author: EUGENE A. WRIGHT, Circuit Judge:

text:
    TESSLER BROTHERS (B.C.) LTD., Plaintiff-Appellant, v. ITALPACIFIC LINE and Matson Terminals, Inc., Defendants-Appellees.
    No. 71-3071.
    United States Court of Appeals, Ninth Circuit.
    March 20, 1974.
    Rehearing Denied May 28, 1974.

      John E. Droeger (argued), Hall, Henry, Oliver & McReavy, San Francisco, Cal., for plaintiff-appellant.
    Kelly Wooster (argued), J. Stewart Harrison, Robert C. Boehm, Brobeck, Phleger & Harrison, San Francisco, Cal., D. Thomas McCune, Lillick, McHose, Wheat, Adams & Charles, San Francisco, Cal., for defendants-appellees.
    OPINION
    Before BARNES, WRIGHT and WALLACE, Circuit Judges.
   EUGENE A. WRIGHT, Circuit Judge:

This is an interlocutory appeal pursuant to 28 U.S.C. § 1292(b) from a district court decision granting summary judgment in favor of Matson Terminals, Inc., limiting Matson’s liability as a stevedore to a maximum of $500, as distinguished from the claimed damage in excess of $14,000. We affirm.

S.N.T.F.L.I. Gonrand delivered to defendant Italpacific Lines in Italy an industrial dry cleaning machine for delivery to Vancouver, B. C. Labor trouble at the destination required delivery instead at Tacoma. At the time of the discharge, appellant Tessler Brothers was the holder in due course of the bill of lading that Italpacific had initially issued to Gonrand. Matson Terminals unloaded the cargo. Tessler Brothers, alleging that Matson damaged the machine in excess of $14,000, sued Italpa-cific for breach of the contract of carriage, and sued Matson for negligence.

Italpacific and Matson claimed that liability, if any, was limited to $500 under § 4(5) of the Carriage of Goods by Sea Act (COGSA) [46 U.S.C. § 1304(5)] and/or the terms of the bill of lading, which contained no declaration of value of the machine. Tessler and Matson moved for summary judgment on the issue of the limitation of Mat-son’s liability to $500. A ruling in Mat-son’s favor prompted this appeal.

Clause 1 of the bill of lading provided that the bill would be subject to the provisions of COGSA, § 4(5) of which provides :

Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the noc-ture and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima fa-cie evidence, but shall not be conclusive on the carrier. [Emphasis added.]

Matson claims that its liability as stevedore is limited under § 4(5) by virtue of clause 21 of the bill of lading. This clause, which purports to extend protections provided for the carrier to those employed by the carrier, is commonly known as a “Himalaya clause.” Mat-son also claims the benefit of clause 18 of the bill of lading, which contains substantially the same provisions limiting liability as § 4(5).

Tessler raises two principal issues on appeal. It contends, first, that an ocean carrier (Italpacific in this case) cannot extend its own limitation of liability to independent stevedores by using a Himalaya clause in a bill of lading. Secondly, it contends that, even if Himalaya clauses are valid, the bill of lading in this case does not, when strictly construed, extend the limitation of liability to the stevedore. We. conclude that both contentions are erroneous.

I

THE EXTENSION OF COGSA LIMITATIONS TO STEVEDORES

Whether a stevedore may benefit from the limitation of liability provisions in COGSA or in an ocean bill of lading has been the subject of considerable litigation. In Robert C. Herd & Co. v. Kra-will Machinery Corp., 359 U.S. 297, 79 S. Ct. 766, 3 L.Ed.2d 820 (1959), the Supreme Court considered the issue in order to resolve an intercircuit conflict.

In Herd, cargo interests sued a stevedore for damages resulting from the stevedore’s dropping of a press being loaded for foreign shipment. Both the COGSA provisions and the applicable bill of lading limited the liability only of the carrier and the ship, making no reference to agents or independent contractors of the carrier. COGSA defines the term “carrier” to include “the owner or the charterer who enters into a contract of carriage with a shipper.” [46 U.S.C. § 1301(a)]. The Supreme Court held that neither the language, the legislative history, nor the environment of the Act shows any intent by Congress to regulate stevedores. 359 U.S. at 302, 79 S.Ct. 766, 3 L.Ed.2d 820.

The Court next considered whether the parties had intended in the bill of lading to limit the stevedore’s liability. It found that the bill of lading referred only to the “carrier’s liability” and showed no intention to limit the liability of stevedores, an intention that could easily have been expressed. The Court noted that the unlimited liability of an agent for his own negligence has long been embedded in the law, and anything in derogation of this principle, whether statute or private contract, must be strictly construed.

Tessler mounts a four-pronged attack on the validity of Himalaya clauses. It contends, first, that Herd, should not be read to indicate that parties may properly extend limitations of liability to stevedores by clearly expressing their intent to do so in the bill of lading. We reject this contention, as have other courts that have considered it.

The Herd court concluded that the stevedore’s liability was not limited because no statute limited it and because the stevedore “was not a party to nor a beneficiary of the contract of carriage between the shipper and the carrier, and hence its liability was not limited by that contract.” 359 U.S. at 308, 79 S.Ct. at 773. We and other courts interpret this to mean that under certain circumstances parties to a contract of carriage may limit a stevedore’s liability, but only if the intent to do so is clearly expressed. Bernard Screen Printing Corp. v. Meyer Line, 464 F.2d 934, 936 (2d Cir. 1972), cert, denied, 410 U.S. 910, 93 S.Ct. 966, 35 L.Ed.2d 272 (1973); Secrest Machine Corp. v. S. S. Tiber, 450 F.2d 285, 286 (5th Cir. 1971); Cabot Corp. v. S. S. Mormacscan, 441 F.2d 476, 478 (2d Cir. 1971), cert, denied, 404 U. S. 855, 92 S.Ct. 104, 30 L.Ed.2d 96 (1971); Dorsid Trading Co. v. S/S Fletero, 342 F.Supp. 1, 6 (S.D.Tex.1972); Carle & Montanari, Inc. v. American Export Isbrandtsen Lines, Inc., 275 F. Supp. 76, 78 (S.D.N.Y.), aff’d mem., 386 F.2d 839 (2d Cir. 1967), cert, denied, 390 U.S. 1013, 88 S.Ct. 1263, 20 L.Ed.2d 162 (1968).

Tessler next contends that seven years before the Supreme Court’s opinion in Herd, the Court held void any bill of lading clauses which deprive cargo interests of any portion of their rights against third parties.

In United States v. Atlantic Mutual Insurance Co., 343 U.S. 236, 72 S.Ct. 666, 96 L.Ed. 907 (1952), the Court held invalid “Both-to-Blame” clauses, often contained in the ocean bills of lading. Provisions in COGSA, 46 U.S.C. § 1304(2) (a), and the Harter Act, 46 U. S.C. § 192, took away, under some circumstances, the right of a cargo owner to sue his own carrier for cargo damages caused by the negligent navigation of the carrier’s servants or agents. When two negligent vessels collided, however, the cargo owner could still recover from the non-carrying vessel. In a both-to-blame situation, each carrier was liable, vis-a-vis each other, for one-half the total damage, and the non-carrying vessel was entitled to include in the total the sums it had paid to owners of cargo in the carrying vessel. The carrying vessel thus ultimately became responsible for one-half the damage suffered by its cargo. The “Both-to-Blame” clause in Atlantic Mutual granted the carrying vessel the right to recoup those sums from its cargo owners.

The Supreme Court held this clause invalid, prompted by “the controlling rule that without congressional authority [carriers] cannot stipulate against their own negligence or that of their agents or servants.” 343 U.S. at 242, 72 S.Ct. at 669. Given a cargo owner’s right to recover from the non-carrying vessel, and the right of that vessel to recover one-half its liability to cargo from the negligent carrying vessel, a stipulation in the bill of lading requiring cargo to indemnify the carrying vessel for sums it paid the non-carrying vessel violated the rule against a carrier stipulating against its own negligence.

Tessler argues that this same reasoning condemns the contractual extension, not authorized by Congress in COGSA, of a limitation of liability to stevedores.

Tessler’s argument is off base. True, a carrier cannot immunize itself from responsibility for its own negligence. It may, however, limit the amount of its liability if the limitation is tied to an agreed value of goods, subject to' carriage at a specific freight rate, with the cargo owner having the option of declaring and recovering a higher value if it pays a higher rate.

This distinction between a limitation on liability and an exemption from liability is crucial. A limitation, unlike an exemption, does not induce negligence. Compensation for carriage is based on the value of the cargo agreed on by the carrier and the cargo owner and, unless immunized by act of Congress [see 46 U.S.C. § 1304(2)], a carrier who negligently damages cargo must respond in that value for its negligence. Hart v. Pennsylvania Railroad Co., 112 U.S. 331, 340-341, 5 S.Ct. 151, 28 L.Ed. 717 (1884); The Ansaldo San Giorgio I v. Rheinstrom Brothers Co., 294 U.S. 494, 496-497, 55 S.Ct. 483, 79 L.Ed. 1016 (1935).

Section 4(5) of COGSA [46 U.S.C. § 1304(5)] limits a carrier’s liability to $500 unless a higher amount is inserted in the bill of lading. Atlantic Mutual, while invalidating clauses that exempt carriers or their agents from liability for their negligence, is inapposite to a discussion of the validity of Himalaya clause in this case, which in effect purports to extend to a carrier’s agents and servants all defenses provided for the carrier, including COGSA’s limitation of liability. For this reason, it is not surprising that Atlantic Mutual, as Tes-sler itself notes, is not mentioned by the Supreme Court in Herd or by other courts that have considered the validity of Himalaya clauses.

A significant restriction on a carrier’s right to limit liability to an amount less than the actual loss sustained is that the carrier must give the shipper “a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge. . . . ” New York, New Haven & Hartford Railroad Co. v. Nothna-gle, 346 U.S. 128, 135, 73 S.Ct. 986, 990, 97 L.Ed. 1500 (1953); Sommer Corp. v. Panama Canal Co., 475 F.2d 292, 298 (5th Cir. 1973), and cases cited therein. Clause 18 of the bill of lading in question provides that the $500 limitation exists “unless the nature of the goods and a valuation higher than $500, shall have been declared in writing by the shipper upon delivery to the carrier and inserted in the bill of lading and extra freight paid if required. . . . ” Section 4(5) of COGSA, to which the bill of lading is expressly subject, has a similar provision.

Tessler contends there is no evidence that the shipper was offered a choice of rates, one with the limitation and another without it. The provisions in the bill of lading and COGSA are prima facie evidence of the opportunity to avoid the limitation, however, and it is Tessler’s burden to prove that such an opportunity did not in fact exist. Petition of Isbrandtsen Co., 201 F.2d 281, 285 (2d Cir. 1953). Tessler did not carry this burden.

Tessler’s third argument against the validity of a Himalaya clause is that § 6 of COGSA describes the only situations, none of which is present here, in which protections may be extended beyond the carrier.

Section 6 [46 U.S.C. § 1306] provides that in special cases a carrier, its agents, and a shipper may enter into “any agreement” as to their respective rights and liabilities. Tessler contends that the section indicates congressional intent to prohibit any other extension of protections not provided in the Act.

This argument does not withstand analysis. Section 6 concerns private, as opposed to common, carriage of goods by sea. It allows carriers and shippers to agree to any terms as to liability and immunity. Therefore, it even authorizes a total exemption from liability, although § 3(8) of COGSA would void such an exemption in an ordinary transaction. The context of § 6 simply does not support the inference that a carrier, cannot, in ordinary cases, extend a statutory limitation of liability to its agents, merely because, in special situations, it can totally exempt itself, and possibly its agents, from liability.

Tessler’s final argument is that the bill of lading is a contract of adhesion and that only persons who give “understanding consent” to such contracts may be bound thereby. See Cabot Corp. v. S. S. Mormacscan, 441 F.2d 476, 478 (2d Cir. 1971).

Congress passed the Harter Act and COGSA to counteract the persistent efforts of carriers, who are the drafters of ocean bills of lading, to insert all embracing exceptions to liability. Encyclopedia Britannica, Inc. v. S. S. Hong Kong Producer, 422 F.2d 7, 11 (2d Cir. 1969), cert, denied, 397 U.S. 964, 90 S. Ct. 998, 25 L.Ed.2d 255 (1970). One of the specific purposes of COGSA was to obviate the necessity for a shipper to make a detailed study of the fine print clauses of a carrier’s regular bill of lading on each occasion before shipping a package. Id. 422 F.2d at 14; H.R.Rep. No. 2218, 74th Cong., 2d Sess. 7 (1936).

We recognize that the content of ocean bills of lading is for all practical purposes completely within the carrier’s power, subject to the provisions of COGSA, and that contracts purporting to limit liability must be strictly construed. Robert C. Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297, 305, 79 S. Ct. 766, 3 L.Ed.2d 820 (1959); Sommer Corp. v. Panama Canal Co., 475 F.2d 292, 296 (5th Cir. 1973).

Even viewed in this light, we cannot agree that Tessler gave no “understanding consent” to the bill of lading. Tessler does not contend that it was unaware of the provisions in question; nor did it present evidence to the district court adequately explaining its failure to declare a higher value, as the bill of lading provided that it could, and thereby increase the liability of the carrier and the carrier’s agents, or to insure itself against the loss that occurred. In the absence of such evidence, we are reluctant to remedy what might be nothing more than lack of foresight.

II

DOES THE BILL OF LADING EXTEND THE LIMITATION OF LIABILITY TO STEVEDORES?

Tessler contends that, assuming the validity of Himalaya clauses in general, the bill of lading here involved does not limit Matson’s liability. When strictly construed, Tessler argues, the bill does not extend the limitation of liability to independent contractors, and, in any event, stevedores are not covered unless the bill of lading mentions them expressly.

Clause 21 of the bill of lading has three distinct limbs: first, it exonerates from liability to the shipper any “servant or agent of the Carrier (including every independent contractor .)”; second, it extends the carrier’s rights and limitations of liability to “every such servant or agent of the Carrier . . . ”; and, third, it provides that the carrier is deemed to be acting on behalf of “his servants or agents . . . (including independent contractors as aforesaid). . . .” Because of the term “independent contractors” is not used in the second of these three provisions, Tess-ler contends that this provision is inapplicable to independent contractors and, thus, to. Matson.

Although we strictly construe Clause 21, we do not read it as narrowly as Tessler would have us. Reading the clause as a whole, it is apparent that “such servant or agent” in the second provision refers to the phrase in the first provision “servant or agent of the Carrier (including every independent contractor . . . ).” The word “such” in the second provision emphasizes that a modification of “servant or agent” — that is, “including every independent contractor” — was intended to apply in the second provision.

The format of Clause 21 is very similar to the bill of lading clauses considered in Bernard Screen Printing Co. v. Meyer Line, 328 F.Supp. 288 (S.D.N.Y. 1971) , aff’d, 464 F.2d 934 (2d Cir. 1972) , cert, denied, 410 U.S. 910, 93 S. Ct. 966, 35 L.Ed.2d 272 (1973), and Carle & Montanari, Inc. v. American Export Isbrandtsen Lines, Inc., 275 F. Supp. 76 (S.D.N.Y.1967), aff’d mem., 386 F.2d 839 (2d Cir. 1967), cert, denied, 390 U.S. 1013, 88 S.Ct. 1263, 20 L.Ed.2d 162 (1968). In both cases, the relevant clause first purported to exonerate completely from liability specifically named legal entities. The second provision stated the limitation of liability ; however, in listing those to whom it extended, the provision did not repeat the parties set forth in the first provision, but merely used a phrase that referred to those parties. The courts in Bernard Screen and Carle & Montanari held, as do we now, that this format is sufficient to extend the limitation of liability in the second provision to the specific parties listed in the first provision.

Tessler’s final contention is that, even if the bill of lading in question extends to independent contractors, it does not extend to stevedores, who must be mentioned expressly. Relying on Cabot Corp. v. S. S. Mormacscan, 441 F.2d 476, 478 (2d Cir. 1971), Tessler argues that stevedores are protected only if the word “stevedores” is included in the bill of lading.

Cabot involved a bill of lading limiting the liability of the “carrier,” which was defined as “all persons rendering services in connection with performance of this contract.” The defendant stevedore damaged plaintiff’s goods while loading cargo belonging to another shipper. The Second Circuit, finding the language of the bill of lading ambiguous, refused to extend the limitation of liability to the stevedore. “One can only guess,” the court stated, “ . whether ‘all persons rendering services’ is designed to include stevedores loading the goods of another shipper.” Id.

Whether a bill of lading extends limitations of liability to stevedores depends on whether “the clarity of the language used expresses such to be the understanding of the contracting parties.” Robert C. Herd & Co. v. Krawill Machinery Corp., 359 U.S. at 305, 79 S.Ct. at 771. Two circuits have recently held that a bill of lading mentioning independent contractors clearly includes stevedores. Bernard Screen Printing Corp. v. Meyer Line, 464 F.2d 934, 936 n. 1 (2d Cir. 1972), cert, denied, 410 U. S. 910, 93 S.Ct. 966, 35 L.Ed.2d 272 (1973); Secrest Machine Co. v. S. S. Tiber, 450 F.2d 285, 287 (5th Cir. 1971). The language of the district court in Bernard Screen is instructive:

To exclude “stevedores,” who are independent contractors, from the scope of the more inclusive term would, in ef-feet, be holding that parties by using the more inclusive term had accomplished the opposite result.

328 F.Supp. at 290. We agree, and hold that the bill of lading at issue extended a limitation of liability to Matson, a stevedore.

Affirmed and remanded for further proceedings.

      . Clause 21 provides :
      It is hereby expressly agreed that no servant or agent of the Carrier (including every independent contractor from time employed by the Carrier) shall in any circumstances whatsoever be under any liability whatsoever to the Shipper, Consignee, or Owner of the goods or to any of this Bill of Lading for any loss, damage or delay of whatsoever kind arising or resulting directly or indirectly from any act, neglect or default on his part while acting in the course of or in connection with his employment and, but without prejudice to the generality of the foregoing provisions in this Clause, every exemption, limitation, condition and liberty herein contained and every right, exemption, from liability, de-fence and immunity of whatsoever nature applicable to the Carrier or to which the Carrier is entitled hereunder shall also be available and shall extend to protect every such servant or agent of the Carrier acting as aforesaid and for the purpose of all the foregoing provisions of the Clause the Carrier is or shall be deemed to be acting as agent or trustees on behalf and for the benefit of all persons who are or might be his servants or agents from time to time (including independent contractors as aforesaid) and all such persons shall to this extent be or be deemed to be parties to the contract in or evidence by this Bill of Lading. [Emphasis added.]

      . The name arises from the case of Adler v. Dickson, [1955] 1 Q.B. 158, involving the steamship “Himalaya.”

      . Compare A. M. Collins & Co. v. Panama Railroad Co., 197 F.2d 893 (5th Cir.), cert, denied, 344 U.S. 875, 73 S.Ct. 168, 97 L.Ed. 677 (1952) (holding that a stevedore, as an agent of the carrier performing the carrier’s obligation, was entitled to a |500 per package limitation in the carrier’s bill of lading because this limitation, while extending expressly only to the carrier, was not personal to the carrier) with R. C. Herd & Co. v. Krawill Machinery Corp., 256 F.2d 946 (4th Cir. 1958) (holding that the provisions of COGSA limiting a carrier’s liability indicate no intention to regulate a stevedore’s liability).

      . The Court stated:
      If such had been a purpose of the contracting parties it must be presumed that they would in some way have expressed it in the contract. Since they did not do so, it follows that the provisions of the bill of lading did ‘not cut off [respondent’s] remedy against the agent that did the wrongful act.’ Sloan Shipyards Corp. v. Emergency Fleet Corp., 258 U.S. 549, 568, 42 S.Ct. 386, 66 L.Ed. 762.
      359 U.S. at 302, 79 S.Ct. at 769.

      . The Court expressly disagreed with the conclusion of A. M. Collins & Co. v. Panama Railroad Co., 197 F.2d 893 (5th Cir. 1952), supra note 3. 359 U.S. at 303, 79 S.Ct. 766.

      . Section 3(8) of COGSA [46 U.S.C. § 1303(8)] provides that any clause that lessens the liability of the carrier or the ship “otherwise than as provided in this chapter” shall be null and void. See Otis McAllister & Co. v. Skibs, 260 F.2d 181 (9th Cir. 1958), cert, denied, 359 U.S. 915, 79 S.Ct. 584, 3 L.Ed.2d 576 (1959). Thus, for example, parties cannot stipulate that they will never be liable for more than $400.

      . 46 U.S.C. § 1306 provides :
      Notwithstanding the provisions of sections 1303-1305 of this title, a carrier, master or agent of the carrier, and a shipper shall, in regard to any particular goods be at liberty to enter into any agreement in any terms as to the responsibility and liability of the carrier for such goods, and as to the rights and immunities of the carrier in respect of such goods, or his obligation as to seaworthiness (so far as the stipulation regarding seaworthiness is not contrary to public policy), or the care or diligence of his servants or agents in regard to the loading, handling, stowage, carriage, custody, care, and discharge of the goods carried by sea: Provided, That in this case no bill of lading has been or shall be issued and that the terms agreed shall be embodied in a receipt which shall be a nonnegotiable document and shall bo marked as such.
      Any agreement so entered into shall have full legal effect: Provided, That this section shall not apply to ordinary commercial shipments made in the ordinary course of trade but only to other shipments where the character or condition of the property to be carried or the circumstances, terms, and conditions under which the carriage is to be performed are such as reasonably to justify a 'special agreement. [Emphasis added.]

      . The plight of cargo owners was aptly expressed in Them Damaged Cwrgo Blues, by James A. Quinby, Esq., of the San Francisco bar, reprinted by permission.
      It is much to be regretted
      That your goods are slightly wetted But our lack of liability is plain,
      For our latest Bill of Lading Which is proof against evading Bears exceptions for sea water, rust and rain.
      Also sweat, contamination,
      Fire and all depreciation That we’ve ever seen or heard of on a ship.
      And our due examination Which we made at destination Shows your cargo much improved by the trip.
      * Si * * *
      It really is a crime
      That you’re wasting all your time,
      For our Bill of Lading clauses make it plain
      That from ullage, rust or seepage,
      Water, sweat or just plain leakage,
      Act of God, restraint of princes, theft or war,
      Loss, damage or detention,
      Lock out, strike or circumvention,
      Blockade, interdict or loss twixt ship and shore,
      Quarantine or heavy weather.
      Fog and rain or both together,
      We’re protected from all these and many more,
      And it’s very plain to see That our liability
      As regards your claim is absolutely nil,
      So try your underwriter,
      I-Ie’s a friendly sort of blighter,
      And is pretty sure to grin and foot the bill.

      . The amount of litigation that has surrounded the validity of Himalaya clauses leads us to believe that such clauses are not at all uncommon in modern ocean bills of lading. The Uniform Ocean Bill of Lading does not contain a Himalaya clause. It does, however, provide in Clause 17 for a choice of rates in language quite similar to that contained in Clause 18 of the bill of lading at issue. W. Poor, Charter Parties and Ocean Bills of Lading 423 (5th ed. 1968).

      . See note 1 supra.

      . The first limb of Clause 21 purports to exonerate from all liability any “servant or agent of the Carrier (including every independent contractor . . ..” Matson does not seek a shield from liability by arguing that we should give effect to this first portion. Rather, it contends that the second portion of Clause 21, extending the carrier’s rights and immunities to “such servant or agent,” controls and extends the carrier’s $500 limitation of liability to Matson.
      We are at a loss to explain why the first portion is even in the bill of lading if it is not meant to have some effect. Given the adhesive nature of this contract, however, and the doctrine of strict construction of limitation of liability clauses, we read the first limb of Clause 21 to have significance only to the extent that it aids us in determining the parties to whom the clause as a whole is intended to apply.

      . The bill of lading considered in Bernard Screen included the following clause:
      The contract evidenced hereby is between the shipper and the owner or demise charterer of the ship designated to carry the goods. It is understood and agreed that, other than said shipowner or demise charterer, no person, firm or corporation or other legal entity whatsoever (including the master, officer and crew of the vessel and all agents and independent contractors) is, or shall be deemed to be, liable to the shipper or consignee as carrier, bailee or otherwise howsoever in contract or in tort. If, however, it shall be adjudged that any other than said shipowner or demise charterer is carrier or bailee of the goods or under any responsibility to the shipper or consignee, all defences (including all limitations of said exonerations from liability) provided to said shipowner or demise charterer by law or by terms hereof shall be available to such other.
      464 F.2d at 935.


source: Caselaw Access Project

author: WEICK, Circuit Judge.

license: Public Domain

text:
    In the Matter of Kenneth Leroy WALLER, Bankrupt, Madeline R. WALLER, Appellant, v. Kenneth Leroy WALLER, Appellee.
    No. 73-1609.
    United States Court of Appeals, Sixth Circuit.
    Argued Feb. 4, 1974.
    Decided April 10, 1974.
    Edward J. Maher, Maher & Widder Co., Cleveland, Ohio, for Madeline R. Waller.
    David J. Richards, Jr., Dworken & Bernstein Co., Painesville, Ohio, for Kenneth L. Waller.
    Before WEICK, EDWARDS and PECK, Circuit Judges.
   WEICK, Circuit Judge.

The controvery in this case arose in the Bankruptcy Court, where the bankrupt, Kenneth Leroy Waller, a ex-husband of appellant, Madeline R. Waller, petitioned the Bankruptcy Court to reopen his previously-closed bankruptcy case, and to enjoin his ex-wife from enforcing a decree of the Common Pleas Court of Cuyahoga County, Ohio, Domestic Relations Division, which decree granted to her a divorce and custody of their six and one-half year old son and adopted and made a part of the decree a separation agreement previously entered into by the parties providing for alimony, maintenance, support and division of property.

The part of the separation agreement (now an order of the Common Pleas Court) of .which the bankrupt sought to enjoin enforcement, provides in paragraph (6), under the heading “Prior Debts”, the following:

The husband shall pay and indemnify and hold the wife absolutely harmless from all existing obligations.

Among the marital debts which the Common Pleas Court had ordered Waller to pay was an open account owing to King Furniture Company of Cleveland, Ohio, for household furniture which was awarded by the Court to the wife in the division of property and which was in her possession and was being used by her for herself and for her minor son in the household which she maintained.

Waller had neglected to pay the furniture bill and when he voluntarily went into bankruptcy less than three months after the divorce, he listed in his schedules as an unsecured creditor, the King Furniture Company, in the amount of $1,951.72. He did not list his ex-wife as a creditor, and there was no proof offered and no claim was made that she knew of his bankruptcy.

Waller received a discharge in the bankruptcy proceeding and the case was closed.

King Furniture Company then sued Mrs. Waller in the Municipal Court of Cleveland, to recover the balance owing for the furniture in the amount of $2,273.84. Mrs. Waller filed a third party complaint in the Municipal Court of Cleveland against Waller, seeking to compel him to pay the bill. She also filed in the Common Pleas Court of Cuy-ahoga County a motion to require Waller to show cause why he should not be punished for contempt for violation of the Court’s decree.

The Bankruptcy Judge, in an ex parte order, reopened the bankruptcy case and granted a temporary injunction restraining the enforcement of the decree. Thereafter he made the injunction permanent. On review, the District Court affirmed. We reverse.

It was the theory of the bankrupt, adopted by the Bankruptcy Judge, that the award of the household furniture to the wife and the order requiring him to pay all marital debts and indemnifying his ex-wife therefrom, was merely division of property and did not constitute alimony, maintenance or support under Ohio law, and therefore it was dis-chargeable in bankruptcy.

Mrs. Waller contended that the division of property and the order requiring her husband to pay the marital bills was “. . . alimony due or to become due, or for maintenance or support of wife or child.” 11 U.S.C. § 35(a)(7) (1970).

The law of Ohio must be resorted to in order to determine what constitutes alimony, maintenance or support. Des-jardins v. Desjardins, 193 F.Supp. 210, 213 (E.D.Ky.1961), modified and aff’d, 308 F.2d 111, 115-116 (6th Cir. 1962).

It is significant that no Ohio case has been cited to us holding that such an award and indemnity did not constitute alimony.

The case closest in point to the present case is Collins v. Smith, 26 Ohio Misc. 231, 270 N.E.2d 377 (C.P.Scioto 1971), where the personal property awarded to the wife was mortgaged and the husband had agreed to hold harmless his wife from any debts or obligations outstanding. The Court held:

We concur with the Seventh District Court of Appeals which took the position that a nearly identical provision constituted an award of alimony, and the obligation to save harmless cannot be discharged in bankruptcy. Fredericks v. Fredericks, Ohio App., 146 N.E.2d 153, 76 Ohio Law Abst. 296. (Id. at 378)

In Collins the divorce decree specifically characterized the award of furniture as alimony, but did not so characterize the indemnity agreement.

The fact that in Collins the personal property was mortgaged, whereas in the present case the debt was an open account, would seem to be immaterial. It is a distinction without a difference.

The Bankruptcy Judge was of the view that under Ohio law the order to pay the marital debts and to indemnify the wife therefrom, could be considered as alimony only in two situations:

. [W]here (1) the hold harmless agreement is directed specifically to the payment of liens upon property, which property itself has been awarded as alimony, or (2) where certain debts have been designated specifically as alimony within the decree, and these debts are themselves directed to the support of the wife or child.

We have found no case in Ohio holding that only in these two situations can the award be considered as alimony.

The Bankruptcy Court stated that in Ohio,

Alimony may comprise property where that property is set aside for the specific and defínate [sic] purpose of supporting and maintaining the wife.

The Bankruptcy Court cited Desjardins v. Desjardins, 193 F.Supp. 210 (E.D. Ky.1961), as authority for this proposition.

The Bankruptcy Court then focused on this “specific and definite purpose” designation as the criteria for distinguishing “alimony” from “property settlement.” The Court felt that unless an award of property in a divorce decree, or the division of property in a separation agreement later incorporated into a divorce decree, specifically designated such award or division of property as “alimony,” it was just a “property settlement,” and therefore it was not within the exception to discharge under Section 17(a) of the Bankruptcy Act. (11 U.S.C. § 35(a)(7).)

The Court then went on to find that in this case—

[I]t seems clear that such phrase [Paragraph (6)] applies not as alimony but merely as property settlement.

Thus the Court found the bankrupt’s obligation to the appellant was dischargea-ble.

In our opinion it is not necessary for a divorce court in Ohio to state specifically whether an award which it makes to a wife is alimony. We are of the view that this is too narrow an interpretation of the Ohio law, and is erroneous. Suppose, for example, the divorce court had ordered Waller to provide household furniture in the living quarters of his wife and child; is there any doubt about the fact that this would constitute “alimony . . . .or for maintenance or support of wife or child” within the meaning of 11 U.S.C. § 35(a)(7) (1970)?

This being true, we submit there is no difference between such an order and one requiring the husband to pay for furniture which he had already purchased for his family, but for which he had not paid.

Ohio Revised Code § 3105.18 provides for alimony as follows:

The court of common pleas may allow alimony as it deems reasonable to either party, having due regard to property which came to either by their marriage, the earning capacity of either and the value of real and personal estate of either, at the time of the decree.
Such alimony may be allowed in real or personal property, or both, or by decreeing a sum of money, payable either in gross or by installments, as the court deems equitable.

The statutory definition of alimony is indeed very broad and includes an allowance in real or personal property, or both, as well as in money. There is no provision in the statute that an award of property must be designated specifically as “alimony”, or that otherwise it will be considered “merely property settlement,” and not alimony. In fact, just the opposite is true. The intent of the separation agreement which became an order of the Court was clear that the wife was to receive the personal property awarded to her without any strings attached thereto, and without having it taken away from her by her husband’s marital creditors, which debts he agreed to pay and against which he indemnified her.

In Fickel v. Granger, 83 Ohio St. 101, 93 N.E. 527 (1910), the Supreme Court of Ohio held:

Alimony . . . is an award by the court upon consideration of equity and public policy and is founded upon the obligation, which grows out of the marriage relation, that the husband must support his wife, which obligation continues after legal separation without her fault. (Syl. 1)

In Durham v. Durham, 104 Ohio St. 7, 135 N.E. 280 (1922), the Supreme Court of Ohio stated in regard to alimony:

It must be confessed that the Legislature has used the term in a more extensive sense than defined by the lexicographers or the courts, (p. 10, 135 N.E. at p. 280)

Later the Court stated:

In divorce the trial court is given a wide latitude of discretion in the allowance of what the statute terms alimony (p. 11, 135 N.E. at p. 281)

In Popp v. Popp, 85 Ohio St. 470, 471, 98 N.E. 1131 (1911), the Supreme Court of Ohio by order reversed the Court of Appeals for “holding that such division of property was not alimony.” See also Kadel v. Kadel, 21 Ohio Misc. 232, 250 N.E.2d 420, 49 Ohio Op.2d 179 (C.P. Clark 1969); Reed v. Reed, 20 Ohio Law Abst. 491 (Ct.App. Franklin 1935); Collins v. Smith, 26 Ohio Misc. 231, 270 N. E.2d 377 (C.P. Scioto 1971); Fredericks v. Fredericks, 76 Ohio Law Abst. 296, 146 N.E.2d 153 (Ct. App. Columbiana 1956).

In Desjardins v. Desjardins, supra, the case relied on by the Bankruptcy Court for distinguishing alimony from a property settlement, District Judge Mac Swinford, in determining Ohio law, stated:

The Ohio courts regard the term “alimony” as synonymous with a division of the property belonging to the parties at the time of separation and hold that decrees approving such agreements are not subject to modification. (193 F.Supp. at 213)

This Court, in Avery v. Avery, 114 F. 2d 768, 770 (6th Cir. 1940), has previously stated:

There is no peculiar sanctity surrounding the words “property settlement.” Bankruptcy courts sit in equity . . and have power “to sift the circumstances surrounding any claim to see that injustice or unfairness is not done in administration of the bankrupt estate.” (Id. at 770).

Waller’s promises contained in paragraph (6) of the separation agreement were surely made with the knowledge of the debt outstanding to King Furniture Company, for he listed the debt on his bankruptcy schedules less than three months later. He also knew of his obligation under the divorce decree to pay the furniture bill and to indemnify his wife therefrom; yet he neglected to list her as a creditor in his bankruptcy schedules and she received no notice of the bankruptcy proceeding.

In light of the statute, history, and the Court decisions, and taking into account the circumstances of the claim, we hold that Waller’s obligation to his former wife to “pay and indemnify and hold the wife absolutely harmless from all existing obligations” constituted alimony, maintenance and support for the wife or child, and was a debt not dis-chargeable in bankruptcy by reason of the exception to discharge in 11 U.S.C. § 35(a)(7).

We also note that the Bankruptcy Court did not rule on the question whether the bankrupt’s obligation to his former wife was discharged because she was not listed as a creditor, she was not sent notice of the bankruptcy proceeding, and there was no proof offered that she ever had knowledge of his bankruptcy proceeding. See 11 U.S.C. § 35(a)(3). Had the Court ruled on this issue, which is peculiarly a federal question, there may have been no necessity for it to decide what constitutes alimony, maintenance or support under Ohio law, which is a question more properly to be decided by Ohio Courts.

The Bankruptcy Court felt such a de-ciskfti was not required by reason of its holding that such a claim on the part of the former wife was not yet mature. The Bankruptcy Court noted that under Ohio law there is a distinction between an agreement to indemnify against loss and an agreement to indemnify against liability. See Henderson-Achert Lithographic Co. v. John Shillito Co., 64 Ohio St. 236, 254, 60 N.E. 295 (1901). Under the former a right does not accrue until damage or loss is incurred, while under the latter such loss or damage is not a prerequisite.

The Bankruptcy Court held that paragraph (6) of the agreement “reads . as an agreement to indemnify against loss as distinguished from an agreement to indemnify against liability.” The Court then determined the former wife’s claim was not mature since she had not “sustained damage, loss, or at least has suffered judgment indicating an adjudication of her liability.” In other words, the wife was required either to suffer judgment or to pay her former husband’s obligation before obtaining any relief in the Bankruptcy Court.

Once again we disagree with the Bankruptcy Court as to the proper interpretation of the agreement under applicable Ohio law.

Paragraph (6) of the agreement states: *'

The husband shall pay and indemnify and hold the wife absolutely harmless from all existing obligations. (Emphasis added.)

Nowhere in the agreement is “loss” mentioned; instead, there are promises to pay, to indemnify and to hold the wife absolutely harmless from existing marital obligations. This terminology is more consistently interpreted as an indemnity against liability, not loss, and therefore the former wife’s claim was sufficiently mature for her to seek relief. See Wilson v. Stilwell, 9 Ohio St. 467 (1859); Martin v. Bolenbough, 42 Ohio St. 508, 514-515 (1885); 41 Am.Jur.2d Indemnity § 1 (1968).

The 1970 amendment to the Bankruptcy Act increased the jurisdiction of the Bankruptcy Courts in order “to effectuate, more fully, the discharge in bankruptcy by rendering it less subject to abuse by harassing creditors.” H.R.Rep.No.91-1502, 91st Cong., 2d Sess. 2, U.S.Code Cong. & Admin.News, p. 4156 (1970). The wife was not an harassing creditor. Inasmuch as the Bankruptcy Court may now' render null and void judgments of state courts dealing with the personal liability of a bankrupt (11 U.S.C. § 32(f)), that Court should act with caution in order not to abuse the balance between the state and federal relationship.

It is pertinent to note in regard to a husband’s liability for maintenance and support for his wife and family, from which alimony, maintenance and support spring, that the Supreme Court of the United States had established an exception to discharge of debts for such a liability even before the Bankruptcy Act was amended specifically to make' this an exception from discharge. Wetmore v. Markoe, 196 U.S. 68, 77, 25 S.Ct. 172, 49 L.Ed. 390 (1904).

The judgment of the District Court affirming the Bankruptcy Court is reversed, and the cause is remanded with instructions to dissolve the injunction and to dismiss the complaint.

      . The Bankruptcy Judge was of the opinion that it was unnecessary for the bankrupt to list his ex-wife as a creditor in his schedules. This view runs counter to 11 U.S.C. § 25(a) (8) which requires the listing of “contingent, unliquidated, or disputed claims.

        If

      In the bankrupt’s “Statement of Affairs”, filed with his schedules, the following question was asked under Item 8:
      Have you been party plaintiff or defendant in any suit within the year preceding the filing of the original petition herein?
      The bankrupt’s answer under oath to this question was “None”. This answer was false as he was party defendant in the divorce case less than three months before his bankruptcy.

      . When the furniture was originally purchased on open account it was certainly regarded as necessary for the maintenance and support of the family, which necessity was the obligation of Waller to provide. To relieve Mm now of this obligation through bankruptcy could result in the seizure of the furniture from the home of his wife and child. Reliance of the Bankruptcy Judge on Schwoll v. Meeks, 76 Ohio App. 231, 63 N. E.2d 831 (1944), is misplaced as that case did not involve a divorce decree providing for maintenance and support of a wife or child. Nor is Addison v. Addison, 95 Ohio App. 191, 118 N.E.2d 225 (1953), applicable as that case involved a money judgment for a debt which was not alimony. The separation agreement provided in paragraph (9) that even attorney’s fees for services rendered to the wife in connection with the agreement or in any divorce or alimony action now pending or hereafter commenced sliall be considered as additional alimony to the wife.

      . It would have been foolhardy for the wife to pay her former husband’s debt, liability which she disputed, particularly since the schedules filed by her husband in the Bankruptcy Court showed no assets available for payment of unsecured creditors totaling $7,556.71, which debts were solely for merchandise purchased. All obligations of the husband, plus a partially-secured claim ($3,247 on his automobile worth $1,000) have been discharged in bankruptcy. Not being satisfied with all of this the bankrupt sought the aid of the Bankruptcy Court to relieve him of his obligation under the divorce decree to pay for the household furniture which he had purchased for his family, and, if successful, it might result in the furniture being taken away from the wife.


author: SEITZ, Chief Judge.

text:
    VIRGIN ISLANDS PORT AUTHORITY, Appellee, v. S. I. U. de PUERTO RICO, CARIBE & LATINOAMERICA, affiliated to the Seafarers International Union of North America, AFL-CIO and Granville Hen-drington, Union Delegate for S. I. U. de Puerto Rico, Appellants.
    No. 73-1459.
    United States Court of Appeals, Third Circuit.
    Argued Dec. 3, 1973.
    Decided March 28, 1974.

      Robert H. Ruskin, Christiansted, St. Croix, V. I., for appellants.
    Verne A. Hodge, Atty. Gen. by Henry L. Feuerzeig, Asst. Atty. Gen., Charlotte Amalie, St. Thomas, V. I., for appellee; Arent, Fox, Kintner, Plotkin & Kahn by Allen G. Siegel, Stanley J. Brown, Washington, D. C., of counsel.
    Before SEITZ, Chief Judge, and GIBBONS and WEIS, Circuit Judges.
   OPINION OF THE COURT

SEITZ, Chief Judge.

Defendant, S. I. U. de Puerto Rico (“the Union”), the exclusive bargaining representative for the employees of plaintiff, the Virgin Islands Port Authority (“the Authority”), appeals from orders of the district court for the Virgin Islands enjoining the Port Authority’s employees from striking and denying the Union’s motion for reconsideration. The Authority, created by the “Port Authority Act,” 29 V.I. C. Chapter 10, is a government corporation. While not expressly authorized by the Port Authority Act to engage in collective bargaining, the Authority has negotiated bargaining agreements with its employees.

At the expiration of the agreement covering 1972, the Authority’s marine operations employees commenced a strike in support of their economic demands against the Authority. Maintaining that the strike was prohibited by 24 V.I.C. § 64(b) (1970), the Authority sought a temporary restraining order and preliminary and permanent injunctions. The District Court agreed that Section 64(b) proscribed this strike and granted the relief requested by the Authority. The Union appeals.

Section 64(b), in relevant part, provides :

Employees of the Government of the Virgin Islands or any agency thereof shall not have the right to strike or engage in any work stoppage whatsoever ....

24 V.I.C. § 64(b) (1970).

Since the Authority is expressly made a government instrumentality, Section 64(b) would seem to apply to the Authority’s employees. While there is no express provision in the Act granting the Authority’s employees the right to strike, the Union contends that the Port Authority Act implicitly excepts Authority employees from the operation of Section 64(b).

The Union asserts that the Virgin Islands legislature granted the Authority complete autonomy in its labor relations, thereby evidencing an intention that the Authority and its employees conduct those relations as would a privately owned corporation and its employees. In support of its contention, the Union relies on the Authority’s power to enter collective bargaining agreements with its employees and the exclusion of Authority employees from civil service protection. Neither point requires the inference that the legislature intended to exempt the Authority employees from Section 64(b).

Although the Authority is not expressly given the power to enter collective bargaining agreements, this power may be inferred from the Authority’s powers to contract and to hire labor. This, however, does not place the Authority’s employees on different footing from other government employees; the Virgin Islands Code recognizes the rights of all government employees to collectively negotiate with the government, 24 V.I.C. § 64(c) (1970), and directs government agencies to recognize employee organizations for the purpose of collectively bargaining and contracting with government employees. 24 V. I.C. § 64(d) (1970).

Thus, the only statutory provision from which Authority autonomy in labor relations may be inferred is the provision placing the Authority’s employees outside the Personnel Merit System which grants certain protection to most government employees. Not all other government employees enjoy the Merit System’s protections, however, and the premise that the legislature did not deem it practical to afford those protections to all government employees does not mandate a conclusion that the legislature did intend to give excluded employees the right to strike. We con-elude, therefore, that the Port Authority Act does not exempt Authority employees from Section 64(b)’s prohibition of strikes by government employees.

We note that Section 64(b) was passed after the Port Authority Act , and had the legislature intended to exempt Authority employees from the clear terms of Section 64(b), it easily could have done so. The Union asserts that this was unnecessary because the Port Authority Act provides that its provisions control when inconsistent with other Virgin Islands statutes. Nothing in the Port Authority Act, however, is necessarily inconsistent with Section 64(b).

As the Virgin Islands Code clearly indicates for other government employees, the right to bargain is not inconsistent with the prohibition of strikes. While 24 V.I.C. § 64(c) gives public employees the right to collectively negotiate with the government, the immediately preceding section prohibits strikes by employees of the Virgin Islands. 24 V.I.C. § 64(b). See also Local 232, U.A.W. v. Wisconsin Employment Relations Board, 336 U.S. 245, 259, 69 S.Ct. 516, 93 L.Ed. 1121 (1948); United Federation of Postal Clerks v. Blount, 325 F.Supp. 879, 883-884 (D.D.C.), aff’d, 404 U.S. 802, 92 S.Ct. 80, 30 L.Ed.2d 38 (1971). Nor is exemption from civil service protections inconsistent with proscription of strikes. In fact, many cases have upheld an an-tistrike rule despite the absence of a civil service scheme. See, e. g., Kirker v. Moore, 308 F.Supp. 615, 624 (S.D.W. Va.1970).

The Union- nonetheless argues that the right to strike was conferred on Authority employees by negative implication; since the bargaining agreement between the Union and the Authority expressly prohibits strikes during the life of the agreement, it gave the employees, the Union contends, the right to strike upon expiration of the agreement. Even if we were to concede that this was the intent of the contracting parties, we would not enforce this part of the bargain. Having found that the law of the Virgin Islands forbids strikes by government employees, we would find that the right to strike contemplated in the collective bargaining agreement is unenforceable by operation of the express statutory prohibition of strikes contained in Section 64(b). The Union and the Authority could not by private agreement waive the illegality of such strikes and evade the express legislative prohibition of strikes contained in Section 64(b).

Finally, the Union contends that the district court found only that the strike was within the express statutory prohibition of Section 64(b) and did not rule on the merits of the Authority’s application for an injunction. This contention rests on the Union’s further claim that in granting the injunction the court made no mention of irreparable harm to the Authority. In granting the temporary restraining order, the district court did find that the Authority would suffer irreparable harm if relief were denied. The Union has not shown that this finding was clearly erroneous nor did it introduce any evidence to cast doubt on this finding or to show any changed circumstances at the time the permanent injunction was granted. The district court did not abuse its discretion in granting the permanent injunction without further reference to the harm to plaintiff likely to result from denial of injunctive relief.

The judgment of the district court will be affirmed.

      . Reported below at 354 F.Supp. 312 (D.V. 1.1973).

      . At tlie preliminary injunction stage, the Union argued that the employees of the Authority were not government employees and were therefore not subject to the proscription of Section 64(b). The district court found that the Authority was a “political subdivision” and that its employees were accordingly government employees. 354 F. Supp. 312, 312-313 (D.V.I.1973). The Union does not challenge that finding here.

      . In determining the powers granted to it, the Authority is authorized to make reference to other Virgin Islands legislation by 29 V.I.C. § 543(17) (1973 Supp.), which provides :
      [The Authority is granted the power] to do all things necessary or desirable to carry out the powers granted to it by this chapter or by any other Act of the Legislature of the Virgin Islands.

      . See Act of Dec. 24, 1968, No. 2375, § 3(c), Sess.L.1968, Pt. II, printed in the annotations to 29 V.I.C. § 543 (1973 Supp.). This provides that Port Authority employees should, so far as practical, receive the same benefits as those given the workers at the Water and Power Authority. Under 3 V.I. C. § 451a(b) (7) (ii) (1967), Water and Power Authority workers are exempted from the career service.

      . The portion of Section 64(b) which prohibits strikes was enacted in 1970. The legislation creating the Port Authority and relied upon by the Union as the basis for their claim of a right to strike was originally enacted in 1968.

      . “Insofar as the provisions of this chapter are inconsistent with the provisions of any other Act of the Legislature of the Virgin Islands, the provisions of this chapter shall be controlling . . . . ” 29 V.I.C. § 578 ■ (1973 Supp.).


author: PER CURIAM:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Carlos JAIME-BARRIOS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Rafael PINI-ORNELAS, Defendant-Appellant.
    Nos. 73-3001, 73-3002.
    United States Court of Appeals, Ninth Circuit.
    March 25, 1974.
    Certiorari Denied June 17,1974. - See 94 S.Ct. 3178.

      Frank Ragan, Deputy Federal Public Defender, (argued), Charles M. Sevilla, Deputy Federal Public Defender, San Diego, Cal., for appellant.
    Peter Nunez, Asst. U. S. Atty., (argued), Harry D. Stewart, U. S. Atty., Stephan G. Nelson, Robert P. Risso, Asst. U. S. Attys., San Diego, Cal., for appellee.
    Before DUNIWAY and CHOY, Circuit Judges, and TAYLOR, District Judge.

       Of the District of Idaho, sitting by designation.

   PER CURIAM:

Appellants, Carlos Jaime-Barrios (Jaime) and Rafael Pini-Ornelas (Pini) have appealed from a judgment of the district court, sitting without a jury, adjudging each of them guilty as charged in Count Three (conspiring to possess with intent to distribute 939 pounds of marijuana) and Count Four (possession with intent to distribute 939 pounds of marijuana) of a four-count Indictment.

On August 2, 1973, appellants filed a motion to suppress the marijuana seized from the vehicles being driven by them and to sever their trial. After an evi-dentiary hearing, the motion to suppress and to sever was denied. Immediately thereafter, the case was submitted to the court upon the evidence introduced at the hearing on the motion to suppress by way of a stipulation of counsel and agreement of appellants. The court found appellants guilty as to the above mentioned counts and not guilty as to Counts One and Two of the Indictment.

Appellants contend that, under the undisputed facts and circumstances existing at the time the vehicles were stopped and searched, the trial court erred in failing to grant their motion to suppress.

The record reveals that on July 3, 1973, at approximately 6:30 A.M., Robert H. Dunlap, a Border Patrol Agent, accompanied by Agent Martinez, was patrolling the High Pass area of the International Border between the United States and Mexico. This is a remote area, fairly desolate, suitable for ranching, and on the date in question, there were only four residences between Tier-ra del Sol Road and East-West Road and Campo, six miles to the west. Agent Dunlap had lived in one of the residences for about two years and knew all of the persons living in the area, as well as being familiar with the vehicles they drove. The Tierra del Sol Road connects with the East-West Road at a point approximately 300 yards from the border and the East-West Road is approximately 100 to 150 yards from the border at the point it intersects with Indian Road. Dunlap testified that on many occasions he had apprehended persons smuggling aliens or marijuana on the Tierra del Sol Road; that the traffic on this road is extremely light and is normally that of residents of the area who usually operate 4-wheel drive vehicles or pickups.

When Agent Dunlap approached the above mentioned area, at approximately 6:30 A.M. on July 3, 1973, he encountered appellant Jaime at the intersection of the East-West Road and the Tierra del Sol Road driving a dark green 1969 Chrysler automobile at a faster rate of speed than normal on this very rough unimproved dirt road. As the cars passed each other, Dunlap got a good look at Jaime who was alone in the Chrysler.

Because of his experience in apprehending persons smuggling aliens and marijuana on this road, the early hour of the day, the fairly high rate of speed the vehicle was traveling on the rough dirt road, and because he did not recognize the vehicle or the driver, Dunlap and Martinez decided to turn around and stop the ear. Dunlap testified that he had been on patrol in the area during the entire night and had not seen the Chrysler at any of the residences in the area, and since none of the houses had garages, it was unlikely that the vehicle might have been parked out of sight.

On cross-examination, Dunlap agreed that on weekends there was more traffic in the area in question because of campers and motorcycles; that the stop of appellants’ vehicles took place the day before the Fourth of July; that it was possible the Jaime vehicle belonged to a visitor, relative or messenger of one of the four homes within two miles of the intersection; that the car could also have belonged to a camper or vacationer driving through the area; and that he had never stopped a car in the immediate area of the stop in question and found aliens or marijuana.

In response to questions by the court, Dunlap stated that the car driven by appellant Jaime was unusual for the area because most people drove pickups; that he owned a 1971 Plymouth which he drove to town and that a neighbor owned a 1967 Plymouth.

After stopping the Jaime vehicle and as Dunlap approached it, he noticed a large amount of white powder around the trunk of the car which was later discovered to be talcum powder. He testified that most of the cars laden with marijuana, which he had previously encountered, used talcum powder to cover the smell of marijuana. When Dunlap approached the driver of the car, a short conversation ensued and then Dunlap asked appellant to open the trunk of his car, which he did, and Dunlap observed kilo-size packages of marijuana covered with white powder.

As appellant Jaime was being placed under arrest, a 1969 Chevrolet passed and Jaime was observed making motions with his hand to the driver. It was observed that the Chevrolet also had white powder around the trunk. The agents pursued and stopped the Chevrolet which, as later determined, was being driven by appellant Pini. Packages of marijuana were also found in the trunk of his car covered with white powder.

Appellant Jaime concedes that if the legality of the stop is sustained, probable cause existed to search his vehicle, based on Agent Dunlap’s smfell of marijuana and the actions and words of appellant. Appellant Pini agrees with the trial judge that the validity of the stop of his vehicle depends on the right of the officers to stop appellant Jaime’s vehicle.

In view of the concessions made by appellants, the only issue remaining is whether, under the facts and circumstances as disclosed in the record, the agents were legally justified in stopping the appellants at the time and place in question. The trial court held that under the circumstances, Agent Dunlap was justified in stopping the vehicles based on the doctrine of “founded suspicion”. We agree. This doctrine was first enunciated by this court in Wilson v. Porter, 361 F.2d 412-415 (9th Cir. 1966) wherein it was stated:

“. . . [D]ue regard for the practical necessities of effective law enforcement requires that the validity of brief, informal detention be recognized whenever it appears from the totality of the circumstances that the detaining officers could have had reasonable grounds for their action. A founded suspicion is all that is necessary, some basis from which the court can determine that the detention was not arbitrary or harassing.”

There is nothing in the circumstances of this case to indicate that Agent Dunlap was motivated by any considerations other than those which he related in his testimony. It is our opinion that in the totality of the circumstances in this case, Dunlap had a founded suspicion as the basis for stopping the Jaime automobile. There is nothing to indicate the basis for the detention was arbitrary or harassing.

This court has repeatedly held that a stop may be made by agents based on a founded suspicion which may be less than probable cause. United States v. Bugarin-Casas, 484 F.2d 853-854 (9th Cir. 1973).

Appellants argue that the driver of the Jaime car could or might have been someone engaged in some lawful activity. However, where the record discloses circumstances, as it does here, which could move an officer in the reasonable exercise of his duty to the action 'taken, we need not look for a reconstructed, after-the-fact explanation of what may have been nothing more at the time of the occurrence than the instinctive reaction of one trained in the prevention of crime. Wilson v. Porter, supra, 361 F. 2d, at 415.

We believe the facts and circumstances surrounding the stop and search in this case are fairly analogous to those in Wilson v. Porter and United States v. Bugarin-Casas, supra. In our opinion the stop and search made in this case was based on a founded suspicion.

Affirmed.


author: HILL, Circuit Judge.

text:
    Patricia GATES, on behalf of herself, et al., Plaintiffs-Appellants, v. FORD MOTOR COMPANY, a corporation, Defendant-Appellee.
    No. 73-1610.
    United States Court of Appeals, Tenth Circuit.
    April 8, 1974.

      Larry A. Tawwater and John W. Norman, Oklahoma City, Okl., for plaintiffs-appellants.
    Wm. G. Smith, Oklahoma City, Okl., for defendant-appellee.
    Before CLARK, Justice, and HILL and McWILLIAMS, Circuit Judges.

       Honorable Tom O. Clark, Associate Justice, United States Supreme Court, sitting by designation.

   HILL, Circuit Judge.

In this diversity action appellant Patricia Gates brought suit against appel-lee Ford Motor Company for personal injury and wrongful death of her husband. The complaint alleges the deceased was operating a tractor, manufactured by appellee, when it overturned on top of him, resulting in his death. It was claimed that the tractor was defectively designed, constituting negligence, strict liability and a breach of implied warranty of fitness.

Based upon the pleadings, depositions, affidavits and other discovery, the district court for the Western District of Oklahoma granted appellee’s motion for summary judgment. We have examined the record in the light most favorable to appellant and find no genuine issue exists as to any material fact. Accordingly, we affirm.

The relevant facts may be summarized as follows. The subject of the action is a small farm tractor, manufactured by appellee in 1946 and sold to third persons by Harold Potter, an authorized Ford tractor dealer. Potter reacquired the tractor twenty-three years later, made some adjustments and repairs on it, and sold it again. Other persons thereafter owned the tractor before appellant’s husband purchased it in August, 1969. He was using the tractor, with a chain attached, to haul logs off his land on March 14, 1970, when it overturned, killing him. Following the accident Potter inspected the tractor and found it had been altered since its sale by him in 1969. A different engine had been installed and the safety bar on the draw bar assembly had been removed.

Appellant contends appellee had a duty to design the tractor, so it could be used safely for its intended purpose, and that this duty was breached because the tractor was designecj in such a manner as to turn over on top of its driver. Without question appellee was under a duty to design a reasonably safe tractor. The record, however, does not support the allegation that this duty was breached. Appellant has shown only that her husband was fatally injured while operating the tractor. But injury, of itself, is not proof of a defect and raises no presumption of defectiveness. Lyons v. Valley View Hosp., 341 P.2d 261 (Okl.1959).

There were no witnesses to the accident, and thus there is no evidence as to the manner in which the tractor was being operated at the time. Potter testified that the tractor model in question was “one of the most stable and safest tractors on the market” at the time it was manufactured. He also said there were no requirements that tractors be equipped with roll bars or safety belts. This testimony was uncontroverted. The record also discloses the tractor should be used with its proper draw bar attachment, but that this piece of equipment had been removed.

The logical inference to be drawn from appellant’s allegations, that the tractor was defective because it would turn over, is that similar accidents had happened on previous occasions. Yet there is no evidence that the tractor, which had been used for almost twenty-four years, had turned over before. We cannot say that one accident constitutes a design defect.

Nor does the record contain any evidence to support appellant’s claim that the tractor was defective because it did not have such safety features as roll bars and seat belts. Potter’s uncontroverted testimony was that these were not required. At best, appellant has suggested improvements. But the rule is well settled that a manufacturer does not have a legal duty to produce a "product incorporating only features representing the ultimate in safety. Marker v. Universal Oil Prod. Co., 250 F.2d 603 (10th Cir. 1957).

To recover, appellant necessarily must establish that the tractor was defective when manufactured, that such defect rendered the tractor unsafe for its intended use, and that the defective tractor proximately caused the deceased’s injuries. The record, however, discloses that no genuine issues exist on any of the material facts. Summary judgment is therefore proper.

Disposition of this case by summary judgment also is proper under Rule 56(e), F.R.Civ.P. Appellee supported its motion for summary judgment with documents. Under the circumstances, the party opposing the motion may not rest upon the mere allegations of his pleading but must respond with specific facts showing a genuine issue for trial. Appellant, however, failed to do this.

The judgment is affirmed.

      . In support of the motion appellee argued, inter alia, that the statute of limitations barred the action because the tractor had been sold some twenty-two years prior to the accident. Although appellant raises the issue on appeal, it needs little discussion. The applicable statute, 12 O.S. § 95 (Supp. 1971), which provides for a two year limitation period, does not begin to run until injury occurs and the cause of action accrues. Thus the action is not barred.

      . “It goes without saying that at times automobiles turn over, and locomotives, and wagons, and vehicles of all kinds, and that rarely is there indication of negligence in design to account for the occurrence. And so with tractors. Operating as they do over all sorts of surfaces, it would be strange indeed [if] ... it did not appear that occasionally one turned over or sustained some other accident not attributable to negligence in design or defective materials or workmanship.” Ford Motor Oo. v. Wolber, 32 F.2d 18, 19 (7th Cir. 1929).

      . Appellant also argues that the alterations made on the defectively designed tractor do not relieve appellee of liability. Ilaving found that no genuine issue exists as to defectiveness, we need not decide the issue.

      . Rule 56(e) provides in part: When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.


author: MEHAFFY, Chief Judge.

text:
    Peter J. BRENNAN, Secretary of Labor, Petitioner, v. OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION, and Vy Lactos Laboratories, Inc., Respondents.
    No. 73-1235.
    United States Court of Appeals, Eighth Circuit.
    Submitted Nov. 12, 1973.
    Decided April 5, 1974.

      Michael H. Stein, Atty., Dept, of Justice, Washington, D. C., for petitioner.
    Thomas A. Finley, Des Moines, Iowa, for respondents.
    Before MEHAFFY, Chief Judge, MOORE, Senior Circuit Judge, and WEBSTER, Circuit Judge.

       The Honorable LEONARD P. MOORE, Senior Circuit Judge, Second Circuit, sitting by designation.

   MEHAFFY, Chief Judge.

The Secretary of Labor has petitioned this court to review the decision of the Occupational Safety and Health Review Commission in Vy Lactos Laboratories, Inc., OSHRC Dock. No. 31 (Feb. 21, 1973). The decision in question affirmed, but on different grounds, a hearing examiner’s report and order that had vacated a citation and proposed penalty issued by the Secretary to Vy Lactos for an alleged serious violation of the Occupational Safety and Health Act’s general duty clause, 29 U.S.C. § 654(a)(1). The Secretary argues that the Commission’s decision is based on an erroneous construction of the general duty clause and that we should therefore reverse the decision and reinstate the citation and proposed penalty. For the reasons stated below, we agree that the Commission’s decision must be reversed, but on the basis of the record before us we feel compelled to remand the matter for further administrative proceedings.

7. The Incident.

Respondent Vy Lactos Laboratories is an interstate manufacturer of animal feed concentrates. In the course of the manufacturing process at its Des Moines, Iowa plant Vy Lactos utilizes proteinaceous fish solubles. These fish solubles, which consist of the “innards and guts” of fish, are received in a liquid “slurry” form that is treated with sulfuric acid to retard decomposition. The slurry is stored in tanks in the basement of the plant.

On the evening of July 15, 1971 a. truck delivered a full load of fish slurry into one of the basement tanks of the Vy Lactos plant in Des Moines. The tank overflowed into an adjacent room in the basement and filled it to a depth of 31 inches. When the overflow was discovered the next morning, a hose was inserted and the slurry pumped out until a depth of three or four inches remained. Employees of Vy Lactos were then directed to enter the basement room in order to clean up the remaining slurry and repair some pumps that had been submerged under the overflow. The employees who entered the basement were almost immediately overcome, apparently by hydrogen sulfide gas, as were those who tried to come to their assistance. Vy Lactos had no emergency breathing apparatus available in the plant and had taken no safety precautions to cope with accumulations of hydrogen sulfide gas. The men who had been overcome were extricated by the fire department rescue squad. Ultimately three of the employees died and two were seriously injured.

77. The Hearing Examiner’s Report.

After an inspection and investigation of the foregoing incident the Secretary issued Vy Lactos a citation for a serious violation of the general duty clause of the Occupational Safety and Health Act, 29 U.S.C. § 654(a)(1), and assessed a proposed penalty of $750.00. Vy Lactos contested the citation and proposed penalty, and a hearing was subsequently held before an OSHRC hearing examiner. At the hearing the Secretary proceeded on the theory that the lethal accumulation of hydrogen sulfide gas was the foreseeable result of natural decomposition of the fish slurry. Vy Lactos, on the other hand, based its proof on the theory that the hydrogen sulfide gas had been produced by a reasonably unforeseeable chemical reaction between the acid in the slurry and iron sulfide particles that allegedly dropped from the ceiling when an employee cut an emergency ventilation hole into the basement room from the floor above with a welding torch.

The report and decision of the hearing examiner basically adopted Vy Lactos’s welding-chemical reaction theory of the incident and dismissed the citation and proposed penalty. The statutory rationale used by the hearing examiner was expressly based on section 17 (k) of the Act, 29 U.S.C. § 666(j), which provides that no serious violation of the Act shall be deemed to exist where:

* * * the employer did not, and could not with the exercise of reasonable diligence, know of the presence of the violation.

The hearing examiner’s use of section 17 (k) of the Act as the sole basis for dismissing the citation and proposed penalty has two basic weaknesses. First, the provisions of section 17 (k) relate only to determinations involving serious violations of the Act. In addition to serious violations (which must be penalized by a fine of up to $1,000.-00), the Act also provides that an employer may be cited for de minimis violations (which carry no penalty) and for “violations” simpliciter (which may be penalized by a fine of up to $1,000.-00). Thus the hearing examiner’s section 17 (k) rationale is irrelevant to any determination of whether or not the Secretary had established a violation,' de minimis or simpliciter. The second basic weakness of the hearing examiner’s rationale is that it addresses itself to the foreseeability of the incident as it actually occurred rather than the foreseeability of the general hazard of hydrogen sulfide accumulations. Neither the general duty clause nor section 17(k) requires any actual death or physical injury for a violation to occur. A violation occurs whenever an employer fails to take reasonable precautionary steps to protect his employees from reasonably foreseeable “recognized hazards” that are causing or are likely to cause death or serious physical injury. Thus, even if the three deaths and two serious injuries involved here were actually the result of an unforeseeable chemical reaction, Vy Lactos may still have been in violation of the general duty clause because of its self-admitted failure to take any precautionary steps whatsoever to protect its employees from the hazard of hydrogen sulfide accumulations that is now apparent.

III. The Review Commission Decision.

Pursuant to the provisions of 29 U.S. C. § 661 (i) Commissioner Burch directed review of the hearing examiner’s decision before the full Commission. Although the Commission affirmed, by a vote of two to one, the result reached by the hearing examiner, it expressly refrained from reliance on the hearing examiner’s section 17(k) rationale. Instead, the Commission majority addressed itself to the threshold issue of whether or not the general hazard of hydrogen sulfide accumulation was a recognized hazard for purposes of the general duty clause.

The Commission majority was of course correct in concluding that the Secretary had to prove, as an essential element of his case, that the hazard involved was recognized. In formulating the Secretary’s burden on this issue, however, the Commission majority clearly indicated it felt that proof of actual knowledge on the part of Vy Lactos of the conditions and of their hazardous nature was not enough. As the majority stated it:

[T]he question under section 5(a)(1) [the general duty clause] is not whether Respondent personally recognized the hazard. Rather, the question is whether the hazard is recognized by the industry of which Respondent is a part.

Majority opinion at 5.

Commissioner Burch, in his dissent, vigorously attacked the majority’s conclusion that an employer’s actual knowledge of a hazard was insufficient to make that hazard recognized for purposes of the general duty clause. Commissioner Burch’s opinion then went on to examine the Secretary’s evidence and concluded that a serious violation had been established.

IV. The Issue on Appeal.

In the early stages of this appeal it appeared that the key issue would be whether or not an employer’s actual knowledge of a hazard would make that hazard “recognized” for purposes of the general duty clause. In oral argument, however, Vy Lactos conceded that actual knowledge of a hazard on the part of an employer would satisfy the general duty clause requirement of recognition.

Although this issue would have been one of first impression, it is understandable that respondent so willingly conceded the point. Even a cursory examination of the Act’s legislative history clearly indicates that the term recognized was chosen by Congress not to exclude actual knowledge, but rather to reach beyond an employer’s actual knowledge to include the generally recognized knowledge of the industry as well.

In conceding the statutory construction issue Vy Lactos did not concede the outcome of this appeal. Assuming that actual knowledge does satisfy the recognition requirement, Vy Lactos argues quite strenuously that the Secretary failed to establish that respondent did in fact have actual knowledge of the hazard before the incident occurred. The Secretary, on the other hand, contends that he established actual knowledge by undisputed evidence. Unfortunately, our review of the record indicates that neither party has conclusively established its case on actual knowledge.

The record does reflect that Vy Lactos utilized proteinaceous fish solubles in its manufacturing process. The record also reflects that Vy Lactos stored the fish solubles and other ingredients in tanks in the basement. The record reveals that Vy Lactos knew that occasional overflows of some sort of material from these tanks into the adjacent basement room had occurred. From the record it is also clear that Vy Lactos had been informed by employees of certain infrequent but highly malodorous and physically irritating conditions in the basement room. Finally it is clear that Vy Lactos’s chemist knew that the proteina-ceous fish solubles were subject to natural decomposition, that the decomposition process would produce hydrogen sulfide gas, and that hydrogen sulfide gas in sufficient concentration poses a serious hazard of death or physical injury.

On the basis of the foregoing facts and the remainder of the record, either the hearing examiner or the Review Commission might well have been able to conclude as a finding of fact that Vy Lactos had actual knowledge of the hazard of hydrogen sulfide accumulation before the incident occurred. Such a finding of fact has not been made, however, by anyone except Commissioner Burch in his dissent. Neither the facts described above nor the remainder of the record establishes the presence or absence of actual knowledge on the part of Vy Lactos as a legal certainty; and this court is powerless to supply the inferences necessary to conclude the fact-finding process. It follows that we must remand this case to the Commission for further factfinding proceedings.

V. Conclusion.

In summary we hold that the Commission erred to the extent that it ignored the Secretary’s evidence of actual knowledge in determining whether or not the hazard involved here had been recognized. We further hold that the record before us is insufficient to conclusively establish either the presence or absence of actual knowledge on the part of Vy Lactos of the hazard. We therefore are compelled to remand this case to the Commission for further factfinding proceedings.

The decision and order of the Occupational Safety and Health Review Commission is reversed, and the matter is remanded for further proceedings not inconsistent with this opinion.

      . The concession is most clearly evidenced by the following exchange: Judge Moore: Mr. Finley [counsel for Vy Lactos], when you use the word recognized, doesn’t that imply recognized by someone? Now by whom do you say it should have been recognized? Mr. Finley: Alright, I have stated that under the Act the term is construed as “recognized hazard in the industry.” Also the commission went on and also said “or recognized by the general public.” Also I believe that it’s probably clear * * * [that] if there is actual knowledge on the part of the employer, I also believe that would take out any consideration as to recognized hazard * * *