistance to [the court's] lawful . . . order” rather than § 401(1), which prohibits “misbehavior of any person in [the court’s] presence or so near thereto as to obstruct the administration of justice.” Nor can this case be brought outside the Pace rule on the grounds that here immunity had been granted. In Harris, which Pace applied, the district court explicitly promised the award of immunity.

It is true that Marra’s refusal to testify occurred in the presence of the jury whereas in Pace the jury was absent. But this distinction, standing alone, lacks significance. Both refusals occurred in the court’s presence. In the present case Marra’s earlier persistent reluctance to cooperate outside the jury’s presence suggested to the court that reenactment of the conduct before the jury was a possibility. While an orderly refusal in the added presence of the jury may increase the chance of demoralization of the court’s' authority that fact alone, under the Harris-Pace test, does not usually embarrass the court sufficiently to warrant summary contempt procedure during Rule 42(a). Nor is there any evidence that the deliberative action of the court would be unduly disrupted. Faced with such conduct the court . has the power, which it exercised in this case, to maintain its dignity without prolongation of any confrontation with the witness. For instance it may declare a brief recess for the purpose of holding the witness in civil contempt as authorized by 28 U.S. C. § 1826 and scheduling a hearing at an early date pursuant to Rule 42(b).

We do not agree with the contention, which the First Circuit has apparently accepted, see Baker v. Eisenstadt, 456 F.2d 382 (1st Cir.), cert. denied, 409 U.S. 846, 93 S.Ct. 118, 34 L.Ed.2d 87 (1972), that Groppi v. Leslie, 404 U.S. 496, 92 S.Ct. 582, 30 L.Ed.2d 632 (1972), undermines Pace. Groppi itself involved an attempted imposition by a state legislature of summary contempt on the leader of a group which occupied the Wisconsin State Assembly for an extended period of time and disrupted the legislature’s proceedings. Such conduct goes far beyond an orderly refusal to testify. Furthermore, the summary imposition of contempt there was found to violate due process for the reason that the two-day hiatus between the wrongful conduct and the imposition of punishment was sufficient to permit notice and an opportunity to be heard. Groppi in no way dealt with the question before this court — whether proceedings should be under Rule 42(b) rather than Rule 42(a).

Our conclusion that summary disposition of contempt under Rule 42(a) was inappropriate under the circumstances does not render district judges powerless. The combination of the inherent authority to impose civil contempt under 28 U.S.C. § 1826 and the power to impose Rule 42(b) criminal contempt upon notice and hearing should in most cases be as adequate as summary criminal contempt under Rule 42(a) to enable the court to achieve the dual ends of inducing a reluctant witness to testify and of punishing his defiance of the court’s order to do so. Cf. Bloom v. Illinois, 391 U.S. 194, 88 S.Ct. 1477, 20 L.Ed.2d 522 (1968). “Where contempt consists of refusal to obey a court order to testify at any stage in judicial proceedings, the witness may be confined until compliance,” Shillitani v. United States, 384 U.S. 364, 370, 86 S.Ct. 1531, 1535, 16 L.Ed.2d 622 (1966). The doctrine that the court must exercise the least possible power adequate to the end proposed “requires that the trial judge first consider the feasibility of coercing testimony through the imposition of civil contempt,” id., at 371 n. 9, 86 S.Ct. at 1536. If the wrongful conduct persists, criminal contempt under Rule 42(b) may then be appropriate. “The civil and criminal sentences [serve] distinct purposes, the one coercive, the other punitive and deterrent; that the same act may give rise to these distinct sanctions presents no double jeopardy problem. Rex Trailer Co. v. United States, 350 U.S. 148, 150, 76 S.Ct. 219, 220, 100 L.Ed. 149 (1956); United States v. United Mine Workers, 330 U.S. 258, 299, 67 S.Ct. 677, 698, 91 L.Ed. 884 (1947).” Yates v. United States, 355 U.S. 66, 74, 78 S.Ct. 128, 133, 2 L.Ed.2d 95 (1957). (Civil and criminal sanctions imposed for one contempt of a continuing nature.)

We recognize that in a short trial the civil sanction may alone be inadequate. With the termination of the trial and discharge of the jury the witness could no longer be civilly confined, since the opportunity to purge himself would cease to exist. Before the conclusion of the trial, however, prompt punishment for criminal contempt may still be feasible. The notice and hearing requirements of Rule 42(b) are sufficiently flexible to enable the trial judge, upon learning that the witness., will not respond to its civil contempt order, to act with dispatch. In an uncomplicated case of the present type, where the facts are simple and a brief consultation between the witness and his retained or assigned counsel should be sufficient to enable him to prepare for a Rule 42(b) hearing, there appears to be no sound reason why the hearing could not be held within a day or two of the witness’ refusal to obey the court’s order. Since the hearing would in all likelihood require no more than an hour or two of the court’s time, trial of the criminal case could be suspended with a minimum disruption to the judicial process. Such a procedure, furthermore, lessens the risk that the witness’ contumacy is the result of fright, confusion, or misunderstanding. Indeed, with the advice of counsel, or faced with imposition of a criminal sentence, he may decide to cooperate.

Because Marra has already served his sentence, it would be useless to remand the case to conform to these procedures. Accordingly the order of contempt pursuant to Rule 42(a) is reversed.

      . Rule 42 of the F.R.Cr.P. provides:
      “(a) Summary Disposition. A criminal contempt may be punished summarily if the judge certifies that he saw or heard the conduct constituting the contempt and that it was committed in the actual presence of the court. The order of contempt shall recite the facts and shall be signed by the judge and entered of record.

        “(b) Disposition Upon Notice and Hearing. A criminal contempt except as provided in subdivision (a) of this rule shall be prosecuted on notice. The notice shall state the time and place of hearing, allowing a reasonable time for the preparation of the defense, and shall state the essential facts constituting the criminal contempt charged and describe it as such. The notice shall be given orally by the judge in open court in the presence of the defendant or, on application of the United States attorney or of an attorney appointed by the court for that purpose by an order to show cause or an order of arrest. The defendant is entitled to a trial by jury in any case in which an act of Congress so provides. He is entitled to admission to bail as provided in these rules. If the contempt charged involves disrespect to or criticism of a judge, that judge is disqualified from presiding at tile trial or hearing except with the defendant’s consent. Upon a verdict or finding of guilt the court shall enter an order fixing the punishment.”

      . Title 18, § 401 provides in pertinent part:
      “A court of the United States shall have power to punish by fine or imprisonment, at its discretion, such contempt and its authority and none other, as—
      “(1) misbehavior of any person in its presence or so near thereto as to obstruct the administration of justice,
      * * * * *
      “(3) disobedience or resistance to its lawful writ, process, order, rule, decree, or command.”

      . At the time of the Krevey trial, Marra faced two related pending indictments. In the first indictment, 72 Cr. 690, he and one Vincent Barone were charged with three counts, the first for conspiracy, 18 U.S.C. § 371; the second charged the passing and uttering of forged federal reserve notes, in violation of 18 U.S.C. § 472; and the third charged possession of the forged reserve notes also in violation of 18 U.S.C. § 472.
      The second indictment, 72 Cr. 1367, originally lodged in the Eastern District of New York but which was transferred to the Southern District, contained two counts, the first for possessing counterfeit federal reserve notes in violation of 18 U.S.C. § 472, and the second for transferring, delivering and selling (dealing in) reserve notes, in violation of 18 U.S.C. § 473.
      On January 9, 1973, Marra pleaded guilty to the conspiracy count of the first indictment and to the dealing count (No. II) of the second indictment.
      On February 26, 1973, Judge Pollack sentenced Marra to two years imprisonment on each of the two counts to which he had pleaded guilty, such terms to run consecutively. The remaining counts were dismissed.

      . Marra’s sentence commenced on January 16, 1973, the day of the Rule 42(a) disposition. On January 26, 1973, Marra filed a motion for bail pending appeal. As no steps to perfect the appeal, other than the filing of a notice of appeal, had been taken, the court ordered Marra released on bail pending appeal, on condition that the appeal be perfected within 10 days from February 7, 1973. Since Marra apparently failed to perfect the appeal within the time allotted by Judge Motley, he was recommitted to confinement. Thus Marra has already served the three-month sentence.

      . Because we find that summary disposition of contempt under Rule 42(a) was inappropriate under the circumstances, we do not reach the Sixth Amendment question of the right to counsel in proceedings under Rule 42(a).


source: Caselaw Access Project

author: RONEY, Circuit Judge:

license: Public Domain

text:
    Mary SPEARMAN, Defendant-Appellee, v. Viva SPEARMAN, Defendant-Appellant.
    No. 72-2965.
    United States Court of Appeals, Fifth Circuit.
    July 9, 1973.
    Rehearing Denied Aug. 13, 1973.

      C. H. Erskine Smith, Birmingham, Ala., Herbert A. Schwartz, Pacific Grove, Cal., for defendant-appellant.
    Charles E. Floyd, C. Neal Pope, Phe-nix City, Ala., for defendant-appellee.
    Before BELL, INGRAHAM and RO-NEY, Circuit Judges.
   RONEY, Circuit Judge:

This case requires us to decide which of two claimants qualifies as the “widow” under a policy of life insurance issued pursuant to the Federal Employees’ Group Life Insurance Act, 5 U.S.C.A. § 8701 et seq. The District Court found that, although both claimants had married the insured, the second wife did not qualify as the insured’s “lawful widow” because she did not establish that insured’s first marriage had been terminated by either divorce or annulment. We affirm.

At the time of his death, on October 1, 1969, Edward Spearman was insured by Metropolitan Life Insurance Company under Group Policy No. 17000-G in the amount of $10,000. The policy provided that, if no beneficiary were designated, the proceeds were to be paid to the “widow” of the insured. The parties stipulated that the policy designated no beneficiary.

After Spearman’s death, both defendants claimed to be his “widow” and claimed the proceeds of his life insurance policy. The first wife, Mary Spearman, is a resident of Alabama and was married to insured on October 2, 1946, in Russell County, Alabama. Two children, twin girls, were born of this marriage, and both carry the surname of Spearman. The second wife, Viva Spearman, a resident of California, married insured on June 7, 1962, in Monte-rey County, California. This marriage produced no offspring.

Metropolitan filed this interpleader action and paid the proceeds of the policy into the registry of the District Court.

The Applicable Law

A. The Definition of “Widow”

The decision in this case turns on the definition of the term “widow” as used in the life insurance policy. The policy itself does not define “widow,” nor does the Federal Employees’ Group Life Insurance Act, supra, provide any guidance. This question is not however, one of first impression. In Tatum v. Tatum, 241 F.2d 401 (9th Cir. 1957), the Ninth Circuit, by looking to judicial interpretations of an analogous federal statute, the National Service Life Insurance Act, 38 U.S.C.A. § 701 et seq., determined that the term “widow” meant “lawful widow.” The Tatum court then turned to_ state law to provide a definition of the term “lawful widow.” Other courts look to state law for a definition of “widow,” apparently following the lead of De Sylva v. Ballentine, 351 U.S. 570, 76 S.Ct. 974, 100 L.Ed. 1415 (1956), which held that federal courts should look to state law in defining terms describing familial relations. “[T]here is no federal law of domestic relations, which is primarily a matter of state concern.” 351 U.S. at 580, 76 S.Ct. at 980. See, e. g., Brinson v. Brinson, 334 F.2d 155 (4th Cir. 1964); Lembcke v. United States, 181 F.2d 703 (2d Cir. 1950).

This case is complicated by the fact that the widows each married Spearman, and now live, in different states. For the validity of each marriage viewed separately, the law of the state where the marriage occurred controls. For the law to determine which of two conflicting marriages is the valid one, and therefore to determine which spouse is the “widow,” we hold that California law should apply, following the Brinson case, supra, which held that the law of an insured’s domicile.at the time of his death should govern. See also Grove v. Metropolitan Life Insurance Co., 271 F.2d 918 (4th Cir. 1959). This holding is appropriate here since California was not only Spearman’s domicile, but also he accepted Government employment in California and entered into the insurance contract while there.

California law is in accord with the general rule which provides that a second marriage cannot be validly contracted if either spouse is then married. E. g., People v. Coronado, 57 Cal.App.2d 805, 135 P.2d 647 (1943); cf. Sohnlein v. Winchell, 230 Cal.App.2d 508, 41 Cal.Rptr. 145 (1964).

In a contest between conflicting marriages under California law, once the first wife presents evidence that her marriage has not been dissolved, then the burden of persuasion shifts to the second wife to establish that her spouse’s marriage to his first wife had been dissolved. Otherwise, the first wife is deemed to have established her status as the lawful wife.

According to the California rule, as in most states, the process of establishing which wife enjoys the status of lawful wife involves these shifting presumptions and burdens of persuasion:

1. Initially, when a person has contracted two successive marriages, a presumption arises in favor of the validity of the second marriage. Cal.Evid.Code § 663; Tatum v. Tatum, supra; Hunter v. Hunter, 111 Cal. 261, 43 P. 756 (1896); Vargas v. Superior Court, 9 Cal.App.3d 470, 88 Cal.Rptr. 281 (1970); Berg Estate, 225 Cal.App.2d 423, 37 Cal.Rptr. 538 (1964). Absent any contrary evidence, the second wife is deemed to be the lawful wife.

2. The presumption of validity accorded the second marriage is, however, merely a rule of evidence. It is a rebut-table presumption, the effect of which is to cast upon the first wife the burden of establishing the continuing validity of her marriage by demonstrating that it had not been dissolved by death, divorce, or annulment at the time of the second marriage. Cal.Evid.Code §§ 604, 606; Tatum v. Tatum, supra, 241 F.2d at 406, citing In re Smith’s Estate, 33 Cal.2d 279, 201 P.2d 539, 540 (1949); Hunter v. Hunter, supra; Vargas v. Superior Court, supra; Berg Estate, supra.

3. California formerly required the first wife to prove that her husband had not dissolved their marriage by showing that no record of either divorce or annulment existed in any jurisdiction in which the husband may have resided. See Nidever Estate, 181 Cal.App.2d 367, 5 Cal.Rptr 343 (1960). This strict burden has now been somewhat relaxed. The current rule is that, to rebut the presumption of validity inuring to the second or subsequent marriage, the first spouse need examine the records of only those jurisdictions in which either she or her husband have been in fact domiciled. See Goldberg Estate, 203 Cal.App.2d 402, 21 Cal.Rptr. 626 (1962).

4. If the first wife shows that an examination of the pertinent records of such jurisdictions and all of the available evidence demonstrate that her marriage remains undissolved, the burden of demonstrating the invalidity of the first marriage then shifts to the party asserting its invalidity, the second wife in this case. In re Smith’s Estate, supra. Unless the second wife then can establish that her husband’s first marriage has been dissolved, the first wife qualifies as the “lawful widow.”

B. The Putative Spouse Doctrine

Even if the second wife cannot qualify as the insured’s “widow,” she may nevertheless be entitled to one-half of the proceeds of the life insurance policy as insured’s “putative spouse.” cf. United States v. Robinson, 40 F.2d 14 (5th Cir. 1930); but see Tatum v. Tatum, supra.

A putative spouse is one whose marriage is legally invalid but who has engaged in (1) a marriage ceremony or a solemnization, on the (2) good faith belief in the validity of the marriage. According to Estate of Foy, 109 Cal.App.2d 329, 240 P.2d 685 (1952),

[t]he term “putative marriage” is applied to a matrimonial union which has been solemnized in due form and good faith on the part of one or of both of the parties but which by reason of some legal infirmity is either void or voidable. The essential basis of such marriage is the belief that it is valid.

109 Cal.App.2d at 331-332, 240 P.2d at 686. See also Tatum v. Tatum, supra; Vallera v. Vallera, 21 Cal.2d 681, 134 P.2d 761 (1943); Flanagan v. Capital National Bank, 213 Cal. 664, 3 P.2d 307 (1931).

The theory under which the “putative spouse” is entitled to recover a share of the insurance proceeds is that, as the insured’s “putative spouse,” she is entitled to share in the property accumulated by the family unit during its existence. The general rule, therefore, is that the “putative spouse” is entitled to the same share in this property as would have been accorded a de jure spouse under the community property laws. See, e. g., Estate of Ricci, 201 Cal.App.2d 146, 19 Cal.Rptr. 739 (1962).

In effect, the innocent putative spouse was in partnership or a joint enterprise with her spouse, contributing her [earnings and services] to the common enterprise. Thus, their accumulated property was held in effect in tenancy-in-common in equal shares.

Sousa v. Freitas, 10 Cal.App.3d 660, 89 Cal.Rptr. 485, 489 (1970). See also Blache v. Blache, 69 Cal.App.2d 616, 160 P.2d 136 (1945); but see Estate of Ricci, supra.

The California courts have uniformly held that, when the premiums on an insurance policy have been paid with community funds, the chose in action represented by the policy constitutes community property. E. g., New York Life Ins. Co. v. Bank of Italy, 60 Cal.App. 602, 214 P. 61 (1923); Bazzell v. Endriss, 41 Cal.App.2d 403, 107 P.2d 49 (1940). This rule was applied to the proceeds of a National- Service Life Insurance Policy in Wissner v. Wissner, 89 Cal.App.2d 759, 201 P.2d 837 (1949), reversed on other grounds, 338 U.S. 655, 70 S.Ct. 398, 94 L.Ed. 424 (1950). Thus, where premiums on an insurance policy are paid during the existence of a “putative marriage,” the proceeds should be treated according to the community property laws.

Since the proportionate contribution of each spouse is immaterial in California, Vallera v. Vallera, supra, and assuming that all of the insurance premiums were paid during the time when the “putative spouse” believed in good faith that she had a valid marriage, then it is presumed that she contributed one-half of the premiums and is therefore entitled to one-half of the proceeds.

The Decision

Applying these rules to the facts before it, the District Court first looked to the law of Alabama and concluded that Mary, the first wife, was validly married in Alabama in 1946. The subsequent marriage to Viva in 1962 in California was valid under California law, unless there was a preexisting marriage. At this point, the presumption in favor of the most recent marriage to Viva required Mary to show that her marriage had not been dissolved or annulled at the time of the insured’s marriage to Viva. This showing she successfully made' by establishing that no petition for annulment or divorce had been filed, by either herself or the insured, in any of their known domiciles since 1946, including Columbus, Georgia, Phenix City, Alabama, and Monterey, California. See Tatum v. Tatum, supra; Hunter v. Hunter, supra; Vargas v. Superior Court, supra; Berg Estate, supra; Goldberg Estate, supra.

After Mary had rebutted the presumption of validity initially attaching to Viva’s marriage, the burden of persuasion shifted to Viva. See In re Smith’s Estate, supra. This burden failed for want of proof: Viva introduced no credible evidence that either Mary or the insured had ever been a party to any legal proceeding that had annulled or dissolved their marriage. The District Court then correctly ruled that Mary had established the continuing validity of her marriage to the insured and that Viva had failed to establish otherwise.

Having failed to prove her claim as insured’s “widow” under the policy of life insurance, Viva then pursued the theory that, as the insured’s “putative spouse,” she was entitled to one-half of the proceeds of the life insurance policy. The District Court found that Viva could not qualify as the insured’s “putative spouse” because she could not meet the requirement of a good faith belief in the existence of a valid marriage. This finding is not clearly erroneous, and must remain undisturbed under Rule 52(a), Fed.R.Civ.P. The evidence before the District Court showed that Viva knew (1) that the insured had fathered two children by Mary Spearman, (2) that Mary and both children carried the Spearman name, (3) that Mary had secured a support decree against the insured, (4) that the insured returned to Alabama each year on his vacation, and (5) that while on these vacations the insured lived in the same house with Mary and his two children. On these facts, the District Court’s finding of an absence of good faith was amply supported. As the District Court stated in its thorough opinion, “Viva admits that she was aware of the possibility, if not the likelihood, of [insured’s] prior marriage to Mary, and, yet, she took no steps to perfect her marital status.”

Viva contends that the District Court’s view of the “bona fide belief” requirement rests upon an erroneous interpretation of the California decisions. She argues that these decisions require only that the “putative spouse” have neither actual knowledge of invalidity nor a belief that the marriage was invalid. Under Viva’s view, then, so long as she did not actually know of her marriage’s invalidity and maintained a belief in its validity, no matter how unreasonable that belief may have been, she qualified as the insured’s “putative spouse.” We decline to adopt such a test of good faith. Rather, we think that the District Court correctly held that a good faith belief in the validity of the marriage must be posited on a view of the facts known to the spouse in question.

Such an objective test is perfectly consonant with the California decisions that have developed and applied the “putative spouse” doctrine. Viva argues that, since the decisions applying the good faith standard have always involved spouses who either knew or believed that their marriage was actually invalid, e. g., Tatum v. Tatum, supra; Estate of Bialy, 169 Cal.App.2d 479, 337 P.2d 511 (1959); Vallera v. Vallera, supra; Flanagan v. Capital National Bank, supra; Schneider v. Schneider, 183 Cal. 335, 191 P. 533 (Cal.1920), the test of good faith is satisfied by a spouse who has no actual knowledge of the marriage’s invalidity and who believes in its validity. We disagree. Although no California case has been cited to us that tests good faith by examining its rea-sonability, the cases that have discussed good faith do not preclude such an approach. Two eases, Estate of Foy, supra, and Estate of Krone, 83 Cal.App.2d 766, 189 P.2d 741 (1948), specifically advert to the fact that the “putative spouses” involved in each had received no information about the invalidity of their marriages. The language in all of these California “putative spouse” cases indicates that a broad approach to good faith is proper. Nowhere do these cases explicitly reject an objective test of good faith.

Costs will be taxed to appellant.

Affirmed.


author: INGRAHAM, Circuit Judge:

text:
    ALABAMA POWER COMPANY, Petitioner, v. FEDERAL POWER COMMISSION, Respondent.
    No. 71-2909.
    United States Court of Appeals, Fifth Circuit.
    July 31, 1973.

      John Bingham, S. Eason Balch, Rodney O. Mundy, Birmingham, Ala., for petitioner.
    Kenneth F. Plumb, Sec. of F.P.C., Gen. Counsel, Leo Forquer, John S. Everett, Staff Counsel, Michael N. Mervin, Platt W. Davis, III, George W. Mc-Henry, Jr., Acting Sol., F.P.C., Washington, D. C., for respondent.
    Before WISDOM and INGRAHAM, Circuit Judges, and BOOTLE, District Judge.
   INGRAHAM, Circuit Judge:

This is a proceeding under § 313(b) of the Federal Power Act, 16 U.S.C. § 8251(b), for the review of an order of the Federal Power Commission requiring Alabama Power Company to establish an amortization reserve account for the licensee’s Project No. 82 pursuant to § 10(d) of the Federal Power Act, 16 U.S.C. § 803(d). Section 10(d) requires a licensee to establish an amortization reserve account which will reflect excess or surplus earnings of a particular hydroelectric project if such earnings have accumulated in excess of a specified (in the license) reasonable rate of return upon the actual, legitimate investment in the project during a period beginning after the first twenty years of operation. The amount transferred to the amortization reserve account may be used pursuant to § 10(d) to reduce a licensee’s net investment in the project. 16 U.S.C. § 803(d). This means that if, after expiration of the license, the government decided to take over or recapture the project under § 14 of the Federal Power Act, 16 U.S.C. § 807, it will be required to compensate the licensee for its net investment in the project reduced by the amortization reserve for the project.

We are concerned here with Alabama Power’s Project No. 82 (the Mitchell Dam on the Coosa River in Alabama). On August 15, 1943, Project No. 82 completed its first twenty years of operation, thus becoming subject to § 10(d) for periods after this date. On November 1, 1959, the Commission’s accounting staff concluded that Alabama Power had derived excess earnings from Project No. 82 for the period from August 15, 1943 through December 31, 1949. It was therefore recommended that the licensee transfer certain funds from Account 216, Unappropriated Retained Earnings to Account 264, Amortization Reserve-Federal. Believing that the Project had not accumulated excess earnings and also objecting to the methods used by the staff in reaching its result, Alabama Power appealed the staff’s decision. The Presiding Examiner, after conducting appropriate hearings, upheld the staff’s recommendation. The company then proceeded to the Commission. Briefs were filed and oral argument was held on May 19, 1964. In the meantime, and before the Commission had reached a decision, the Commission decided that it was necessary to establish a method for determining a licensee’s net investment in a project as that term is used in § 3(13) of the Federal Power Act, 16 U.S.C. § 796(13). A notice of proposed rulemaking was issued on January 20, 1966. Because the establishment of amortization reserves under § 10(d) is related to the computation of net investment in a project under § 3 (13), the instant proceedings were deferred pending the outcome of the rule-making. The Commission was unable, however, to come up with a satisfactory uniform method of calculating net investment. On September 27, 1968, the Commission issued Order No. 370, 40 FPC 1351, setting forth the proposed formula. After numerous objections were filed, a rehearing was held, the re-suit being that on August 4, 1969, Order No. 387, 42 FPC 330, was issued which concluded that Order No. 370 should be set aside and the rulemaking terminated.

After this interlude the present proceedings resumed. The Commission upheld the Presiding Examiner in all respects save two. Alabama Power brought this petition for review of Commission Opinion No. 596, - FPC - (1971), when it failed to obtain the relief it desired on rehearing before the Commission.

Project No. 82 is only a part of Alabama Power’s power generating system. The complete system is referred to as the Electric Department. While a licensee is required to keep detailed accounting records as to the total earnings of the whole system, it is not required to identify earnings as attributable to a particular project. Thus, because we are concerned with the excess earnings of only one project in the system, No. 82, it is necessary to allocate a portion of the Electric Department’s earnings to No. 82 in order to determine if this project produced excess earnings for the period in question.

Both Alabama Power and the FPC agree on the allocation formula. “The formula states that the proportional relationship of project earnings to investment base of the project shall be equal to the proportional relationship of Electric Department earnings to investment base of the Electric Department.” Order No. 596, supra, at fí 15. Once the project earnings are determined, it will be a relatively simple task to ascertain the amount of those earnings which can be labeled “excess or surplus” as exceeding the licensee’s specified reasonable rate of return. The controversy, therefore, centers around the proper method of computing project earnings. It is at this point that the company hopes to reduce the ultimate amount of excess earnings required to be transferred to the amortization reserve account.

The issues in this case can be further narrowed. The true unknown in the allocation formula is project earnings. The Electric Department earnings are determinable by reference to the licensee’s books. Generally, the investment base of both the project and the Electric Department is not difficult to determine. But the problem — which is the crux of this case — is resolving what elements should comprise the investment base. Alabama Power disagrees with the Commission in four particular areas and these form the issues to be resolved here: (1) the term “actual, legitimate investment” as used in § 10(d) of the Act, and in Article 17 of the license, contemplates an investment base undiminished by depreciation reserves; (2) the unamortized portion of the Plant Acquisition Adjustments Account should be included in the Electric Department investment base; (3) the Electric Department investment base should include contributions in aid of construction; and (4) construction work in progress should be included in the investment base of both the Electric Department and the project. As can be seen, each issue relates to an effort by the company to increase the investment base (the denominator of the allocation equation) of either the Electric Department or the project, or both. If the company can increase the denominator of the equation, then naturally the resulting percentage will be lower. When this lower earnings percentage is applied to Electric Department earnings to determine the allocable portion of Project No. 82 earnings, a lower dollar amount will result. The company’s goal would thus be achieved —lower project earnings and correspondingly decreased excess earnings required to be transferred to the amortization reserve account.

I.

We turn first to a consideration of whether — as the Commission held — the investment base of both the Electric Department and the project for purposes of allocation should not include depreciation reserves. The resolution of this question turns on the meaning of “actual, legitimate investment” as that term was used in § 10(d) of the Federal Water Power Act of 1920, in Regulation 17 of the Commission’s Rules and Regulations, First Revised Issue, effective June 6, 1921, and in Article 17 of the license issued to Alabama Power for Project No. 82. The parties have created a mystery surrounding the meaning of this term and have developed complex arguments based primarily on legislative history and 1920 accounting principles in quest of their differing solutions to this mystery. We have concluded, nevertheless, that the issue is resolved very simply. For after all is said and done, and we return to the beginning, the Act and the license, we find that “actual, legitimate investment” is defined in the license, and that the definition there contemplates an undepreciated investment base. The controversy must end once that conclusion has been reached.

As originally enacted § 10(d) of the Federal Water Power Act of 1920 reads as follows:

“That after the first tweny years of operation, out of surplus earned thereafter, if any, accumulated in excess of a specified reasonable rate of return upon the actual, legitimate investment of a licensee in any project or projects under license, the licensee shall establish and maintain amortization reserves, which reserves shall, in the discretion of the Commission, be held until termination of the license or be applied from time to time in reduction of the net investment. Such specified rate of return and the proportion of such surplus earnings to be paid into and held in such reserves shall be set forth in the license.”

Federal Water Power Act, § 10, ch. 285, 41 Stat. 1068 (1920), as amended 16 U. S.C. § 803(d) (1968) (emphasis added).' Section 1 of Regulation 17 of the Commission’s 1921 Rules and Regulations tracks the language of § 10(d). Section 2 of this regulation defines the term “actual, legitimate investment” for purposes of “this regulation and of Section 10(d) of the act” in the following manner:

“Actual, legitimate investment means the net debit balance in the fixed capital accounts of a project or projects of items properly includible therein under the accounting rules and regulations of the commission.”

Regulation 17 is incorporated into Article 17 of Alabama Power’s license for Project No. 82.

As the Commission recognized:

“Even though Section 10(d) relates to computing excess earnings, based on a comparison of allocated earnings and the specified reasonable return, and even though it does not directly govern allocation of earnings, it nevertheless provides that the investment in the project is the ‘actual, legitimate investment’ in the project. Facing the problem of defining this phrase is thus made a prerequisite to allocating earnings to the project.”

Opinion No. 596, supra, at ff 32 (emphasis added). Because this phrase is defined in Article 17 of the license by reference to Commission Regulation 17 as being the “net debit balance in the fixed capital accounts,” we must determine what role depreciation plays in arriving at the net debit balance of the fixed capital accounts. If depreciation is deducted in arriving at this balance, then the phrase “actual, legitimate investment” means a figure computed by deducting depreciation. If, in arriving at the net debit balance in the fixed capital accounts, depreciation is not deducted, however, then “actual, legitimate investment” must mean a figure calculated without reduction of depreciation. For the answer, we look to the testimony before the Presiding Examiner of Paul J. Arrington, the FPC staff’s expert witness:

“. . . The term ‘net debit balance,’ as used in the Regulation 17 refers to the fixed capital accounts and the net debit balance in the fixed capital accounts is the original project cost plus additions minus retirements.
PRESIDING EXAMINER: And depreciation ?
THE WITNESS: Not depreciation. Depreciation is not recorded in the fixed capital accounts. The net debit balances in the fixed capital accounts would be only the original cost of the property as originally constructed plus the cost of additions and minus the cost of retirements and minus the cost of any amounts representing donations, donations in aid of construction.
Now, it is our position that the definition of ‘actual legitimate investment’ in Regulation 17, is not correct in view of the clarification amendment of the Act in 1935.”

Neither party has presented, and our independent research has not disclosed, any reason to conclude that the staff’s expert erroneously defined the phrase “net debit balance in the fixed capital accounts.” It is thus clear that the term “actual, legitimate investment” as defined by Commission Regulation 17 for purposes of § 10(d) of the 1920 Act and for the license to Project No. 82 means a figure calculated without a reduction of depreciation reserves. Therefore, unless there is a reason to ignore this definition, it must control this case, and Alabama Power’s investment base for allocation purposes should not be reduced by depreciation.

The amendment of § 10(d) in 1935 does not furnish a basis for ignoring the 1920 definition of “actual, legitimate investment.” We realize, of course, that when the Federal Water Power Act was amended in 1935 to become Part I of the Federal Power Act, the term “actual, legitimate investment” as used in § 10(d) of the original version of the Act, was changed to read “net investment.” The FPC relies heavily on the evidence that this amendment was made merely for clarification and was not intended to substantively change the meaning of this section. But, notwithstanding the arguments to the contrary, we have held that the term, as used in Alabama Power’s license for Project No. 82, is clearly defined. We cannot ignore this definition on the ground that — in Mr. Arring-ton’s words — “the definition of ‘actual legitimate investment’ in Regulation 17 is not correct.” That definition, even though it may not be “correct,” is the definition which is correct for purposes of determining the meaning of actual, legitimate investment in this allocation case which has its roots in a license issued before the alleged correction in the definition. “A license issued under Part I of the Federal Power Act may not be altered except by agreement between the Federal Power Commission and the licensee. (§ 6 of the Act [16 U.S.C. § 799]). The Commission has no power, acting alone, to amend or in any way change an outstanding license.” Niagara Mohawk Power Corp. v. Federal Power Com’n, 91 U.S.App.D.C. 395, 202 F.2d 190, at 198 n.3 (1952), aff’d, 347 U.S. 239, 74 S.Ct. 487, 98 L.Ed. 666 (1954). See Alabama Power Co. v. Federal Power Com’n, 291 F.2d 558 (5th Cir., 1961).

Through an analysis influenced by a desire to implement what it believed to be sound policy considerations the Commission held that actual, legitimate investment means a depreciated investment base. Paragraph 35 of its opinion is illustrative.

“The staff has offered an unconvincing argument that the phrase, ‘actual, legitimate investment,’ as defined by the reference in Regulation 17 to ‘net debit balance,’ requires deduction of depreciation. However, we take note of the fact that at the time the regulations were written, a profound difference of opinion existed within the accounting profession with regard to the accounting treatment of depreciation. Regulation 17, as interpreted by the licensee, did not reflect the thinking which was beginning to prevail within accounting circles at the time the license was issued. Furthermore, it is unlikely that anyone carefully explored the exact meaning of the terms in Regulation 17 since, by law under Section 10(d), Regulation 17 would not be applied for twenty years.”

Thus, the Commission, at least implicitly, recognized that actual, legitimate investment, defined in Regulation 17 as the “net debit balance in the fixed capital accounts” does not require deduction of depreciation. Nevertheless, the Commission side-stepped this conclusion by reasoning that “the issue should be stated in terms of clarifying what has been heretofore an unclear Commission policy, from the point of view of Alabama Power Company and other licensees. The issue then becomes whether the Commission can legally prescribe a new rule, in spite of the estoppel and binding contract questions.” Opinion No. 596, supra, at j[ 40. The Commission then concluded that “the Commission’s discretion to prescribe a precise rule is clear.” Id. at f[ 46. The Commission’s formulation of the issue and the analysis resolving it in favor of the FPC were based on the premise that the meaning of actual, legitimate investment, as used in Alabama Power’s license, needed clarifying. That we disagree with this premise is clear from our earlier analysis of § 10(d), prior to amendment, Regulation 17, and Article 17 of Alabama Power’s license. For this reason, we cannot accept the Commission’s conclusion that petitioner’s investment base must be determined by deducting depreciation reserves. We, therefore, set aside that portion of the Commission’s order which required Alabama Power to allocate earnings to Project No. 82 on the basis of a depreciated investment base.

II.

“When a utility acquires property to be used as an operating unit, and when the purchase price is more than the original cost of the property less the accumulated provision for depreciation and amortization as of the time of the acquisition, the excess portion of the purchase price is placed in Account 100.5, Electric Plant Acquisition Adjustment. It is then amortized over a period of years.”

Opinion No. 596, - F.P.C. -, at H 60 (1971). Alabama Power’s electric plant acquisition adjustments account contained a “substantial sum” referable to the period involved in this § 10(d) allocation proceeding. The company argued that this sum should be included in the Electric Department’s investment base, but this contention was rejected by the staff and the Examiner. The Commission, however, accepted the company’s argument for including such un-amortized sums in the Electric Department’s investment base and adopted the following standard as the test for determining whether inclusion is appropriate in a particular allocation proceeding.

“We think that in an amortization reserve proceeding our treatment of the unamortized portion of the acquisition adjustments account should be determined by reference to the policy of the state regulatory commission which sets the retail rates for the utility owning the project. To the extent that a state commission in a rate proceeding has actually allowed acquisition adjustments in the rate base, the Federal Power Commission, for allocation purposes only, will allow such amounts in the earnings (investment) base of the company’s electric department and in the earnings base of the project if such amounts relate to the project. This policy will apply only if the allocation formula is the same as that used in this proceeding.”

Opinion No. 596, supra, at |f 70. The reason for establishing this new standard was explained as follows:

“The annual earnings figure for the company’s electric department is the starting point in allocating earnings. Since this figure results from the rates set by the state commission, it is proper for the Federal Power Commission when considering earnings base components both to recognize the relationship between earnings and earnings base and to incorporate in its determination the state commission’s rate base policy relating to the issue of acquisition adjustments.”

Id. at H 71. In short, unamortized acquisition adjustments will be included in a licensee’s investment base in a § 10(d) allocation proceeding if the state regulatory agency having authority over the licensee’s retail rates permits the licensee to include such amounts in its rate base; the touchstone is state regulatory policy.

This standard was that advocated by Alabama Power. The company’s apparent victory proved hollow, however, because the Commission held that Alabama Power had “not clearly demonstrated that for the amortization reserve period involved in this proceeding, the Alabama Commission included acquisition adjustments in its rate base.” The company’s evidence before the Commission when this determination was made consisted of an exhibit relating to accounting adjustments, first approved by the Alabama Public Service Commission in 1945, which allowed the company to amortize Account 100.5, Electric Plant Acquisition Adjustments, by charges to Account 505, Amortization of Electric Plant Acquisition Adjustments. Since the latter account is an operating revenue deduction account (an above-the-line entry), the inference sought by the company is that this allowance was indicative of a state regulatory policy to treat plant acquisition adjustments as a proper element of a licensee’s rate base. However, this desired inference is negated by a statement in the closing lines of the Alabama Commission’s 1945 report: “This permission to make such changes to Account 505 is made with the express reservation that such treatment is for accounting purposes only and such treatment shall not be construed as decisive of or presumptive of the treatment to be accorded these charges in rate or other proceedings.” Included in this exhibit was a letter from the Alabama Public Service Commission dated August 20, 1951, directing the company “to continue to amortize amounts recorded in Account 100.5 by charges to Account 505, Amortization of Electric Plant Acquisition Adjustments.” This ruling was based on the evidence adduced in the 1945 proceedings. Again, the 1951 ruling was not issued in a rate-determination proceeding and thus concerns only suitable accounting practice. Nonetheless, certain language in this letter indicates that by 1951 the Alabama Commission was not as reluctant as it had been in 1945 to make a definite decision regarding the proper treatment— whether for accounting or rate making purposes — of the amortization of the acquisition adjustments account. This letter reads:

Alabama Power Company
600 North 18th Street
Birmingham, Alabama
Gentlemen:
In the proceedings conducted in August 1945 and bearing Docket No. 9437, with respect to the reclassification of your accounts, this Commission considered the question whether the charges to amortize the amount recorded in Account 100.5, Electric Plant Acquisition Adjustments, should properly be treated as operating revenue deductions or its income deductions. We did not deem it necessary at that time to determine this question but permitted you to make such charges to Account 505, Amortization of Electric Plant Acquisition Adjustments, which is an operating revenue deduction account.
You have now advised us that by-reason of developments in the pending proceedings in connection with your proposed issue and sale of $15,000,000 First Mortgage Bonds, it has become important for this Commission to issue a ruling as to the proper accounting treatment of such amortization.
We have reviewed the evidence submitted by you in the proceeding bearing Docket No. 9437 in support of your position that charges to amortize the amounts recorded in Account 100.-5,-Electric Plant Acquisition Adjustments, should be treated as operating revenue deductions. Such evidence is to the effect that the amounts recorded in Account 100.5 represent reasonable costs incurred in arms length transactions by which properties devoted to electric public utility service were acquired in the course of establishing or extending your integrated system with resultant better service and lower rates. We are of the opinion that costs of such a nature are costs incurred to provide electric utility service and that amortization of such costs should be accomplished by operating revenue deductions. We assume the accuracy of your evidence in such proceedings and you are therefore directed to continue to amortize amounts recorded in Account 100.5 by charges to Account 505, Amortization of Electric Plant Acquisition Adjustments.
Yours very truly,
ALABAMA PUBLIC SERVICE COMMISSION

In the instant case the FPC attached little or no probative value to this letter because of the statement in it by the Alabama Commission that: “We assume the accuracy of your evidence.” The FPC considered this statement as implying that in issuing its 1951 ruling, the Alabama Commission had “not scrutinized in any way” the company’s evidence. In light of the Alabama Commission’s statement in the letter that it reviewed the evidence presented in the 1945 proceedings, however, it is obvious that the Commission placed far too much emphasis on the statement concerning the accuracy of the company’s evidence. This isolated sentence, divorced from the context in which it was made, does not support the FPC’s total rejection of this evidence. When the 1951 letter is read as a whole, and considered with the 1945 order and opinion, it could support an inference that the Alabama Commission would treat plant acquisition adjustments as having place in a licensee’s rate base.

Alabama Power also offered evidence that in a 1958 rate proceeding involving another company, the Alabama Commission held that acquisition adjustments were properly included in the rate base. This evidence was regarded as insignificant because the proceeding there did not concern Alabama Power’s rates and also because the decision was not rendered during the period being treated in the instant allocation case.

Finally, in 1969 and 1971, the Alabama Commission handled rate cases involving Alabama Power and there allowed unamortized plant acquisition adjustments to be included in the company’s rate base. This latter evidence was tendered to the Commission in Alabama Power’s petition for rehearing. The Commission considered it but con-eluded that it was irrelevant and decided against reopening the proceeding. This decision was apparently grounded on the remoteness in time of these rate cases to the period involved in this case.

Alabama Power asserts that the manner in which the Commission applied its new standard in this proceeding is arbitrary and, for practical purposes, renders it virtually impossible for it to prevail under the standard by offering sufficient proof of the Alabama Commission’s rate policy during the period in question. Paragraph 70 of Opinion No. 596, together with the FPC’s treatment of the petition for rehearing, exhibits an almost complete reliance by the Commission on the absence of a general rate case involving Alabama Power during the period involved in this allocation proceeding as the basis for holding that the company could not meet the standard. There is an absence of any other explanation for its holding. Moreover, there is no discussion of the reasons for the FPC’s apparent requirement that in order to come within the new standard a licensee be involved in a rate case during the period concerned in a subsequent allocation determination. This requirement does not appear in the Commission’s formulation of the standard.

Our function as a reviewing court is not to set up standards or rules for the FPC to follow in deciding whether unamortized acquisition adjustments should be included in this petitioner’s investment base. Nor, once the Commission has established such a standard, is it our function to determine whether Alabama Power comes within the standard. See Southwestern Elec. Power Co. v. Federal Power Com’n, 304 F.2d 29, 42 (5th Cir., 1962), cert. den., 371 U.S. 924, 83 S.Ct. 292, 9 L.Ed.2d 232.

“It is certain that this Court may not retry the controversy, substitute its judgment for that of the Commission as to any doubtful or debatable questions of fact, or reverse the challenged orders because the Commission has rejected the views of the [Alabama Power Company] as to what inferences should be drawn from the evidence. The Commission ‘is the agency which weighs the relevance of factual data.’ See National Labor Relations Board v. Stowe Spinning Co., 333 U.S. 226, 231, 69 S.Ct. 541, 545 [93 L.Ed. 638].”

Iowa v. Federal Power Commission, 178 F.2d 421, 427 (8th Cir., 1949), cert. den., 339 U.S. 979, 70 S.Ct. 1024, 94 L.Ed. 1383. The inferences to be drawn from the evidence presented is peculiarly a matter for agency expertise, and thus we are not free, as Alabama Power suggests, to hold that the state’s regulatory policy during the period in question was to include unamortized acquisition adjustments in a licensee’s rate base. Our role in reviewing the Commission’s application of its newly developed standard is, however, to make certain that there is a “rational basis for its conclusions and warrant in the record for its judgment.” Southwestern Elec. Power Co. v. Federal Power Com’n, 304 F.2d at 43. “[A] reviewing court cannot perform its proper function when the regulatory body has failed to make adequate exposition of the grounds for its decision.” South Carolina Generating Co. v. Federal Power Com’n, 249 F.2d 755, 764 (4th Cir., 1957), cert. den. 356 U.S. 912, 78 S.Ct. 668, 2 L.Ed.2d 585. See Atchison, P. & S. F. Ry. v. Wichita Bd. of Trade, 412 U.S. 800, 93 S.Ct. 2367, 37 L.Ed.2d 350 (1973); Schaffer Transp. Co. v. United States, 355 U.S. 83, 91, 78 S.Ct. 173, 2 L.Ed.2d 117 (1957); Scenic Hudson Preservation Conf. v. Federal Power Com’n, 354 F.2d 608 (2nd Cir., 1965); Rochester Gas & Elec. Corp. v. Federal Power Com’n, 344 F.2d 594 (2nd Cir., 1965), cert. den., 382 U.S. 832, 86 S.Ct. 72, 15 L.Ed.2d 75. Compare Scenic Hudson Preservation Conf. v. Federal Power Com’n, supra, with Scenic Hudson Preservation Conf. v. Federal Power Com’n, 453 F.2d 463 (2nd Cir., 1971) (after remand).

We have concluded that the record in this case does not support the Commission’s refusal to include the unamortized portion of the Electric Department’s acquisition adjustments in its investment base for purposes of this allocation proceeding. Whether the Commission allows Alabama Power to adduce additional evidence in support of its position, or elects merely to amplify its reason for rejecting the evidence presently in the record and that offered in the company’s petition for rehearing, is a matter for agency determination. We remand this part of the case for further proceedings consistent with this opinion.

III.

The remaining two issues concern contributions in aid of construction and construction work in progress. Considering the decision we have reached regarding the meaning of actual, legitimate investment, it is necessary that we set aside the Commission’s order as it relates to these two issues and remand them to the FPC for reconsideration in light of this opinion. We do not hold, as we did on the depreciation issue, that the Commission erroneously excluded contributions in aid of construction and construction work in progress from the investment base of either the Electric Department or the project. Rather, because the approach of the Commission in reaching its conclusions on these issues was fundamentally the same as that it used in deciding the depreciation issue, it seems appropriate that the Commission should be allowed to reassess its decisions in these two areas against the backdrop of our decision. See generally United States v. Moretti, 478 F.2d 418 (5th Cir., 1973).

Those portions of Order No. 596 with which we were concerned on this petition for review are set aside and this case is remanded for further agency action not inconsistent with this opinion.

      . This section was part of the Federal Water Power Act of 1920, 41 Stat. 1063, as amended, and is now in Part I of the Federal Power Act, 16 U.S.C. § 791a-823. “The Federal Power Act consists of three parts. The first part, in general, provides for the creation of the Federal Power Commission, the improvement of navigation and the development of water power. 16 U.S.C.A. § 791-823. Part II of such Act, in general, provides for the regulation of electric companies engaged in interstate commerce. 16 U.S.C.A. §§ 824-824h. Part III of such act, in general, relates to licensees and public utilities and contains procedural and administrative provisions. 16 U.S.C.A. §§ 825-825r.” Northwestern Elec. Co. v. Federal Power Com’n, 125 F.2d 882, 884 (9th Cir., 1942).

      . In 1935 the Federal Water Power Act was amended, and became Part I of the Federal Power Act. See note 1, supra. The phrase “actual, legitimate investment” was deleted from § 10(d) and the phrase “net investment” substituted in its place. 41 Stat. 1068. The issues in this case arise primarily because of the use of the term “actual, legitimate investment” in the 1920 Act and in licenses issued under it. See Textual discussion under I of this opinion, -infra. Section 10(d) was again amended in 1968, Pub.L. 90-451, § 4, 82 Stat. 617, but this amendment has no bearing on the resolution of this case.

      . This section provides :
      Upon not less than two years’ notice in writing from the commission the United States shall have the right upon or after the expiration of any license to take over and thereafter to maintain and operate any project or projects as defined in section 796 of this title, and covered in whole or in part by the license, or the right to take over upon mutual agreement with the licensee all property owned and held by the licensee then valuable and serviceable in the development, transmission, or distribution of power and which is then dependent for its usefulness upon the continuance of the license, together with any lock or locks or other aids to navigation constructed at the expense of the licensee, upon the condition that before taking possession it shall pay the net investment of the licensee in the project or projects taken, not to exceed the fair value of the property taken, plus such reasonable damages, if any, to property of the licensee valuable, serviceable, and dependent as above set forth but not taken, as may be caused by the severance therefrom of property taken, and shall assume all contracts entered into by the licensee with the approval of the Commission. The net investment of the licensee in the project or projects so taken and the amount of such severance damages, if any, shall be determined by the Commission after notice and opportunity for hearing. Such net investment shall not include or be affected by the value of any lands, i'ights-of-way, or other property of the United States licensed by the Commission under this chapter, by the license or by good will, going value, or prospective revenues; nor shall the values allowed for water rights, rights-of-way, lands, or interest in lands be in excess of the actual reasonable cost thereof at the time of acquisition by the licensee: Provided, That the right of the United States or any State or municipality to take over, maintain, and operate any project licensed under this chapter at any time by condemnation proceedings upon payment of just compensation is expressly reserved.

      . For purposes of recapture under § 14 of the Act, the computation of a licensee’s net investment — the amount required to be paid to a licensee in the event of recapture — in a project would be governed by § 3(13) of the Act, 16 U.S.C. § 796(13). The purpose of § 10(d) “was to compel a reservation of a portion of the earnings and to remove them from being available for distribution of dividends.” Order No. 387, 42 FPC 329, 332-33 (1969). The relationship of § 10(d) with § 3(13) and § 14 is that a § 10(d) allocation proceeding, the purpose of which, is to determine the amount which must be transferred to the amortization reserve account, is the first step in preparation for recapture under § 14; recapture may never occur, but as a part of government regulation a licensee must have his accounts in order in anticipation of this contingent event. The next step would be for the government, upon termination of the license (after fifty years of operation), to initiate recapture proceedings under § 14. Section 3(13) would then be used to determine the licensee’s net investment in the project. Once this determination is made, the amortization reserve account, established pursuant to § 10(d), could be used to further reduce the net investment figure to arrive at the final figure to be paid to the licensee whose project has been recaptured.

      . The account numbers used in the text are those prescribed by the Commission’s Uniform System of Accounts Prescribed for Public Utilities and Licensees, which were effective from January 1, 1937 through December 31, 1960. The Commission revised this system of accounts effective January 1, 1961, hut this revision does not affect the present proceedings and, as did the FPC staff and the Commission, we will refer to the accounts prior to the 1961 revision.

      . This section provides :
      * * * “net investment” in a project means the actual legitimate original cost thereof as defined and interpreted in the “classification of investment in road and equipment of steam roads, issue of 1914, Interstate Commerce Commission”, plus similar costs of additions thereto and betterments thereof, minus the sum of the following items properly allocated thereto, if and to the extent that such items have been accumulated during the period of the license from earnings in excess of a fair return on such investment: (a) Unappropriated surplus, (b) aggregate credit balances of current depreciation accounts, and (c) aggregate appropriations of surplus or income held in amortization, sinking fund, or similar reserves, or expended for additions or betterments or used for the purposes for which such reserves were created. The term “cost” shall include, insofar as applicable, for elements thereof prescribed in said classification, but shall not include expenditures from funds obtained through donations by States, municipalities, individuals, or others, and said classification of investment of the Interstate Commerce Commission shall insofar as applicable be published and promulgated as a part of the rules and regulations of the Commission;

      . See note 4, supra. See generally Order No. 387, 42 FPC 330 (1969).

      . See Opinion No. 596, supra, at Iffl 82 and 83.

      . This formula is expressed as follows:
      X Electric Department Earnings
      Project Investment Base Electric Department Investment Base
      X=Project Earnings

      . Initially there was a dispute concerning the elements to be included in the Electric Department’s earnings (the numerator in the allocation formula) with the company arguing for decisions which would reduce these earnings. In this petition for review, however, we are only concerned with issues relating to the investment base, the. other issues having been resolved at the administrative level.

      . In addition to determining the proper disposition of the ■ unamortized portion of the acquisition adjustments account, there is the related problem concerning the proper treatment of the annual amortization expense. Since this latter problem will be resolved once the proper method of treating the acquisition adjustments account has been determined, it is not necessary to consider the annual charges separately.

      . Opinion No. 596, supra, at ¶ 32. This paragraph is quoted in the text infra.

      . We agree with the following observations of the Commission concerning the impact of legislative history and accounting principles prevalent at the time the license was issued:
      Bach party to this proceeding has relied on the legislative history of the Federal Water Power Act as support for its portion on deduction of depreciation, but the reliance in each case has not produced conclusive argument. The disarray found in the accounting theory of the 1920’s surfaces here, in the legislative history, as well as in the arguments relating to interpretation of the Commission’s regulations.
      Id. at H 39.

      . SECTION 1. General requirements.—
      REGULATION 17.—
      AMORTIZATION RESERVES.
      [As amended June 6, 1921]
      After the first 20 years of operation, out of surplus earned thereafter, if any, accumulated in excess of a specified reasonable rate of return upon the actual, legitimate investment of a license in any project or projects under license the licensee shall establish and maintain amortization reserves, which reserves shall, in the discretion of the commission, be held until the termination of the license or be applied from time to time in reduction of the net investment. Such specified rate of return and the proportion of such surplus earnings to be paid into and held in such reserve shall be set forth in the license.

      . The relevant portion of Article 17 reads as follows:

        Article 17. — After the first 20 years of operation of said project under this license, out of surplus earnings thereafter, if any, (950) accumulated in excess of a specified reasonable rate of return upon the actual, legitimate investment of the Licensee in said project, all as defined in and determined by the provisions of Regulation 17 of said rules and regulations of the Commission, the Licensee shall establish and maintain amortization reserves, which reserves shall, in the discretion of the Commission, be held until the termination of the license or be applied from time to time in reduction of the net investment.

      . See H.R.Rep.No.1318, 74th Cong., 1st Sess., at 24 (1935) and S.Rep.No.621, 74th Cong., 1st Sess., at 17, 45 (1935).

      . The policy considerations underlying the Commission’s decision are adequately summarized by this statement from Opinion 596 at If 34:
      The practical effects of not deducting-depreciation, depending on the relative ages of the project and the remainder of the system, were clearly described by the examiner. From the point of view of the ratepayer who pays for annual depreciation expense, logic and fairness compel deduction of depreciation in this proceeding as well as in rate proceedings. In a rate proceeding, if the rate of return were applied to gross investment rather than a depreciated rate base, the licensee would receive a double recovery of its investment in plant. Since the licensee has collected depreciation charges from the ratepayers, it is not logical to argue that the amortization reserve must be computed on a non-depreciated base. If such a base were used, the excess earnings would be reduced, the compensation paid to the licensee would be that the licensee would receive another form of double recovery. This would be patently unfair to the ratepayers.
      This statement overlooks at least one consideration. As explained in note 4, supra, and as recognized by the Commission in Order No. 387, 42 FPO 329 (1969) § 10(d)’s primary purpose is to provide a regulatory tool to prevent a licensee from distributing its “excess” profits to its shareholders. These excess profit are to be set aside in an amortization reserve account to be used in the event the government recaptures a project. Section 3(13) defines the amount to bo paid in the event of recapture as the “not. investment” of the licensee in the project. This section then details the manner in which to compute net investment. It is significant that this computation requires the deduction of depreciation. Pursuant to § 10(d), the amortization reserve account can be used to reduce this net investment. Therefore, under the Commission’s interpretation of actual, legitimate investment, depreciation would be deducted twice — once in computing net investment under § 3(13) and again when the net in.vestment is reduced by the amortization reserve, because the amortization reserve was computed by deducting depreciation. Perhaps this is a proper policy determination. But, it can be plausibly argued that, at least in 1920, this determination had not been made and that this explains tire use of the phrase “actual, legitimate investment” instead of “net investment” in § 10(d). The legislative history is not revealing, much less decisive, on this point.
      TVe are thus left, as we have previously reasoned, with the definition of the term “actual, legitimate investment” as it appears in the license and the Act. Contrary to the Commission’s statement in If 42 of Opinion 596 that there had not been, prior to the instant case, an attempt to define actual legitimate investment, we are convinced that Regulation 17 clearly defines the term.

      . We have reached this conclusion well aware that in reviewing the action of an administrative agency the scope of our review is limited. However, contrary to the position taken by the FPC in its appellate brief, our scope of review on this issue is not governed by the substantial evidence rule because we have not been dealing with agency conclusions based on findings of disputed facts. We have, nonetheless, under familiar princi-pies of administrative law deferred to agency expertise in this area but remain firmly convinced that the FPO’s conclusions are plainly erroneous, whether viewed under a substantial evidence, a rational basis, or a reasonableness standard.

      . No portion of this account is attributable to Project No. 82. Opinion No. 590, -FPC-, K 60 at n. 24 (1971).

      . Id. at n 73.

      . The distinction between above-tlie-line and below-the-line accounts is that an expenditure entered in a below-the-line account operates to reduce distributable income of the licensee without a corresponding inclusion of the expenditure in determining the rate base. Hence, although an expenditure entered below-the-line is properly classed as an expense, it is not an operating expense (a cost of service) whicli can be recouped through charges to the ratepayer. Above-the-line accounts are charged to operating expenses and are considered in determining a licensee’s rate base.
      Although the initial accounting entry classifying an expenditure is not binding in a subsequent rate-determination case, it is, practically speaking, very difficult for a company to establish that a below-the-line entry should be considered as a part of the cost of service and consequently as an operating expense. See generally Southwestern Elec. Power Co. v. Federal Power Com’n, 304 F.2d 29, 41 (5th Cir., 1962). This conclusion helps explain why the FPC places so much emphasis for regulatory purposes on the accounting practices of a licensee. The belief is that by regulating accounting methods, as well as actual accounting entries, the FPC can indirectly exert its influence on state regulatory bodies which have the final say in setting a licensee’s retail rates. Id. n. 24 at 41.

      . Pertinent excerpts from this report and the accompanying order of the Alabama Public Service Commission, issued on August 9, 1945, read as follows:
      REPORT OF THE COMMISSION
      The petition in this cause was filed with the Commission on July 26, 1945 and a public hearing thereon was held by the Commission at its offices in Montgomery, Alabama on August 3rd, 1945.
      The petition sets forth the Company’s proposal to record petitioners reclassification of plant account as of January 1, 1937 as filed with the Commission November 26, 1940, to make certain accounting adjustments to such reclassification as filed and seeks an order of the Commission directing disposal of amounts to be recorded in Account 107 Plant Adjustments and amounts to be recorded in Account 100.5 Electric Plant Acquisition Adjustments, all pursuant to the requirements of the Uniform System of Accounts for Electric Utilities as prescribed by this Commission.
      The petitioner filed with this Commission on November 26, 1940, petitioner’s reclassification and original cost studies of electric account pursuant to Electric Plant Account Instruction 2-D of the Uniform System of Accounts. Such reclassification and original cost studies were concurrently filed with the Federal Power Commission. After a field investigation by representatives of the Federal Power Commission, the results of which were made available to this Commission, conferences were held in the offices of the Federal Power Commission in December 1944 and April 1945 between representatives of the petitioner and members of the staff of the Federal Power Commission (members of the staff of this Commission being present) who discussed the reclassification of the plant account of petitioner and the adjustments relating thereto proposed by the examiners of the Federal Power Commission. During the progress of this discussion, representatives of the Company discussed various phases of the problems involved in conferences with this Commission and members of its staff.
      As a result of these discussions, petitioner has made identical proposals to the Federal Power Commission and this Commission relating to the recording of the Company’s reclassification of plant account and the disposal of the amounts to be recorded in Account 107 Plant Adjustments and amounts to be recorded in Account 110.5 Electric Plant Acquisition Adjustments.
      * * :¡¡ S %

      At the hearing on August 3, 1945, the Company offered testimony and documentary evidence in support of its petition.
      The Company maintained at the hearing that under the provisions of the System of Accounts prescribed by this Commission the proper income account for recording the monthly charges for the amortization of Account 100.5 is Account 505 “Amortization of Electric Plant Adjustments”, an account which provides for operating revenue deductions. In support of its position, the Company presented evidence that the amounts reflected in Account 100.5 represented actual cash or cash equivalent paid in many arms-length transactions throughout the history of the Company for properties acquired as operating units or systems; that these acquisitions were made in the course of and as a necessary part of its program to provide an integrated electric system and that as a result of such acquisition and integration it has been able to replace small isolated systems throughout the State served by small and inefficient generating plants with a modern integrated electric system consisting of large centrally located hydro electric and steam generating plants, an interconnected system of transmission lines and distributing systems, all of the most modern type, to the great improvement of the quality of its service to its customers. The Company also presented detailed evidence as to expansion of the Company’s service year by year and the decline in its rates for service of all classes. The Company also presented accounting opinion that under such circumstances it is proper to treat amounts devoted to amortization of Account 100.5 as operating expense.
      This Commission does not consider that it is necessary to decide in this proceeding the question whether current charges to revenue for amortization of amounts recorded in Account 100.5 should be considered for regulatory purposes as in the nature of an operating revenue deduction or as an income deduction. Inasmuch as the conditions or terms are not clearly prescribed under which income deductions Account 537 should be used instead of operating revenue deductions Account 505, and inasmuch as either of such accounts may by its terms be used to reflect the substance of the transaction as a segregation of revenue for the amortization or retirement of invested capital recorded in Account 100.5, our order will permit that monthly charges for such amortization may be recorded by the Company in Account 505 without now deciding whether such charges are under the facts of this case in the nature of operating revenue deductions or income deductions. This permission to make such charges to Account 505 is made with the express reservation that such treatment is for accounting purposes only and such treatment shall not be construed as decisive of or presumptive of the treatment to be accorded these charges in rate or other proceedings.
      s¡: sH * :¡= *
      ORDER OF THE COMMISSION
      The premises considered, IT IS ORDERED BY THE COMMISSION:
      1. That petitioner dispose of the balance of $9,886,575.06 to remain after adjustment in Account 107, Plant Adjustments, and may do so as set out in detail in the report accompanying this Order.
      2. That petitioner dispose of the balance to remain after adjustment in Account 100.5, Electric Plant Acquisition Adjustments, in the amount of $8,777,898.84 and may do so by making monthly charges of $48,766.11 to Account 505 “Amortization of Electric Plant Acquisition Adjustments”, subject to the reservation stated in the report accompanying this Order, with concurrent credits of the same amount to Account 100.5 commencing as of August 1, 1945 and continuing for fifteen (15) years. Provided, however, that such amortization may, at the election of the Company be accelerated from time to time upon approval of the Commission.
      * * *

      . But see note 21, supra.

      . Paragraph 70 of Opinion No. 596 reveals the FPC’s views concerning the probative value of the 1951 letter: “We also note that the licensee submitted as Exhibit 1 a letter from the Alabama Commission dated August 20, 1951, approving amortization of Account 100.5 by charges to Account 505 (above-the line) on the basis of licensee’s evidence that amounts recorded in Account 100.5 resulted in bet-fer service and'lower rates. This evidence apparently was not scrutinized in any way by the Alabama Commission, because it stated in the same letter: ‘We assume the accuracy of your evidence.’ ”

      . In re Alabama Power Co., 88 P.U.R. 3d 391 (Ala.P.S.C.1971); In re Alabama Power Co., 83 P.U.R.3d 321 (Ala.P.S.C. 1971).

      . See Opinion No. 596,1[ 70, quoted in text, supra.


author: LAY, Circuit Judge.

text:
    Mary Ellen BERNARD, Appellant, v. OMAHA HOTEL, INC., Appellee.
    No. 72-1457.
    United States Court of Appeals, Eighth Circuit,
    Submitted April 9, 1973.
    Decided Aug. 8, 1973.

      Richard J. Dinsmore, Omaha, Neb., for appellant.
    Ronald H. Stave, Omaha, Neb., for ap-pellee.
    Before LAY and STEPHENSON, Circuit Judges, and TALBOT SMITH, Senior District Judge.

       The Honorable Talbot Smith, Senior United States District Judge, Western District of Michigan, sitting by designation.

   LAY, Circuit Judge.

This is a diversity personal injury case, appealed from the federal district court in Nebraska. The plaintiff, Mary Ellen Bernard, a citizen of Illinois, sued Omaha Hotel, Inc., the owner and operator of the Holiday Inn in Omaha, Nebraska. She alleged that she was injured when she caught her heel and fell in an exitway as she was preparing to leave the motel on July 11, 1969. The trial court instructed the jury under Nebraska law and upon deliberation the jury returned a verdict for the defendant.

On appeal the plaintiff essentially raises the following alleged errors: that the court erred (1) in submitting contributory and comparative negligence to the jury; (2) in excluding evidence concerning defendant’s knowledge of the existence of missing tiles in the area of Mrs. Bernard’s fall; (3) in refusing additional pre-trial discovery time in view of defendant’s late disclosure of its maintenance records; (4) in refusing to give plaintiff’s requested instructions; and (5) in requiring plaintiff to try her case to a six-man jury. Upon review we find no prejudicial errors in the trial court’s rulings and affirm the judgment on the verdict.

Mrs. Bernard was leaving the Omaha Holiday Inn from an exitway when she fell. The evidence shows some small tile squares were missing from the floor immediately in front of the door sill. The defendant produced evidence from several witnesses, including an officer of the Omaha Police Department, who testified that Mrs. Bernard had told them that she did not see the step, had missed it, and had fallen. This evidence was sufficient to place plaintiff’s exercise of reasonable care into issue. We find no error in the trial court’s submission to the jury of contributory negligence under Nebraska’s comparative negligence statute. Likewise our review, limited by plaintiff’s brief oral exceptions made at trial, of plaintiff’s requested instructions and the court’s given instructions, convinces us that there was no error in the instructions. Further, the issue raised relating to the district court rule requiring submission of the case to a six-man jury has now been resolved by the Supreme Court of the United States, Colgrove v. Battin, -- U.S. -, 93 S.Ct. 2448, 37 L.Ed.2d 522 (1973).

Plaintiff’s basic complaint centers around the restrictions placed by the trial court on her counsel’s examination of Mr. McCue, the manager of the Holiday Inn. Plaintiff asserts that her counsel was not allowed to prove that an ice machine, located near the exit, had flooded prior to July 11, 1969, thereby supposedly loosening the tiles. Plaintiff claims this evidence was relevant to demonstrate the defendant corporation’s knowledge of the defective condition existing. The difficulty with plaintiff’s premise is that it is based on a supposition of proof that was neither demonstrated nor offered to be demonstrated and as far as the present record is concerned, it is extremely doubtful whether it could have ever been shown. The related examination of Mr. McCue was as follows:

“Q. Going back to this period of July of 1969, had you had trouble with flooding in the breezeway area ?
A. Not to my knowledge. It would be on these reports if we had.
Q. Would you take a look at them and find out.” Immediately following this plaintiff’s counsel asked:
“Q. Mr. McCue, have you had problems prior to 11 July 1969? Did you have problems in that particular breezeway, Breezeway 165, with respect to the ice machine creating flood conditions in that breezeway ?”

and the court sustained an objection saying:

“I say the jury and the Court wouldn’t be concerned about why they were in the condition they were in, except as to the knowledge the defendant might have as to the records that existed.”

In Hawkins v. Missouri Pacific Railway Company, 188 F.2d 348, 350 (8 Cir. 1951), we observed:

“ . . . the failure to comply with the requirement of rule 43(c) of the Rules of Civil Procedure, 28 U.S.C.A., as to making offer of proof, leaves appellant here without any basis for complaint of the trial court’s action. This is not a situation of such plainness and certainty as to what the witness’ testimony would be that the making of an offer of proof could properly be regarded as a mere futility. Cf. Cropper v. Titanium Pigment Co., 8 Cir., 47 F.2d 1038, 1042, 1043, 78 A.L.R. 737; Gantz v. United States, 8 Cir., 127 F.2d 498, 503. And equally, the situation can not be said to be one that involves such a plain probable miscarriage of justice on seeming error as to entitle it to be urged that we should act sua sponte, without regard to procedural preservation and actual demonstration of the asserted error.”

Although we tend to agree that the trial court may have been overly restrictive in the examination, this witness’ prior response indicates that he did not possess any knowledge concerning the flooding of the ice machine. Furthermore, an examination of the Holiday Inn’s maintenance logs, later pursued in McCue’s direct and redirect examination, showed that no record was made of such an incident.

Complaint is likewise made that the court would not allow McCue to testify whether any employees noted a defective condition in the area on July 11 and July 12 and whether they made a report of the same. The record shows the following :

“Q. Under your system of reports of employes of defective conditions or conditions needing repair in the premises, would this have included reporting missing tiles or loose tiles in Breezeway 165?
A. Had they noticed it, yes.
* * * •» *
Q. Assuming, Mr. McCue, that on July 11th, or prior thereto, a condition of loose tiles and missing tiles had been observed by an employe, would that have been a condition that you would have expected them to report?
A. Yes, sir.
Q. If that condition existed on July 11th, July 12th or July 19th, the dates of the accident and the photographs, would that condition have been reported by an employe ?
A. If they had noticed it, it should have been, yes.
Q. You, yourself, did not notice it, you say?
A. No sir.
Q. Assuming that condition existed at the time the photographs were taken on July 12, 1969, you didn’t notice it?
MR. SODORO: I object to the question, Your Honor, for the reason it is argumentative.
BY THE COURT: Overruled.
Q. Did you or did any employes make any report of any condition on July 12,1969.
A. I did not.
BY THE COURT: Just a moment.
MR. SODORO: Objected to, Your Honor, for the same reason.
BY THE COURT: Sustained.
MR. SODORO: It is subsequent to this accident. It has nothing to do with it.”

Later the witness was given the opportunity to review the logs to see if any employee had ever reported the missing tiles. Although the record is not altogether clear, it is apparent the logs failed to show that any employee made such a report.

Complaint is likewise made that the defendant was dilatory in turning over the maintenance records and that plaintiff should have been given more leeway to develop the names of employees to be subpoenaed at trial. We have examined the entire record and find no prejudice here. Plaintiff was given the names of all employees who possessed knowledge of the condition several months before trial. Only one such employee’s deposition was taken and none were subpoenaed to attend the trial. Under these circumstances we do not find such prejudice in the record as a whole to hold that the trial court’s rulings require a new trial.

Although we affirm the judgment we nevertheless order that the defendant absorb its own costs and pay one-half of the cost of the overall appendix. Defendant is responsible for requiring the appendix to contain the complete medical testimony which is totally immaterial on this appeal. Under Rule 30(b) of the Federal Rules of Appellate Procedure, the parties are responsible for agreeing on only that portion of the record necessary for appellate review on the issues raised. The inclusion of the medical testimony merely prolonged the time for a busy court reporter to complete the transcript, increased the costs to the appellant and served to hinder the efficient administration of handling of a civil appeal.

Judgment affirmed; costs are assessed as ordered.

      . Fed.R.Civ.P. 51 reads in part:
      “No party may assign, as error the giving or the failure to give an instruction unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of his objection.”.

      . Compare Harris v. Smith, 372 F.2d 806, 815 (8th Cir. 1967), wherein we said:
      “Appellee claims that in any event there was no offer of proof concerning the essence of Dr. Harris’ testimony and therefore the issue is here not reviewable. Rule 43(c), Federal Rules of Civil Procedure, 28 U.S.C.A., provides specifically that an offer of proof may be made when objection has been sustained to a question propounded by the examining attorney. To make an offer of proof in the above circumstances would have been the proper course but a formal offer of proof is not an absolute requisite to enable the presentment of error on appeal if that error affects the substantial rights of the parties. . . . If a question is proper on its face and indicates an answer favorable to the appellant, no offer of proof is necessary.” (Our emphasis).