author: STALEY, Circuit Judge.

text:
    C. Perry ELTERICH and Ruth R. Elterich, his wife, et al., Appellants, v. The CITY OF SEA ISLE CITY, a municipal corporation, et al.
    No. 71-1912.
    United States Court of Appeals, Third Circuit.
    Argued Sept. 29, 1972.
    Decided March 26, 1973.

      Eugene T. Radcliffe, Powell, Davis, Dietz & Colsey, Mount Holly, N. J., for appellants.
    Carl J. Gregorio, Kisselman, Deighan, Montano, King & Summers, Camden, N. J., for appellees.
    Before STALEY, VAN DUSEN and MAX ROSENN, Circuit Judges.
   OPINION OF THE COURT

STALEY, Circuit Judge.

This is an appeal from the granting of the appellees’ motion for summary judgment. The appellants brought this action in the district court under 42 U.S.C. § 1983 seeking to recover damages on the grounds that the appellees, City of Sea Isle City (“City”) and various city officials had unlawfully appropriated their land and deprived them of its use through what the appellants contend was an arbitrary and unlawful use of appellees’ power. The allegation of unlawful taking was based on events which took place in the aftermath of a damaging storm. The following is an account of those events.

Sea Isle City is located on a coastal island separated from the mainland of New Jersey by a bay. On March 6,1962, a severe storm caused extensive damage to most of the island, including property owned by the appellants. When the storm subsided, martial law was declared on the island, and the process of assessing the extent of damage began. After a period of evaluation, the City deemed it necessary to repair a dune line near the island’s coast to protect the City from the effects of future storms. Land owned by the appellants, among others, was chosen as the site for the protective barrier which was constructed by the United States Army Corps of Engineers. At no time after the storm were the appellants permitted to reoccupy their lands.

By the time this case came before the district court for a determination of the merits of the appellants’ contentions, the City had acquired the property in question either by condemnation proceedings or by sales under the threat of condemnation. Granting the appellees’ motion for summary judgment, the district court stated that since the rights of the appellants whose property was condemned were adequately protected by the State of New Jersey, a ruling on the validity of the awards would be an unwarranted interference with state court jurisdiction. With respect to the claims of those who sold under threat of condemnation, the court said: “[I]t is a fair assumption that they considered all of those matters at the time that they made the deal.”

On appeal, the question presented is whether New Jersey’s condemnation procedure preserved the full measure of the appellants’ property rights under the United States Constitution. There is no question that the mere exercise of eminent domain power does not offend due process, Roberts v. City of New York, 295 U.S. 264, 55 S.Ct. 689, 79 L.Ed. 1429 (1935); Chicago, Burlington & Quincy Railroad Co. v. Chicago, 166 U.S. 226, 17 S.Ct. 581, 41 L.Ed. 979 (1897). Nor, as appellants' brief concedes at page 6, is there any dispute that the City had authority under both the United States Constitution and the New Jersey Constitution to condemn their land for public use. Appellants’ claims under § 1983 relate only to the matter of compensation. On appeal, they contend that they have not been properly compensated for being deprived of the use of their land as a result of the City’s action.

They assert that in addition to the market value of the land, they are entitled to the value of its use for the period of time between the taking and condemnation. They also seek to be reimbursed for taxes allegedly paid after the City took possession. All these matters could have been urged in the state condemnation proceedings.

New Jersey law provides, as the United States Constitution requires, that an owner whose land is condemned must receive just compensation, U.S. Const. Amends. V and XIV; New Jersey Const.1947, Art. I, ¶ 20; see State of New Jersey v. Burnett, 24 N.J. 280, 131 A.2d 765 (1957). Generally, a sum of money equal to the market value of the land at the time the complaint is filed constitutes just compensation. Olson v. United States, 292 U.S. 246, 54 S.Ct. 704, 78 L.Ed. 1236 (1934); State of New Jersey v. Cooper, 24 N.J. 261, 131 A.2d 756, cert. denied, 355 U.S. 829, 78 S.Ct. 41, 2 L.Ed.2d 42 (1957); see N.J. S.A. 20:1-9 (1969). Where the taking occurs before the condemnation action and the property decreased in value before the action is commenced, the condemnee is entitled to the value at the taking. State of New Jersey v. Jones, 27 N.J. 257, 142 A.2d 232 (1958). Cf. Klopping v. City of Whittier, 8 Cal. 3d 39, 104 Cal.Rptr. 1, 500 P.2d 1345 (1972). New Jersey also recognizes that a condemnee is entitled to be compensated for the value of the use of his land where the condemnor goes into possession without full payment.

“ * * * In condemnation proceedings interest is allowed where the condemnor goes into possession without full payment and the owner of the property is deprived not only of his property but of the profits and increments from the use and for this latter deprivation interest is allowable on equitable principles.” New Jersey Highway Authority v. Ellis, 24 N.J. 1, 130 A.2d 601, 604 (1957); State of New Jersey v. Hankins, 63 N.J.Super. 326, 164 A.2d 615 (1960).

Similar adjustments are made with respect to taxes paid during the time after the taking. Housing Authority of City of Hoboken v. Segal, 112 N.J.Super. 359, 271 A.2d 439 (1970).

The fact that the appellants were deprived of their land before the condemnation took place does not mean their constitutional rights were denied, since compensation is available. See Yearsley v. Ross Construction Co., 309 U.S. 18, 60 S.Ct. 413, 84 L.Ed. 554 (1940); Hurley v. Kincaid, 285 U.S. 95, 52 S.Ct. 267, 76 L.Ed. 637 (1932); Stringer v. United States, 471 F.2d 381 (C.A.5, 1973).

No assertion has been made that the appellants have been denied an opportunity to press their claims in the state court. Clearly they had an opportunity. If the appellants were dissatisfied with the awards they received, they had a right to appeal in state court. It is the clear pronouncement of the New Jersey courts that the rights appellants assert here were guarded. The Federal courts do not sit as courts of review over alleged errors of state courts. Landowners Consideration Association v. Montana Power Co., 300 F.Supp. 54 (D.C.Mont.1969); see Martin v. Creasy, 360 U.S. 219, 79 S.Ct. 1034, 3 L.Ed.2d 1186 (1959). Neither were those who sold under threat of condemnation denied any rights. Their opportunity to assert the matters alleged here was given up at the sale they fully accepted.

Lastly, we note that the City of Sea Isle City is not a proper party in an action under § 1983. United States ex rel. Gittlemacker v. County of Philadelphia, 413 F.2d 84 (C.A.3 1969), cert. denied, 396 U.S. 1046, 90 S.Ct. 696, 24 L.Ed.2d 691 (1970). The action, therefore, should have been dismissed as to Sea Isle City.

We hold that no federally protected rights of the appellants have been violated. The State of New Jersey fully preserved all rights of the appellants in their condemnation proceedings.

For the foregoing reasons, the cause will be remanded to the district court with directions that the action against Sea Isle City be dismissed and, in all other respects, the judgment of the district court will be affirmed.

      . 42 U.S.C. § 1983 provides :
      “Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.”

      . Following the storm, a series of ordinances were passed by the governing body of Sea Isle City which dealt with the regulation of land use in the dune area.

      . While the appellants concede that the laws under which the appellees acted are constitutional, they allege that appellees’ actions under such laws were carried out in a constitutionally impermissible manner. However, damages for whatever injury appellants suffered might have been recovered had they pursued by appeal in the state courts their available state court condemnation remedy. This case does not present a situation where the remedy provided under state law was inadequate or foreclosed. Cf. McGuire v. Sadler, 337 F.2d 902 (C.A. 5, 1964).


source: Caselaw Access Project

author: RONEY, Circuit Judge:

license: Public Domain

text:
    Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Plaintiff-Appellant, v. GREAT AMERICAN DISCOUNT AND CREDIT COMPANY, INC., Defendant-Appellee.
    No. 72-2177.
    United States Court of Appeals, Fifth Circuit.
    April 9, 1973.
    Richard F. Schubert, Sol. of Labor, Carin Ann Clauss, Donald S. Shire, U. S. Dept. of Labor, Washington, D. C., Beverley R. Worrell, Regional Sol., U. S. Dept. of Labor, Atlanta, Ga., for plaintiff-appellant.
    Frank W. Riggs, John W. Davis, Montgomery, Ala., for defendant-appellee.
    Before GEWIN, SIMPSON and RONEY, Circuit Judges.
   RONEY, Circuit Judge:

The Government appeals from the District Court’s determination that defendant’s employment agencies are entitled to the “retail or service establishment” exemption in Section 13(a)(2) of the Fair Labor Standards Act. 29 U.S. C.A. § 213(a) (2). We reverse.

Not only is this case one of first impression in this Court, but we are told that no other Court of Appeals has addressed the application of the retail or service establishment exemption to employment agencies.

Our analysis of the problem causes us to conclude that Congress did not intend to exempt employment agencies from the operation of the Act. Defendant Darrell Walker, president of - the Great American Discount and Credit Company, Inc., is engaged in the business of operating employment agencies under various names and styles in Alabama and Tennessee. These agencies locate, on a local basis and without the assistance of other agencies, suitable employment for clients, who generally pay the placement fee. The service consists solely of introducing the job applicant and the prospective employer. The agencies are independent establishments and, although Walker communicates frequently with all of them, only rarely do they trade information.

Having agreed to dismiss the action against the Great American Discount and Credit Company, Inc., the Secretary of Labor proceeded against walker alone. The District Court found that Walker’s interests in the various employment agencies constituted sufficiently unified operation and common control to amount to a single enterprise engaged in commerce under the statutory definition:

“[T]he related activities performed (either through unified operation or common control) by any person or persons for a common business purpose, and includes all such activities whether performed in one or more establishments or by one or more corporate or other organizational units . . . ."

29 U.S.C.A. § 203(r).

The Court concluded, however, that Walker’s businesses merited the “retail or service establishment” exemption in Section 13(a)(2), which exempts from the minimum wages and maximum hours requirements of the Act

“any employee employed by any retail or service establishment ... if more than 50 per centum of such establishment’s annual dollar volume of sales of goods or services is made within the State in which the establishment is located, and such establishment . . . has an annual dollar volume of sales which is less than $250,000 . . . .”

A “retail or service establishment” is defined in that provision as

“an establishment 75 per centum of whose annual dollar volume of sales of goods or services (or of both) is not for resale and is recognized as retail sales or services in the particular industry . . . ."

Although the dollar volume of sales of the single enterprise consisting of all of the employment agencies owned by Walker either as sole proprietor or as a partner exceeded $250,000, none of the individual agencies ever exceeded $250,-000 annual gross volume of sales. To obtain the exemption, therefore, Walker need show only that the individual agencies were retail and service establishments within the meaning of the Act.

Walker’s claim rests on two arguments: (1) that although an early administrative ruling held that employment agencies were not exempt, a 1949 amendment to Section 13(a)(2) broadened the scope of the exemption to include businesses such as his; and (2) that his businesses meet the statutory requirements because there is industry recognition that its sales are “retail sales or services.”

The employer has the burden of proof in establishing facts requisite to an exemption, Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 86 S.Ct. 737, 15 L.Ed.2d 694, reh. denied, 383 U.S. 963, 86 S.Ct. 1219, 16 L.Ed.2d 305 (1966); Schultz v. Louisiana Trailer Sales, Inc., 428 F.2d 61 (5th Cir.), cert. denied, 400 U.S. 902, 91 S.Ct. 139, 27 L.Ed.2d 139 (1971), and the exemption provisions are to be narrowly construed against those seeking to assert them, Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 80 S.Ct. 453, 4 L.Ed.2d 393 (1960).

From the beginning, the Fair Labor Standards Act of 1938 provided that retail establishments were exempt from the Act. The Department of Labor’s Wage and Hour Administrator issued in 1941 an interpretative bulletin which characterized “retail establishments” as those businesses selling goods or services to private individuals for personal or family consumption or to businesses or state agencies if at prices and in quantities appropriate to personal or family consumption. The Administrator’s general characterization of “retail establishments” was considered by the Supreme Court in 1946. In Roland Co. v. Walling, 326 U.S. 657, 66 S.Ct. 413, 90 L.Ed. 383 (1946), the Court held inter alia that a business engaged in commercial wiring, electrical contracting for industry, and repair and replacement of electric motors and generators did not constitute a “retail or service establishment.” It was suggested that no sale of any article for business or profit-making use, as opposed to personal consumption, could qualify as a retail sale. See Roland Co., supra, at 673-677, 66 S.Ct. 413; see also Martino v. Michigan Window Cleaning Co., 327 U.S. 173, 66 S.Ct. 379, 90 L.Ed. 603 (1946); Boutell v. Walling, 327 U.S. 463, 66 S.Ct. 631, 90 L.Ed. 786 (1946).

In 1949 Congress abrogated this “business use” test by amending the relevant sections of the Act. But Section 16(c) of the amendment expressly provided that any existing “order, regulation, or interpretation of the Administrator of the Wage and Hour Division or of the Secretary of Labor . . . shall remain in effect . . . except to the extent that . . . [it] may be inconsistent with the provisions of this Act . . . ,”63 Stat. 920 (1949).

The 1941 Interpretative Bulletin had specifically dealt with employment agencies. It is there noted that, although employment agencies perform a service, they “are not in the ordinary ease sufficiently similar in character to retail establishments to be considered service establishments within the meaning of Section 13(a) (2).” (Interpretative Bulletin No. 6, pp. 9-10, issued June 16, 1941, and printed in 1942 Wage and Hour Manual, pp. 334-335).

The Government argues that, in Section 16(c), Congress granted its unique imprimatur to the 1941 interpretation which excluded agencies from the exemption. Walker contends, on the other hand, that the 1941 interpretation was premised on the “business use” test, not upon the retail nature of the business, and therefore was inconsistent with the 1949 Amendment. Walker’s position, as employer, is that, by eliminating the business use test, the 1949 Amendment broadened the scope of the Section 13(a)(2) exemption to include businesses such as his, which he contends are recognized as providing “retail” sales and services in the employment agency industry.

It was the opinion of the District Court that the exemption clearly applies to defendant’s business practices. The Court found that virtually all the income of Walker’s employment agencies is derived from transactions completed within the states in which they are located. Their service, which the Court referred to as “the location of a job for a customer,” is not for resale. The District Court accepted a distinction between retail and wholesale employment agencies; Walker’s, characterized by some witnesses as retail agencies, which seek to introduce individual employees directly to employers, and those characterized as wholesale agencies, which place large groups of potential employees in contact with other agencies representing potential employers. Thus, the Court found that there is a distinction between wholesale and retail sales or services in the employment agency industry and that virtually all of the defendant’s business is of a retail character.

The District Court distinguished employment agencies from the loan companies involved in Mitchell v. Kentucky Finance Co., 359 U.S. 290, 79 S.Ct. 756, 3 L.Ed.2d 815 (1959), on the ground that, since the credit business “obviously” is not a “retail or service establishment” and its status was not affected by the 1949 Amendment, the relevant portions of the interpretative bulletin which excluded loan companies from the retail concept should remain in effect. The District Court decided that the reason the Administrator denied the exemption to employment agencies was that their “sale of services” are not “to private persons to satisfy their personal wants.” When Congress abandoned the business use requirement, the Court reasoned, employment services were placed within the exemption.

We think the District Court failed to appreciate the threshold “retail concept” test which a business must first meet before the industry characterization of its sales can be considered. The Government correctly argues that it was the failure of employment agencies to meet this test which caused the Administrator to designate them as non-exempt in the 1941 Bulletin and that the elimination of the business use test did not change this fundamental determination.

The so-called expert testimony offered here to characterize the service as “retail” resembled that in loan company cases. In Aetna Finance Co. v. Mitchell, 247 F.2d 190 (1st Cir. 1957), the Court found the testimony to reflect nothing more than the

disposition (in a more or less rough analogy borrowed from the mercantile field) to refer to small loans to individuals as “retail financing” in contrast to “wholesale” lending institutions which dealt with industry through either buying accounts receivable or financing inventories. Such usage hardly has relevance to the intended meaning of the term “service establishment” as used in § 13(a)(2).

247 F.2d at 193.

In Kentucky Finance, supra, a business making small personal loans and purchasing conditional sales contracts from retailers claimed to be an exempt retail or service establishment. The Company offered evidence that the industry regarded its transactions as retail, but the Supreme Court denied the exemption on the basis of explicit discussion in the legislative history which stated that, industry parlance notwithstanding, the retail concept was not applicable to the credit industry.

In Idaho Sheet Metal Works, supra, the Supreme Court flatly rejected the “industry usage” standard for the retail concept, and the Court’s conclusive consideration was that reliance on industry parlance “would compel results flatly inconsistent with those Congress explicitly contemplated and might indeed work a major revolution in the Act’s coverage not acknowledged in any legislative statement or report before us.” 383 U.S. at 201, 86 S.Ct. at 745. The Court reasoned that the legislative recital of certain industries, such as telephone, gas, and electric, “demonstrates that not everything the consumer purchases can be a retail sale of goods or services” and that industry usage is not controlling. 383 U.S. at 203, 86 S.Ct. at 746.

In Idaho Sheet Metal Works, supra, the Court clearly indicated a two-step process: (1) ask whether the sale of a particular type of goods or services can ever qualify as retail, whatever the terms of the sale; and (2) if — and only if— the answer is affirmative, is it then necessary to determine the terms or circumstances that make a sale of those goods or services a retail sale. 383 U.S. at 202-203, 86 S.Ct. 737.

What we are required first to determine, consequently, is whether the retail concept can ever apply to the employment agency industry.

Determination of whether a business fits the retail concept is not without difficulty. The Administrator concedes that “[t]here are types of establishments in industries where it is not readily apparent whether a retail concept exists and whether or not the exemption can apply.” 29 C.F.R. § 779.317. In trying to define the characteristics of such an establishment, the regulations acknowledge that a precise line cannot be drawn and exact objective standards cannot be established. 29 C.F.R. §§ 779.312-779.321.

In this situation, courts have consistently relied upon the expertise of the agencies established by Congress to administer its statutes. See Lewis v. Martin, 397 U.S. 552, 90 S.Ct. 1282, 25 L. Ed.2d 561 (1970); Red Lion Broadcasting Co., Inc. v. FCC, 395 U.S. 367, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969).

From the inception of the Act, employment agencies have been on the Administrator’s non-exempt list. The language of the administrative regulations supports this classification. Throughout the regulations are numerous references to “the traditional local retail or service establishment,” 29 C.F.R. § 779.315; “establishments which are traditionally regarded as local retail service establishments such as . . . restaurants, hotels, barber shops, [and] repair shops,” 29 C.F.R. § 779.314; and “that a ‘retail concept’ cannot be artificially created in an industry in which there is no traditional concept of retail selling or servicing.” 29 C.F.R. § 779.316. Establishments “not having been traditionally regarded as retail or service establishment cannot under any circumstances qualify as a ‘retail or service establishment’ within the statutory definition of the Act, since they fail to meet the first requirement of the statutory definition.” 29 C.F.R. § 779.316.

A comparison of the Administrator’s partial list of establishments lacking a “retail concept,” 29 C.F.R. § 317, with the partial list of establishments whose sales or services may be recognized as retail, 29 C.F.R. § 320, reflects the propriety of placing employment agencies on the non-exempt list.

A reading of the Administrator’s attempts to characterize retail businesses buttresses the decision that the term “retail” is not properly applicable to employment agencies:

“The term ‘retail’ is alien to some businesses or operations. For example, transactions of an insurance company are not ordinarily thought of as retail transactions.”

29 C.F.R. § 779.316.

“Typically a retail or service establishment is one which sells goods or services to the general public. It serves the everyday needs of the community in which it is located. The retail or service establishment performs a function in the business organization of the Nation which is at the very end of the stream of distribution, disposing in small quantities of the products and skills of such organization and does not take part in the manufacturing process. . . . Such an establishment sells to the general public its food and drink. It sells to such public its clothing and its furniture, its automobiles, its radios and refrigerators, its coal and its lumber, and other goods, and performs incidental services on such goods when necessary. It provides the general public its repair services and other services for the comfort and convenience of such public in the course of its daily living. Illustrative of such establishments are: Grocery stores, hardware stores, clothing stores, coal dealers, furniture stores, restaurants, hotels, watch repair establishments, barber shops, valet shops, and other such local establishments.”

29 C.F.R. § 779.318(a).

Although courts are not bound by interpretative bulletins, see 29 C.F.R. § 779.8, they provide us with guidance simply because they reflect the position of those most experienced with the application of the Act. See Foremost Dairies, Inc. v. Wirtz, 381 F.2d 653 (5th Cir. 1967), cert. denied sub nom. Home Town Foods, Inc. v. Wirtz, 390 U.S. 946, 88 S.Ct. 1031, 19 L.Ed.2d 1134 (1968). The bulletins persuasiveness depends upon its thoroughness, its consistency, and the validity of its reasoning. Mitchell v. Trade Winds Co., 289 F.2d 278 (5th Cir. 1961). It is evident to us that the Administrator has considered all relevant issues.

Although of no more precedential authority than our own District Court, decisions of the only two other courts which have considered this matter have found employment agencies non-exempt. In Schussler v. Employment Consultants, Inc., 333 F.Supp. 1387 (N.D.Ill.1971), the Court had “no difficulty in concluding that an employment agency . . . does not involve what is customarily considered a retail service.” 333 F.Supp. at 1390. In a case cited by the Administrator in his regulations, the New York City Municipal Court held that employment agencies “are not sufficiently similar in character to retail establishments to be considered ‘service establishments’ within the meaning of Section 13(a)(2).” Yunker v. Abbye Employment Agency, Inc., 32 N.Y.S.2d 715, 723 (Mun.Ct.1941).

We conclude that the District Court’s decision to include employment agencies within the scope of the exemption contravenes the well established principle that exemptions from the Fair Labor Standards Act “are to be narrowly construed,” Kentucky Finance, supra, 359 U.S. at 295, 79 S.Ct. 756, and limited to those “plainly and unmistakably within their terms and spirit.” Arnold v. Ben Kanowsky, Inc., supra, 361 U.S. at 392, 80 S.Ct. at 456; Schultz v. Instant Handling, Inc., 418 F.2d 1019 (5th Cir. 1969); see Wirtz to Jernigan, 405 F.2d 155 (5th Cir. 1968).

Reversed and remanded.


author: PER CURIAM.

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY d/b/a Eugene Good Samaritan Center, Respondent.
    No. 72-1072.
    United States Court of Appeals, Ninth Circuit.
    April 2, 1973.

      Julius Rosenbaum, Washington, D. C. (argued), Peter G. Nash, Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, NLRB, Washington, D. C., Robert J. Wiener, Officer in Charge, NLRB, Portland, Ore., Paul J. Spielberg, NLRB, Washington, D. C., for appellant.
    William D. Brandt, Salem, Ore. (argued), Robert H. Fraser, Luvaas, Cobb, Richards & Fraser, Eugene, Ore., Herbert B. Galton, Portland, Ore., for appellee.
    Before BARNES, MERRILL, and HUFSTEDLER, Circuit Judges.
   OPINION

PER CURIAM.

The Evangelical Lutheran Good Samaritan Society does business in Oregon as the Eugene Good Samaritan Center, a facility which is a “Non-Profit Center for Retired People,” and is licensed by the State of Oregon as a 118-bed “Nursing home and a 30-bed Convalescent Hospital.”

The Center is licensed under Medicare, as “an extended care facility.” One of seven one story buildings, denominated “Wing 700,” is recognized as “the extended care facility,” usually housing 20 or less residents (out of the usual 20-130 residents of all wings): The 20 usually come from a hospital, and after recuperation, either go home or go to the nursing home area.

The Center has no laboratory, no doctors, and no portable x-ray facilities on the premises; no acutely ill or injured persons are allowed on the premises; nor any surgical or maternity patients. No physician is provided by the Center for any resident; each resident makes his own arrangements for his own personal physician. The Center is administered by the Reverend Frederick Juilfs, and an office manager, one Director of Nursing, one Supervising Registered Nurse, and three additional registered nurses. (These supervise licensed practical nurses, nurses aides and orderlies. The latter work in three shifts interchangeably throughout the Center.)

We have for review several questions; the first and most important being:

Was the Center an “employer” within the National Labor Relations Act, or was the Center exempt as a non-profit hospital, under § 2(2) of the Act?

Originally the Board, in the exercise of its administrative discretion, had declined to exercise jurisdiction over proprietary (profit) hospitals, and nursing homes (either non-profit or proprietary), primarily because of (a) their local nature, (b) the probability that their labor disputes would be regulated by state law, and (c) their insubstantial impact upon interstate commerce. Flatbush General Hospital, 126 NLRB 144 (1960). Seven years later, in 1967, the Board overruled Flatbush, extending jurisdiction to proprietary hospitals with gross revenues of $250,000 per year. Butte Medical Properties, etc., 168 NLRB 266 (1967); and on the same date, exercised jurisdiction over the nursing home industry, if such homes were operated for a profit, and had a gross income of $100,000 per year. University Nursing Homes, Inc., 168 NLRB 263 (1967).

Finally, the Board extended its jurisdiction to non-profit nursing homes. Drexel Homes, Inc., 182 NLRB 1045 (1970).

In so extending its jurisdiction, the Board found it necessary to contend with various semantic terms — “rest homes”, “homes for the aged”, “retirement homes”, “convalescent homes”, “sanitariums”. It solved its problem by determining it would exercise jurisdiction over operations offering “extended care facilities”; accepting the American Hospital Association’s definition thereof: “an establishment with permanent facilities that include inpatient beds; and with medical services, including continuous nursing services, to provide treatment to patients who require inpatient care but do not require hospital services.”

“Hospital Services” are those ordinarily available only in a general hospital, including facilities for surgery, x-ray, laboratory analysis, obstetrics, and related specialized procedures. Wesleyan Foundation, 171 NLRB 124 (1968); Sierra Hospital Foundation, 181 NLRB 869 (1970).

The Board determined the appellant was not a hospital within the meaning of § 2(2) of the Act, but was “an extended care facility”. We are bound to accept the Board’s determination if it has a reasonable basis in the evidence, and is not inconsistent with the law. NLRB v. E. C. Akins & Co., 331 U.S. 398, 403, 67 S.Ct. 1265, 91 L.Ed. 1563 (1947).

Appellant urges that the Board’s findings support the Board’s ruling, but that the facts do not support its Findings. We hold otherwise.

It is true that under the law of the State of Oregon, appellant’s Wing 700 was licensed as a 30-bed “convalescent hospital”, and the other six units as an 118-bed “nursing home.” Reciting the facts hereinbefore listed, and quoting language from Drexel Homes, Inc., supra, the Trial Examiner found “that the Center is similar to the establishment involved in Drexel Homes, Inc.” (judged by the American Hospital Association’s definition (R. 19)), and that it did not supply “general or in most instances any, hospital services.” The Trial Examiner apparently strongly relied on the fact that Respondent had no medical staff, per se, but that each patient, if he or she wished, had a personal physician. “The residents and patients of all seven wings of the Center have social activities and religious services available,” but not doctors nor any care for those “acutely ill.” The Center advertised itself as a center for retired people; that residents may “go and come as you please.” The Examiner found that the patients in Wing 700 “except for being closer to the Registered Nurse in charge of the Center, received the same standard of care as other patients or residents of the Center” (R. 22). He also found that Medicare recognized the necessity at times, after hospital care, of care from an “extended care facility”. Half of the patients in Wing 700 were in this class, and on Medicare. (Board’s Opening Brief, p. 17, note 22).

We cannot rule that the Examiner’s findings, in view of the holdings of the cases cited, were not supported by substantial evidence or that they were arbitrary or capricious. We reject the “integral” theory relied on by the Respondent to bring its operation within the hospital exemption, and we affirm the jurisdiction of the Board over the Center’s operations.

There is little doubt but that the facts before us demonstrate substantial support for the Board’s findings that the Center interfered with, restrained and coerced its employees, in violation of § 8(a)(1) of the Act. A threatened shut-down of the Center and loss of jobs was threatened by Director of Nursing Moore to two of her nurses (Skinner and Anderson), if they persisted in their union support. Cf. NLRB v. Gissel Packing Co., 395 U.S. 575, 618-619, 89 S.Ct. 1918, 23 L.Ed.2d 547 (1969). Nor can we hold, contrary to the Board’s findings, that the licensed practical nurses were supervisors. Garden of Eden Home, Inc., etc., 199 NLRB No. 5 (September 14, 1972).

The Board’s Order will be enforced in full.


author: BUTZNER, Circuit Judge:

text:
    UNITED STATES of America, Appellee, v. Ronald Richard FISHER, Appellant.
    No. 72-1284.
    United States Court of Appeals, Fourth Circuit.
    Argued Feb. 6, 1973.
    Decided April 20, 1973.

      Richard E. Crouch, Arlington, Va., for appellant.
    Justin W. Williams, Asst. U. S. Atty. (Brian P. Gettings, U. S. Atty., E.D. Va., on brief), for appellee.
    Before BUTZNER and FIELD, Circuit Judges, and MURRAY, District Judge.
   BUTZNER, Circuit Judge:

Ronald Richard Fisher appeals from a judgment of conviction, entered upon jury verdicts, for failing to report for induction into the armed forces and failing to keep his local selective service board advised of his address. We vacate the judgment and remand the ease for a new trial because Fisher was not afforded his sixth amendment right to effective representation of counsel.

Fisher was arraigned on December 17, 1971, and the district court set January 23, 1972 as his trial date. At the arraignment, Mr. Alfred D. Swersky represented Fisher, and Fisher paid him $250 for his services. Fisher could not afford Swersky’s trial fee, so he terminated their relationship following the arraignment. Swersky never advised Fisher that an attorney could withdraw as counsel for a criminal defendant only with permission of the court, and he did not request the court to relieve him of his responsibilities in the case until the morning of trial.

Fisher next retained Mr. Joseph L. Duvall to represent him. Duvall accepted the employment even though he had another trial scheduled for the same day. He assured Fisher that if a trial proved necessary, he could have the trial continued. On January 9, 1972, Fisher paid Duvall $1,000 and returned to Ohio expecting Duvall would obtain a continuance. Duvall never entered a formal appearance as Fisher’s counsel, but he met with an Assistant United States District Attorney to try to arrange a dismissal of the charges in exchange for Fisher’s voluntary enlistment in the armed forces. The assistant district attorney, noting that Fisher could not enlist because of a pending Ohio felony charge, refused to consent to dismissal.

Duvall sought a continuance from the district court, but it was denied. The day before trial he called Fisher in Ohio and told him to return to Virginia the next morning. That same afternoon the clerk of the district court called Swersky to remind him that he was still counsel of record in the case and that he would have to appear with Fisher. Swersky obtained the file from Duvall that evening and spoke with Duvall about the case.

When the case was called for trial, Swersky brought these facts to the attention of the district judge and moved for a continuance. The government did not oppose the motion. The judge, however, censured Swersky for his lack of preparation and ordered him to consult with Fisher for thirty minutes to prepare for trial. Approximately one hour later, the trial began with Swersky as Fisher’s attorney. The jury found Fisher guilty on both counts.

The sixth amendment guarantees the right to counsel in federal felony prosecutions. Johnson v. Zerbst, 304 U.S. 458, 462, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938). Implied in the right to counsel is the right to effective representation, whether counsel is appointed or retained. Powell v. Alabama, 287 U. S. 45, 57, 53 S.Ct. 55, 77 L.Ed. 158 (1932); Stokes v. Peyton, 437 F.2d 131, 136 (4th Cir. 1970). Normally, a claim of ineffective counsel should be raised by a motion under 28 U.S.C. § 2255 (1970). United States v. Mandello, 426 F.2d 1021, 1023 (4th Cir. 1970). Mandello, however, recognized that there may be cases “where it conclusively appears in the trial record itself that the defendant was not provided ... effective representation.” 426 F.2d at 1023. This is one of those cases. The lack of preparation by defense counsel was explained to the district court before the trial began, and the district judge questioned Fisher, Swersky, and Duvall. The court reporter transcribed this informal hearing before the district court, and the transcript is available for our consideration. In these circumstances, nothing would be gained by postponing consideration of Fisher’s sixth amendment claim.

Swersky’s statements to the district court prior to trial demonstrate that he was not prepared to defend Fisher. Both Fisher and Swersky thought that Swersky’s services had been terminated almost a month earlier. Thus, Fisher’s claim is based on an established insufficiency of preparation, not on his counsel’s subjective assertion that he was not prepared for trial. See e. g. Sykes v. Commonwealth, 364 F.2d 314, 315 (4th Cir. 1966). He contends that the Court’s order to proceed to trial after a one hour conference with his attorney denied him the mature and reflective judgment of counsel that is an essential element of effective representation. See Garland v. Cox, 472 F.2d 875, 879 (4th Cir. 1972).

The government offers two arguments to rebut the claim that Fisher received ineffective assistance of counsel. First, it asserts that this case was a simple selective service violation that required no more than an hour of preparation. Second, it contends that Swersky’s experience in selective service litigation made the one hour preparation time reasonable. Neither argument is persuasive.

The many complex issues that frequently arise in selective service litigation contradict the government’s implicit assumption that these cases involve only easy points of law that can be handled with a minimum of preparation. Failure to report for induction and failure of a registrant to keep his board advised of his current address are both serious offenses, each carrying a maximum sentence of five years imprisonment. A defendant who is subjected to the possibility of incarceration is entitled to have the avenues of defense explored by his counsel during the preparation of the case. See ABA Standards Relating to the Defense Function § 4.1 (Approved Draft 1971). The issues raised on appeal in this court belie the government’s claim that this was an uncomplicated case in which the sketchy preparation disclosed by this record was sufficient. The government itself raised a significant evidentiary problem by introducing testimony showing that Fisher had tried to flee when Ohio officials arrested him on an unrelated assault charge. And paradoxically, while the government insists Fisher was afforded adequate representation, it urges us to disregard a number of assignments of error on the ground that Swersky did not note proper objections.

Even if the government were correct in its contention that the case was primarily a dispute over Fisher’s credibility, his defense still could have benefited from adequate preparation. Fisher, claiming that he did not intend to violate the law, testified that he was willing to fulfill his military obligation. He also testified that he could not enlist at the time of trial because he had been charged with a felony in Ohio. He said that he hoped that the Ohio charge would soon be reduced to a misdemean- or, which would make him eligible for enlistment. Obviously, witnesses in Ohio, where Fisher then resided, could have provided much relevant evidence to corroborate his story. Business associates or others who knew him could have offered character testimony that may have strengthened his assertion that he had acted in good faith and had simply been negligent in communicating with his Board. His Ohio attorney, or Ohio prosecuting authorities, could have confirmed any plan to reduce the Ohio charge to a misdemeanor, and the subsequent reduction of that charge indicates that obtaining this evidence was not beyond the realm of possibility.

Neither Swersky’s general competence nor his experience in selective service litigation eliminated the prejudice Fisher suffered as a result of the lack of preparation. Swersky’s defense of Fisher during the trial, though aggressive, did not nullify the inevitable prejudice resulting from the lack of advance preparation. Moreover, Swersky’s conduct at arraignment negates any inference that he could prepare the case in an hour. At the arraignment he requested a longer period than one month to prepare because of the complicated nature of some possible defenses available to Fisher.

The government also urges that Fisher waived any motion for continuance when he told the district judge that he did not know of any witnesses who could help him and that he was willing to go ahead with the trial. Considered in the light of the trial court’s prior admonition that no continuance would be granted unless a specific need were shown and the court’s intimation that counsel might be assessed the costs of delay, this colloquy did not amount to the “intentional relinquishment . of a known right,” that is required for waiver of the right to counsel. Johnson v. Zerbst, 304 U.S. 458, 464, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938). The inability of Fisher or his counsel to justify a continuance following the brief consultation ordered by the trial court did not cure the basic error in the trial: the failure of trial counsel to devote adequate time for preparation. Indeed, the lack of preparation impaired trial counsel’s effectiveness in explaining the need for a continuance. For example, he made no effort to confer by telephone with Fisher’s Ohio counsel to learn whether Ohio officials would promptly reduce the felony charge to a misdemeanor. Nor did he suggest the need to examine the board’s records to ascertain the order of call. A reasonably prudent attorney would have investigated this defense because Fisher had been declared a delinquent before he was ordered to report for induction. Cf. Gutknecht v. United States, 396 U.S. 295, 90 S.Ct. 506, 24 L.Ed.2d 532 (1970). We conclude, therefore, that the representation Fisher received was not “within the range of competence demanded of attorneys in criminal cases,” McMann v. Richardson, 397 U.S. 759, 771, 90 S.Ct. 1441, 25 L.Ed.2d 763 (1970), and his conviction must be vacated.

We recognize the need — recently emphasized by Federal Rule of Criminal Procedure 50(b) — for district courts to maintain control over their dockets to expedite the trial of criminal cases, and in no way do we approve the failure of Fisher’s lawyers to prepare for trial. We also reaffirm that judges are empowered to insist that counsel be prepared so that trials may be held as scheduled and that trial courts do not lack authority to censure attorneys for dilatory tactics. See ABA Standards Relating to the Function of the Trial Judge §§ 1.4, 3.8, and 7.1 et seq. (Approved Draft 1972). But conviction without effective legal representation is a misplaced sanction for the shortcomings of a defendant’s attorneys.

We find no reversible error in Fisher’s other grounds of appeal. The judgment is vacated, and the case is remanded for a new trial.

      . The Ohio charge was subsequently reduced to a misdemeanor to which Fisher pleaded guilty.

      . For this appeal, Fisher retained a third attorney, who was not involved in any of the proceedings in the district court and is not associated with either Swersky or Duvall.

      . Our conclusion is the same whether we apply this circuit’s presumption of ineffective representation following late appointments, Garland v. Cox, 472 F.2d 875, 879 (4th Cir. 1972), or use a “totality of the circumstances” approach. See Rastrom v. Robbins, 440 F.2d 1251 (1st Cir. 1971); Moore v. United States, 432 F.2d 730 (3d Cir. 1970).

      . The district court properly cautioned the jury that the only part of this evidence that was relevant to the selective service charges against Fisher was the address Fisher gave to the arresting officer. Nevertheless, the assistant district attorney, on cross examination and in final, argument, attempted to bring the full incident to the jury’s attention. This error should not recur when Fisher is tried again.

      . Fisher had obtained dismissal of another felony charge that was pending at the time he was ordered to report for induction.


author: PELL, Circuit Judge. FAIRCHILD, Circuit Judge

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Nick SENAK, Defendant-Appellee.
    No. 72-1431.
    United States Court of Appeals, Seventh Circuit.
    Argued Dec. 5, 1972.
    Decided April 24, 1973.
    Rehearing Denied June 5, 1973.

      David L. Norman, Asst. Atty. Gen., Robert A. Murphy, Atty., Civil Rights Division, Department of Justice, Washington, William C. Lee, U. S. Atty., Fort Wayne, Ind., for plaintiff-appellant.
    Max Cohen, Gary, Ind., for defendant-appellee.
    Before FAIRCHILD, PELL, and SPRECHER, Circuit Judges.
   PELL, Circuit Judge.

In February 1972, a federal grand jury returned a five-count indictment against Nick Senak, a public defender for Lake County, Indiana. The indictment charged that Senak, while acting under color of law, “willfully and unlawfully exacted and took” money from various persons, thereby willfully depriving those persons of their right under the Fourteenth Amendment not to be deprived of property without due process of law, in violation of 18 U.S.C. § 242. More specifically, notwithstanding his appointment under Indiana law as a “pauper attorney,” by virtue of which he was entitled to governmental compensation, Senak had allegedly exacted fees from a pauper “client” (Count I) and from friends or relatives of other impoverished “clients” (Counts II-V) by threatening inadequate legal representation of those he had been appointed to represent unless the extra sums were paid to him.

On March 27, 1972, the district court reluctantly sustained Senak’s pre-trial motion to dismiss the indictment on the ground that the indictment failed to state an offense against the United States. The Government seeks reversal of the court’s order dismissing the indictment.

We must, as an initial matter, determine whether the Government is barred from maintaining this appeal. The indictment involved in this appeal is the second against Senak under 18 U.S.C. § 242. An indictment returned in May 1971 had been dismissed by the district court on October 19, 1971, on Senak’s motion. The Government had filed a notice of appeal as to that dismissal but later had moved successfully under Rule 42(b), Fed.R.App.P., to dismiss its appeal. Senak claims that the second indictment is substantially the same as the first one and that “[w]hen the Government abandoned the appeal [of the dismissal of the May 1971 indictment] and the appeal was dismissed for want of prosecution, the judgment of the district court was in effect affirmed and now bars the second indictment on principles of res judicata, collateral estoppel and former jeopardy.”

The cases on which Senak relies, including this court’s decision in United States v. Ponto, 454 F.2d 657 (7th Cir. 1971) (en banc), are distinguishable. A federal grand jury may return a second indictment for the same offense when the first indictment has been dismissed or otherwise found defective. United States v. Root, 366 F.2d 377, 383 (9th Cir. 1966), cert. denied, 386 U.S. 912, 87 S.Ct. 861, 17 L.Ed.2d 784 (1967); Buie v. United States, 76 F.2d 848, 849 (5th Cir. 1935), cert. denied, 296 U.S. 585-586, 56 S.Ct. 97, 80 L.Ed. 414 (1936); United States v. Manetti, 323 F.Supp. 683, 690-691 (D.Del.1971). Cf. 18 U.S.C. § 3289. Further, we disagree that the Government’s decision not to pursue its appeal precluded the grand jury from returning another indictment on the same matter. Cf. United States v. Beard, 414 F.2d 1014, 1017 (3d Cir. 1969). Senak was not put in jeopardy; jeopardy is usually held to “attach” at the time trial commences and a jury is impanelled. See United States v. Jorn, 400 U.S. 470, 480, 91 S.Ct. 547, 27 L.Ed.2d 543 (1971); cf. Illinois v. Somerville, 410 U.S. 458, 93 S.Ct. 1066, 35 L.Ed.2d 425 (1973). We therefore hold that the second indictment was not barred.

Rule 7(c), Fed.R.Crim.P., requires that an indictment “shall be a plain, concise and definite written statement of the essential facts constituting the offense.” “The true test of the sufficiency of an indictment is whether it contains the elements of the offense intended to be charged.” Hagner v. United States, 285 U.S. 427, 431, 52 S.Ct. 417, 419, 76 L.Ed. 861 (1932), quoted in United States v. Debrow, 346 U.S. 374, 376, 74 S.Ct. 113, 98 L.Ed. 92 (1953). The elements of an 18 U.S.C. § 242 offense are: (1) the defendant’s acts must have deprived someone of a right secured or protected by the Constitution or laws of the United States; (2) the defendant’s illegal acts must have been committed under color of law; (3) the person deprived of his rights must have been an inhabitant of a State, Territory, or District; and (4) the defendant must have acted willfully. See United States v. Jackson, 235 F.2d 925, 927 (8th Cir. 1956). Only elements (1) and (2) are in dispute on this appeal.

Senak contends that a public defender is immune from liability under § 242 and that, once he is appointed in a given case, he does not act under color of state law but functions purely as a private attorney. For this proposition, Senak relies on Brown v. Joseph, 463 F.2d 1046 (3d Cir. 1972), where the question was whether a Pennsylvania county public defender could be held liable for damages in an action brought by a former indigent client who alleged constitutional deprivations under 42 U.S.C. § 1983, the civil counterpart of 18 U.S.C. § 242. The district court there held that the complaint failed to state a claim upon which relief could be granted on the basis that the defendant was not acting under color of state law. On appeal, the Third Circuit decided it need not reach the “under color of any law” question. The court instead held that a county public defender enjoys immunity from liability under the Civil Rights Act.

Brown, supra, the one case Senak cites on this issue, is inapposite. The court’s remarks about “color of law” are dicta. Further, an examination of the holding there reveals that the court was concerned with immunity for state judges, prosecutors, and public defenders “for acts done in the performance of [their] judicial function [s] . . . .” 463 F.2d at 1048. The court recognized an exception to immunity where the officials’ acts are clearly outside the scope of the officials’ jurisdiction. Id. Also, the court emphasized certain policy considerations which are irrelevant to the charge in the indictment before us, e. g., the importance of encouraging the officials’' “free exercise of professional discretion in the discharge of pre-trial, trial, and post-trial obligations.” Id.

Senak provides neither binding precedent nor persuasive reasons to lead us to conclude that the Government would be unable, as a matter of law, to satisfy the “color of law” requirement. See United States v. Classic, 313 U.S. 299, 326, 61 S.Ct. 1031, 1043, 85 L.Ed. 1368 (1941): “Misuse of power, possessed by virtue of state law and made possible only because the wrongdoer is clothed with the authority of state law, is action taken ‘under color of’ state law.” See generally Screws v. United States, 325 U.S. 91, 107-111, 65 S.Ct. 1031, 89 L.Ed. 1495 (1945). At this juncture we do not know, for example, in what words Senak couched his alleged demands for money or what representations he made to the alleged “victims.” Nor do we know all the conditions that attached to Senak’s appointment as public defender, i. e., the duties and ethical conduct required by law of someone assuming such a position. If the indictment is sufficient in other respects, the Government should be given the opportunity to try to establish that Senak acted “under color of . . . law.”.

The district court’s objections to the indictment centered on the supposed absence of the “deprivation of a constitutional right” element. Implicit in its discussion, however, were doubts about the “under color of any law” requirement. In the court’s view, to hold that the defendant, by charging a fee, had deprived the named persons of property without due process of law was “to strain that concept well past its breaking point.”

The “constitutional deprivation” element of the section 242 offense charged here consists of three concepts: the right to “property,” a “deprivation,” and “due process.” It is clear that the right to acquire, enjoy, own, and dispose of property is protected by the Constitution. Each count of the indictment against Senak referred to the named person’s right to property under the Fourteenth Amendment and specified the form of that property (money) and the approximate amount allegedly taken. Cf. United States v. Konovsky, 202 F.2d 721, 726 (7th Cir. 1953).

A more difficult problem is whether Senak’s alleged conduct constituted a “deprivation” under the Constitution. The district court considered that term to import a “taking” in the sense of “a nonconsensual divestiture compelled by legal authority” and reluctantly concluded that the indictment failed to allege such a “taking”:

“When the verbiage concerning ‘taking’ and ‘exaction’ is stripped away, all that [the indictment] alleges is a successful demand for money in exchange for the performance of a preexisting legal duty. . . . The fatal defect in the indictment here is that it fails to allege that defendant’s ‘victims’ were ever under any legal obligation to pay the sums demanded. . . [N]o such obligation in fact existed.
Unless the defendant’s demands . . . are backed by the power of the state, there is no ‘taking’ in a constitutional sense.”

In its prior opinion sustaining the motion to dismiss directed to the first indictment, which opinion was incorporated by reference in the second opinion, the district court stated: “There is no claim that those charged [a fee] were ever under any compulsion, legal or otherwise, to pay. . . .” (Emphasis added.)

It would seem obvious that there was no legal compulsion. Senak was being paid by the state and could not have successfully claimed any additional compensation from those he represented, either directly or vicariously. However, that he had no legal right to the money he supposedly collected or that the named “victims” might have asserted a successful defense to a suit by him for payment does not preclude the possibility that Senak “deprived” those persons of their property. See United States v. Barr, 295 F.Supp. 889 (S.D.N.Y.1969); cf. Culp v. United States, 131 F.2d 93 (8th Cir. 1942).

It appears to us that reality is ignored to say that there is no compulsion “otherwise” on an impoverished person who has supposedly been provided with legal representation or on his relatives and close friends when they are confronted with a demand from that counsel, ostensibly by virtue of his appointment “backed by the power of the state,” for additional compensation if there is to be adequate representation. The constitutional right to appointed counsel does not contemplate any standard less than adequate representation.

We are not here dealing with the inherent variation in legal skills existing fronj lawyer to lawyer. Attorneys appointed to represent indigents, like retained counsel, undoubtedly will possess varying degrees of legal acumen; none, however, should be purposely inadequate. When the matter is baldly put as a choice between adequate representation possibly followed by an acquittal and inadequate representation which could reasonably assure a conviction, the choice is surely of the Hobson variety.

The litigant with means can choose his counsel. The pauper cannot, and his constitutional right to appointed counsel has has not been extended to the point of affording him this privilege. That it has not been should be no basis for exposing him to the necessity of trying by some means to gather together funds to compensate the attorney whom he has not selected and who has told him that without those funds he would not be competently represented.

Finally, we note that a “deprivation” does not have to be authorized by state law. See, e. g., Catlette v. United States, 132 F.2d 902, 905 (4th Cir. 1943). A defendant must act “under color of . . . law,” but his acts need not have been in compliance with the law. United States v. Wiseman, 445 F.2d 792, 796 (2d Cir. 1971), cert. denied, 404 U.S. 967, 92 S.Ct. 346, 30 L.Ed.2d 287. The Government claims that Senak’s official position enabled him to perpetrate a scheme of obtaining money to which he was not entitled. His being county public defender allegedly gave him the opportunity to make the demands and clothed him with the authority of the state in so doing.

In sum, we think that the district court construed the “deprivation” requirement too narrowly.

By emphasizing compulsion and coercion, the district court seemed to suggest that “deprivation” is a taking accomplished without adherence to proper procedures. The term “deprivation” by itself, however connotes neither legality nor illegality. • The portion of the Fourteenth Amendment with which we are concerned in this ease — “nor shall any State deprive any person of life, liberty, or property, without due process of law” - — indicates that the violation of due process standards makes a particular “deprivation” an objectionable, illegal “deprivation.” Cf. Lynch v. Household Finance Corp., 405 U.S. 538, 552, 92 S.Ct. 1113, 31 L.Ed.2d 424 (1972); Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969). That is, the Amendment focuses on the means by which the “deprivation” is achieved.

The Government argues that “the named victims possessed certain constitutional rights both before and after defendant’s appointment [as public defender] ; specifically, each citizen’s basic, continuing right to use and control his own property until such time as he voluntarily disposes of it . . .or it is taken from him through means consistent with due process standards . . . ."

In our opinion, the indictment satisfactorily alleges a violation of that constitutional right.

Senak argues by way of conclusion that “[a]t best, the indictment alleges a procedural violation of State law by the defendant.” As we have explained, we find that the indictment does allege a violation of federal rights. Senak’s assertion prompts the recall of Mr. Justice Frankfurter’s challenging words, “The history of liberty has largely been the history of observance of procedural safeguards.” McNabb v. United States, 318 U.S. 332, 347, 63 S.Ct. 608, 616, 87 L.Ed. 819 (1943).

We thus disagree with the district court’s assessment that this case does not warrant the exercise of federal jurisdiction. We do, however, understand the court’s apprehension that the Government has opened a Pandora’s box. We have held that the particular indictment before us adequately states an offense under 18 U.S.C. § 242; we intimate no opinion about the sufficiency of other possible indictments under section 242 involving different factual situations.

The order dismissing the February 1972 indictment is reversed, and the cause is remanded to the district court for further proceedings consistent with this opinion.

Reversed and remanded.

FAIRCHILD, Circuit Judge

(concurring).

While I agree that the instant indictment states an offense against the United States under 18 U.S.C. § 242, the legal theory upon which the indictment is grounded does not, in my view, satisfactorily grapple with the primary “deprivation” effected by defendant’s alleged conduct.

The right of indigents to appointed counsel is guaranteed by the Sixth Amendment. Gideon v. Wainwright, 372 U.S. 335, 83 S.Ct. 792, 9 L.Ed.2d 799 (1963). And, the “essence of this right is the right to effective, competent and adequate representation.” Wilson v. Phend, 417 F.2d 1197, 1199 (7th Cir. 1969). See also, Calloway v. Powell, 393 F.2d 886, 888 (5th Cir. 1968). Thus, if an appointed attorney threatens to provide less than adequate legal services for an indigent defendant unless paid additional sums, he in effect subjects that defendant to a deprivation of his Sixth Amendment rights.

It is this subjection of an indigent to deprivation of his Sixth Amendment rights which is the real harm posed by defendant’s alleged conduct. Accordingly, the indictment would be better framed if it focused upon this reality.

      . 18 U.S.C. § 242 provides in pertinent part:
      “Whoever, under color of any law, statute, ordinance, regulation or custom, willfully subjects any inhabitant of any State, Territory, or District to the deprivation of any rights, privileges or immunities secured or protected by the Constitution or laws of the United States . . . [is guilty of an offense.]”

      . Ind.Ann.Stat. § 4-5716, Burns’ 1968 Repl., IC 1971, 33-9-6-1, authorizes criminal court judges in counties having a population of 400,000 or more to appoint public defenders to defend any poor person accused of the commission of a crime who lacks the means to employ an attorney. If it appears to the judge that a person previously deemed to be a “poor person” has funds to pay for counsel, the county attorney is to sue for recovery of a reasonable sum for the services rendered by the public defender. The sums recovered go into the general county fund. The compensation to be paid pub-lie defenders is determined by the criminal court judges and comes from public funds. § 4-5717, IC 1971, 33-9-6-2.


author: STEVENS, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Robert E. CLEVELAND, Defendant-Appellant.
    No. 72-1471.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 8, 1973.
    Decided April 16, 1973.
    Rehearing Denied May 7, 1973.

      Joseph A. Lamendella, Samuel J. Betar, Chicago, Ill., for defendant-appellant.
    James R. Thompson, U. S. Atty., William T. Huyck and Ann P. Sheldon, Asst. U. S. Attys., Chicago, Ill., for plaintiff-appellee.
    Before FAIRCHILD, CUMMINGS and STEVENS, Circuit Judges.
   STEVENS, Circuit Judge.

Defendant was indicted and convicted on three counts of tax evasion in violation of 26 U.S.C. § 7201. On appeal, he raises numerous issues relating to the sufficiency of the evidence, several evidentiary rulings, the voir dire, the instruction of the jury, and the application of the Jencks Act, 18 U.S.C. § 3500. Only the final point has merit.

The prosecution was based on the “net worth” theory of proof. This theory assumes that a taxpayer's increase (or decrease) in net worth plus his nondeductible expenses (less nontaxable receipts, if any) during the tax year should equal his taxable income. If there is a substantial unexplained discrepancy between this figure and the amount actually reported, the inference that taxable income was not reported is sufficient to support a conviction. See Capone v. United States, 51 F.2d 609 (7th Cir. 1931); Guzik v. United States, 54 F.2d 618 (7th Cir. 1931). Although the theory puts the burden of explaining the discrepancy on the defendant, and has other deficiencies, the Supreme Court has approved its use. United States v. Johnson, 319 U.S. 503, 63 S.Ct. 1233, 87 L.Ed. 1546; Holland v. United States, 348 U.S. 121, 75 S.Ct. 127, 99 L. Ed. 150.

“While we cannot say that these pitfalls inherent in the net worth method foreclose its use, they do require the exercise of great care and restraint. The complexity of the problem is such that it cannot be met merely by the application of general rules. Cf. Universal Camera Corp. v. Labor Board, 340 U.S. 474, 489 [71 S.Ct. 456, 95 L. Ed. 456]. Trial courts should approach these eases in the full realization that the taxpayer may be ensnared in a system which, though difficult for the prosecution to utilize, is equally hard for the defendant to refute . . . Appellate courts should review the cases, bearing constantly in mind the difficulties that arise when circumstantial evidence as to guilt is the chief weapon of a method that is itself only an approximation.” 348 U.S. at 129, 75 S.Ct. at 132.

With this admonition in mind, we turn to the case at hand.

I. Sufficiency of the Evidence.

The government’s calculations indicate that defendant failed to report $6,064.76 in 1964; $6,744.92 in 1965; and $5,864.-35 in 1966, the three indictment years. By way of contrast, he reported no income in 1964; $102.10 in 1965; and $1,591.04 in 1966. Cleveland argues that close examination of the government’s case reveals that the proven discrepancies were only $909.00 in 1964; no taxable income in 1965 (although he reported $102.10); and $2,839.00 in 1966. The proven discrepancies in 1964 and 1966, he argues, are not substantial enough to support a conviction.

1964

Cleveland claims the government made four errors in its schedules for 1964. First, the government included as an increase in net worth $5,000 received in settlement of a lawsuit, but did not enter the same amount as a liability to his client. There was evidence at trial, however, which showed that Cleveland felt no obligation to pass the money on to his client and in fact had used it for his own purposes. Nor had any attempt to collect it ever been made. Tr. 150. This evidence was sufficient to establish that the $5,000 was income. Rutkin v. United States, 343 U.S. 130, 136-137, 72 S.Ct. 571, 96 L.Ed. 833 (1954); United States v. Wyss, 239 F.2d 658 (7th Cir. 1957).

Second, defendant contends he should have been credited $800 on the purchase price of a building (the Foster Avenue building). The closing statement shows a credit of $800 for “6 stoves and 2 refrigerators.” Gov.Ex. 41C, App. 78-79. Defendant’s expert witness testified that this represented “a reduction in purchase price.” Even though we must view the evidence most favorably to the government, for purposes of decision we accept this testimony. Nevertheless, the $800 is immaterial in light of the other evidence of guilt.

Third, Cleveland contends that he overstated on his 1964 tax return the interest expense on the Foster Avenue property, thereby creating the impression of additional resources available to defendant during the tax year. The government, however, did not rely on the tax return in its computations. It relied instead on the Liberty Savings and Loan Mortgage payment ledger cards. Gov. Ex. 41. Defendant stipulated to the interest figures contained therein. Gov. Ex. ZZZ.

Fourth, the government did not credit defendant for $636 in insurance commissions received by him on his own life insurance policy. Defendant’s own expert witness recognized that the amount was income. Tr. 341-342. Cleveland was not entitled to credit for the sum since it was income.

The findings with respect to defendant’s 1964 income are supported by the record.

1965

The primary objection to the government’s computations for 1965 concerns the inclusion of $8,116.99 in a Glencoe Bank checking account in the name of defendant’s wife. Cleveland contends that those funds cannot be traced to him. The Clevelands were married in 1962; they separated in 1965. The account was opened, maintained, and closed in 1965. The evidence showed that Bernice Cleveland had no income during her marriage. Defendant alleges that Mrs. Cleveland brought $30,000 into the marriage. We find no evidence supporting this allegation. The only evidence introduced on the point indicates that she brought roughly $2,000 into the marriage. Tr. 88, 90. The evidence was sufficient to support the inference that the $8,116.99 was income to Cleveland.

Appellant also argues that he is entitled to a theft loss on the $8,116.99 because his wife took the money on dissolution of the marriage. There was no theft, however, since defendant gave the money to his spouse for deposit in her separate account. A gift does not entitle one to a theft loss.

The evidence on the $8,116.99 and all other elements of the government computation are supported by the evidence.

1966

Defendant contends that the 1966 figures are incorrect because they treat loans from three friends as income. The testimony of the three was quite dubious, and the jury evidently did not believe that the payments totalling $3,925 were loans. In any event, appellant admits a proved unaccounted for difference of $2,839 in a year when he reported only $1,591.04. In view of the fact that this is an amount which was computed without making any realistic allowance for normal living expenses, we cannot accept his contention that the amount is insubstantial.

The evidence was sufficient to support the government's calculations for each of the three indictment years. The consistent pattern of income understatement proven in this case is sufficient to support the inference of willfulness. Holland v. United States, 348 U.S. 121, 139, 75 S.Ct. 127, 99 L.Ed. 150.

II. The Admissibility of Evidence.

Defendant argues that his objections to certain government evidence were improperly overruled. The objections were grounded on the marital privilege, the Fifth Amendment, and the rule against evidence of unrelated criminal activity.

In preparing its case, the government conducted many interviews with defendant’s former wife, Bernice. Although she never testified at trial, defendant sought to suppress all information and leads obtained from her, contending that the interviews violated the marital communications privilege. The trial court refused to hold a hearing on the matter.

Although testimony by a government agent as to what a spouse said would be inadmissible in the Fifth Circuit, the rule is otherwise in the Second Circuit. As we stated in United States v. Doughty, we prefer the view of the Second Circuit. See 460 F.2d 1360, 1364 n. 3 (7th Cir. 1972). In any event, no such testimony was given at this trial, and we find no authority for the broad exclusionary rule advocated by defendant. See the Advisory Committee Notes to Rule 504, Proposed Federal Rules of Evidence.

At defendant's trial, the government read to the jury portions of the transcript of divorce proceedings involving Cleveland and his spouse, Bernice. That transcript contains numerous admissions by defendant as to his financial condition. Since the government did not read to the jury all relevant portions of the transcript, defendant contends it was permitted to “pick and choose from the taxpayer’s statement” in violation of Holland v. United States, 348 U.S. 121, 128-129, 75 S.Ct. 127, 132, 99 L.Ed. 150. Appellant’s reliance on that portion of the Holland opinion is completely misplaced. That discussion was concerned with the need for corroboration of admissions made to Internal Revenue agents; it had nothing to do with the use of portions of a transcript, the complete text of which is available to both parties.

Appellant also raises the Fifth Amendment as a bar to selective introduction of the transcript. He concedes that the entire transcript could have been read to the jury without offense to his Fifth Amendment rights. Since the government chose to read only part of it, he contends that he could not have read additional excerpts to the jury without, in effect, commenting on his failure to testify. We find no merit in this argument.

His next point relates to testimony on the $5,000 received by Cleveland in settlement of a lawsuit. The government deemed it income to Cleveland because he had appropriated it to his own use. The evidence supported this conclusion. Defendant properly points out that evidence of past crimes is not ordinarily admissible because of the danger of prejudice. But in this case, defendant strenuously contended that the $5,000 was not income since it belonged to his client. On that issue, evidence that Cleveland defied his obligation to his client and appropriated the money to his own use was properly admitted.

The appellant also argues that evidence of understatement of income in pre-indictment years is not admissible. The government had introduced evidence to that effect for 1961, 1962, and 1963 although prosecuting only for 1964, 1965, and 1966. Such evidence is admissible to show the element of willfulness. United States v. Shavin, 320 F.2d 308, 314 (7th Cir. 1963), cert. denied, 375 U. S. 944, 84 S.Ct. 349, 11 L.Ed.2d 273.

III. The Voir Dire.

The defendant proposed the following question for voir dire: “Would you give greater credence to the testimony of an expert witness employed by the Internal Revenue Service merely because he is an Internal Revenue Service Officer?” Defendant assigns error to the fact that the trial judge, who personally conducted the voir dire, declined to ask the proffered question but instead asked:

“Now, I will make this statement to you and I will make it — it applies also to the other eleven prospective members of this jury: In this case there undoubtedly will be evidence furnished by certain witnesses who may, in one respect or another, be employees of the Internal Revenue Service, of the United States Government. There may be other government witnesses. I will make this statement and I will ask you whether or not you think that this is a fair statement. These witnesses would be entitled to no greater or no less credence from the jury than any other witness who may take the witness stand. Would you agree with that?” Supp.Tr. 12.

The trial court also instructed the jury to “apply the same standards to the testimony of each expert, whether produced by the government or the defendant.” Tr. 409-410. The judge did not err in refusing to ask the proffered question.

IV. Jury Instructions.

In a manner similar to his handling of the voir dire, the trial judge refused several instructions offered by defendant on the issue of willfulness; the court gave the standard La Buy instruction. We have examined that instruction as well as those advanced by defendant and conclude that the trial court adequately instructed the jury. See Tr. 395-414.

After some twenty hours of deliberation, the court received the following communication signed by the jury foreman:

“Judge Decker, in order that the jury arrive at a fair and just decision, we are requesting another clarification of the word ‘willful’ and its significance to this case as it relates to the guilt or the innocence of the defendant Robert Cleveland of the charge as included in the government’s indictment.”

In response, the court reread portions of the original instructions describing the nature of the case and defining the term “willfulness.” Tr. 423-425. While the court could have avoided any problem by sending a copy of the complete instructions in with the jury at the start of deliberations as is sometimes done, we are satisfied that the procedure followed in this case did not mislead or confuse the jury.

V. Section 3500 Statement.

Special Agent Carey testified at length as a government witness. Defendant requested the trial judge to make an in camera inspection of a report Carey had prepared and to order the government to produce that part of the report which “relates to the subject matter of Agent Carey’s testimony.” The judge directed the government to give him the report the following morning, stating that he would “take a look at it.” The next morning, without clearly indicating whether or not he had examined the report, the judge stated that he was “going to adhere to my ruling that no portion of the report comes under a 3500 statement.”

The government defends this ruling on alternate grounds: First, that the judge did in fact make the in camera inspection which defendant requested; and, second, that in any event a Special Agent’s Report is not a “statement” producible under the Jencks Act, 18 U.

5. C. § 3500.

We are persuaded by appellant’s analysis of the relevant colloquies that the record does not demonstrate that the judge examined the report. The document is not before us and the record contains no finding or other unambiguous comment indicating that the judge did in fact review Carey’s report. A more reasonable interpretation of the transcript is that the judge construed our holding in the second Keig case as establishing a rule for this circuit that a Special Agent’s Report is, as a matter of law, not a “statement” within § 3500. Although the government so interprets Keig, and there is indeed language in the opinion which supports this interpretation, we have concluded that the statute may not be so construed.

Two problems which recur under § 3500 must be separately identified. First, is a document which has been prepared by a government witness a “statement” as defined in subsection (e); and, second, if so, is it producible pursuant to subsection (b)?

The definition of the term “statement” in subsection (e)(1) — assuming that the plain language means what it says — includes the report of a government agent who testifies as a prosecution witness. It has commonly been so held, and Revenue agents are treated like other government agents who testify at the trial. We must, therefore, conclude that Special Agent Carey’s written report was a “statement.”

That conclusion does not necessarily mean that the statement was producible. For the right to production turns on whether the content of the statement “relates to the subject matter as to which the witness has testified” within the meaning of subsection (b). The procedure for answering that question is thoroughly and accurately described in Senior Judge Hastings’ opinion in United States v. O’Brien, 444 F.2d 1082 (7th Cir. 1971), see especially 1086-1087. Suffice it to say here that since Special Agent Carey’s report was a “statement” within subsection (e), subsection (c) of the statute required the judge to make the in camera inspection requested by defendant in order to determine whether any part of the report was producible. Since we cannot be sure this was done, following the procedure set out in O’Brien we vacate the judgment and remand for further proceedings. If the trial judge determines that no part of the report need be produced, he should enter a fresh judgment. Defendant may then have the report sealed and transmitted to this court for review of the lower court’s determination. If, on the other hand, he concludes that production was wrongfully denied, it would then become his duty to accord defendant a new trial.

This disposition of the appeal is not necessarily inconsistent with the holding in Keig because the statements there involved were not producible pursuant to subsection (b) unless they related to the testimony of Agent Marici. We do, however, expressly disapprove of the language of that opinion insofar as it may be read to imply that a Special Agent’s Report is not a statement within subsection (e).

Judgment vacated and remanded with directions.

      . There was no precise explanation of why the credit was given. It could, of course, represent payment by the defendant of an obligation of the seller, in which case it would not reduce the purchase price.

      . United States v. Williams, 447 F.2d 894 (5th Cir. 1971); Ivey v. United States, 344 F.2d 770 (5th Cir. 1965).

      . United States v. Mackiewicz, 401 F.2d 219, 225 (2d Cir. 1968), cert. denied, 393 U.S. 923, 89 S.Ct. 253, 21 L.Ed.2d 258.

      . United States v. Keig, 334 F.2d 823, 825 (7th Cir. 1964). The first Keig opinion is reported at 320 F.2d 634 (7th Cir. 1963). In the first case we reversed and remanded with instructions to the trial court to make an in camera inspection of a Special Agent’s Report. On remand, the trial court found that the statement was not producible and in the second Keig appeal we affirmed that determination.

      . Subsection (e) reads as follows :
      “(e) The term ‘statement’, as used in subsections (b), (e), and (d) of this section in relation to any witness called by the United States, means—
      (1) a written statement made by said witness and signed or otherwise adopted or approved by him ;
      (2) a stenographic, mechanical, electrical, or other recording, or a transcription thereof, which is a substantially verbatim recital of an oral statement made by said witness and recorded contemporaneously with the making of such oral statement; or
      (3) a statement, however taken or recorded, or a transcription thereof, if any, made by said witness to a grand jury.
      Added Pub.L. 85-269, Sept. 2, 1957, 71 Stat. 595, and amended Pub.L. 91-452, Title I, § 102, Oct. 15, 1970, 84 Stat. 926.”

      . Subsection (b) reads as follows :
      “(b) After a witness called by the United States has testified on direct examination, the court shall, on motion of the defendant, order the United States to.. produce any statement (as hereinafter defined) of the witness in the possession of the United States which relates to the subject matter as to which the witness has testified. If the entire contents of any such statement relate to the subject matter of the testimony of the witness, the court shall order it to be delivered directly to the defendant for his examination and use.” (Emphasis added.)

      . Clancy v. United States, 365 U.S. 312, 81 S.Ct. 645, 5 L.Ed.2d 574, rev’g., 276 F.2d 617 (7th Cir. 1960); United States v. Sheer, 278 F.2d 65, 67-68 (7th Cir. 1960); United States v. Berry, 277 F.2d 826 (7th Cir. 1960); United States v. McCarthy, 301 F.2d 796, 797-799 (3rd Cir. 1962); Lewis v. United States, 340 F.2d 678 (8th Cir. 1965); Mims v. United States, 332 F.2d 944, 948 (10th Cir. 1964) (government conceded point).

      . United States v. O’Connor, 273 F.2d 358, 360-361 (2d Cir. 1959).

      . We do not preclude the possibility that error which may have stemmed from an understandable reliance on Keig might be harmless if it is perfectly clear that the defense was not prejudiced. See United States v. Aaron, 457 F.2d 865 (2d Cir. 1972).

      . This comment is, of course, also applicable to the dictum in United States v. Krilich, 470 F.2d 341 (7th Cir. 1972) page 351 n. 18, and to comments in United States v. Lacob, 416 F.2d 756, 761 (7th Cir. 1969), insofar as they so interpret Keig.

      This opinion has been circulated to all of the active members of the court. No judge has requested that the case be heard en banc.

      . To avoid a possible dispute over the application of Circuit Rule 23, in the event that Judge Decker shall determine that a new trial is necessary, we direct that all proceedings pursuant to our remand, including such possible retrial, be conducted by Judge Decker.


author: PICKETT, Circuit Judge.

text:
    UNITED STATES of America, Plaintiff-Appellant, v. Harry S. CROSS, Jr., Defendant-Appellee.
    No. 72-1492.
    United States Court of Appeals, Tenth Circuit.
    Argued March 26, 1973.
    Decided April 27, 1973.
    Edmund B. Clark, Chief, Appellate Section, Land and Natural Resources Division, Dept. of Justice, Washington, D. C. (Kent Frizzell, Asst. Atty. Gen., Jacques B. Gelin and Dennis M. O’Connell, Attys., Dept. of Justice, Washington, D. C.; James L. Treece, U. S. Atty., Charles W. Johnson, Asst. U. S. Atty., Denver, Colo., on the brief), for plaintiff-appellant.
    Willis K. Kulp, Greeley, Colo., for defendant-appellee.
    Before PICKETT, SETH and MC-WILLIAMS, Circuit Judges.
   PICKETT, Circuit Judge.

The United States brought this action seeking an injunction to prevent Harry S. Cross from constructing a building on its easement over lands upon which the Bureau of Reclamation had constructed and was operating a high voltage electric transmission line. Cross admitted the proposed construction, but denied that it was an encroachment on the rights granted by the easement. The trial court held, on stipulated facts, that the easement couched' in general terms had been, over the years, construed by the parties as permitting such construction and denied the relief sought, 339 F.Supp. 221.

Cross’ predecessor in interest, in 1938, granted to the United States “a right of way and easement, together with all rights and privileges incident to the use and enjoyment thereof to construct, maintain and operate a 115 Kv. transmission line over and across” the described lands. At the time of the grant the easement was located over open agricultural lands. Subsequent to the erection of the transmission line the area in which the Cross lots are located was subdivided and became a part of the city of Greeley, Colorado. Since 1950 eight dwelling houses and a gasoline service station have been constructed on lots within the right of way and under the transmission lines. The last of these structures was completed in March 1966. Most of these buildings extend under two or three of the conductor wires. The Cross house extends under only one.

The parties agreed that the presence of the Cross house will make inspection of the lines more difficult, make detours of equipment necessary, increase line maintenance cost and increase the delay and expense in the event of a power outage, and, that under certain conditions electric currents could be induced to flow in various metal parts of any structure located beneath a line, thereby causing a hazard to the occupants. Cross made it clear, however, through photographic exhibits and a drawing, that his proposed construction would interfere no more, and possibly less, with the government’s maintenance of the line than any of the existing structures, none of which has ever been challenged by the government as an encroachment on its easement. Moreover, in 1961, the government specifically stated in writing that it had no objection to the construction of the gasoline station.

In dismissing the action, the trial court stated:

The uses of the land under the transmission line do not prevent the plaintiff from operating and maintaining the line, but such uses have increased the difficulty and cost of maintenance over what it would be if no such uses were made of the land under the line. Yet, at no time since these uses were initiated in the year 1950 until January 1971, did the plaintiff object to such uses as an unlawful interference with its easement rights, or that such uses were incompatible or inconsistent with or constituted an unreasonable interference with the plaintiffs rights under the easement.
On the contrary, when one Roth-man, who built a filling station under the transmission line in 1961, (Building L Exhibit 16) wrote plaintiff and asked whether it had objection to the construction of the filling station in that location, was informed by the plaintiff it had none.
These facts, together with the fact that the easement grant contains no provision prohibiting the uses made by the owners of the servient estate, leads to the conclusion that both the owners of the servient estate and the plaintiff as the owner of the dominate [sic] estate construed plaintiff's easement as not precluding the use of the servient estate for residential purposes.

The issue presented is not one of estoppel or waiver of governmental rights but is whether the proposed construction is an encroachment upon the rights granted by the easement. It is the general law of contracts that in construing ambiguous and indefinite contracts the courts will look to the construction the parties have given to the instrument by their conduct before a controversy arises. The Colorado courts recognize this rule. In Greeley and Loveland Irrigation Company v. McCloughan, 140 Colo. 173, 342 P.2d 1045 (1959), the court says: “Colorado has long recognized the rule that in construing a contract the courts will follow the construction placed upon it by the parties themselves. [Citing cases.]” See also Chevron Oil Co. v. Barlow, 406 F.2d 687 (10th Cir. 1969); 17A C.J.S. Contracts § 325 (1963). The same rule is applicable to easements. With reference to easements, 2 Thompson on Real Property § 385 (Repl.1961) states:

The rule is well settled that where a grant of an easement is general as to the extent of the burden to be imposed on the servient tenement, an exercise of the right, with the acquiescence and consent of both parties, in a particular course or manner, fixes the right and limits it to the particular course or manner in which it has been enjoyed. The grant of a way when there is any uncertainty or ambiguity in it may be interpreted by reference . especially to the practical interpretation put upon the grant by the acts of the parties in the use of the easement immediately following the grant. When the grant is ambiguous the construction given by the parties themselves, as proved by the manner in which they exercised their rights under the conveyance, is legal evidence.

Gayton v. Lebedina, 158 Cal.App.2d 252, 322 P.2d 285 (1958); Isenberg v. Woitchek, 144 Colo. 394, 356 P.2d 904 (1960); Marden v. Mallard Decoy Club, 278 N.E.2d 743 (Mass.1972); Doody v. Spurr, 315 Mass. 129, 51 N.E.2d 981 (1943); York v. Cooper, 60 Wash.2d 283, 373 P.2d 493 (1962); 25 Am.Jur. 2d, Easements and Licenses § 23 (1966); Annot., 3 A.L.R.3d 1256 (1965); 28 C.J.S. Easements § 91A (1941).

The general terms of the easement granted only a right to erect, maintain and operate an electric transmission line over the property. Subject to this grant the owner was free to use the land as he saw fit. Over the years no objection was made to residential use of the right of way. Cross’ construction interferes no more with the government’s maintenance of the line than any of the existing structures. We agree with the trial court that the parties by their conduct have construed the easement to permit residential use of the servient tenement.

In an extensive argument in its brief, the government contends that it cannot be deprived of any property right because of acts of government administrative officials or on any estoppel or laches theory. These contentions have no application to the issues here. The government has not been deprived of any property right. It has no more or less than it had at the time of the original grant in 1938. The holding of the court below is that the original grant as construed by the parties permits residential use of the servient estate as proposed by Cross.

Affirmed.